How to interview a financial professional

By Jean Chatzky - December 11, 2020


Choosing the right person to guide you toward your money goals can feel overwhelming. Picking the right financial professional may take some legwork on your end but spending the time upfront can ensure that you select the right person to help you create and implement your financial plan.

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Choosing the right person to guide you toward your money goals can feel overwhelming—there’s an alphabet soup of credentials after the names of many people who call themselves financial professionals.  That makes it tough to tell the angle the professional is coming from (it’s different when their specialization is in investments versus insurance or accounting) not to mention whether the advice you’re getting is on target.

Picking the right financial professional may take some legwork on your end but spending the time upfront can ensure that you select the right person to help you create and implement your financial plan. “It’s really important because the decisions you make with your money can have lasting consequences,” says certified financial plannerTM Liz Frazier.

Begin by narrowing down your options by getting a few recommendations.

Rather than asking family or friends for their recommendations, consider turning to trusted coworkers, who may be in a similar position to yours, or asking other professionals in your life such as an accountant or lawyer. If your network can’t help, two good places to start online are the  National Association of Personal Financial Advisors or the Financial Planning Association.

Once you’ve got a few contenders (shoot for at least three), you’ll want to sit down and interview each one. You can do this over the phone, but if you can do it in person or even via a video chat, you’ll get a better feel for the their style. (Note: If he or she doesn’t have time for a free introductory meeting, move on.)

Here are five questions to ask the financial professional in the interview—and two to ask yourself afterward:


Questions for your financial professional:
Do you have a lot of clients like me?

You want a professional who has experience working with clients in a similar financial position and life stage to yours. Someone who’s used to working with young families saving for their kids’ college tuition, for example, or with those transitioning into retirement, will have an expertise the best approaches to tackle your specific situation and income level.

“If you’re hyper wealthy and can fund every goal and cover every risk, your situation is different than someone who doesn’t have enough money to do that,” says Barbara Roper, director of investor protection at the Consumer Federation of America. “The financial professional who can serve one kind of client may not be particularly well suited to serve the other.”


How do you get paid?

Some financial professionals charge by the hour; some charge a percentage of the assets that they manage; and others receive a commission for selling specific types of investments. If a financial professional is making a commission, make sure you know whether they’re paid to recommend certain products, and ask to see their Form ADV, which should disclose any conflicts of interest. There are pros and cons to each method, and it’s important that you understand (and feel comfortable with) the method the use.  It’s also important to try to get a sense of what this relationship will cost you each year in dollars so that you can do an apples-to-apples price comparison.


Are you a fiduciary?

A fiduciary is legally required to put your interests first at all times. You likely will want a financial professional who says “yes” to this question.  But Roper recommends going even further, since the current enforcement of the fiduciary standard is relatively weak. She recommends asking your potential financial professional to sign the Fiduciary Oath, promising to adhere to a fiduciary standard. Starting this fall, anyone who holds a Certified Financial Planner credential, will also be held to a higher standard by the Certified Financial Planner Board of Standards.


How will we keep in touch?

You want someone who you can reach out to at any time, and who communicates in a way that works for you, whether that’s email, texting, or regular phone calls. In-person meetings should take place at least once or twice a year, and you want someone who’s ready to communicate more often as questions or issues arise.  You’ll also want to know whether you’ll be communicating directly with your financial professional directly or whether someone else in the office will be the primary contact on your account.


Questions for yourself:
Have I done my homework?

Ask all the financial professionals you’re considering for referrals—and check them. If they use credentials, such as CFP® or ChFC or PFS after their name, you can check with the issuing organization (find it here) to make sure they’re in good standing and see what’s required in order to get the designation.

You can also see whether a financial professional has been subject to any disciplinary actions, by plugging their name into databases run by the Securities and Exchange Commission or the Financial Industry Regulatory Authority. “The first baseline thing that you want to do is avoid a con artist and avoid getting scammed,” Roper says.


What does my gut say?

Even if a financial professional checks all the boxes based on your interview, if you’re not sure that a financial professional is the right fit for you or you just simply don’t like them, consider that a red flag. Financial conversations can get really personal. You’re going to talk about your dreams and mistakes as well as potential money issues with a parent or spouse. “Meeting with a financial professional can be like therapy,” Frazier says. “It can bring up a lot of feelings and personal issues, and you have to feel comfortable talking about them with this person.”

With Beth Braverman

 

 

 

Investing involves risk including possible loss of principal. 

The opinions and forecasts expressed are those of the author and individuals quoted and should not be construed as a recommendation or as complete.




About the author
Jean Chatzky, Financial Editor, NBC's TODAY Show
 
Jean Chatzky, the financial editor for NBC’s TODAY show, is an award-winning personal finance journalist, AARP’s personal finance ambassador, best-selling author, and host of the podcast HerMoney with Jean Chatzky on iTunes. 

 

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