When you think maybe a financial expert could help you to manage your investments, before you decide if choosing a financial planner or better before you decide if a financial planner is right for you, you should ask him some basic questions.
One thing you need to keep in mind is that the financial planning industry is unregulated. Only about 40,000 of the 250,000 have passed tests necessary to be Certified Financial Planners and are able to demonstrate their competence.
Remember, you need to be careful with these people, especially when you talk about anything regarding money.
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1. How much do you charge? - Recently, I met with a planner, and he wanted to work fee-only. I hate this kind of people. However, most planners get a portion or all of their compensation through commission-based, fee-based — or a combination of the three. Don’t hesitate in asking this question, it may help you know exactly what you are paying for the working relationship.
2. Ask if been fired by a client - Ask your planner if a client is gone elsewhere. May be cause of a lack of service by the planner’s or it could just be a clash of personalities than parties.
3. I can see your U4? - The U4 is the “report card” of your financial planner’s background. Asking the financial planner to show his U4, so you find if a complaint has been filed against him. If he’s done anything wrong, it will be showed on his U4. If financial planner not tell the whole truth, you can always check finra.org.
4. How many clients do you have? – Do you want to be considered as a person or just a number? Whether you want understand how much you will be considered going forward, then a simple thing you can do is to asking your planner how many clients they have.
5. Please, your portfolio? - How to do to know if your financial planner practice what he preaches. It’s simple, you need to check If the financial planner is willing to show you some of the holdings in her portfolio. Exactly. It might help you to believe in her investment strategy and would you trust.
