Time to read: 6 min

Deciding to work with a financial advisor is a big decision. Whether you’ve recently had a windfall and want to make sure you’re maximizing it, have wondered for a while if you’re making the most effective decisions for long-term financial growth, or anything and everything in between, choosing to get outside help is an incredible step towards achieving your financial goals.

However, with so many different advisors touting their unique philosophies and processes, sharing their track records, and throwing around terms you may not be familiar with, it can be hard to know exactly where to start.

During meetings with prospective financial advisors, it’s important to ask questions – but if you’re new to the process, you may not even know what to ask. We’ve compiled the top three questions you should ask a potential financial advisor as well as shared what else you can do make sure an advisor is the right fit for you.

Top Three Questions to Ask a Financial Advisor.

1. What are your values, what’s important to you, and what can I expect from this relationship?

People want to do business with people they trust and like for a reason, and while a “gut feeling” certainly isn’t the only metric you should base an important decision around, working with somebody who feels like a good fit does matter. Having similar communication styles and values makes the relationship more cohesive and allows you to work with the advisor more easily.

When answering this question, pay attention not just to what the advisor says, but they way they talk you through the answer. Are they taking time to answer each part of the question, or brushing it off? Do you like the way they communicate with you? This will give you invaluable information, not just about whether your values align, but if you can picture working with them.

• How are you compensated?

What matters most is not necessarily what the answer is, but how direct and honest the advisor is with you. Your advisor should be completely transparent and outline exactly how they are paid, what that process looks like, and how their compensation is structured. They should invite follow up questions and be willing to answer with as much detail as you ask for.

• How are we going to work together?

With their answer, your financial advisor will not only share their process but set expectations for how you work together. A good advisor will communicate expectations outright, ensuring that you’re on the same page.

From answering questions around how regularly you’ll meet, what communication you should expect outside of those meetings, and what a typical response time is to how they will go about achieving your goals, you’ll get to learn what the process is and see if it’s something that makes sense to you, you’re onboard with, and trust.

There are No Bad Questions.

People start their journey with a financial advisor with wildly different levels of experience and knowledge. For those that are beginners, it’s natural to worry that your questions may be too basic or highlight a lack of experience.

However, we believe that there is no such thing as a silly question. Only you know what you do or don’t know – just as only you know what is important to you. If it’s something that matters enough for you to ask a question about it, your financial advisor should be happy to explain it to you in whatever details you need to understand the process and feel confident.

Questions a Financial Advisor Should Ask You.

If the first thing a potential advisor does when you enter their office is share the benefits of a specific process, go into detail on market conditions, or give you a rundown on their financial strategies, they’ve already missed a step.

Your finances should be structured with your specific goals and life plans in mind, which is why, before they do anything else, a prospective financial advisor should ask you one key question: What are your goals?

Of course, some people may not have clearly defined what their goals are and, if they are first thinking about their finances long-term, they may not be sure where to start. When this happens, there are some additional questions we ask to help prospective clients define their goals, such as:

1. Are you seeking tax deferral?
2. Is this money something you’d like to set aside for retirement?
3. Are there any short-term goals you have in mind?
4. Are there any long-term goals you have in mind?

These questions help our clients think about all the options they have for their money and what they really want to use it for, which allows us to determine the most effective way to structure it.

Don’t Forget to do Your Homework.

In addition to asking the right questions, there are a few other things you should do before entering a relationship with a financial advisor.

First, make sure you check any potential advisor on Broker Check. This database will allow you to search an advisor and see if they have any claims filed against them, giving you additional insight into how they do business and how trustworthy they may be.

Second, make sure to ask for references, specifically from clients who may have goals and values that are similar to yours, as they’ll be the best indicator of whether or not the advisor will be a good fit.

Finally, make sure you visit multiple financial advisors to see who is the best fit for you. Like with so many other things, there really isn’t a one size fits all approach, and while there are many wrong ways to approach finances, there isn’t just one right way. It’s important that the person or firm you select is trustworthy and has a proven record, but it’s also important that it feels like a good fit. By meeting with several advisors, you’ll get a better understanding of how they stack up against each other, the way they do business, and their communication styles, which will help you determine what your preferences are.

The decision to enter a relationship with a financial advisor is not one to be taken lightly. This person will have access to a great deal of information about you and their guidance has the potential to have a huge impact on how you manage your finances and grow your wealth. By asking the right questions, researching prospective advisors, and ensuring that the one you pick has values that align with yours, it’s a decision you should be able to make with confidence.

This blog is for informational purposes. Certain information contained herein (including any forward-looking statements and economic and market information) has been obtained from published sources and/or prepared by third parties and in certain cases has not been updated through the date hereof. While such sources are believed to be reliable, The Tranel Group does not assume any responsibility for the accuracy or completeness of such information. The Tranel Group does not undertake any obligation to update the information contained herein as of any future date.