Meeting With a Financial Adviser for the First Time? Here's How to Prepare
A little preparation can help you get more out of your first meeting with a financial adviser. Here's what to gather, what to expect and the questions you should be ready to ask.
A financial adviser can help you make sense of your finances, set realistic goals and develop a plan to achieve them. But a little preparation before your first meeting can help you get more out of the conversation.
Start by identifying your top three financial goals or concerns. Consider both your short- and long-term priorities, whether that's paying down debt, saving for a home or planning for retirement. Knowing what matters most to you will help the adviser understand your needs and recommend a path forward.
You don't need to have all the answers before your first meeting. The goal is to come prepared with a clear picture of your priorities and questions. This will help you make the most of your time and determine whether the adviser is the right fit for your financial needs.
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Gather a snapshot of your finances
To help your financial adviser get a clear picture of your financial situation, gather a few key documents before your first meeting. These include:
- Recent pay stubs or other proof of income
- Most recent federal income tax return
- Current checking and savings account balances
- 401(k), IRA, pension and other retirement account statements
- Brokerage and other investment account statements
- Mortgage statements showing your balance, interest rate and monthly payment
- Credit card, auto loan, student loan and other outstanding debt balances
- Social Security benefit estimate, if applicable
- Life, disability and long-term care insurance policy details
- Will, trust and other estate planning documents, if applicable
- Employee benefits information, including retirement plans, insurance and stock options
Your adviser may ask you to upload these documents to a secure online portal before your appointment or bring them to the meeting. Don't worry if you can't find everything on the list. Bring what you have and follow up with any missing documents afterward. There's no need to delay your first meeting.
Know where your money is going
It’s helpful for your financial adviser to understand where your money goes each month; with that information, they can help you decide how to best save and invest your money to meet upcoming expenses or goals.
Estimate your typical monthly spending. If you have a budget, that can be a good place to start, since it outlines your recurring expenses. Identify any major recurring expenses, like your mortgage, health insurance and car and home insurance costs, and make sure you factor these expenses into your monthly spending.
It’s also important to flag any large expenses coming in the next few years, such as:
- Buying a home or making major renovations
- College tuition or other education expenses
- Major travel or vacations
- Purchasing or replacing a vehicle
- Medical expenses or planned procedures
- Retirement or a planned career change
- Supporting aging parents or other family members
- Weddings or other major family events
Be sure to account for any income that varies throughout the year, such as commissions, bonuses, freelance earnings, rental income or stock-based compensation. Let your adviser know if you expect any significant changes to your income, too.
Be ready to talk about more than money
During your first meeting with a financial adviser, you won't just talk about the specifics of your saving and spending. An adviser might ask you questions to better understand your priorities and attitudes about money, such as:
- At what age would you like to retire?
- What does your ideal retirement look like?
- How comfortable are you with investment risk and potential market losses?
- Does anyone depend on you financially, such as children or aging parents?
- Do you expect to receive an inheritance?
- Do you want to leave an inheritance for your family or other beneficiaries?
- Is charitable giving important to you?
- What are your biggest financial concerns?
- Do you anticipate any major life changes, such as marriage, divorce, a career change or relocation?
- How confident do you feel about managing your finances?
- Would you prefer to be actively involved in financial decisions or have an adviser take a more hands-on role?
Prepare questions for the financial adviser
Your first meeting with a financial adviser gives you a chance to get to know them and make sure that they’re the right fit for your needs, too. Don't be afraid to ask about their experience, qualifications, fees and approach to financial planning. Come prepared with a few questions to ask, including:
- How are you compensated, and do you earn commissions?
- What will I pay in fees, and are there any additional costs?
- What financial planning and investment management services are included?
- What professional credentials and certifications do you hold?
- Do you regularly work with clients who have financial goals and circumstances similar to mine?
- Do you have minimum investment or account balance requirements?
- What is your approach to investing and managing risk?
- Who will manage my investments and oversee my financial plan?
- How often will we meet to review my financial plan?
- How will we communicate between meetings?
- How will we measure progress toward my financial goals?
- Are there any potential conflicts of interest I should know about?
- How can I verify your credentials and check your disciplinary history?
Understand how financial advisers get paid
Financial advisers may be compensated in several ways, and that structure can affect what you pay. Don't hesitate to ask about how the adviser is paid, and then ask any follow-up questions you might have about how the structure affects your costs.
Your adviser should be willing to help you understand how their structure works, but here are a few common fee structures for financial advice that advisers may use:
- Assets under management (AUM): Adviser charges a percentage of the assets they manage for you
- Flat fee: Client pays a set amount for a financial plan or ongoing advice
- Hourly fee: Adviser charges for the time spent providing advice
- Subscription or retainer: Client pays a recurring monthly, quarterly or annual fee
- Commissions: Adviser may receive compensation when a client purchases certain investments, insurance products or other financial products
- Combination: Some advisers use more than one compensation method
Fee-only and fee-based advisers may sound similar, but there's an important distinction.
Fee-only advisers are compensated directly by their clients and don't earn commissions from selling financial products.
Fee-based advisers also charge clients for their services, but they may earn commissions from recommending or selling certain investments, insurance policies or other financial products.
To understand what you'll actually pay, ask the adviser to explain their fees in dollars, not just percentages. Find out which services are included, such as financial planning, investment management, tax planning or estate planning guidance.
Also, ask about additional costs, including investment fund expenses, trading fees or account maintenance charges. These expenses may not be included in the adviser's fee and can add up over time.
Know what happens after the first meeting
After your first meeting, your financial adviser may ask for additional documents or schedule a follow-up appointment to discuss their recommendations. Ask when you can expect to receive a financial plan and what steps you'll need to take next.
You may also receive an engagement agreement outlining the services the adviser will provide, their responsibilities and the fees you'll pay. Review the agreement carefully and ask questions about anything you don't understand before signing.
Don't feel pressured to make a decision right away. Take the time to choose a financial adviser you trust, feel comfortable working with and believe can help you achieve your financial goals.
Don't feel pressured to make a decision that day
You don't need to have your finances perfectly organized before meeting with an adviser. What's more important is having a clear understanding of your financial goals and being prepared to discuss your priorities. Remember, the first meeting is just as much about evaluating the adviser as it is about reviewing your finances.
By the end of the meeting, you should understand what services the adviser offers, how much you'll pay and what to expect next. Most importantly, you should feel confident that they're someone you can trust to help you reach your financial goals.
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