11 Questions to Ask a Prospective Financial Advisor as a Young Professional

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questions to ask a prospective financial advisor

In today’s blog post, we outline 11 questions to ask a prospective financial advisor to ensure that you find someone you can trust, that is knowledgeable, and that can grow with you throughout your career as a young professional.

The mere task of finding a financial advisor can be a time consuming and oftentimes challenging endeavor, especially given that many young professionals don’t yet have a stable of trusted professional resources developed yet (i.e. attorney, CPA, etc.). Thankfully, if you know the right questions to ask a prospective financial advisor it can help take some of the guesswork out of finding a good fit.

Questions to Ask a Prospective Financial Advisor: The Client Experience

  1. What types of clients do you typically work with? You want to work with an advisor who has experience in helping people like you! So be sure to dig into what type of clients the advisor works with and what issues they help those clients resolve. This ensures they’re experienced in helping resolve client issues that mirror yours.
  2. What would our first year together look like? This question is especially important for young professionals who may have never worked with a financial advisor before as it helps to set the right expectation about what first-year communication and accomplishments will be.
  3. How frequently will we be in communication? After many of the common planning items are tackled in the first year, it’s common to meet in-person two or three times per year with a financial advisor as a young professional.
  4. Do you use your own proprietary financial planning software or use software developed by a third-party? Advisors are not in the technology business, and it’s common for advisors to leverage third-party financial planning software. If the advisor uses their own, it’s not a bad thing, but be sure to dig into whether or not it is robust enough to handle the comprehensiveness of your needs. Security can also be an issue with homegrown solutions.
  5. What is your philosophy on investment management? If promises of “beating the market consistently” or “picking great mutual funds/stocks” are uttered, it’s likely time to keep searching. Markets are incredibly efficient, making it extremely difficult to “beat the market” and picking the next winning mutual fund or stock is extremely hard—if not impossible—so the focus should largely be on helping you save efficiently, minimizing investment costs, and developing a long-term allocation designed to meet your goals.
  6. What is the average expense ratio (%) of the underlying funds used in your client’s portfolios? There are few better predictors of future investment success than how low you keep your investment fees. In the words of John Oliver, “keep your fees like your milk, at or less than 1%.”

Questions to Ask a Prospective Financial Advisor: Your Best Interests

  1. How are you compensated? There is likely no more important question to ask a prospective advisor. Advisors can be paid through a fee, like an annual planning fee or percentage of assets managed (“AUM fee”), commissions, or some combination. Make sure this is fully documented in a written client agreement so there is no confusion.
  2. Are you held to a fiduciary standard? Surprisingly, not all financial professionals are required by law to act in your best interest. If the advisor acknowledges that she or he is held to the fiduciary standard, follow that up by asking if they’ll acknowledge that in writing. If yes, keep chatting! If no, head for the exit.
  3. What credentials do you carry? The gold standard for financial advisors is the CFP® designation or Certified Financial Planner. To use the CFP® marks, advisors must have a bachelor’s degree, completed two years of financial planning coursework, have a minimum three years of experience, and have completed a six to ten hour exam. You can verify your advisors CFP designation here.
  4. What conflicts of interest (if any) may exist if we were to work together? Conflicts of interest are not bad in and of themselves, it’s pretending they don’t exist that should raise concerns. Conflicts can be something as simple as referring business to a mortgage consultant that just happens to be your brother. Having an open dialogue about any and all conflicts that could arise is a critical first step to building trust.
  5. Have you been cited by a regulatory or professional governing body for disciplinary issues? If you get anything other than an unequivocal no, it’s likely time to continue the search elsewhere. To verify that your advisor has a clean regulatory record, you can use the SEC’s advisor search and FINRA’s broker search to verify.

In addition to asking good questions about fees and compensation, there should be room for asking personal questions that will help you get at the heart of the most important question—is this somebody I like and trust enough to do business with? If the answer is not a resounding “yes!”, then keep looking. There is no shortage of qualified and ethical people out there who would love to help you navigate the financial complexities of your life as a young professional.

Lastly, don’t just take our word for it. Check out the following great resources that can serve as a complement to the list above for questions to ask a prospective financial advisor. NAPFA: Consumer Tools – Tough Questions to Ask your Advisor | NAPFA: Consumer Tools – Comprehensive Financial Advisor Diagnostic | 25 questions for a potential financial advisor | How to choose a financial advisor – CFP Let’s Make a Plan


About Matt Cosgriff, CFP(®)

Minneapolis Financial Planner | Intrapreneur | Young Professional | Millennial Guru | Tech Aficionado | Traveler | Food Lover | Minnesota Wild Fan | Movie Quoter | Follow on Twitter| LinkedIn

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