Hiring a financial planner is an incredibly personal - and important - decision. This is someone who will be perusing the intimate details of your financial life, and could potentially hold your future retirement success in their hands.
Most experts agree that anyone would benefit from working with a financial planner, no matter their level of income. However not all financial planners will be a good fit for you. Before you start working with a financial professional, it's a good idea to ask them these five questions:
1. Do you have experience working with others in my life situation?
Your financial planner isn't there to judge you, their job is to help you make the best of any financial situation.
This could mean helping you organize your financial life, developing a new plan now that you are divorced, or figuring out how to retire early.
Finding a financial professional that has experience working with other clients similar to you, with a comparable attitude towards risk and similar needs, is a good first step.
2. What is your net worth, how did you make your money, and how is it growing?
The best option is to learn from an individual who has already proven their chops on their own money, before they decide to test out their theories on your retirement account.
Far from being rude, your financial planner is likely to expect this question and probably has an answer ready to share and if they are afraid to answer then it might be time to move on to another planner to interview.
Hearing their strategy for growth may help you determine whether or not they would be a good fit for your long-term goals.
3. Are you willing to sign binding fiduciary and non-disclosure agreements?
A fiduciary agreement, also known as being held to a fiduciary standard, means that your financial planning professional is required to place your interests above their own -- even when it means they make less money on a trade or sale.
Non-disclosure agreements are especially important for high net worth individuals, as this reinforces the standards of privacy required for anyone handling your personal and financial information.
4. How are you compensated for helping me?
Financial planners are often making money from a variety of sources: direct hourly or flat-fee payments from clients for managing financial interests and a percentage or fee for trades.
It's important to know exactly how your advisor is compensated before you make a final decision (but it's important to remember that you often get what you pay for!
5. Tell me about a client's success (and a failure!)
While most professionals are interested in telling you about fantastic success stories, understanding where something went wrong is just as important to future learnings. Having a candid discussion up-front about how things can go wrong or what helps them go right is an important conversation and will also help you determine if you can trust the advisor.
Most people find working with a financial planner to shed light on many financial factors they had not considered. You may learn more about financial principles and ways to improve your family fortune – or simply get a plan in place that leaves you feeling more comfortable about your future.
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Jerry Broussard, CFP®
Jerry Broussard is a Kaplan, La and Lafayette, La Fee-Only Financial Planner serving the entire Gulf Coast region. Broussard Financial Group, LLC specializes in providing objective financial planning to help clients build, manage, grow, and protect their assets through life’s transitions. Jerry Broussard is also a NAPFA-Registered Financial Advisor and a CERTIFIED FINANCIAL PLANNER™ Professional.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as investment, tax, or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.