Introduction
Choosing the right financial advisor is a crucial step towards securing your financial future. Asking the right questions can help you find an advisor who aligns with your financial goals and values. Ensure you make an informed decision so you feel more confident in the partnership. Let’s explore the most important questions to ask when choosing a financial advisor.
#1 Are You a Fiduciary?
Knowing whether a financial advisor is a fiduciary is crucial. A fiduciary is legally obligated to act in your best interest, putting your needs above their own. This can significantly impact the trust and transparency in your financial relationship.
All advisors must uphold fiduciary standards. This means they are committed to providing unbiased advice and recommendations best suited to your financial situation. Their fiduciary duty ensures that your goals and interests are always the top priority. Merit holds itself to a Fiduciary standard, both contractually with our clients and simply because we believe it is the right thing to do.
#2 How Do You Get Paid for Your Financial Advisory Services?
Learning how a financial advisor gets paid helps you understand potential conflicts of interest. Advisors can be compensated in various ways, such as fee-only, commission-based, or a combination of both.
You should only work with a financial advisor who provides a clear and transparent fee structure. It is best to work with one that primarily operates on a fee-only basis, meaning they charge a flat fee or a percentage of assets under management.
This approach minimizes conflicts of interest, ensuring that the advice you receive is purely in your best interest. Understanding their payment structure gives you confidence in the recommendations they provide.
#3 How Much Should I Expect to Pay You Per Year?
Financial advisory fees can vary. But it's important to know what you will be paying annually. Typical costs include management and administrative fees and other potential charges.
The expected annual fees should be clearly outlined during your initial consultation. The financial advisor should provide a detailed breakdown of costs so there are no surprises.
This transparency will help you plan your finances effectively and ensure you understand the value you get for the services provided.
#4 What Are Your Qualifications?
Understanding a financial advisor's qualifications is important so you know they are reputable and trustworthy. These qualifications ensure the advisor has the necessary knowledge and expertise to handle your finances effectively.
At Merit, our team members hold various certifications, including Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), and Certified Public Accountant (CPA).
These credentials demonstrate a high level of competence and adherence to professional standards. The right advisors will have years of experience in the financial industry, ensuring they can provide sound advice and personalized strategies tailored to your needs.
#5 What Services Do You Provide?
Knowing the range of services a financial advisor offers helps you determine if they can meet your specific financial needs. A comprehensive advisor should provide services that cover all aspects of your financial life.
You’ll want to work with an advisor who provides a range of services. This should include financial planning, investment management, retirement planning, and estate planning.
It’s best if they also provide specialized advice for life transitions such as:
This holistic approach ensures every aspect of your financial well-being is addressed, providing you with peace of mind and a clear path to achieving your financial goals.
#6 What Types of Clients Do You Specialize in Serving?
You should ask about the type of clients a financial advisor specializes in to give you insight into whether they have experience with situations similar to yours. Specialized knowledge can lead to more effective and relevant advice.
As an example, Merit specializes in serving clients undergoing significant life transitions such as retirement, divorce, career changes, and more. We also work extensively with business owners and high-net-worth individuals.
#7 What’s Your Investment Philosophy?
An advisor’s investment philosophy can greatly impact your portfolio’s performance and risk level. Choosing an advisor whose philosophy aligns with your financial goals and risk tolerance is important.
You should choose a financial advisor who follows a disciplined, evidence-based investment philosophy. They need to be focused on creating diversified portfolios tailored to each client's risk tolerance and long-term goals.
This approach may include regular portfolio reviews and adjustments to ensure your investments remain aligned with your financial objectives.
By emphasizing long-term growth and minimizing unnecessary risks, they can help you achieve financial stability and successful wealth management. Find out more about Merit’s investment philosophy and strategy.
#8 What Are Your Personal or Firm Values?
Asking about the values of a financial advisor or firm gives you insight into their approach to client relationships and financial planning. That way, you can make sure you’re both on the same page.
At Merit, our mission is to revolutionize the client experience by fostering transparency, integrity, and personalized service.
We believe in putting clients first, which means acting with honesty and providing advice that is always in their best interest.
Our commitment to these values builds long-term, trusting relationships with our clients. Their financial well-being is our top priority. Merit exists to enrich the lives of those we serve.
#9 How Will You Track and Report on Progress Against Our Stated Goals?
Tracking and reporting progress is essential to ensure your financial plan stays on course. Your financial advisor should have a clear system to monitor your portfolio and track your progress toward your financial goals.
They should provide regular updates through detailed reports and review meetings, which can be quarterly, semi-annual, or as needed. These reports include performance metrics, goal tracking, and any necessary adjustments to your plan.
At Merit, our client portal, Merit Connect, provides real-time account access and balances, allowing you to access all your financial information at your fingertips anytime, anywhere.
#10 Do You Have Testimonials From Former or Current Clients?
While financial advisors can’t share direct contact information due to privacy concerns, they should be able to offer you access to feedback from their clients.
Merit Financial Advisors has plenty of great reviews from the people we’ve worked with. Read through our client testimonials to see some of the past feedback and stellar reviews we have received.
Reading these reviews can give you a sense of our commitment to excellence and the positive impact we have on our clients’ lives.
#11 What Resources Will I Have While Working with You?
Getting access to a variety of resources is fundamental for comprehensive financial planning. You should have access to an extensive range of resources designed to support your financial journey and to guide your conversations with your financial advisor.
These could include:
- Market Research and Commentaries: Stay informed with timely market updates and insights from their in-house investment team.
- Client Webinars and Events: Participate in educational webinars and in-person events to deepen your financial knowledge.
- Online Resource Library: The best financial advisors will give you access to their vast library of financial insights, articles, and tools.
- In-House Experts and Specialists: Benefit from personalized advice and guidance from a team of experienced financial professionals.
These resources are designed to empower you with the knowledge and tools needed to make informed financial decisions. Check out Merit's market updates and extensive library of insights and resources.
#12 How Often Will You Communicate and Meet with Me?
Regular communication with your financial advisor is key to ensuring that your financial plan remains on track. This should be at a communication frequency that meets your needs.
We recommend at least one or two meetings per year to review your financial progress and make necessary adjustments. But many clients prefer more frequent check-ins such as quarterly or monthly meetings. Especially during significant financial events or market changes.
This flexible approach ensures that you receive the support and updates you need to stay informed and confident in your financial decisions.
#13 Which Custodians Do You Use?
The security and management of your assets is arguably the most crucial part of choosing the best financial advisor.
The right team will be partnered with reputable custodians such as Fidelity, Charles Schwab, and SEI.
These custodians are well-known for their robust security measures and excellent customer service. By using these trusted sources, Merit Financial ensures that your assets are securely held and efficiently managed.
Conclusion
Picking the right financial advisor is a significant step towards achieving your financial goals. By asking these critical questions, you can select an advisor who aligns with your values, understands your needs, and provides the expertise necessary for your financial success.
At Merit Financial Advisors, we are committed to transparency, integrity, and personalized service. Schedule a consultation with us today to start your journey towards a confident financial future.