6 Most Important Questions To Ask Your Financial Advisor

Posted by Emily Rhodes on April 26th, 2024

You may need a financial advisor for guidance on maximising wealth, saving for child education and retirement. The financial goals may differ according to the person’s income, short-term goals, needs and wants. Thus, putting your hard-earned wealth in the right hands is necessary. It is because one wrong investment decision could impact your other life goals. Analysing the right timing, amount to save, and tenure is critical. This is where a financial advisor helps.

Who is a financial advisor?

A financial advisor assesses the individual needs and helps them with investment decisions like- stocks, bonds, tax and insurance. They help clients with short and long-term goals. He analyses your present financial situation by checking your debts, income, investments and financial management. He also needs to know about your saving and spending habits for planning investments. Precisely, he is your wealth manager, debt manager, and investment advisor.

What should you ask your financial advisor for the first time?

First, you must pick the best financial advisor by analysing your goals, and pain points. Secondly, interview some financial advisors by asking them tough questions.  Here is what questions can you ask a financial advisor:

1) What services do you offer?

An independent advisor may tell you about the services they offer. It will help you know whether they are independent. The phrase “independent financial advisor” means–he offers a variety of services that an advisor must provide.

It may be like- helping the client with- budgeting, planning and applying for taxes, reducing taxes, utilising benefits and insurance covers. Analyse what services out of these the advisor provides. It will help you know whether he is the right person for you.

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2) How much do you charge?

A financial advisor must tell you the amount he will charge before onboarding you. It is part of the rule that an advisor must abide by. However, the charging pattern may differ. Some may charge according to per-hour consultancy.

Others may charge a fixed income depending on the services you want. They may also claim a portion of the pension/ tax relief or rebate as their fee. However, it may not be possible for the financial advisor to tell you the exact costs. He must provide a brief or approx., amount to expect.

However, things may not turn out in your favour every time. What if you encounter a high bill by the session ends? It may prove problematic for you to pay in one lump sum. Take some time off from the advisor or pay the half fee.

 If he does not relent, analyse ways to pay differently. For example- you may get unsecured loans from a direct lender for your needs. It will help you pay the dues on the same day without impacting the relationship. If you do so, he will be eager to help you next time as well.

3) What are your certifications and qualifications?

You may spot confusing initials against the financial advisor’s name. Some go by investment advisor while some prefer certified financial planner. However, it lies in your responsibility to analyse the best one. He must meet your financial requirements and goals. If the designation confuses you, check the register or google the designation online. It will help you know the exact meaning.

4) How volatile are the investments you recommend?

It is one of the most important questions to ask your financial advisor. You must know the risk percentage that your existing investments hold. A genuine legal financial advisor will help you analyse the path with clarity.

He would either demand some time to analyse the risk against your income and liabilities and the investment time. Additionally, he would help you with the type of investment that suits your investment habit the best. If he does so, he is the best advisor.

5) How do you compensate for the loss?

Every individual wants to invest securely with reassurance from a financial advisor. It is important because a minor mistake may impact your investments.

A regulated financial advisor compensates for the loss accordingly. For example, he may provide indemnity insurance governed by the law. However, you must know the jurisdiction that covers your hearing and complaints.

Constantly managing courtly ordersrequires cash backup. If you have too many financial engagements, check quick cash options. It may help you pay the legal feesonline.  For example, you may get loans in 15 minutes with no credit check facility. Utilise this to quicken the hearing process and claim your compensation. These loans are ideal for short-term but critical cash needs.

6) Do you have any clients needing similar assistance?

Ensure that they have a history of dealing with similar cases. It helps you know the success rate and decide accordingly. Here are some answers to expect:

• Yes, I deal with this regularly and I can validate it with proof.
• Yes, I have dealt with similar cases
• No, this is my first case but I can help you.

Ignore the last two. Go with the first one here. Check the authenticity of the proofs by contacting one of their clients.  If he allows, it could prove helpful..

Bottom line

These are some important questions that you should ask your financial advisor. However, the question may vary according to your requirements, financial goals and purpose. These are some basic questions that customers generally ask. It may help you analyse the type and ask the right questions.