top of page

Looking for your first financial planner? Here are 8 great questions to ask

Updated: Apr 6, 2023

Selecting a financial planner is an important decision that can have a significant impact on not only your financial well-being, but your personal life satisfaction now and in the future. It’s essential to choose someone who you can trust and who has the expertise to help you achieve your financial goals. Here are eight questions to ask a prospective financial planner:

1) Tell me more about your experience and credentials?

It’s essential to choose a financial planner who has the necessary qualifications and credentials. Look for someone who is a Certified Financial Planner (CFP) or a Chartered Financial Analyst (CFA). These credentials indicate that the planner has met certain education, experience, and ethical requirements.

2) Why are you passionate about financial planning?

This question will give you a keen insight into the ‘why’ behind your financial planner. Their story should resonate with you in a way that fits your character and complements your goals. It's also a great question to ask to probe how they will put your best interests first.

3) What types of clients do you typically work with?

Many financial planners focus on a specific type of individual or business. These focus areas can be specific to a particular field or science, age group, belief, or specific planning need such as divorce planning, life transitions, expats, etc. A great tool you can utilize to locate a planner for your specific need is XYPN’s Find an Advisor tool.

4) What type of planning work will you do for us behind the scenes?

A good financial planner will provide clear expectations on the work and time spent directly with you, and work spent analyzing your circumstances. They may even have to review and sign a document called an engagement standards at the onset of the relationship that lays out what to expect. Also, ask for a client service calendar that they may provide you.

5) How often will we meet, and what will those meetings entail?

For an ongoing advisor relationship, regular meetings are key in determining constant communication and monitoring progress of investments and your financial plan. Many advisors will create an agenda prior to a meeting, which you can ask to see an example of.

6) How are you compensated for working with us?

Financial planners can be paid in a few different ways and sources. Below is a breakdown of those, and its wise to understand this prior to entering an engagement with an advisor:

  • Investment Management Fee - This is most common and typically is a percentage of the total amount of investments the advisor is managing on your behalf. For example, if the advisor is managing a $300,000 account for you and charges a 1% Management fee, this would equate to ~$3,000 per year depending on market movements. These typically increase the more the advisor is managing, as the complexity and service level tends to increase as well. This is suited well for someone in retirement who is looking to delegate management to an advisor, or is more ‘hands off’ on their approach.

  • A one-time project based fee - The advisor charges a one-time fee based on the scope of the project and needs. This may reflect the number of hours spent on the project, or a simple flat fee. Typically, this does not involve asset management, and is geared towards the creation of a financial plan.

  • Ongoing Planning Fee - In this arrangement, and advisor charges a monthly fee to retain the advisor, and their service. This type of fee can typically range from $100-500 per month and is a fit for individuals with higher than usual planning needs. This type of arrangement and the services vary significantly from advisor to advisor so be sure to ask for a specific breakdown of what is provided under this arrangement before determining if it is a good fit.

  • Commission - In this arrangement the advisor is paid a percentage of a sale of a specific financial product, and is common when purchasing insurance, annuities, medicare supplements, mutual funds, and alternative investments.

7) How do you stay current with changes in the financial industry?

The financial industry is constantly changing, and it’s essential to work with a planner who stays up to date with those changes. Ask how your prospective planner stays current with industry developments and whether they attend conferences or continuing education courses.

8) How do you handle conflicts of interest?

Financial planners may have conflicts of interest that can impact the advice they give you. For example, if they receive a commission on the products they recommend, they may be incentivized to recommend products that aren’t in your best interest. Ask your prospective planner how they handle conflicts of interest and whether they are a fiduciary, meaning they are legally required to act in your best interest.

In conclusion, choosing a financial planner is a significant decision that can impact your financial well-being. By asking these eight questions, you can ensure that you choose someone who has the necessary qualifications and credentials, aligns with your goals, and puts your best interests first.

This article is written by Jake Stalder, CFP® of Navigate Financial Planning LLC.


Commenting has been turned off.
bottom of page