Key takeaways

  • Financial planning is defined differently across the industry
  • Planner certifications, experience and investment styles can vary greatly
  • Financial planners have different approaches to how they deliver advice
  • Some firms use technology for a modern, more accessible experience
  • What you pay can vary based on the planner, the advice, or your asset level

Finding the right person to handle your financial needs can be a daunting process. With so many confusing titles and designations in the industry today, how are you supposed to know who has your best interests in mind?

Luckily, we've put together ten specific questions to ask before working with a financial advisor.

#1 Is there a minimum asset amount required to work with you?

Most financial advisors have asset minimums and many start between $100,000 to $500,000. Some are even higher. Why?

This is how they get paid – they charge a percentage of how much they invest for you. As a result, your net worth becomes more important than what actually matters - your goals.

There are a few consumer-centric planners that have introduced more modern fee structures – hourly, flat fee, and subscription fees – with no asset minimums.

Simple, clear fee structures help minimize conflicts of interest and improve transparency.

#2 What advice is included?

Can you help me with things like employee benefits, major purchases, or making tough decisions about money with my spouse?

A financial advisor should provide guidance on everything your money touches.

They should offer unbiased, personalized financial advice that integrates into every facet of your life.

Here are just a few things financial advisors should cover:

  • cash flow
  • tax planning
  • benefit elections
  • investments
  • retirement

Ask what services they provide: you want more than investment advice, you want someone who will help you implement your plan.

Some examples might include:

  • consolidating your investment accounts
  • Social Security planning
  • assisting with executing estate planning documents
  • putting appropriate insurance in place
  • making benefit elections
  • lower overall taxable income

If you ask a financial advisor these questions and they look confused or unconfident, that's a red flag. It's time to end the meeting.

#3 Will my financial advisor be a CERTIFIED FINANCIAL PLANNER™ Professional (CFP® Professional) and how often will we meet?

CFP® Professionals have achieved the highest level of certification in the industry.

Rigorous education and experience requirements are combined with elevated ethical standards, including the fiduciary standard. This means they are legally obligated to do what is best for you. This is called "fiduciary duty."

Moreover, the institution that issues the CFP® Professional designation, the Certified Financial Planner Board, is always updating the requirements for professionals to maintain their certification through continuing education.

One example of this is the recent requirement that CFP® Professionals must understand the psychology of financial planning and how individual beliefs, values, and attitudes toward money influence our financial decisions and lives.

As for meetings, your planner should be proactively:

  • scheduling bigger picture planning sessions and regular check-ups to measure progress
  • making appropriate adjustments
  • offering the ability to touch base as planned and unplanned life events unfold

#4 What’s your approach to investing my money?

There are three general approaches to investing.

  1. Firms that focus exclusively on managing money. Any planning advice is incidental and secondary to the investments. You will typically pay a high fee, between 1% to 2%, based on the amount they invest for you.
  2. Online investment platforms (robo-advisors). Offer automated investing strategies. Fees may be lower because you are getting less for paying less – a call center, a technology platform, automated investments and little to no planning.
  3. What we believe is financial planning as it should be. This approach starts with a broader financial plan – one that looks at your entire life and not just your money – and personalizes an investment strategy to support it. This solution is designed to fit your life today with the flexibility to evolve as your plans do. This is the type of financial planning we’re committed to providing at Facet.

#5 How many CFP® professionals work for your company and how much experience do they have?

First, always ensure you are working with a CFP® Professional.

Next, determine if it is one planner or a team?

  • If one planner, make sure they have experience working with people in your situation – early career professionals, families, business owners, entrepreneurs. Ask how they work with outside experts – insurance, tax, estate professionals.
  • If a team, ask about how they support you and if you will work 1-on-1 with a CFP® Professional. Choose a planner that has the experience you need and that can provide the service you deserve.
  • Finally, look at the team behind the planner. Do they have the experience and expertise to support your planner, and you, through the good, and not so good, times?

#6 What am I actually getting? Do I get a report, or some other deliverables?

Some advisors use software to auto-generate complicated 60+ page reports every quarter, which you may or may not read.

Others provide investment management advice and reports that track your money over time but fall short with broader planning advice – it’s infrequent and reactive versus ongoing and proactive.

More client focused planners, like those at Facet, provide easy to understand advice, not reports, that are personalized, actionable, and jargon-free.

Ask about their planning process – how they work with you when you start the relationship and how they provide you with ongoing support through planned and unplanned life events.

Planned events are the big life milestones – new job or promotion, starting/raising a family, your dream home, starting a business, retirement and everything in between.

The unplanned are those things we can’t always control – loss of a loved one, recessions and market downturns, or tax law changes.

Find someone that can guide you effortlessly through whatever life throws at you. Your short, medium, and long-term goals.

#7 Can I reach your planners outside business hours? How does technology enhance your service?

Whether you’re busy with work or life (or both), want someone to help remove the worry and stress with money, or want someone to help you think through money-related decisions big and small, you want someone who is accessible.

If you need to meet outside of the traditional hours of 9 to 5, make sure the planner can accommodate it and fit your meetings into your life, not the other way around.

On technology, look for planners that use it to enhance your experience and their service. The planning process should be efficient, easy for you, and accessible anywhere.

#8 Will I speak to the same person every time I call, or will I reach a call center?

What's their communication style? You will see everything from call centers, to small teams, to a dedicated planner.

When you are talking about personal financial matters, you want to talk to someone that knows you and that you trust. A team might be OK if they play specific roles – planning, insurance, investments – and you should know this going into the relationship.

For financial planning as it should be, look for a 1-on-1 relationship with a CFP® Professional.

#9 Are there any hidden fees, add-ons, planner commissions or product purchases required to work with you?

How an advisor charges for their services is only one part of the equation.

Look into any asset or fee minimums, mandatory investments (that carry commissions), or fees that are hidden.

There may be multiple fees involved in the relationship, and you want to know them upfront. The more open and transparent the planner is, the better.

Look for a fee structure that makes sense for your situation and aligns with the services provided.

#10 How much will I pay annually, as a dollar amount not as a percentage, for your service?

Most advisors use an assets under management (AUM) model – they charge a percentage based on the assets they invest for you.

Fees are typically between 1% and 2% – for example, $500,000 at 1% means you pay $5,000 per year.

With this fee structure your fees increase every year as your assets do – at $1,000,000 you would pay at least $10,000 per year. This adds up to serious money, your money, over time. And ask what additional services you get for paying a higher fee. You might be surprised to hear you don’t get more for paying more.

Planners leading the movement to consumer-centric services are introducing more modern fee structures designed to be clear and fair.

With fixed fees and no minimum asset requirements, you pay for what you need and your fees don’t increase just because your assets do. You get the right level of service and keep more of your money working for you (as it should be).

You have questions, Facet has answers. Our CFP® Professionals get to know you personally and help you navigate your life more confidently. To learn how you can enjoy the power of choice and the freedom from worry that comes with having a Facet expert on your side, get in touch today.