Questions to Ask Your Financial Advisor –PillarWM

Hiring a financial advisor is a crucial decision that you should make only after you have done thorough research and analysis of all your options. This is more important for high net worth and ultra-high net worth individuals, since you have numerous high-value assets that you need to place in safe and reliable hands. If you have more than 10 million dollars in liquid net worth, you can refer to our Ultimate Guide for the best questions to ask your financial advisor. For your convenience, in this article, we will be answering some of these questions to ask your financial advisor, such as “What are your qualifications?”, “Are you a fiduciary?” and “What are my all-in costs?”

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At Pillar Wealth Management, we offer fiduciary advice to clients who have 5 million to 500 million in liquid investable assets. Our wealth managers have the experience you should want in the professional who manages your finances. We can help through our array of wealth management services, including legacy planning, tax management, estate planning, investment management, and risk management. You can schedule a free consultation with someone from our team to learn more about our services.

Financial Advice for High Net Worth Individuals

Financial advice is necessary for anyone who wants to manage their finances in a sustainable and profitable manner. In particular, if you have a net worth of millions of dollars, you might not have the time or the knowledge to handle all the financial aspects that accompany such a large sum of money. There might be aspects you might not have even considered yourself, such as risk management or tax mitigation.

As financial advisors are well-versed in wealth management matters, they can be of great benefit to high net worth and ultra-high net worth investors. You can use their insights to grow your wealth and protect it for your future and your family’s financial security. So, you need to know the questions to ask your financial advisor before starting a relationship.

Pillar Wealth Management caters specifically to high net worth and ultra-high net worth investors; therefore, we have the knowledge and tools you might need to improve your wealth management. Our services cover various financial aspects, such as investment management, tax planning, risk management, retirement planning, accounting, estate planning, and much more. Contact us to talk with one of our specialists.

What to Look for in a Financial Advisor

When looking for a financial advisor, it takes more than merely asking them, “What are your qualifications?” You can determine whether they’re right for you from the very first consultation using a few simple steps and knowing which questions to ask your financial advisor. You can read more about these steps in our Ultimate Guide, explicitly designed for ultra-high net worth families, with more than 10 million dollars in liquid assets, who want the best possible financial advice they can get.

A financial advisor’s track record speaks volumes. It is a clear indication of their abilities and capability to handle assets worth millions of dollars. The financial industry is competitive and ruthless. Your advisor should have extensive experience to give you the best service that they can while capitalizing on market trends to enhance your wealth.

A proactive attitude is necessary characteristic in your financial advisor. They must be actively monitoring and rebalancing your portfolio to adjust to your changing needs and financial objectives. Your investment portfolio is one of the main aspects of wealth management since it determines how much revenue you generate and how effectively you can secure your assets. You can learn more about maximizing your portfolio’s growth by reading our five critical shifts guide.

As an affluent investor, you are exposed to more threats than just market volatility. The right financial advisor should identify these threats and challenges and suggest strategies or methods to overcome them or protect yourself against them. Preserving your wealth is as important as enhancing it. You can read more about securing your family’s financial future in our hard-cover book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies for Families Worth $25 million to $500 million.

Types of Financial Advisors

One of the questions to ask your financial advisor is about which type of advisor they are. The term financial advisor covers a large group of financial experts who are specialists in different fields. The category includes investment advisors, money managers, certified financial planners, certified public accountants, wealth managers, and more. While it is preferred that financial advisors have specialization in their field of interest, it is not mandatory for them to have certifications. Similarly, they may follow a fiduciary standard of care or a suitability standard of care. We will discuss more on this in the next section.

In short, the kind of financial advisor you choose to hire depends more on the type of service you are looking for. Some people purely want advice on their financial plan, while others want their financial advisor to manage all their investments actively. High net worth and ultra-high net worth investors benefit more from financial advisors experienced in working with affluent clients, that is, wealth managers.

Wealth managers are typically fiduciaries, and they understand the complexity of a high net worth portfolio. You can talk to one of our wealth managers to discuss how they can help you manage your finances.

