5 Financial Advisor Interview Questions
Table of Contents
5 Financial Advisor Interview Questions
I thought this blog would be a fun one to write as I often joke about it with new prospective clients. I’ll be sitting there getting to know Mr & Mrs. New Client and I’ll always end with – “any questions for me?” All too often, I’ll see them look down at their sheet of paper and start peppering me with questions out of the blue. That is when I’ll joke and say, “Sounds like you Googled what to ask a financial advisor” and of course, we all laugh hysterically (or at least chuckle).
The reality is, that there are some great questions to ask when interviewing a financial advisor and I figured why not share my thoughts here on what to ask, what it means, and how hopefully your trusted Diversified, LLC advisor would answer.
Questions:
Are you a fiduciary?
For starters, this is probably the number one question we get asked these days. However, most people don’t even know what it truly means. The short answer is: putting the client’s interests ahead of our own. By doing so a fiduciary advisor attempts to take all conflicts out.
Diversified Answer: Yes, all of our advisors act and are structured to maintain full fiduciary standards.
What designations do your firm and advisors hold?
When asking this question, you are trying to understand what further education your advisor or financial planning team holds. This is a way of distinguishing oneself and in theory, shows a further dedication to financial planning vocation. The big ones people look for are Certified Financial Planner, which is akin to a master’s in financial planning, and Certified Financial Analyst, which is more akin to a PhD in investment management.
Diversified Answer: All of our planning groups have CFPs, our CIO is a CFA, and we additionally have other designations here such as Certified Public Accountants, and Certified Estate Planners. We here at Diversified take a lot of pride in our chosen careers and are truly dedicated to giving the best advice we know how.
How are you compensated?
This is a big one folks, because, to my knowledge, no one works for free. Furthermore, the answer Google is telling you to look for is that your advisor gets paid by YOU. This is one way to help ensure that they are functioning as a true fiduciary. You see if we get paid via product company there remains a conflict as to why are you investing in XYZ, is it because it is the best investment for you the client, or for us the advisor? Essentially, if you get commissions from product companies vs fees from clients directly it doesn’t mean you technically aren’t a fiduciary. However, if commissions are received one should be aware and understand how it is in their best interest.
Diversified Answer: We get compensated from our clients I am proud to say.
Do you do financial planning?
There is a big difference between an advisor who “says” they do financial planning and one who actually does do financial planning. Giving investment advice, and that is all, doesn’t really classify as financial planning. Rather, I would call that investment planning. Someone doing financial planning has a well-defined process for looking over your entire financial life. Additionally, they do planning or give some guidance on the 8 sections defined by a CFP professional. They are:
- Professional conduct and regulation
- General Principles of Financial Planning
- Risk Management and Insurance Planning
- Investment Planning
- Tax Planning
- Retirement Savings and Income Planning
- Estate Planning
- Psychology of Financial Planning
Diversified Answer: Not only do we give guidance on the things above we also have an entire financial planning department at Diversified. We take it a step further by using multiple financial planning software to go deeper into modeling for our clients.
What services do you offer?
This question is certainly very personal to each individual. Some people are looking for limited engagement services and some more comprehensive services. My personal bias, and what we are vigilantly trying to build, is getting the most bang for one’s buck. Essentially, how much value can your advisor team offer?
Diversified Answer: This by far is the answer I am most proud of as we strive to deliver everything under one roof. Not only at Diversified do we do financial planning and investment planning, but we are extraordinarily proud to offer estate planning, tax services, benefits, all insurances including homeowners and auto, long-term care planning, SS and Medicare planning, retirement income planning, basically everything in question 4 plus a whole lot more.
Top 5
Well, folks, there you have it – the top 5 interview questions to ask your advisor and our humble answers. This isn’t everything to ask, but what I felt are the most important items to highlight. I tell you this for many reasons. First, I want you to be well-informed always. Second, a lot of you have been clients for a long time, and others not so much. Regardless, I think it serves as a good reminder as to what I believe makes us special and hopefully why you chose us. Finally, and very selfishly, would love for you to keep this blog around and share it with anyone in your lives whom you think would benefit from our craft we are truly dedicated. I hope you enjoyed this blog and oh yeah stay wealthy, healthy, and happy.
