02/22/2017
Questions to Ask a Financial Advisor

Questions to Ask a Financial Advisor

With the Department of Labor’s fiduciary rule, which requires financial professionals to work in their client’s best interest, now on apparent delay and potential rollback, it is a good time to review your relationship with your financial adviser.

Here are some questions to ask the person advising you on your investments:

Are you held to the fiduciary standard?

Those advisers who are not fiduciaries are held to a lesser standard called “suitability,” meaning anything they sell you must be appropriate for you, but not necessarily in your best interest.

How will I pay for your services?

Your adviser should clearly state, in writing, how they will be paid for their services. The three primary methods are fees based on an hourly or flat rate; fees based on a percentage of your portfolio value, called “assets under management”; and commissions paid per transaction.

To determine which model works for you, consider how often you expect to trade and whether you want your money proactively managed.

What experience do you have?

Find out how long your adviser has been in practice, and ask if they have any professional certifications, designations, or licenses. Some include certified financial planner, CPA personal financial specialist, and chartered financial analyst. Such certifications are governed by national organizations and require adherence to the fiduciary standard.

What services do you offer?

Services offered can depend on factors including credentials, licenses, and areas of expertise. Some professionals conduct financial planning alone without selling financial products, and others may only manage assets.

What is your approach to planning and investing?

While some advisors prefer a holistic plan that combines all of your financial goals, others will provide advice on specific areas. Be sure that your advisor’s views align with your tolerance for risk.

Do you have a financial interest in the entity that houses my account?

If you are interviewing advisers not associated with large brokerage or insurance companies, ask about their relationships. Do they use an independent third party custodian or clearing firm? These prevent the adviser from having direct custody of your assets and adds another level of security to your account.

Is there anything in your regulatory record I should know?

Background checks on financial professionals can be conducted through the Securities and Exchange Commission and Financial Industry Regulatory Authority websites, or the state securities website NASAA as well as the CFP Board. While some violations should be bright red flags, others may be acceptable.

How often will we interact?

 
Ask if the adviser will remain your primary contact.

Financial Advisors at OptiFour Integrated Wealth Management

OptiFour Integrated Wealth Management’s team of dedicated financial professionals has provided financial planning assistance in and around Washington, D.C. for over 25 years. To learn more about our services or to get started today, please visit our homepage!

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