If you do a Google search for “Questions to ask a financial advisor”, you’re likely to find a lot of repetition.
- How do you get paid?
- Are you a fiduciary?
- What designations do you have?
- What is your investment philosophy?
These questions seem to be ubiquitous across nearly all articles out there. And they’re good questions to ask when vetting a potential financial advisor. But what if you’re no longer interviewing advisors? What if you’ve actually found an advisor – and you enjoy working with him or her?
In 23 years of working with clients, I’ve found that a few clients come up with excellent and interesting questions. Often, however, some of the best questions are prefaced with “I know this isn’t your area of expertise, but….”
Actually, when I reflect, I think that most of the following questions DO fall into the area of expertise for a good financial advisor. They’re all questions I’ve been asked, and if you’re working with the right financial advisor, they’re all questions you should feel comfortable in asking.
Should I sell my house?
As financial advisors, we’re not real estate agents. However, like real estate agents, we see the outcome of a lot of real estate transactions. We’re also versed in the tax considerations of selling and / or buying a house and most importantly, we should know all of your financial situation intimately. We can project the long-term outcomes, whether you’re looking to downsize, relocate, or anything else. Have I ever mentioned that people should move more? That’ll be the topic of another post.
Buy a car/ lease a car
People often ‘smaller’ transactions like a car purchase are below the purview of a financial advisor. They shouldn’t be. For many of us, a car is the second-or-third-biggest purchase we’ll make in our lives! We’ve got the fancy calculators that the guy or gal in the financing office at the car dealership has. Unlike that person, we work for YOU. We can sleuth out what the best choice will be – Finance? Lease? Used? New? I’ve even gone to the car dealership with a client to help with the negotiation process. I told the car dealer that my client could not afford the price he offered and we walked out. She got the price she wanted. (Now I need someone to help ME when I buy MY next car!)
Should I marry this guy/gal?
Okay, I know that some of you will look at this one as a ‘bridge too far’. What does a financial advisor know about intimate personal relationships? Well, if you have the right financial advisor, you probably will agree that he or she is one of your most intimate relations. We probably spend more time with you than your doctor. And relationships do have a financial component. The right advisor will be able to relate closely enough to provide perspective on both the relationship AND the resulting cold, hard numbers.
How will I be remembered?
Your mortality is part of your plan. Take a moment at your next advisor review to think about what the impact of your life (and your finances) will be on loved ones, on your community, and on the world in general, if you died today. Not satisfied with the outcome? Work with your advisor to push things in a direction that you’d like to see. Estate planning is about saving on taxes and probate costs, but more importantly, it is about having a lasting impact. A good advisor will help you think that through.
Should I stay in my job?
Just like with a marriage, your career carries with it both emotional, psychic, AND financial consequences. On more than one occasion, I’ve counseled a reluctant client to leave their job. Was I out of line? In both cases, I knew the client’s finances better than anyone in their lives. As importantly, I’d heard them unload about job stresses and had SEEN the toll it was taking on them. And, working with a wide swath of people across different industries, was able to find some perspective for them. We mapped out scenarios, including ‘worst case’, decided that a job change was the right decision, and (knock wood), the results have been immensely positive.
How do I talk to my kids about money?
We’ve come up with ways of talking money with just about anyone. No two clients are exactly alike, and in order to be effective as a resource, we need to tailor our approach to each client’s learning and comprehension style. Same goes for kids. We can help you to design a strategy for talking to them. Or, in some cases, folks have brought their kids along and had them sit with me. Some of these kids are clients now (some talking about bringing in THEIR kids!)
When should I take my Social Security benefit?
I read an article lately where the first paragraph went something like “Befuddled by Social Security? Don’t feel badly – So are Social Security employees”. There are SO many moving parts when thinking about whether and when to collect Social Security benefits. This is especially complex for married couples. Unlike the folks at the Social Security office, we have robust planning and modeling software to help you to make a more informed decision about your choices. We also know about the other parts of your income and can help you navigate hidden tax consequences tied to linking Social Security with other income sources.
Do I need insurance?
There’s a warn-out saw about asking a barber if you need a haircut. The answer will never be ‘no’. Does your financial advisor get compensated for selling insurance, or are they ‘Fee-Only’? If they do get compensated for such sales, make sure you keep this in the back of your mind when having discussions about things like insurance. If you trust them implicitly, it can be helpful to have their perspective, and if you need insurance, it can be one less stop on your financial ‘shopping’ trip. But if your advisor IS a fee-only fiduciary, it makes all the sense in the world to start with them to identify insurance needs. Once you’ve had the opportunity to get a truly unbiased opinion, your advisor may be able to put you in touch with lower cost resources for purchasing insurance you decide you need.
I’ve got 10 different things I want to spend money on. Which one(s) should I go with?
We’re professional jugglers. Planning long-term income and spending strategies often requires robust software tools that we have at our disposal. Beyond just the sheer computing power, though, a good advisor will be frank and will help you to identify which things on your list might be impulsive and which things might be more likely to bring you joy for a time to come. It’s not about NOT spending money, after all. It’s about using the resources you have to get the most out of them (while avoiding going broke!) Bring us your lists. We’re happy to have them.
Hopefully, this short list will give you some inspiration and will help to drive the conversation at the next review with your advisor. Measure your comfort level with asking any of the above questions. If you feel all of these are ‘in-bounds’, congratulations – you’ve found the right advisor!