Financial Planning requires a lot of Study, Research and Analysis. A Financial Planner does all this and provides you the perfect plan that work for your financial needs. Our List of 8 “Important Questions to ask Your Financial Advisors” will help you select a pitch perfect Financial Planner for your Hard Earned Money

As a Client to Financial Planner , you must ask these 8 important questions to certify whether the Financial Planner you are meeting, is worthy or not. In the end, its your hard earned money that’s going through planning.

Here are the 8 Important Questions to ask Your Financial Advisors:

1. WHAT EXPERIENCE HE HAS?

This is the First Question that you should ask your Financial Planner. You should ask the planner to describe her work experience and how it relates to the current practice. You should always choose a financial planner who has an experience providing important information’s related to plans and counselling session on your financial needs.  

2. WHAT ARE HIS QUALIFICATIONS?

“Financial Planner” term is used by many financial professionals. You must ask the planner what qualifies him to offer financial planning advices. Is he a recognized as a CERTIFIED FINANCIAL PLANNER professional or CFP® practitioner, a Certified Public Accountant/ Personal Financial Specialist (CPA/PFS), or a Chartered Financial Consultant (CHFC) or a SEBI Approved Professional ? Always Look for a planner who has solid work experience in financial planning topics such as insurance, tax planning, investments or retirement planning. If the FP holds a financial planning designation/ certification, check on his background with CFP Board or any other relevant professional organizations.

3. WHAT SERVICES DOES HE/SHE OFFERS?

The services a financial planner offers depends on a number of factors including credentials, licenses and his/her areas of expertise. Financial planners cannot sell insurance or securities products such as mutual funds or stocks without the proper licenses, or give investment advices unless they are registered with state or Federal authorities. Some planners offer financial planning advice on a range of topics but do not sell financial products . Others on the other hand may provide you the advice only in specific areas such as retirement planning or financial planning.

4. WHAT IS HIS APPROACH TO YOUR FINANCIAL PLANNING?

Always ask the financial planner about the type of clients and financial situations they have worked in. Few FPs require you to have a certain net worth before offering services for your financial planning .Always get this question Clarified before you take the plans. Hedge Funds FPs always ask you for a certain Net worth to handle your Financial planning.  

5. WILL HE BE THE ONLY PERSON WORKING WITH YOU?

The financial planner may work with you or will have someone from his/her office assist you. You may want to meet the person who will be working with you. If the planner works with other professionals outside his practice area to develop financial planning recommendations, You can get the list of their names and check on their backgrounds and get feedbacks.

6. HOW WILL YOU PAY FOR HIS SERVICES?

Financial Planner should clearly inform you about how he/she will be paid for the services to be provided. Planners can be paid in several ways: It can be in the form of salary paid by the company for which the FP works. The FP’s employer receives payment from you, either in fees or commissions, and pay FP as salary. Fees based on an hourly rate, a flat rate, as a commission.

Commissions are paid by a third party usually the Company that has the Product e.g. Mutual Fund or Insurance Plans to FPs, to carry out the financial planning recommendations. Commissions are paid as a small percentage of the amount you invest in that companies product.

E.g. When you Buy a Mutual Fund from Vanguard or Blackrock , these companies pay financial planners a small amount as commission.

7. HOW MUCH DO YOU TYPICALLY CHARGE FOR SERVICES?

While the amount you pay to FP will depend on your needs, the financial planner should be able to provide you with an estimate or quotations of possible costs based on the work to be performed. Such estimates should include the planner’s hourly rates/flat fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.

8. HAVE YOU EVER BEEN PUBLICLY DISCIPLINED FOR ANY UNLAWFUL OR UNETHICAL ACTIONS IN YOUR PROFESSIONAL CAREER?

Several government and professional regulatory organizations, such as FINRA, your state insurance and securities departments, and CFP Board keep records on the disciplinary history of financial planners and advisers. You Should ask which organizations does the planner is regulated by and contact these groups to conduct a background check. All financial planners who have registered as investment advisers with the Securities and Exchange Commission or state securities agencies, or who are associated with a company that is registered as an investment adviser or SEBI, must be able to provide you with a disclosure form called Form or the state equivalent of that form.

Hope you like our Article on “Important Questions to ask Your Financial Advisors” , Please do read our other articles from our Blog.