Questions for a Financial Advisor and The Answers You’re Looking For

Partnering with the right financial advisor is critical for high net worth individuals for several reasons. They can help grow your wealth through asset allocation and diversification strategies. They can help secure your future through extensive retirement planning. They can protect your assets by leveraging tax optimization strategies and through risk management, and much more.

However, finding the right financial advisor is much harder than it sounds. You need to know about asking the right questions for a financial advisor as well as other factors to help you filter potential candidates. That’s why we have developed this complete guide for high net worth investors with $10 million or more in liquid assets on choosing the best financial advisor.

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Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.

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You can learn all about the questions for a financial advisor, but you can also save time and talk directly to Pillar Wealth Management. We are a private wealth management firm offering a range of financial advisory, financial planning, and investment management services. Our skilled wealth managers and financial advisors have been serving wealthy clients exclusively for more than three decades. We are always striving to help our affluent clients meet their short and long-term financial goals and attain financial success and security. So, if you are searching for the right financial advisor for yourself, schedule a no-obligation chat with us right away.

In today’s blog, we’ll be looking at the questions for a financial advisor you need to ask as well as the answers you need to hear. Let’s get started.

4 Questions for a Financial Advisor and Their Answers

There may be many other questions for a financial advisor, but in the following, you’ll learn about four critical questions for a financial advisor. For high net worth individuals and families, amassing $5 million to $500 million may be easy. However, retaining that wealth for the rest of their lives, that’s an entirely different story. Such wealthy individuals often lack the time to thoroughly plan their financial goals, execute their investment strategies and then constantly monitor their wealth.

Even if they do have the time, they might lack the skills to do so, and this lack of skill can make it difficult for them to achieve their targets as quickly as possible. As a result, it becomes crucial to know the questions for a financial advisor, which they need to ask, and to hire someone that can grow their assets while protecting them and helping them meet their goals.

However, you can’t just pick the first financial advisor you find and trust them for all your financial advice and decisions. Unless you want to head towards an uncertain retirement, you need to pick the right financial advisor. And to pick the right financial advisor, you need to ask the right questions for a financial advisor.

Here are some of those questions for a financial advisor, as well as the answers you should be looking for.

1. What Services Do You Provide to Your Clients?

This is one of the most crucial questions for a financial advisor. Ideally, you should be able to find all the services you need with one financial advisor rather than going to several advisors for different advisors.

Doing so will, firstly, drive up your costs as you will have to pay the service fees for every financial advisor separately, thereby draining your wealth faster. Secondly, and more importantly, it will make your overall wealth management more inefficient.

Different advisors will be following different strategies that may clash with your various financial goals. For instance, your broker may be investing aggressively to help you reap high returns and grow your wealth quickly.

At the same time, your tax advisor may be trying to control your tax bill by limiting your investment activities. Therefore, the lack of synergy will simply land you in a lot of financial trouble. You need to choose a financial advisor that offers all the services you need under one roof. So, among the questions for a financial advisor is the one that asks whether they provide the following services, among many others.

• Financial Planning

Financial planning is an important service, without which all your other financial activities can be meaningless. That’s why there are certain types of financial advisors who only focus on providing this service so that you can develop the perfect financial plan according to your goals. So, among the important questions for a financial advisor is to ask them to define their approach to financial planning.

This is the key point here: your goals. Financial advisors will ask you about your goals in life, whether those are short-term or long-term, whether those are financial in nature or otherwise. Then, based on those goals, they will help you develop a comprehensive financial plan.

Moreover, as you grow older or as your financial situation changes, your goals might also change, and therefore, your financial advisor will keep adjusting your financial plan accordingly.

• Investment Management

Your investments and portfolios will be at the very center of your financial plan and will be linked with most of your other financial activities and goals. Therefore, this is one service that has to be in sync with your financial targets and plans to avoid any mismanagement of wealth and prevent loss of assets.

So, as part of your questions for a financial advisor, make sure the advisor offers comprehensive investment management services that, again, incorporate your goals, and based on that, follow smart asset allocation, portfolio diversification, and other appropriate investment strategies. Learn more about the intricacies involved in portfolio management from our exclusive guide on portfolio performance for affluent individuals.

• Retirement Planning

Among the important questions for a financial advisor is whether they offer retirement planning. People assume that they can start planning for retirement when they reach their 40s or 50s. However, the truth is that you need to start your retirement planning as young as possible, even if you’re still in your 20s. The earlier you start, the better the chances that you will be able to achieve all your retirement goals in time, with even some assets to spare.

As an ultra-high net worth individual, you can have simple retirement goals such as donating $5 million to a favorite charity or have a more complex goal of leaving some money to your heirs, traveling the world, donating to several charities, and even investing in a friend’s business.

