Annie, Twin Cities area

Annie:

Listed below are eight key questions you should ask a Financial Planner:

1. 1.  Do you serve clients in a fiduciary capacity?   Ask the advisor to put in writing whether they uphold the fiduciary standard.  Also ask if they have a client bill of rights.                                                                                                                     
2.  How are you compensated?  There’s a difference between “fee-only” and “fee-based”.  Fee-only means an advisor if paid a flat fee, a percent of the value of a client’s assets or an hourly fee.  (No commission).  Fee-based means an advisor takes either fees or commissions on products or services they sell.
3. Can you provide professional references?  The SEC forbids advisors from disclosing any client references.  Therefore ask for a CPA or attorney reference.
4. Do you have any disciplinary action against you?
5. Do you have an independent custodian for client assets?  It’s important to have an independent custodian hold your assets.  In the Madoff situation, the Madoff firm held the assets.
6. What is your ratio of clients to investment advisors?  50:1 is an average amount.
7. How is your portfolio invested?
8. What is the total cost of services?  Ask for an annual estimate of the costs.  The cost should include visible and the invisible costs.

By asking a financial planner these questions, you gain some valuable insight.

Joe

  photo credit: nDevilTV

Got something to say?