6 Important Questions Your Financial Advisor Should Ask You

Despite recent reports that just under half of all American adults can handle an unexpected expense of $1,000 or more, the majority choose not to seek outside financial help. In fact, only 17 percent use a financial advisor, according to a 2019 CNBC and Acorns Invest in You savings survey.

Many people who choose to handle their finances on their own make costly mistakes, such as simply guessing how much they would need for retirement and not saving early enough. In 2018 the National Financial Educators Council found that self-directed financial management mistakes cost the average American $1,230.

Working with a Certified Financial Planner® (CFP) can lessen the likelihood of these potential losses and help individuals and families strengthen their long-term financial situation. In 2019 Certified Financial Planner Board of Standards, Inc. examined consumer confidence regarding financial security in the face of a potential recession and found that 73 percent of respondents who worked with a CFP® felt more prepared now than they did during the financial crisis of 2007-08.

Finding a CFP® is an important safeguard to protect your assets, but it’s even more critical to find one who understands your unique financial situation and aspirations. When you’re looking for a CFP®, find one who asks these six questions.

“Can You Tell Me about Yourself?”

Your advisor should want to get to know you and what’s important regarding your personal life and retirement savings plan. One of the most efficient ways they can do this is by asking the aforementioned, open-ended question. This allows you, the client, to direct the conversation and relay information that you might not have even thought was central to a savings plan. For instance, if you own a business, your advisor might ask you to consider tax minimization or legacy planning. Beyond that, this exercise allows the advisor to know you and your family better, which, in turn, can help improve trust and forge a deeper, meaningful connection.

“What Made You Seek Independent Advice?”

Once your advisor knows more about you, they should attempt to gauge why you sought out independent financial advice. In doing this, they can get a better idea of where you need support and direct their efforts to ensure they meet your demands in these areas. Some people might simply not have the time to focus on their finances and require comprehensive help, while others need guidance in a specific area. Other reasons people hire advisors include a change in financial goals or family dynamic or altered tax status as a result of a recent move.

“What Are Your Goals?”

Many people look to financial advisors for assistance with retirement savings plans, but there is an abundance of other goals you might have concerning financial planning. By asking about your financial goals and objectives, your advisor can not only help you determine specifically what it is you intend on saving for but also implement a unique plan designed to meet those expectations. Some of the most common goals outside of retirement savings include education funding, estate planning, asset allocation, and major purchases.

“What Are Your Most Pressing Financial Concerns?”

While your advisor will work with you on a comprehensive wealth management plan, they must know your most pressing financial concerns so that they can be addressed immediately. For instance, if you are getting divorced or remarried, your advisor will be able to help you navigate concerns regarding the division of assets and investments and determine whether you have enough income to support various lifestyle choices.

“Where Do You See Yourself in Five Years?”

Financial planning isn’t only about creating a long-term strategy with the end goal of saving for retirement. As mentioned, people have many different financial goals and aspirations, some of which they may want to achieve within the next few years. A good advisor will ask you where you see yourself in five years to help create a comprehensive plan that might include expenses related to marriage, having children, or buying a house. They can even take into account factors such as debt and inflation.

“With debt and living expenses on the rise in much of the country, the importance of setting financial goals—and sticking to them—has never been greater,” noted First National Bank of Omaha executive vice president of consumer banking Jerry O’Flanagan.

“What Do You Expect out of This Relationship?”

The simple answer to this question is the fulfillment of financial goals and aspirations, but it’s also important for both you and your advisor to think about considerations that will help ensure a successful relationship. Before meeting an advisor, you should have an idea about what you expect from them, and, in turn, be clear and concise in voicing your goals and concerns. 

If you’ve never worked with an advisor before, consider past service relationships and what you did or didn’t like.

Author

Robert Ryerson

Although Robert M. Ryerson completed all the necessary requirements to earn bachelor of arts degrees in both English and economics at Rutgers University, college policy at the time prohibited the issuance of dual degrees. As a result, he graduated from Rutgers with a single bachelor of arts in economics before finding employment as a stockbroker with Shearson Lehman Brothers in New York City. Robert M. Ryerson has since established himself as a respected estate administrator and legacy planner. In addition to his degree from Rutgers, Mr. Ryerson holds professional designations as both a Certified Financial Planner professional and a Certified Identity Theft Risk Management Specialist. He has shared his knowledge on the subject of identity theft as the author of the book What’s The Deal With Identity Theft?: A Plain-English Look at Our Fastest Growing Crime. He has also covered identity theft issues directly for students as the instructor of the adult education course Understanding Identity Theft: Our Fastest Growing Crime.

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