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.
-
Stock Market Today: Solid Signals Lift Stocks Despite Tariff NoiseMarkets are whistling over the White House in an ongoing display of corporate America's enduring ability to survive and advance.
-
Amtrak Joins Prime Day With Deals on Fares — But You’ll Have to Act FastPrime members can score 20% off midweek fares — what travelers should know before booking.
-
Key to Financial Peace of Mind: Think 'What's Next?' Rather Than 'What If?'Even if you've hit your magic number for retirement, it's hard to stop worrying about money. Giving it a clear purpose is one way to reduce financial anxiety.
-
Three Estate Planning Documents a Business Owner Can't Afford to SkipA business owner's estate plan should protect the company and its employees as well as the entrepreneur's heirs. These three documents are critical.
-
Opportunity Zones: An Expert Guide to the Changes in the One Big Beautiful BillThe law makes opportunity zones permanent, creates enhanced tax benefits for rural investments and opens up new strategies for investors to combine community development with significant tax advantages.
-
Five Ways Retirees Can Keep Perspective Through Market JittersMarket volatility is a recurring event with historical precedents (the dot-com bubble, global financial crisis and pandemic), each followed by recovery. Here's how people who are near or in retirement can navigate economic uncertainty.
-
I'm a Financial Strategist: This Is the Investment Trap That Keeps Smart Investors on the SidelinesForget FOMO. FOGI — Fear of Getting In — is the feeling you need to learn how to manage so you don't miss out on future investment gains.
-
Can You Be a Good Parent to an Only Child When You're Also a Business Owner?Author and social psychologist Susan Newman offers advice to business-owner parents on how to raise a well-adjusted single child by avoiding overcompensation and encouraging chores.
-
How Advisers Can Steer Their Clients Through Market Volatility (and Strengthen Their Relationships)Financial advisers need to be strategic when they communicate with clients during market volatility. The goal is to not only reassure them but to also help them avoid rash decisions, deepen your relationship with them and build lasting trust.
-
The Hidden Costs of Caregiving: Crisis Goes Well Beyond Financial IssuesMany caregivers are drained emotionally as well as financially, leading to depression, burnout and depleted retirement prospects. What's to be done?
