Eric Brotman* says that when you decide to seek professional advice, it’s important to choose a financial advisor who is a good fit for you.
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When you’re ready to take the leap from DIY financial planning to seeking professional advice, the first step is to choose who you’re going to trust with your financial future.
A financial advisor is likely going to be someone that you work with for many years — maybe even someone who works with your family for generations.
It’s important that you choose the right advisor for you.
That means taking the time to ask the crucial questions that will tell you whether or not it’s a good fit.
In this blog, you can learn the big questions you should ask all financial advisors you’re considering, starting with this one: What exactly do you do?
What services are provided?
There are a lot of different areas in which a financial advisor can provide expertise: real estate, banking, mortgages, insurance, law, tax, investments …
Some firms offer one of these.
Some offer two or three.
There are probably very few that offer all of them — which is a good thing.
Jack of all trades but master of none is not what you’re looking for.
Knowing exactly what services an advisor can provide is the first step in knowing if he or she is a good fit for you.
What is done in-house?
With financial advisors, not every service they provide is done personally, or even by someone in the same office.
Some services are outsourced.
While this is not a bad thing nor should it be a deterrent, it is important to know what your advisor is doing personally so you know what you’re paying for.
Do you have an advisor or a salesperson?
Going to a financial advisor to help make sense of financial products that you own or are considering can be extremely helpful, but it’s important to know that your advisor has your best interest in mind.
If the advisor works for a specific insurance company or investment product provider, he or she is a salesperson who may be incentivised to recommend a product that his or her company manufactures and has on the shelf.
Make sure you have an advisor who will search multiple companies and options and who is agnostic about the ultimate decisions to find what fits best for you.
How does the firm invest?
If you’re seeking help with investments, understand how the advisor or firm chooses where your money is invested.
Some firms will personally allocate your assets and manage your portfolio in-house.
Some will manage your portfolio design and outsource certain components — like stock picking — to a third party.
Beware of firms that outsource the bulk of your asset management to a third party.
This is often much costlier for you.
If your advisor is handing off your money to someone else to manage, at least make sure you know what other services you are paying him or her to provide for you.
The lesson:
When you’re looking for a financial advisor, be prepared to ask questions so you know what to expect and if the advisor is right for you.
Understanding what your advisor handles personally and what will be outsourced is a good place to start in your search.
* Eric Brotman is a certified financial planner and business owner. He tweets at @brotmanplanning.
This article first appeared at www.forbes.com.
