Questions You Need to Ask Your Financial Planner

Though many people view a financial planner as a luxury only necessary for the extremely wealthy, the truth is that a financial planner can help almost anyone achieve their financial goals and grow their finances. If you’ve been considering working with a professional financial planner to improve your financial situation, you might be wondering how to go about choosing the right planner for you.

You’ll want to speak with a few different professionals to find the right person that can help you achieve your financial goals now and help you prepare for life shifts like retirement later. There are some things you will need to know about their background and approach to financial advising, so read on for a few questions you can ask a potential financial planner to help you find the right fit.

Ask about Fiduciary Duty

This is a very important question to ask your potential financial planner. Financial professionals that must abide by the fiduciary rule are considered fiduciaries, and they are required by law to act in the best interests of their client.

Nonfiduciaries, by contrast, are simply told to abide by a suitability obligation. This means any financial advice they give must be suitable, but they are not required to put a client’s best interests above their own. Financial advice that you get from a nonfiduciary may be influenced by commissions or other factors.

To get the best advice for you that is not influenced by any outside obligations or conflicts of interest, it is best to look for a true fiduciary when hiring a financial planner.

How Does Your Financial Planner Get Paid?

You must understand how your financial planner is paid. Ask about their payment structure and try to stick with fee-only planners if possible. Fee-only planners can charge a percentage of the assets they are managing (1 percent is common), an hourly rate, or a flat fee. Advisors and planners who work on a fee-only basis do not receive any commissions for recommending products, so it is easier to avoid conflicts of interest this way.

Don’t confuse fee-only with fee-based advisors; fee-based advisors still receive a commission for selling certain financial products.

Who Is Their Ideal Client?

Financial planners and advisors can have several specialties in different areas. When working with a planner, it is in your best interest to find a professional who has experience in an area that is important to you. For example, a young couple looking to pay down student loan debt and save for their first home may not want to seek out financial planners who mainly work with clients nearing retirement. Ask any potential planners to describe what an ideal client would look like for them to help you determine if their expertise aligns well with your goals.

Ask Them to Explain a Financial Concept

A financial planner is someone you will likely work with for a long time. One good way to see if you will be comfortable working with them for the long-term is to ask them to explain something to you. If the explanation they give you is too complex or difficult for you to understand, then that is a good indication you should be looking for someone else. The person you work with to help you make financial decisions should be able to explain these concepts to you easily and in a way that you can clearly understand.

Do They Have Any Disclosures on Their Record?

Financial planners are there to help you make important decisions about your financial future. If they or their firm have faced any criminal, regulatory, or disciplinary actions of any kind, then that is something you definitely need to know about. To double-check, you can look over the firm’s Form ADV, which will contain these types of disclosures.

You can access that information through the SEC’s Investment Advisor Search tool (on the website for the US Securities and Exchange Commission) in an online format, or you can also request copies of the written paperwork through an SEC branch.

Ask about Their Investment Strategy

The general investment philosophy of the firm is something you will also want to ask about early on. It’s important that they can explain their investment philosophy in terms you can easily understand.

You’ll want to have an advisor that has a philosophy that aligns with your own; this will make it much easier to stick with the plan when the market isn’t going well. Some important points would be types of investments they recommend, diversification, growth versus value, and trying to time the markets. Market timing is when financial advisors try to predict what’s going to happen and recommend shifts in your portfolio based on simple hunches. This could cost you significantly, since timing the market incorrectly can have big consequences.


Robert Ryerson

Although Robert M. Ryerson completed all the necessary requirements to earn bachelor of arts degrees in both English and economics at Rutgers University, college policy at the time prohibited the issuance of dual degrees. As a result, he graduated from Rutgers with a single bachelor of arts in economics before finding employment as a stockbroker with Shearson Lehman American Express in New York City 1984. Robert M. Ryerson has since established himself as a respected estate administrator and legacy planner. In addition to his economics degree from Rutgers, Mr. Ryerson holds several professional designations including Retirement Income Certified Professional (RICP)®; Certified In Long Term Care (CLTC)®; Certified Financial Fiduciary (CFF)®, and Certified Identity Theft Risk Magenament Specialist (CITRMS)®. He has shared his knowledge on the subject of identity theft as the author of the book What’s The Deal With Identity Theft?: A Plain-English Look at Our Fastest Growing Crime. He has also covered identity theft issues directly for students as the instructor of the adult education course Understanding Identity Theft: Our Fastest Growing Crime.

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