5 Questions to Ask When Choosing a Financial Advisor

5 Questions to Ask When Choosing a Financial Advisor

October 2023  SmartAsset

Whether you’re saving for retirement, considering major purchases, planning your estate, or just want a second set of eyes on your investments, hiring a financial advisor who you feel best suits your needs could be key.  A 2022 Northwestern Mutual study found that 62% of U.S. adults admit their financial planning needs improvement. However, only 35% of Americans work with a financial advisor.

The value of working with a financial advisor varies by person. While advisors are legally prohibited from promising returns, research suggests that people who work with a financial advisor feel more at ease about their finances and could potentially end up with about 15% more money to spend in retirement.

Finding a fiduciary shouldn’t be that hard. Thankfully, it isn’t.

Whatever your reasons for seeking financial advice, it’s important to have a list of questions planned to ensure you’re hiring a financial advisor who can help you plan to reach your goals.

5 Questions to Ask When Choosing a Financial Advisor

1. Are You a Fiduciary?

Fiduciaries are financial advisors with a legal obligation to prioritize your interests as they manage your assets or money.

Unlike a broker who may push you into insurance policies or investments to rack up fees and commissions, fiduciaries are bound to recommend options that benefit you, the customer. While conflicts of interest can still exist, any potential conflicts of interest must be disclosed.

2. How Much Experience Do You Have?

In addition to asking about their professional certification, it can also be a good idea to ask a prospective financial advisor about their overall experience.

Generally, the more experience they have the better, especially if your financial situation is complicated. You should consider asking about their education, previous employers and track record of success.

You might also want to consider performing a background check to find out whether they’ve ever been convicted of a crime or been involved in a criminal investigation by a regulatory or trade group.

Don’t be afraid to ask for references from current or previous clients, and be wary of a financial advisor who seems reluctant to provide this information.

3. What Type of Services Do You Offer?

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