Grilling Your Financial Advisor

Thinking about getting a financial advisor? Choosing the right one is important. This is the person who will not only be investing your money (or giving you guidance for doing it yourself), but also help you map out your entire financial future. Finding a good person, and someone that fits with your needs, can make a big difference for your money and even your long-term quality of life.

Grill yourself first

First of all, you have to acknowledge that your advisor has to work for you. And for that to happen, you need to know what you actually need. So consider what you want before you start grilling someone else.

Do you have a pretty big nest egg and need someone to invest it wisely so it grows well and doesn’t disappear when there’s a market correction? Or do you need someone who can nurse your portfolio but also look at more than just your savings; things like your insurance needs, saving for your kids’ education and estate planning. Do you want to be aggressive with your money, or more careful? All your answers will inform your approach to talking to potential advisors.

What to ask

When you sit down with a few potential advisors, here are some questions you will want to ask:

1.     What’s your background? Ask some of those basic job interview-like questions. If your advisor has been at the job for years, find out what she or he’s been doing, who they serve and what their track record is. What about before becoming an advisor? Dig to be sure this person knows money and has the right designations.

2.     Can I talk to your clients? Even if you’ve been referred by a friend or family member, ask for referrals in similar financial situations to yourself. These people can give you a frank report and help you assess if this person is good, and if they’re good for you.

3.     What have you done for your clients? An advisor is not just an investor, but someone who helps you plan your financial life. A good advisor has helped others grow their nest egg, but also cope with risk and allocate their money for specific plans like sending their kids to university or buying a new house.

4.     What makes you different? The market is full of advisors, ask yours what they can offer you that others cannot, be it better investment advice, a more balanced approach to finance or better overall support.

5.     How do you get paid? Dig down and make sure you really understand how the money works here. Do they get money when you make it? When you cash out? Is this a fee arrangement where you pay for advice and make your own financial moves?

6.     How do you keep up to date? Find out if this person reads regularly to understand the latest on the markets, the insurance industry, the housing market, post-secondary education costs and other issues that pertain to you.

7.     What’s your philosophy? Above all, make sure this person thinks the same way about money as you do. You may disagree in future, but your general goals should be the same so the choices you make together are the right ones for you.

Lastly, there’s a question you can’t ask anyone but yourself. Do you like and trust this person? Use the evidence you gain by asking the right questions to make that determination yourself. Because that will decide who you hire to help you guide your money into the future.

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