How to Choose a Financial Advisor & What You Should Ask


by Christopher E. Mediate

Did you know that more than two-thirds of near-retirees haven’t met with a financial professional? No, really! When you put into context the past few years of economic uncertainty, I find that statistic particularly alarming. Per a survey conducted by Retirable, which polled 2,000 Americans aged 55 and older, 60% stated that they don’t feel they have enough money to last them thru retirement. Further, only 27% feel they’re confident in their savings lasting them throughout their lives.

Now, I want you to read those numbers and let them sink in for a second. Next, I want you to consider this: there was a time where the hard-earned dollars you earned over the length of your life were guaranteed to comfortably get you thru retirement with no extra effort necessary. Pensions used to be rock solid and the government was sure to keep you afloat by way of your Social Security Benefit. Back then, there wasn’t a huge precedent to seek assistance from a financial professional in order to get a desired retirement.

Well, the reality is that this is no longer the case. Your dream retirement is now fully your responsibility. However, you don’t have to go it alone. That’s what financial professionals are here for. But finding the right one for you isn’t easy – and certainly shouldn’t be something you take lightly. Here are some important questions you should be asking your prospective money handlers:

What does your financial strategy consist of?

When you ask this question, you are essentially trying to figure out the extent of services offered. Take my own firm for example. We believe in comprehensive financial planning. Meaning, whenever we are constructing a financial plan, we like to make sure we are addressing every single aspect that could affect the way we build it. This includes tax planning, estate planning, long-term care planning, all in addition to retirement income planning. We provide counsel in all of these areas and include them in the plan when needed based on your unique situation, but we cannot prepare your taxes like an accountant would during tax season, as tax preparation is not a service we render (yet). We are not lawyers, so we cannot create a will or trust for you, you’d need an estate attorney for that. For those specific and specialized services, we have trusted contacts to refer you to, as the advisor you’re interviewing should as well if they don’t offer them. It’s important to get down to the nitty gritty and figure out what their philosophy is and what services they can accommodate. This way, you can plan accordingly yourself.

Can you describe your process? How do you financial plan?

In the previous point, I talked about getting down to the nitty gritty when asking them specific questions on their philosophy, and it’s ideal to apply the same logic here. You are well within your rights to know how they specifically conduct business – every advisor has their own process. It’s good to know how long it will take, what they will need from you during this process, and especially, you will want to know when you start getting charged. During that first appointment, you could be getting charged right then and there, and continue to get charged each time you come in. That portion of their process should likely be figured out before you even step thru the doors of their office.

How can you help me work toward my goals? (Such as paying off debt or planning for retirement) What tools will you use to help me determine my goals clearly?

In the modern days, this will usually prompt the advisor to describe how they come up with their analysis results that will allow them to make the right decisions about your plan. Some of these tools used can help determine your risk score, quantify hypothetical scenarios, benchmark your goals, among other things. But before they can do any of this analysis for you, they need to get a deeper understanding of what your specific financial deficiencies are and what your own philosophy on money is.

How responsive and accessible are you? How long will it take to get a text, call or email back?

When it comes to picking the right financial advisor, communication and availability are two very big qualities you should be looking for. It is your money; you should know what’s going on with it whenever you are wanting to know. And when events are occurring that may affect your money, they should be reaching out to you first before you even have the inclination to contact them.

How do you get paid?

This is perhaps the single most important interview question you should ask. More often than should be, we’ve had quite a few individuals come into our office who had their money with an advisor where they didn’t know how much they were being charged. Unfortunately, in the financial industry there tends to be gray area because everyone is different. If you are intending for them to manage your assets (AUM), they will typically charge a fee between 1-2% on the year, charged at either a quarterly or monthly basis. Additionally, they could also be dually licensed as insurance agents. In those cases, they earn commissions based on the products they are selling – something else to consider before signing those papers.

What areas could you improve on within my current financial plan? What blind spots do you currently see with my finances?

These are just some general questions you can ask to get a better idea of the state of your finances. Most individuals tend to not have a firmly keen understanding on them (hence why you are seeking help) and the end goal should be to come away from that meeting with a better idea than what you came in with.

How often will we meet to review and update the plan?

The last question to ask is one that can sometimes be overlooked, which is why I wanted to make sure to include this. Reviews of your plan usually vary by advisor. In our case, we do them annually. Some do them twice a year, and some do them quarterly. It also might depend on you and how often you’d like to stay in the loop. Needs change, situations change, and life happens, you should be reviewing your plan once a year at an absolute MINIMUM. And again, your advisor should be reaching out to you whenever it’s time.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.