6 Things to Ask a Financial Advisor

By Katy Macek

With the economic uncertainty of COVID-19, we’ve all had finances on our mind. Making sure you’re on solid financial ground can help ease financial stresses now and into the future. Perhaps you’ve wondered if it’s the right time to hire a financial advisor.

With so many unknowns, a finance expert can help prevent you from making short-term “fixes” that may negatively impact your long-term goals, especially with new laws and regulations, says Emma Mueller, financial consultant with Madison-based Park Capital Management, LLC.

“Working with a financial advisor who can navigate the complexities of these new rules and apply them to your situation is key to a successful outcome,” Mueller says, “whether it’s debt consolidation or retirement planning.”

Financial advisors can even walk clients through COVID-19 concerns, such as if they’ve lost their job and need to figure out their options — especially for lost employee benefits, like health and life insurance, says Carrie Waters Schmidt, a financial planner with Equanimity Wealth Planning and Investing offering comprehensive financial planning through Lincoln Financial Advisors Corp.

Schmidt and Mueller answer some common questions about using a financial advisor.

WHAT DO ADVISORS HELP WITH?

The goal is to help you make smart choices with your money, for the betterment of your current and future self, Schmidt says. In other words, Schmidt says she often helps clients decide where they should allocate their money, whether that be an IRA account, life insurance, college savings plan or a savings account — to name a few. Planners can also help with budgeting and debt consolidation.

“Most advisors like helping others, especially when you start early on because we get to be a part of those successes as you hit those milestones,” Mueller says.

HOW DO I FIND AN ADVISOR?

Often, this is the hardest part, Mueller says. Ask for recommendations from your bank or credit union as well as friends and family. Interview at least three — because someone who’s a good fit for your friend may not be for you.

“Most products are fairly similar — it’s the person you’re working with [that] you need the most confidence in,” she says. “You need to trust the advisor you’re building a relationship with.”

If you’ve got specific goals, Schmidt says a simple internet search can go a long way.

“I’ve had several people call me simply because they found me on the web and they feel my areas of specialty fit their needs,” she says.

WHAT SHOULD I ASK MY ADVISOR IN ORDER TO DECIDE IF I SHOULD HIRE THEM?

Mueller suggests asking personal questions, such as how long they’ve been working in the business, if they enjoy it, what their investment philosophy is and why you should choose them versus doing it on your own.

Be sure to ask what certifications they have, such as Certified Financial Planner (CFP) and Certified Retirement Plan Professional (CRPP), among others.

DO I NEED AN ACCOUNT MINIMUM TO WORK WITH AN ADVISOR?

This varies depending on the advisor and the company, but Schmidt says, generally, if you’re just looking for

planning services, advisors do not require a minimum balance. Investors, on the other hand, usually require an account minimum for liability purposes.

However, “most small investors don’t need an advisor’s help with their investing until there’s enough to warrant paying the advisor’s fees,” she says.

HOW DO ADVISORS ENSURE THEY’RE THE BEST MATCH FOR A CLIENT?

“A good financial advisor should look at all aspects of your financial life,” Mueller says. “It doesn’t matter if you have very much to start. It’s an advisor’s job to help you get there.”

Schmidt says advisors assess the liability of potential clients, based on assets and savings habits, but also their overall attitude toward money.

“I don’t take on clients just based on their account size, but on their mindset and values,” Schmidt says. “… Some of my best clients are young professionals who started with nothing. We all start somewhere, don’t we?”

HOW ARE ADVISORS PAID?

That depends on the advisor, so Schmidt and Mueller both recommend asking. Most charge a percentage of the client’s portfolio, but others charge a flat fee, service fees or others.

Many advisors offer a free consultation meeting, after which you can decide whether to move forward with them.

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