Engaging a financial adviser is a significant decision in your life. Advisers can add value in a number of ways as you identify new goals, seek to address financial concerns and approach major life events. Moreover, financial advice is an ongoing process and working with an adviser is a long-term decision, intended to last years or even decades. As such, ensuring you find the right adviser is essential.
It’s important to both find an adviser with the right skillset for your unique needs as well as to ensure they service you in the way that you would like. Here are the key questions to ask, as well as some red flags to avoid.
1. Ask about their clients
In order to determine whether the adviser has expertise in areas that are relevant to you, ask whether they have clients in a similar position to you, with similar professions, life stages and goals. Do they have current clients in your industry and at a similar phase of financial journey?
Ask them to tell you about some of the client relationships where the adviser has had the biggest positive impact. This will give you a sense for whether they are knowledgeable about things that matter to you and whether they have the right experience within those areas.
You can also ask to speak with some of their current clients to do further due diligence.
2. Ask about their approach to financial planning and investment management
Share with your potential adviser your current financial situation and ask them to articulate what they would do differently to better meet your needs and goals. Ask them to name the biggest opportunities they see based on the way you are currently managing your capital.
Ask what they would keep and what they would change. You can also probe on additional hypothetical situations to understand how they might handle a particular circumstance such as: how they would help you think about a second home purchase, stock exercise or how they plan to manage their clients through a future recession.
3. Ask about their client service
You should make sure you are comfortable with how they will serve you as a client. Important items to inquire about include who would take over your account if the adviser were to become sick or leaves the practice, how fast they respond to calls or emails from clients, and what they would need and expect from you to have the most positive impact.
It’s also important to take additional due diligence measures (basic things like checking qualifications and awards, news stories and whether they’re affiliated to any financial products or providers). You should not move forward with a financial adviser if you have any concerns around that due diligence.
You should also have a clear sense for how much your adviser is charging you and how they are compensated. If you don’t have a clear sense for the prices you will be paying both to the adviser and for underlying investments, that is a problem. You want to ensure that the interests of your adviser are aligned with yours.
Don’t be hurried, don’t be pressured. Ask, observe and decide.
Katie Prentke English is Co-Founder and Chief Marketing Officer of Harness Wealth, a digital platform that helps clients identify key actions to optimize their financial returns, tax efficiency & family estate plan, and connect with the best tailored advisers to execute on those opportunities.