With more than 10 years of experience as an investment adviser and insurance professional, my goal has long been to help my clients reach their financial goals so they can enjoy their retirement to the fullest.
That said, it helps when people have realistic goals concerning retirement and the willingness to make the choices needed to work toward achieving those goals.
That all begins with the choice of a financial adviser. It is up to you to do your homework, ask the right questions and make a reasoned choice when picking a person or group to help you manage your money.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Financial advisers likely aren't going to share all the information about themselves or how they conduct business on their websites, but there are a handful of questions you should ask before moving forward.
They might prefer these questions didn't come up, but if the financial professional you're talking to is reluctant to answer them, you might want to consider moving on to the next name on your list.
Here are the questions your potential adviser might hope you don't ask—but you should:
1. What investments or companies do you recommend?
If an adviser recommends a specific type of investment or a specific company or companies, it's possible they are only offering a handful of the options out there.
Reject a cookie-cutter approach. A financial adviser should offer a broad and diverse range of investment approaches, and more importantly, should customize recommendations to each client.
2. What's been your approach over the last five or 10 years?
It is reasonable to have a conversation about an adviser's track record of recommendations before making your decision. How they answer could be a red flag. An answer may come easy if they only offer a one-size-fits-all approach to investing. Press them for specifics on how they would add value to your bottom line with specific, customized choices for your investments.
3. What are your fees?
There is more than one way to pay for financial management, and each has pros and cons.
Fee only
This is a one-time flat fee for a financial plan. When paying a flat fee, it's important to understand what value you're receiving for the fee you're paying.
Fee based
This typically is a percentage fee levied on your portfolio in return for professional management. Fee ranges vary, but generally average between 1% and 2.5% of the total value of the investments. One of the most important components to deciding whether a fee is low or high is what value you're getting from paying the management fee.
Commission based
Some advisers prefer to earn a commission after recommending a fund or investment to their client. There is criticism of possible conflict of interest since the commission is paid by the company whose products the adviser sells. That doesn't preclude an adviser from making sound decisions regarding your portfolio, but you should stay vigilant that your needs are being met.
All of these are viable options for paying a financial adviser. When asked, a potential adviser should offer all of them, or a blend of fees based on your personal preferences.
4. What's the minimum investment you will accept?
You certainly should discuss whether a potential adviser requires a minimum investment before you agree to work together. A minimum investment will allow an adviser to build a more customized plan for your money. If you don't meet the minimum requirements, hopefully the adviser can offer you another solution, such as directing you to a colleague who has waived those requirements.
5. How are you different from other advisers?
If an adviser cannot answer this question, I recommend you walk away. An adviser should be able to provide distinctions tailored to you and your needs rather than offering a one-for-all plan.
One of the most important keys to your financial success leading to a comfortable and confident retirement is to align yourself with an investment adviser who shares your goals and vision and who is able to provide a plan to help you meet them.
Senior investment adviser Chris Hobart is founder of Hobart Financial Group, based in Charlotte, North Carolina. He is a Registered Financial Consultant, Investment Adviser Representative and licensed insurance agent.
Kim MacCormack contributed to this article.
-
Aging: The Overlooked Risk FactorSponsored Elder care is a personal and financial vulnerability many people fail to plan for.
-
AI vs the Stock Market: How Did Alphabet, Nike and Industrial Stocks Perform in June?AI is a new tool to help investors analyze data, but can it beat the stock market? Here's how a chatbot's stock picks fared in June.
-
Eight Tips From a Financial Caddie: How to Keep Your Retirement on the FairwayThink of your financial adviser as a golf caddie — giving you the advice you need to nail the retirement course, avoiding financial bunkers and bogeys.
-
Just Sold Your Business? Avoid These Five Hasty MovesIf you've exited your business, financial advice is likely to be flooding in from all quarters. But wait until the dust settles before making any big moves.
-
You Were Planning to Retire This Year: Should You Go Ahead?If the economic climate is making you doubt whether you should retire this year, these three questions will help you make up your mind.
-
Are You Owed Money Thanks to the SSFA? You Might Need to Do Something to Get ItThe Social Security Fairness Act removed restrictions on benefits for people with government pensions. If you're one of them, don't leave money on the table. Here's how you can be proactive in claiming what you're due.
-
From Wills to Wishes: An Expert Guide to Your Estate Planning PlaybookConsider supplementing your traditional legal documents with this essential road map to guide your loved ones through the emotional and logistical details that will follow your loss.
-
Your Home + Your IRA = Your Long-Term Care SolutionIf you're worried that long-term care costs will drain your retirement savings, consider a personalized retirement plan that could solve your problem.
-
I'm a Financial Planner: Retirees Should Never Do These Four Things in a RecessionRecessions are scary business, especially for retirees. They can scare even the most prepared folks into making bad moves — like these.
-
A Retirement Planner's Advice for Taking the Guesswork Out of Income PlanningOnce you've saved for retirement, you'll need your nest egg to support you for as many as 30 years. For that, you need a clear income strategy, not guesswork.
