Close
Image description

Questions to Ask Before Hiring a Financial Planner

January 3rd, 2013 Personal Finance

The simple fact of the matter is, financial planning is a vital part of ensuring the fiscal security of you and your loved ones, especially once you reach the age of retirement. Of course, navigating through the endless acronyms and knowing where exactly to put your money isn't exactly simple. If you've been wondering what to do with your cash, it could be worth hiring a financial adviser - these qualified individuals can do a lot to help you put it exactly where it needs to be. However, there are some key questions you need to ask the person you're thinking of hiring to make sure the two of you would be a good fit.

1. Check his or her U4 form. Think of the U4 as a report card for financial advisers - any complaints leveraged against him or her, or any wrongdoings he or she may have done in the past will be catalogued here. Ask the financial adviser what you can expect to find if you were to consult his or her U4. If you aren't satisfied with the answer, you can always find the information for yourself online. This is a great way to give yourself peace of mind before moving forward with a particular financial adviser.

2. How much do you charge? You'd be surprised at how infrequently this question is pursued - people may regard it as impolite to flat-out ask a financial adviser how much he or she charges. But if you don't, you could wind up paying much more than you expected. Financial advisers have a few different ways of making money - some are based on commission, while others charge a flat fee for their services. Still others employ a combination of the two. Knowing which one will work best for your particular situation can help you narrow down your search dramatically.

3. How many clients do you have? You may feel like advisers with a large number of clients have so many because they're the best. While they may in fact be very good at their jobs, the result of too many clients could be that you start to feel alienated. When a financial adviser takes on more than he or she can handle, he starts to forget the names and faces of his or her clients, which can make you feel unimportant.

4. What's in your portfolio? This question may feel uncomfortable to ask, but financial advisers are typically pretty good about letting you see where their own money is going. This is a great way for you to figure out how your potential adviser is allocating his or her own funds, which can say a lot about where your money might end up going. Have a look at where he or she is investing his money and determine if these are companies and services you would be happy with for yourself.

Long-term financial planning isn't always easy, which is why it pays to have a professional taking care of the heavy lifting for you. A financial adviser can do quite a bit for you, but you need to make sure that the two of you are a good fit. By doing your homework and going on in armed with the right questions, you should be able to find out whether you can pursue a professional relationship or if you should move on and see if someone else can help you out.