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Six Questions to Ask Your Financial Advisor

Six Questions to Ask Your Financial Advisor

Six Questions to Ask Your Financial Advisor

If you are meeting with a potential financial adviser for the first time, your goal should be information gathering. After all, you are working to grow your assets, achieve financial security and develop a working relationship with the professional who will help you manage your finances. Here are six questions you should ask:

Will I have enough money to retire?

Your adviser will help you coordinate all of your current investments, your savings, and your projected retirement income sources to determine how your assets may grow. Additionally, your adviser will offer professional expertise in setting and reaching your financial goals.

Are you a fiduciary? 

A fiduciary is legally and ethically bound to put your interests first. You may be surprised that not all professionals who identify as financial advisers are fiduciaries, so it is critical to determine if the person you are meeting with is obligated to put you first. Here are the characteristics of a fiduciary:

  • Put their clients’ best interests before their own, seeking the best prices and terms.
  • Act in good faith and provide all relevant facts to clients.
  • Avoid conflicts of interest and disclose any potential conflicts of interest to clients.
  • Do their best to ensure the advice they provide is accurate and thorough.
  • Avoid using a client’s assets to benefit themselves, such as by purchasing securities for their own account before buying them for a client.
  • Registered Investment Advisers (RIAs).
  • They are often paid a percentage of assets under management, a flat fee, a fee per hour or as a percentage of assets under management. JCN Financial and Tax Advisory Services clients pay a flat fee.
  • They are governed by the Securities and Exchange Commission (SEC)

What is your investment philosophy?

Before you commit to a business relationship with a financial advisor, it is critical that you understand his or her investment strategy and the philosophy behind it. Are you potentially in for a high risk approach to your financial investments, or is the advisor more cautious? Is the advisor more focused on short-term or long-term results?

Ideally, your advisor should help you reduce anxiety about your finances, and enable you to become a participant in your own investments.

“We focus on one’s life and what each of us need in order to have a life of no regrets and satisfaction,” said John Neyland, of JCN Financial and Tax Advisory Services. “We see the investment portfolio as a doorway not the room to a better life.

“Understanding your investment strategy and how it works is essential. Lack of knowledge will generate and compound fear. Therefore we teach in our meetings what our investments are and how they work. We have quarterly classes that take a deeper dive into the market, current conditions and what control we have in the given environment.”

The most stressful element of investing for most people is future financial security, and the level of risk involved in strategizing their approach.

“We do not believe in unfettered risk,” Neyland said. “Therefore, I Have several measures and essential strategies that minimize risk of loss. A proposition that says one could make a fortune or lose it all is untenable. While there can be no guarantees that is certainly not to imply the risk cannot be significantly reduced.”

It is essential to find an advisor who will actively include you in the decisions made about your money.

“We require our clients to participate in portfolio management,” Neyland said. “Over the years this is shown to be a great solace to those we serve.”

What are your qualifications?

You need to know who the advisor really is, and what his or her qualifications are. Most likely there will be some confusing initials that follow the advisor’s name. To determine what all of it means, you may want to refer to the Financial Industry Regulatory Authority (FINRA) list of Professional Designations.

Additionally, ask the advisor specific questions about his or her track record in the investing arena. How does he or she participate in continuing education about investing, and how is the advisor licensed? How long has the person been a financial advisor?

You can also check out the Security and Exchange Commission’s Investment Advisor Public Disclosure form filed by the advisor.

How will your ongoing working relationship work?

How will the advisor keep you informed about your investments? How often will the two of you actually meet face to face? Find out how much access you will have to the advisor, his staff, and most importantly, to updated information about your investments? With whom will you have the most contact – the advisor or his or her staff?

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