Either way, retirement goals require extensive planning. Your advisor will help you figure out how much to save, how much to spend and how much to invest at each stage of your retirement plan.

Therefore, make sure to ask about all the services they offer when asking questions for financial advisor. Start chatting with the wealth managers and financial advisors at Pillar Wealth Management to learn about the full range of our financial advisory, planning, and wealth management services.

• Tax Planning

Tax planning is a crucial service that many affluent clients tend to ignore till they find out they lost millions and millions of dollars in their tax bill for the year. Similarly, many financial advisors who are offering exclusive financial services such as investment management or retirement planning tend to ignore the tax implications of their financial activities. So, among the important questions for a financial advisor is to ask them to elaborate on their tax minimization strategies.

As a result, while you may have a brilliant investment strategy or perfectly crafted retirement or insurance plan, you will be losing millions of dollars’ worth of tax every year, making your overall wealth management inefficient and pushing you further away from your goals. So, make sure your advisor provides tax planning and optimization services as well.

• Estate Planning

Estate planning is a particularly important service for high net worth individuals and families as they intend to transfer vast amounts of their wealth to their loved ones. However, this is easier said than done. So, among the important questions for a financial advisor is to ask them about their experience with estate planning.

During estate planning, there are many legal hurdles to cross, family conflicts to settle, and, again, tax implications to manage. This can be almost impossible to accomplish on your own. With the right financial advisor, however, this whole nightmare can become a simple and straightforward process.

They can ensure the smooth transfer of the maximum amount of your wealth to your intended beneficiaries only. You can find out how to choose such an advisor for your estate planning needs from our extensive guide for investors worth $10 million or more.

• Insurance Planning

While wealthy individuals with $5 million to $500 million don’t face the usual risks as the average American, they do face other risks that could leave them entirely bankrupt or lead them to lose all their assets.

Therefore, insurance planning and risk management are even more crucial for them to maintain their status and protect their assets from a wide variety of risky situations. Order a copy of our book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies for Families Worth $25 million to $500 million, to learn how else you can protect your wealth.

2. Do You Specialize in Certain Types of Clients?

This is also one of the most important questions for a financial advisor, which you need to ask. There are all kinds of financial advisors out there, catering to a wide variety of people from diverse backgrounds.

However, as a high net worth individual with $5 million to $500 million in liquid assets, you are entirely different from the rest of the crowd. As a wealthy individual, you will have complex financial needs and face much more complicated problems as well.

Therefore, you need someone who is specifically familiar and experienced with those types of problems only. So along with asking about the type of clients they deal with, among the questions for a financial advisor, which you should ask, is “Do you have any minimums?” Certain institutions like private banks set the minimum at $100,000, while you need to be looking for advisors who set the minimum at $1 million or more.

At Pillar Wealth Management, we exclusively serve clients with $5 million to $500 million in liquid assets. Moreover, we strictly work with a small number of clients every year so that we can provide them with the best services and full dedication. Start a no-obligation conversation with us today to discuss your financial needs.

3. How Much Will It Cost Me to Hire You?

Obviously, this is one of the important questions for a financial advisor, which you need to ask. This is a complex question and requires a complex answer as well. If your advisor straight away quotes a fee percentage and stops there, it’s a big warning sign. Go through our complete guide on financial advisors to learn about the other warning signs you need to watch out for.

The truth is that wealth management and other similar financial planning services involve various costs and expenses, the least of which might be your advisor’s fee. For instance, depending on the combination of active and passive money management, you might have to bear high transaction costs or internal expenses. You can learn more about the importance of active and passive management from this handy guide.

Furthermore, you might have to bear capital gains taxes and various other tax expenses. There might be the bond sale spread, margin interest, commission, and various other costs to worry about. If your advisor doesn’t explain all these costs as well as their strategy to reduce them, they are not the one for you.

4. How Can Your Services Help Me Meet My Goals and Targets?

Amongst all the questions for a financial advisor, this will be the hardest to answer but will also reveal the most about how committed and skilled the advisor is. To be honest, there’s no simple answer for how an advisor can help you achieve your goals. It’s a combination of factors, such as providing fiduciary services, customized solutions, constantly monitoring and adjusting your performance, protecting your assets, and much more.

5. Do You Abide by Fiduciary Duty?

Fiduciary duty requires the advisor to put the client’s needs above their own. Any advisor registered with the SEC is required to abide by fiduciary duty.

If conflicts of interest arise, the advisor should disclose them so the client can decide how to proceed. Receiving a commission for selling a particular product is a conflict of interest, so many advisors follow a fee-only compensation model. A fee-only advisor does not accept commissions or other sales-related perks; they are compensated only by the fees paid by their clients.

