9 Best Questions to Ask a Financial Advisor in 2023

June 29, 2023

Finding an advisor is hard – and you don’t want to hire the wrong person – even if they have good intentions, the wrong advisor can derail your finances.

In today’s video, Alex shares nine questions you should ask before hiring a financial advisor in 2023.

9 Best Questions to Ask a Financial Advisor in 2023

Resources:

Full transcript:

SPEAKERS

Alex Okugawa 0:00
Finding an advisor is hard and you don’t want to hire the wrong person even if they have good intentions, the wrong advisor can derail your finances.

In today’s video, I’m going to share with you nine questions you should ask before hiring a financial advisor in 2023.

By the end of this video, you’ll have the questions you need to weed out bad advisors and make sure your money is well taken care of.

Okay, question number one, are your recommendations truly in my best interest?

Really, what you’re looking for is someone who adheres to the fiduciary standard of care. In other words, someone who will always act in your best interest versus simply trying to sell you a product. What you’re looking for is someone who can say, Yes, I adhere to the fiduciary standard, which means that we will put your interests ahead of our own

Question number two, do you provide comprehensive advice? Or is it focused on one specific area?

In other words, will I need to find another advisor for advice in different areas. In many ways, the Certified Financial Planner designation can be considered the gold standard in the industry. Now, not every great financial advisor will have the Certified Financial Planner designation. But nonetheless, it’s a great way to help you initially weed out those who may not be serious, comprehensive financial advisors versus those who are.

One way to determine that is if the recommendations will be focused in on just one area or if they will be comprehensive in nature is to simply ask do you cover areas like estate planning, life insurance, Social Security, and Medicare, in addition to investment planning. An advisor who’s focused on providing comprehensive advice is really going to be looking at all those different areas and consider them within the whole of your financial plan.

Now, that doesn’t mean that there aren’t Expert Advisors in every single area, or they’re not experts in every single area. But really what they need to be as the quarterback coordinating everyone and bringing it together into your financial plan to accomplish your goals.

Question number three, what are your qualifications?

In other words, do you have the knowledge and experience necessary to help me accomplish my goals? And the reason why this question is so important is you need to make sure that whoever you’re trusting your money with, which is a big deal is up for the task: Retirement planning, tax planning Social Security Rules. This is no small feat. And not only does it takes studying to understand the rules, but the rules are constantly changing, which is quite frustrating.

Number four, what kind of people do you primarily work with?

You don’t want to be working with let’s say, let’s say you’re a retiree, and you go to see an advisor who’s focusing on young couples in the tech startup space, although that advisor would likely be able to help you that’s not what they do on a routine basis. Now, there is one exception to this rule. And that’s if you’re interviewing a firm with a large enough team that there are multiple advisors on that team that do different things and focus on different areas.

By the way, if we’ve never met before, my name is Alex Okugawa and I’m a certified financial planner, here at One Degree Advisors. If you’re enjoying the content so far, please drop a like and if I’m missing anything as I go along, I’d love to know a question that you’d consider asking.

Alright, question number five, what’s your service plan? How often will I hear from you?

The service plan is important. And people usually ask this in the form of a question like, how often will I hear from you? Because what you don’t want is to have an advisor that just goes oh, well, you know, when something comes up, or you know, you can, you can always reach out to me, and some ways that can be a little bit reactive. And so we personally found some of the best advisors will have a schedule that lists out the different things that they will be doing on your behalf throughout the year as well as when they plan to meet with you. The reason why we found this to be so helpful is because it makes sure that “A”, the advisor is staying true to what they said and be keeping them held accountable. And it also provides a way to be proactive in the planning process rather than reactive.

Question number six, what’s my all-in cost? And where can I see this in writing?

Ideally, you want to find an advisor who’s focused on keeping investment expenses low, but also has a reasonable investment advisory fee in other words what they get paid. However, fees in the absence of value provided is a real problem if that advisor is providing tremendous value, they build a comprehensive plan, tax analysis for you and they’re looking at your estate plan, they’re meeting with you regularly to make sure that you’re on track. Those things can be worth it. And in many ways the value provided can exceed the fee. So that’s the main thing you need to figure out by asking this question is, what’s the total expense? And is the value that this advisor will provide going to exceed the fee that they will charge?

Question number seven, will you help me solve any and all of my financial problems that I might have?

The answer you’re looking for here is yes, areas such as helping with 401K plans, a death in the family, taxes, real estate, social security, medicare, college, gifting, and just about any other financial issue imaginable. And while that advisor may not necessarily be the expert in every single area, they should have a network of resources that will be able to help you, and they should be there to make sure things get done. In other words, they’re not going to stop until a solution has been found.

Question number eight, where do you keep my money? And how do I see it?

This is the question that’s going to help prevent you from being scammed out of your money. And ultimately, this is what caused Bernie Madoff to be successful in his Ponzi scheme. You want your money held at a third-party custodian. That would be places like Schwab or fidelity or altruist. Institutions, where the advisor isn’t actually holding the money in-house, but it’s held at a third-party custodian. In other words, you can go to that third-party custodian’s website and they’re responsible for the safekeeping of your assets. And you can log in directly to their website and see your accounts at any time.

Last question number nine, how do you get paid? This question can be more nuanced. So I’m not going to spend a ton of time here but we did make a video going into three different types of compensation models, commission, fee for service, and assets under management. If you’d like to learn more, you can click on the video below.

Once again, this is Alex Okugawa from One Degree Advisors. And if you enjoyed today’s video, please like and subscribe for more. It helps us grow the channel to reach more people like you and help them retire successfully and with confidence. We also created a guide called Five retirement mistakes to avoid, you can download that for free. It’s It’s our gift to you and it’s in the description below. Thanks for watching

Transcribed by https://otter.ai

The One Degree Blog

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This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you. Disclosures: https://onedegreeadvisors.com/solutions/#disclosures