It’s important to know what questions to ask your financial advisor. Here are five critical ones.

1. Get started investing for my financial goals

If your financial situation indicates that you have the capacity to start investing, it might be time to consider hiring a financial advisor. However, the cost could be prohibitive if you don’t have a significant amount of money to invest. In that case, consider using an online platform that allows you to do your own trading while still taking into account your financial goals and risk tolerance. Fees for self-directed investing are substantially lower.

2. Personalized financial advice but don’t need to meet my advisor in person

Most of the big investment firms, such as Vanguard, Schwab, Fidelity, and others, offer self-directed investing along with advice online or from a team of advisors who are available virtually or by phone.

3. Local advisor or a wider array of financial advice

If you have more complex needs, meeting with an advisor in person could be a solution. Your network of friends, family, and workmates may be able to recommend someone locally, or an online search can provide some names. You will pay an hourly fee for financial advice, or a flat fee for a service such as creating a financial plan or an investment portfolio. The advisor will charge a fee for managing your investments, usually a percentage of their value or a flat annual fee.

Is Your Financial Advisor Right for You? 5 Key Questions to Ask

After you have short-listed a few candidates for your financial management, the next step is to analyze whether they are the right fit for you. You can do this by preparing a list of specific questions to ask your financial advisor to get an idea of their capabilities. Here are some of the questions to ask your financial advisor in your first consultation.

1. What services do you provide?

A certified financial planner, an independent registered advisor, or any advisor with a financial certification can provide a range of financial services. To resolve more complex situations, they work with CPAs, attorneys, and other experts.

Your advisor can recommend a retirement strategy, including 401k accounts and various IRAs, as well as help you understand how much money you will need to retire and maintain your desired lifestyle.

A financial advisor will work with you to manage your estate and ensure your assets are distributed as you would like. They can also help you create a trust for the disposal of your assets.

Along with creating an investment management strategy to meet your wealth goals, your advisor takes into account the tax implications of your investments and advises you on the best timing for selling assets at a profit.

Other services offered by financial advisors include investing in education savings accounts, ensuring that you have adequate life and property insurance, and advising you on charitable giving, such as through creating a foundation. If you are a business owner, your advisor can help you with improving your operations, and if you plan to sell your business, your advisor can work with you to ensure the process is smooth and financially rewarding.

2. Do They Follow A Fiduciary Standard of Care?

Reliability and trust are crucial in any business relationship, and even more so when your finances are involved. Among the first questions to ask your financial advisor should be, “Are you a fiduciary?”

Fiduciary financial advisors are legally obliged to act in your best interests and disclose any conflict of interest that might arise. They must also provide full disclosure with any financial advice. In the case of negligence, they can face legal consequences. Hiring a fiduciary financial advisor gives you a sense of security, knowing that your wealth is safe. By asking such questions to ask your financial advisor, you increase your feeling of security.

3. How Will They Be Compensated?

Before you go and hire any financial advisor, it is imperative that the questions to ask your financial advisor include, “What are my all-in costs?” Payment structures can be commission-based, fee-based, or fee-only. In many cases, a management fee is charged in addition to commissions earned on your profits. However, there is a chance of conflicts of interest in these payment structures.

Additionally, hidden costs and transaction fee might not be disclosed by the financial advisory firm right away. Therefore, it is best to read the terms and conditions of their fee structure carefully. Fee-only financial advisors charge an annual fee independent of how well your investments perform in the market. This makes them more suitable for wealthy investors; as you can trust, they’re not pushing you towards certain investments to earn more commissions.

4. What is Their Investment Approach?

An advisor’s investment approach or investment philosophy directly affects how well your portfolio will perform, so an inquiry into their approach is a must-have for questions to ask your financial advisor. Our Performance Guide can help you identify strategies that can improve your portfolio’s performance to generate more profit and minimize risk. There are many investment approaches that are commonly used, such as value investing, growth investing, and socially responsible investing.