6. What Is Your Investment Philosophy?

Every advisor or investment advisory firm has an investment philosophy. Some prefer active to passive management. Advisors may use model portfolios that reflect a particular level of risk tolerance and particular financial goals. There are plenty of software analytical tools that are used to select the securities and assets to build a portfolio that meets the client’s goals. The analytics used will be based on various theories about markets.

Your advisor should be familiar with these investment options and be able to discuss them with you. Your financial plan should elaborate on the firm’s investment philosophy for you.

7. How Often Do You Communicate with Your Clients?

Your financial plan should be changed when a major life event happens to change your financial goals. Ask your advisor to regularly review your long-term financial outlook.

Moreover, a financial plan should be evaluated regularly because markets are constantly evolving. Ask how much time your advisor will devote to monitoring your plan.

Your asset allocation should be reviewed every few months.

8. Do You Require a Minimum Investment?

This is an important question for a financial advisor because it will be linked to your advisor’s fee structure. Your advisor will likely charge you a fee that is a percentage of the value of the assets that they will manage. In that case, the minimum asset requirement may be quite large.

Some advisors charge a minimum fixed fee rather than a percentage, which may be more than you can afford.

9. What Certifications Do You Have?

When you’re considering a financial advisor, you can ask them where they went to school and what their credentials are. You may be happy to hear that the advisor is a CPA, for example. Take a look at the FINRA website for a complete list of credentials, which includes the details of the training and experience required to earn each credential.

What’s also important is their level of experience. You care about the advisor’s capacity to relate to your financial situation. If their clientele has many of the same goals and needs as you have, and the advisor has been successful in satisfying the needs of those clients, you’re on the right track!

10. What Extra Costs Should I Be Aware Of?

A fiduciary will always try to minimize your costs. You will want to know how much money you can save because your advisor recognizes the importance of cost control in managing a portfolio.

Ask for some examples of the cost savings they’ve made with other clients. Then you can feel confident in your advisor’s expertise. Also, ask them how they work to minimize fees and how they help you pay less in taxes.

Check Assumptions and Keep the Dialogue Flowing

Every conversation with your advisor is an opportunity to clarify and validate the assumptions that you make about the advisory relationship. Keep asking your advisor questions about costs and investment philosophy to eliminate any doubts you may have about the path you’re on. Be frank and open about your financial situation so the advisor stays up-to-date about your goals and risk tolerance.

Wrapping Up

Your relationship with your financial advisor will be one of the most crucial relationships in your entire life. It will not affect your financial health and life but can also affect the lives of your family, heirs, and beneficiaries after you are gone. Therefore, for the sake of your wealth and your loved ones’ financial security, you need to choose the right advisor, and these questions for a financial advisor should help.

The financial advisors at Pillar Wealth Management hold more than sixty years of combined experience in offering a range of fiduciary and fee-based financial advisory and investment services. We are always striving to help our clients meet all their short and long-term financial goals and attain financial serenity in life. Schedule a no-obligation consultation with Pillar Wealth Management today.

Frequently Asked Questions

What are some good questions to ask a financial advisor?

Ask your advisor about the services they provide, their investment philosophy, their fees, how they are paid, and how your investments are monitored.

How do I prepare for a meeting with a financial advisor?

Before your meeting, gather together documents relating to your finances, such as bank statements, insurance policies, investment account statements, and income and expense records.

What information will a financial advisor ask for?

The advisor will want to know the details of your financial situation, including your income and expenses, debts, insurance policies, tax returns, and existing investment accounts.

What do you discuss with a financial advisor?

Be prepared to discuss your financial goals and needs and various aspects of your financial situation, such as your budget, income, expenses, and risk tolerance.

What are the questions financial advisors hear most often?

Most investors are concerned about the impact of the economic and political climate on their investments, and they often need a strategy for buying and selling securities.

What questions should I ask my financial advisor before retirement?

You will need to save money for retirement, and your advisor can help you calculate how much you’ll need besides your retirement accounts and any earnings from investments.

How do you know if a financial advisor is good?

Check for disclosures with the SEC to ensure your advisor has not had any serious complaints; you can also judge the advisor by the results they produce.

What are the three questions a financial manager asks?

The financial manager wants to know about your income and expenses, your goals for the future, and your risk tolerance.

How do you interview a finance person?

Ask the person about their training and experience, what their investment philosophy is, and how they are paid.

What are the key questions financial planning must answer?

A financial plan covers the basic requirements for income and expenses over a lifetime—saving for retirement and major expenditures, investing to increase wealth, and preparing to pass on one’s estate.

Authors

Hutch Ashoo

Chris Snyder

To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.

We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.

You see, our goal is to only accept 17 new clients this year. Clients who have from $5 million to $500 million in liquid investable assets to entrust us with on a 100% fee basis. No commissions and no products for sale.