Financial Planning

10 Questions to Ask Your First, Next or (Maybe?) Last Financial Adviser

When it comes to your financial future, you can’t afford to settle. So get nosy. Question No. 1: Are you a fiduciary?

No one knows for sure what will happen next with the Department of Labor’s new fiduciary rule.

The much-debated and often-delayed rule, designed to increase consumer protections for retirement investors, was partially implemented starting June 9. But the DOL will continue listening to public opinion until Jan. 1, when the rule is scheduled to go into effect fully.

In the meantime, investors will be out there looking for financial professionals they can trust. And they should go about their search with their own high expectations for the services they want.

Here are some questions that can help you find the right person or firm to assist you with your planning:

1. Are you a fiduciary?

As of June 9, a financial professional is required to provide fiduciary-level advice when discussing funds held in qualified retirement accounts (which are those funded with pre-tax money, including 401(k)s, 403(b)s, employee stock ownership plans and simplified employee pension plans). This means the adviser must act in the best interest of each client and must disclose any possible conflicts of interest when making a recommendation.

The rule doesn’t require this level of service on non-qualified money, however (meaning accounts funded with after-tax money). Those transactions are still covered by the less rigorous suitability standard, which says the guidance provided and products recommended are suitable to the client’s needs and objectives, and does not require agents to disclose any conflicts of interest.

2. How are you paid for your services?

Most advisers are paid one of three ways:

  • Fee only: They charge a flat hourly rate (or an “a la carte” rate) for services or are compensated as a percentage of assets under management or as a flat fee, instead of taking compensation from commissions on investment transactions.
  • Fee based: They’re paid a fee, but they can also accept commissions on the products they recommend, such as load-based mutual funds or annuities and insurance.
  • Commission based: They may receive commissions for selling investments, real estate, insurance products or loans.

Fiduciary advisers generally are fee only.

3. What licenses, credentials or other certifications do you have?

The mysterious mix of letters and numbers behind most financial professionals’ names likely means more inside the industry than to the general public. Some are required, depending on the kind of work the person does; others are not. Take each on a case-by-case basis, and if you don’t know what something means, Google it — or simply ask. A couple of designations to look for are Registered Investment Adviser (RIA) or Investment Adviser Representative (IAR); both are fiduciaries and must act in the client’s best interest. There’s also the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation, which requires a comprehensive board exam.

4. What services do you and/or your firm provide?

Are you looking for a one-stop shop? In addition to portfolio management, your adviser may offer services such as wealth management, insurance sales, tax planning, estate planning and risk management. Some firms have tax professionals and attorneys they work closely with, or even have on staff. Others are happy to consult with your personal attorney or CPA.

5. What kind of clients do you specialize in?

Most people keep the same adviser for years, and that person’s primary job is to grow their money. But if you’re retired or close to retiring, it’s time to shift gears and look for someone who specializes in retirement planning – someone who knows about preservation and distribution. You also might want to find a person who works with portfolios that are similar in size to yours, so he can bring that experience to the advice he gives you.

6. Could I see a sample of the types of financial strategies you prepare for clients?

Many financial professionals and their firms will offer printed brochures with general information. Try to get your adviser to drill down a little further with specific examples of the work he’s done.

7. How much contact do you have with your clients?

Especially in retirement, an adviser should be available when needed. He or she should return your calls, and you should plan to meet at least twice a year, even if it’s just to touch base and make sure nothing has changed in your personal life.

8. Will I be working only with you or with a team?

You might think an adviser flying solo would give you more attention, but a 2015 report from PriceMetrix found advisers working in teams actually have deeper client relationships than sole practitioners, and they’re more productive.

9. What is your approach to retirement planning?

Of course, you want someone who understands the change you’re making from accumulation to distribution. But in retirement, it’s also more important than ever for your adviser to take a holistic approach to retirement planning – looking at your goals, income streams, tax efficiency, inflation, long-term care and estate planning.

10. Have you ever been publicly disciplined for any unlawful or unethical actions during your career?

There are a couple of quick checks you can do on your own. At BrokerCheck you can do a free broker inquiry that will tell you whether an individual or firm is registered to sell securities, offer investment advice or both. You also can get some information on employment history, licensing and regulatory actions, arbitrations and complaints. You can do a search at the U.S. Securities and Exchange Commission’s Investment Adviser Public Disclosure website as well. You also can check with the Better Business Bureau and your state’s office of insurance regulation.

Make sure you interview more than one financial professional and/or firm to find someone who is easy to talk with and who understands your needs. And don’t settle. The right adviser is out there waiting for you.

Kim Franke-Folstad contributed to this article.

About the Author

Sean P. Lee, MSFS

President and Founder, Elevated Retirement Group

Sean P. Lee, MSFS, is the president and founder of Elevated Retirement Group in Murray, Utah. He is an Investment Adviser Representative, held to the fiduciary standard when making investment recommendations, and a licensed life and health insurance professional.

Most Popular

Refunds for $10,200 Unemployment Tax Break to Begin This Week
Coronavirus and Your Money

Refunds for $10,200 Unemployment Tax Break to Begin This Week

The IRS will start issuing automatic refunds in mid-May to people eligible for the unemployment benefit tax exemption.
May 14, 2021
18 Worst Things to Buy at Dollar Stores

18 Worst Things to Buy at Dollar Stores

These discount retailers stock plenty of bargains, but some of the merchandise isn’t worth the buck.
May 14, 2021
Thinking of Buying an RV or Motor Home? Think Again!
personal finance

Thinking of Buying an RV or Motor Home? Think Again!

A Lemon Law attorney has some insights on the downsides of RV ownership you should think about before putting your money down and hitting the road.
May 16, 2021


Today is the Last Day to Fund Your IRA and Cut Your Taxes
Tax Breaks

Today is the Last Day to Fund Your IRA and Cut Your Taxes

Although you need to act quickly, you still have a few hours to make a 2020 IRA contribution and lower your tax bill.
May 17, 2021
Contributing to Your HSA Today Could Lower Your Tax Bill
Tax Breaks

Contributing to Your HSA Today Could Lower Your Tax Bill

If you haven't already contributed the full amount to your HSA for 2020, you have a few more hours to do so and potentially reduce your tax bill at th…
May 17, 2021
33 States with No Estate Taxes or Inheritance Taxes

33 States with No Estate Taxes or Inheritance Taxes

Even with the federal exemption from death taxes raised, retirees should pay more attention to estate taxes and inheritance taxes levied by states.
May 13, 2021
13 States That Tax Social Security Benefits
social security

13 States That Tax Social Security Benefits

You may have dreamed of a tax-free retirement, but if you live in these 13 states, your Social Security benefits are subject to a state tax. That's on…
May 11, 2021