Working with a financial advisor can bring clarity to decisions about debt, investing, taxes, insurance and retirement. Yet many people hesitate to hire one because they are not sure what an advisor actually does, how advisors are paid or how to tell a good one from the rest.
A little preparation goes a long way. Knowing what to expect, and which questions to ask, helps you find an advisor who fits your goals and earns your trust over the long run.
What a good advisor should do
A good advisor starts by listening. Before recommending anything, they should learn about your income, spending, debts, savings, family situation and goals, along with how you feel about risk. Their advice should then be tied clearly to those goals, explained in plain English and delivered in writing so you can review it at your own pace.
Advice is only the beginning. The most helpful advisors also help you put the plan in place, whether that means opening accounts, comparing loan offers, coordinating with a tax preparer or reviewing insurance policies. They should also check in regularly, because a plan that is never revisited quickly falls out of date.
The best financial advice is advice you understand, trust and actually put into action.
Questions to ask before you hire
Ask how the advisor is paid. Some charge a flat fee or an hourly rate, some charge a percentage of the assets they manage and some earn commissions on products they sell. Each model has trade-offs, but you should always receive a clear, written explanation of every fee. Also ask whether the advisor acts as a fiduciary, meaning they are required to put your interests first.
Next, ask about credentials, experience and the kinds of clients they usually serve. You can look up many advisors through public databases such as FINRA BrokerCheck and the SEC's Investment Adviser Public Disclosure site to review their registrations and any past disciplinary history. Finally, ask how often you will meet, how they will communicate with you and what happens if your situation changes.
Trust your instincts during the first meeting. A good advisor will answer your questions patiently, avoid pressure and never make you feel rushed into a decision.
The advisors at Finance Advice Plus offer honest advice plus hands-on support to families in Phoenix and across the East Valley. Contact us for a free advice session.