Interviewing Financial Planners
by william_lako
 Money Talks Blog
May 14, 2013 11:04 AM | 4175 views | 0 0 comments | 287 287 recommendations | email to a friend | print | permalink
When you are looking for a financial planner, you ultimately want to choose someone with whom you feel comfortable discussing your finances. Ideally, you should interview multiple planners or firms, and ask each of them to outline the services they offer; their education, experience and specialties and their methods of communicating with clients. Some relevant questions, such as the following, can provide insight on how the planner or his firm may approach planning for your financial goals.

1. How are you compensated?

Any financial expert you are considering working with should be willing to clearly explain all fees you will pay to him or his firm, and all expenses you will pay that are associated with any investment they recommend. You will also want to ask about any fees built into the products you buy from your adviser, as this may alert you to any potential conflicts of interest. If the firm is selling a product it also oversees, you should examine the fees to see how they compare to the costs of investing in other products or similar investments.

2. What assumptions do you use when running retirement planning projections?

If you work with someone who uses a conservative set of assumptions, you may end up with more than what they have projected, not less. Likewise, an aggressive set of assumptions may be difficult to achieve. A conservative set of assumptions should be growing financial assets at 7% a year, using an inflation rate of 4% (meaning personal expenses go up by 4% a year), and increasing the value of real estate assets on paper by 2% a year.

3. Tell me about your ideal client.

Ideally, you want someone who has expertise working with someone like you. Find a financial adviser whose model client sounds very similar to your situation in terms of age, stage of life and asset level. Those with higher net worth may want to look for a firm with experts in taxes, insurance, investments and trusts.

4. Ask a potential financial adviser to explain a concept to you.

You want to work with someone who can explain financial concepts to you in language you can understand. You may consider questions like:  

  • How do you determine how much of my money should be in stocks versus bonds?
  • How do you determine how much money I can safely withdraw each year without depleting my assets?
  • What do you think of annuities?

Interviewing multiple financial planners will take time. It is important to remember that this will be the person you trust with your financial life. If you do not understand their answers to these questions, tell them so. A good adviser will take the time to explain what you need to understand to make an informed decision.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.

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