Value investing aims to seek underpriced stocks that have the potential to increase in price. The investor purchases these underestimated stocks with the expectation that they will rise in value. Growth investing aims to generate high earnings; therefore, it involves investing in small or newer companies which are predicted to increase in value above their industry or sector average. These are high-risk, high-reward investments which many affluent investors with aggressive portfolios prefer.

Lastly, socially responsible investing takes the investor’s values into consideration. This can include environmentally conscious policies and sustainability. Affluent investors also tend to have philanthropic needs, which can be strategically used by financial advisors to even reduce your taxes. The questions to ask your financial advisor should cover these aspects of the advisor’s expertise and knowledge.

5. Which Asset Allocation Strategies Will They Use?

A rich investor’s goals, risk tolerance, and time horizon are the primary factors in creating an investment portfolio. It would help if you asked your financial advisor how they plan on allocating your assets to help you reach your financial goals in your given time period.

Mainly, financial advisors invest in asset classes such as equities, bonds, stocks, cash, and cash equivalents. For high net worth and ultra-high net worth investors, more categories can be added, such as real estate, antiques, precious jewels, and paintings. Asset allocation strategies can be implemented to generate high-rewards or to protect your wealth. Whichever asset allocation system your financial advisor chooses to go with, your questions to ask your financial advisor needs to include asking them to justify their allocation strategies.

These questions to ask your financial advisor can get you started on narrowing down that list of candidates. Any financial advisor you work with should be clear on your objectives and values. They should communicate with you about your financial plans, be honest about any liabilities or conflicts of interest that you could face, and provide clear answers regarding what are appropriate questions to ask your financial advisor.

Most importantly, the best financial advisors show a keen and active interest in your financial management, regularly consulting with you and providing you updates. None of your questions to ask your financial advisor should be difficult to answer by someone with the right knowledge and financial management skills.

Choosing the right financial advisor for your needs and values

As you search for a financial advisor, make sure that you understand your needs and financial goals. You can then ask a potential advisor how they can help you satisfy those requirements. Initiate a conversation with a shortlist of advisors, which you’ve created from your research online or among your personal network. Meeting with an advisor and sharing the details of your finances and what kind of advice you need will show you whether the advisor is someone who understands you and can help you reach your goals.

Why You’re in Safe Hands with Pillar Wealth Management

Financial advisors vary greatly in terms of their qualifications, fee structure, services, experience, and standard of care. Now that you have answers to the questions to ask your financial advisor, you are more equipped to make the best choice for yourself. If you’re still unsure about the whole process, you can refer to our Ultimate Guide for more clarity. It will help you determine the best financial advisor for you by outlining the questions that you should be asking them in your first consultation.

Pillar Wealth Management offers exceptional wealth management services to clients who have 5 million to 500 million in liquid investable assets. Our fiduciary, fee-only firm ensures that your wealth is in the safest and most experienced hands. Our wealth managers understand the unique needs of affluent families who want to enhance their wealth and secure their financial future. You can book a free consultation with one of them to get started on your journey to financial serenity.

Frequently Asked Questions

What are some good questions to ask a financial advisor?

You should ask your advisor about the services they provide, their investment philosophy, their fees, and how they are paid.

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

Before meeting with a financial advisor, gather together documents relating to your finances, such as bank statements, insurance policies, investment account statements, and income and expenses.

What should I ask my financial advisor each year?

Meet with your advisor every quarter to evaluate how well you are meeting your financial goals and discuss any changes to your financial situation, which could impact your financial plan.

What do you need to talk to a financial advisor?

A financial advisor will want to know all about your financial situation, including your income and expenses, debts, insurance policies, tax returns, and existing investment accounts.

How do I impress a financial advisor in an interview?

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 do financial advisors not tell you?

Unless you ask, financial advisors may not tell you if their earn commissions; they may not tell you that you can negotiate their fees.

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 need to save money for retirement, and your advisor can help you figure out how much you’ll need besides your retirement accounts and your 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.

Why is it good to talk to a financial advisor?

Consult with a financial advisor to make a plan for growing your wealth and achieving the financial goals you have set for yourself, your family, and your children’s future.

Authors

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.