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The Top 7 Questions to Ask When Choosing a Financial Advisor

Posted on Sep 30, 2011 by  in Financial Advisor Corner, Retirement Plans for Business, Retirement Readiness

While you should always consult a professional before making drastic decisions about your retirement plan or investments, how do you know that the advisor is dependable? Have you found a financial advisor that is right for you? Here are seven questions to ask a prospective advisor.

  1. “What percentage of your business is a result of servicing retirement plans?” Typically, an advisor that specializes in retirement plans will be better-suited to help you design a plan that is geared towards your specific objectives and needs.  Plans are not one-size-fits-all and a plan that is right for one client may not be right for another.
  1. “How long have you been servicing retirement plans?” An advisor’s level of expertise frequently comes down to his or her education and experience. An advisor who has real life experience will often be able to guide you through uncertain times or situations better than one who has little practical experience.

    Finding the right financial advisor

    How can you make sure you're doing business with the right financial advisor?

  1. “What value proposition do you offer?” The answer may help you see what that person values, and what separates him or her from other advisors. This question can also help to gather  information about fees, termination policies, guaranteed services, etc. If the advisor does not offer a value proposition, we recommend finding a different advisor who does.
  1. “How do you help my participants achieve meaningful retirement?” While discussing this topic, you need to find out if the advisor will help educate participants on retirement saving and investing. Rather than making financial decisions for them, the advisor should be able to provide thoughtful, but straightforward, answers about why he or she is making specific recommendations to participants. Participants don’t need to learn to be investment experts, but they do need to know how to plan for retirement. Effective advisors typically focus on educating participants first and foremost and do not put undue emphasis on less important factors, such as fund expenses and fees. Remember that in most cases, the participant is paying for the plan, so you need to make sure that the advisor is servicing their needs.
  1. “What do you do to ensure we are following our Investment Policy Statement (IPS)?” A good advisor will be able to provide evidence to demonstrate that the terms of the IPS are being met. It is important that you don’t just take the advisor’s word for it – make them show you.
  1. “What are some of your references?” It doesn’t have to be a mystery as to whether or not the advisor’s claims are true – do your research by talking to a few reliable sources.
  1. “Who are your service partners?” You should know about the platforms or providers used by the professional, if any. Ask the advisor if he or she collaborates with other experts or professionals to provide further support to you as the plan fiduciary.

The message that you should get from the answers to these questions is that promoting retirement readiness is the advisor’s first priority. For the plan to be successful, the advisor must educate the participants and get them engaged in making the most of their investments.

One Response to “The Top 7 Questions to Ask When Choosing a Financial Advisor”

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