Plan Performance Direct

Uncategorized

Choosing the Right Financial Advisor

How do you know if a financial advisor is suited to manage your portfolio?

 

With so much economic uncertainty going on across the nation and around the world, many of you have been asking about how to find the right financial advisor. What questions should you be asking in order to find the perfect match for you and your family?

Make sure you understand their fees; have a frame of reference to compare them to other fiduciaries.      

 

Here’s a list of questions that will help you learn more about a particular advisor and their fitness to advise you financially:

 

  • “Do you have a supporting team? If so, who will be my primary point of contact?” Some firms are broken up into different teams like sales, investment, and operations. You’ll want to know whether the advisor’s firm is segmented, and if it is, how they plan to communicate. It’s important to know this so that things don’t get lost somewhere in the communication pipeline and your portfolio can be managed consistently.
  • “How long have you been helping clients?” Understanding how bear markets work, how to prepare clients for potentially difficult times, and what kind of investment changes need to be made only comes from experience. An advisor also needs to know how to prepare your portfolio for an eventual recovery.
  • “Who are your typical clients?” Be sure to ask this question so that you understand how your assets will fit with a particular advisor’s client size. If your assets are on the smaller size and their normal clients’ assets are on the higher side, how do you know if they’ll proactively reach out to you? Conversely, if their average client has smaller assets and you have larger ones, how do you know that your investments will be sophisticated enough to work for you?
  • “Are you paid as a fiduciary or a broker?” Brokers are paid via commission, and fiduciaries are paid through fees. The difference is that commissions are one-time, upfront payments that are viewed by many as not serving the client’s best interests. Fees come out periodically, and are based on the total size of your portfolio. Most people these days seem to be moving toward using fees so as to offer their clients a greater degree of comfort.

    On that note: If your advisor is a fiduciary, ask them what their fees are and how they benchmark them across the industry. Don’t pay too much; just because someone’s charging you a fee doesn’t mean that it’s right. Make sure you understand their fees; have a frame of reference to compare them to other fiduciaries. 

If you have any additional questions about financial advising or choosing the right advisor to manage your portfolio, don’t hesitate to reach out to us. We’re happy to answer any of your questions.