Given the uncertainty in the financial world today, it’s a good idea to think about hiring a financial advisor to help you navigate the ups and downs of the market.

Now more than ever before, people of varying income levels are growing increasingly concerned and aware of their money. It’s no surprise that economic uncertainty is inspiring many people to take action and hire a financial advisor to help them on their financial journeys.

Asking questions is crucial to finding the right financial advisor for your specific goals and needs. The more you learn upfront, the easier it will be to make an informed decision and find the best fit. So when you’re evaluating a potential fit, it’s a good idea to come prepared with a detailed list of questions.

Whether you already have found your financial advisor in Albuquerque, or just beginning the search for one, here are 7 Critical Questions to Ask a Financial Advisor:

1. Are you a fiduciary?

Always seek to work with a fiduciary financial advisor.  A fiduciary is someone who is legally required to operate transparently and tries to minimize conflicts in interest when possible.

Fiduciary financial advisors must:

• Put their clients’ best interest before their own, seeking the best prices and terms
• Act in good faith and provide all relevant facts to clients
• Avoid conflicts of interest and disclose any potential conflicts of interests to clients
• Do their best to ensure the advice they provide is accurate and thorough

2. How do you get paid?

With so many varying payment models today, it is crucial to understand how the advisor gets paid and why they charge to work with them.  And this is the question that the advisor should answer quickly, honestly, and transparently.

• Does the financial advisor get paid a commission for a product or investment they sell you?
• Do they charge a flat fee based on the complexity and scope of services, or do they charge a percentage of assets under management?

Good advisors deserve to be compensated for their work and value – there should be no fine print when it comes to integrity.

More often than not, the way the advisor answers this question is usually the most significant determining factor on whether or not this advisor will be a good fit for you.

3. How will our relationship work?

You’ll want a clear understanding of the exact service model being offered and how to communicate with your financial advisor effectively.

• Are there formal meetings you will receive per engagement year, and what is the policy of communication with the advisor between those formal meetings?
• Can I call and email me at any time with questions or concerns?
• What’s the scope of financial planning work that will be done?

Some advisors tailor personal financial plans for their clients, focusing on income strategies, investment management, tax planning, health care, and estate planning.  While other advisors simply focus on product or investment solutions. It’s important for you to know what to expect before you enter into a relationship of any kind.

4. What are my all-in costs?

This question aims to find out if there are any additional costs that you may incur.

You should always feel comfortable knowing what your financial advisor expects you to pay for.

• Will you charge extra for a financial plan?
• Will I be charged an hourly fee for advice?
• Will there be custodial fees that will be charged?
• What expenses do your investment recommendations charge?
• Will you receive a commission on any of your product recommendations?
• Will I incur transfer costs, transfer fees, or account closing fees?
• Do you receive a commission for recommending certain products?
• If using a third-party money manager or separately managed account, what costs and fees will be assessed?

It’s common for people to incur additional costs when advisors fail to mention them.  Asking this question will help you make an informed decision, and helps with managing your expectations.

5. Are you an independent advisor or connected to a broker-dealer/wirehouse?

This question helps you understand the parameters your advisor has to recommend products and services.

Their product availability and service scope limit many brokerage firms and wirehouses.  This, alone, doesn’t make the advisor the wrong fit; this is merely a point to consider when making the right recommendations for you.

If you prefer more flexibility in planning scope, product availability, and service capability, you may want to consider working with an independent advisor who doesn’t have product or service limitations or sales quotas to meet.

6. Who is your custodian?

This question is asked to understand where the advisor holds the accounts they manage for you.

It’s important to know this information related to the portability and the fees on the accounts.

A custodian is a financial institution that holds customers’ securities for safekeeping to prevent them from being stolen or lost.

7. What are the investment fees I will pay if you manage my accounts?

Investment fees can rob you of your returns over time, so having a clear understanding of what costs are involved is crucial for your long-term financial success.

For example, do they charge trade commissions, take a percentage fee on the account balance being managed, or assess account management fees?

While this may seem confusing, it is essential to take time and truly understand the fee structure.  The last thing you want to do is pay more than you need to.

Interested in having a conversation with an advisor you can trust?

Oakmont offers a unique financial planning process through the Oakmont Blueprint. Whether you’re near retirement, just getting started, or anywhere in-between, it’s essential to assemble a great team to help you achieve your goals.

Oakmont is on a mission to make it easier to work with a fiduciary financial advisor.  Click here to schedule a no-cost, no-obligation meeting with one of our advisors.