If you are considering hiring a financial advisor, you may be wondering what to ask and how to tell whether the relationship will work for you.
Our view is that you should understand how decisions will be made before you agree to work together. You should also know what happens after the initial plan is delivered and what you will receive for the fee you pay.
These seven questions can help you evaluate any financial advisor. They are especially useful for women approaching retirement or making financial decisions after divorce, the loss of a spouse, or another major life change.
An advisor should be able to explain the process before asking you to make a decision.
You should understand:
Both you and the advisor need enough information to determine whether the relationship may be a good fit. You should not feel pressured to make that decision after one conversation.
Financial advice should not feel like a set of instructions. You deserve to understand why a recommendation is being made, which reasonable alternatives were considered, and how the recommendation relates to your circumstances.
You should feel comfortable asking the advisor to slow down, explain something differently, or review an option again. Pay attention to how the advisor responds. That can tell you a great deal about what future conversations may be like.
Different circumstances bring different financial decisions. A woman approaching retirement on her own may have different concerns from someone recently divorced or adjusting after the loss of a spouse.
Ask how often the advisor works with women facing circumstances similar to yours and which decisions commonly require attention.
The answer should extend beyond managing investments. Social Security, taxes, Medicare, retirement income, and estate coordination may all affect the decisions you make.
Retirement planning involves more than growing investments. It also requires deciding how your savings and other resources will provide income.
Ask how the advisor coordinates income from sources such as:
You should also understand how withdrawals may affect your taxes and Medicare premiums. The answer can help you determine whether the advisor provides retirement income planning or focuses primarily on portfolio performance.
Speaking with a current client may give you another perspective on what it is like to work with the advisor after the initial planning process is complete.
If references are available, ask whether you can speak with someone whose circumstances are reasonably similar to yours.
The purpose is not to ask about private financial information or investment results. It is to learn how clearly the advisor communicates, how responsive the firm is, and whether the advisor follows through on what was promised.
A financial plan is based on the information available when it is created. Your circumstances, priorities, and the rules affecting your finances will change.
Ask how the advisor:
You should understand what happens after the initial plan is delivered and how the advisor will help when a new decision arises.
Ask the advisor why they chose this work and why they serve the people they serve.
The answer may help you understand what motivates the advisor and how they approach relationships with clients.
An advisor’s story does not replace qualifications, experience, or a sound planning process. It can help you decide whether the advisor’s motivation and values align with what you want from the relationship.
Fees are important. You should understand exactly how an advisor is compensated, which services are included, and whether other expenses may apply.
The percentage or dollar amount does not tell you what you will receive in return. Ask what kind of help you can expect after the initial plan is delivered and how the advisor will help with decisions beyond managing investments.
You should also ask when the advisor is required to act as a fiduciary when providing financial advice.
The larger question is whether the advisor’s experience and ongoing help fit what you need and justify the fee.
These questions can help you evaluate any financial advisor. If you would like to understand how our firm approaches them, we have answered these questions and several others directly in our FAQ.
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