Searching for a financial advisor can sometimes feel overwhelming and intimidating.
For most, it’s just a world that they do not fully understand. They don’t even know what questions they should be asking.
My good friend, John Rumsey, is a financial advisor in Raleigh, NC. I asked him to put together a few questions (and their answers) that many people seem to be hesitant to ask.
Here are 5 questions and their respective answers:
- Are they compliant? Go to http://brokercheck.finra.org/. You can look up any licensed advisor through this site and see their history. This will tell you what licenses they have…Are they only licensed to sell insurance? Can they also trades stocks and bonds? It will also tell you if they have ever had a settlement or lawsuit against them. It doesn’t always mean they were in the wrong but it is something to look for. You can see their previous work history to see if they have bounced around to a lot of different firms or maybe if they just changed career paths. Complaints against the advisor are also listed so you can see if there have been any bad experiences in the past.
- Can I just walk into the practice? Although walk-ins are sometimes welcome, it is not recommended. Make sure your appointment is scheduled. Most financial firms are not walk-in clinics and shouldn’t be. The advisor and the client need to always schedule time together so both can come prepared and make the most out of the meeting. If an advisor is available to meet with you when you walk in, then that could be an indication that they do not have a lot of business to work on.
- What should I bring with me? Come prepared to the meeting with questions written down that are important to you. Are you concerned about your retirement? Is sending your kids to college going to be challenging? Will you have to care for your parents later on? You may not know the answers to these questions but you certainly want to ask them your advisor can understand what is most important to you. Your advisor should be able to incorporate these important topics into your overall financial planning.
- Should I expect to sign anything or be billed? Most advisors do not charge for their first meeting. This is because they recognize the value of trust and also need to understand if they can help your situation before spending time on it. Never sign paperwork in the first meeting. First meetings are for introductions and information gathering. You should be willing to share a lot of your personal financial situation with this person so it is helpful to bring copies of statements. You can always black out account numbers, social security numbers, or other information until you feel comfortable with the advisor. But I would not recommend withholding information or you will not have a productive meeting. You would not go to your doctor with a broken foot and not tell him how it happened. In the same way, you should not ask someone to solve your retirement concerns but not be willing to show them how much you have already saved.
- Is it okay for me to get a second opinion? It is perfectly acceptable to research a second opinion. Advisors can run their practices many different ways—different fee structures, investment styles, and depth of financial planning. It’s important that you find an advisor that offers what you need at a reasonable price.
Remember, it’s your money and your future. Don’t be afraid to ask questions. An advisor should make you feel comfortable and confident that he or she has your best interest in mind.