Questions to ask a Financial Planner

The choice to use a financial planner (FP) is a personal decision. Using a FP is a lot like finding a knowledgeable CPA, a competent lawyer or a fantastic hair stylist. When meeting with a FP you should be prepared. Some Financial Planners will meet with you the first time for a nominal fee. Some will meet you for free. Because the financial planner’s time is as important as yours, you should be prepared and organized.

You are putting your financial lively hood in the hands of someone else and you will need to do your homework to ensure you have chosen a reputable company. When you meet with the FP, keep in mind, “Can I trust this person with my money, my lively hood and my personal information?”

The following is an initial list of questions:
1.What company or firm is the FP affiliated with? (e.g. Amerprise, Edward Jones, Fidelity, etc.)
2.How long has the FP been with the firm?
3.Where did the FP receive his education / training?
4.What company does the FP and his family use for financial planning?
5.Is the firm insured? A reputable company will be insured (e.g. like your bank account is insured with FDIC) If the firm isn’t insured, I’d end the conversation right there. If they aren’t reputable enough to be federally insured, I wouldn’t trust them with any amount of my money.
6.What service(s) are offered by the FP firm? (e.g. buy, sell stocks, purchase bonds, money markets accounts)
7.What will the FP do for you and your family? (e.g. meet a few times a year, answer email questions, work up a detailed portfolio?)
8.How often can you meet with your FP? Is there a cost associated with each meeting?
9.Can you communicate in writing or does it always have to be in person? (e.g. changing a money market option may require a physical signature, whereas a question about a stock can be answered in an email response)
10.How much are the services for the FP? Is this a one time charge? How often do you have to pay? (e.g. Our FP charged $600 for the initial workup and it’s good until I have a major event in my life that would require a “new workup” ) (e.g. winning the lottery )
11.How does the FP get paid? Which services pay the FP? (e.g. purchasing an annuity will result in a dividend payment to the FP)
12.What are the FP recommendations?
13.Does the FP provide guidance and allow you to make the final decision or does the FP mandate what needs to be done? (e.g. you MUST deposits “x” dollars monthly)
14.Is there flexibility in your Financial Plan? (e.g. can the monthly allotment or bank draft be easily stopped in the event you need the money?)
15.Are you interested in Roth, Keogh or other Retirement plan? Do you know what the differences are between various plans? Are you satisfied with and/or understood the FP explanation of the differences?
16.What information will the FP need to work up the initial plan? (e.g. tax returns, W2s, Insurance, Stocks, bonds, Pension and Employer 401K values
17.Does the FP have a specialty? (e.g. stocks, long term planning, etc.)
18.If you have children and need to plan for hirer education, what are the FP’s suggestions for a 529 or other educational savings plan? Are you satisfied with the FP’s response?
19.Will the FP make recommendations to reduce or increase your withholding (w4)?
20.Will the FP make recommendations on selections within your current Pension or Employer 401K programs?
21.How does the FP “plan” supplement your current Pension and Employer 401K?
22.When you make deposits or pay for services, are they payable to the firm or the FP? (To protect your interests all monies should be paid by check, money order or bank check directly to the firm and not to the individual FP). (If the FP requires the monies be paid in the FP’s name, RUN VERY FAST with your money in the OTHER DIRECTION. Take your financial future to a reputable institution.
23.What financial activity can be done on the web?
24.Does the firm have a website? (Most reputable firms have a secure website)
25.How does the FP and the firm protect against identity theft?
26.How secure are your hard copy files stored in the office and how secure are your internet activity on the firm’s website?

This initial list is not all inclusive, it is a tool to get you thinking and spark discussions with the FP and firm you are interviewing.

As you continue interviewing your potential future FP, keep in mind your answer to the following. If you share your finances with a spouse, partner or significant other, how do their responses match up against your responses?

1.Do you trust this individual?
2.Did you form a bond or make a connection?
3.Do you believe that they can provide you and yours with the financial assistance and guidance you need or want?
4.Did the services offered by the firm and FP match up with the want and need of you and yours?
5.Did the FP rush through the “free” or initial meeting?
6.Did the FP give you his/her undivided attention? (e.g. did he let all phones go unanswered? Did he have any interruptions that “were more important than you?”)
7.Did the FP explain and respond to your questions so that you could understand the responses?
8.Did the FP encourage interaction, questions, etc.?
9.Did the FP ask you about you and your family? (This usually indicates that the FP is gathering information not only for your financial plan, but he is beginning to form a bond).
10.Did the FP ask you about what your plans and goals were for your financial future? (If the FP doesn’t know what your wants and needs are, how can he work a plan?)

If you felt like you made a connection and can trust the FP with your financially livelihood, you might have the beginnings of a great partnership.

If you received the simplest of doubt, uneasiness, or “not sure”, or “ewe” kind of feeling, grab your car keys, your partner and RUN as fast as you can away from this firm and FP.

Seriously listen to your gut and intuition, throughout the entire relationship. If you ever get a feeling or a nudge about the FP you have chosen, begin the interview process all over. A reinvestment of another fee for a new FP is well worth it in the end.

Good luck in your effort to find a trustworthy, successful FP.