Talk to our finance specialists today 1300 257 426

Questions to Ask Your Financial Advisor

By: Louise Mosqueda0 comments

Knowing everything about how your money comes and goes is essential. You need to be on top of what you are spending money on and how much you are saving every month. But for some people, it can be hard; especially for those who have stocks and bonds to look after. That is why they hire financial advisors to give them a nudge in the right direction to ensure that they are on the right side of things.

What to ask them

If you’re considering to make investments or buy bonds, it is best to talk to a financial advisor first to ensure that this is a smart move. Now, if you’re looking for a financial advisor and have no idea how to assess if they are qualified for your needs; here are a few questions to ask them to help you evaluate them more thoroughly.

Are you a fiduciary?

Not everyone is here to help you. Some are just after your money. The best way to find out if they are there for you and have your best interests in mind is by asking them if they are a fiduciary.

A Fiduciary is someone, often a person or organisation that has the best interest of the other party at heart. It also means that they are bound to ethically act in their client’s best interest which includes finances, managing assets for another person or organisation.

When you ask them this, and they give you anything but a straight yes or no answer, you might want to reconsider working with them regarding your finances.

How do you make money?

Financial advisors don’t give out free advice. Often, they have a business model they follow to ensure that their client’s needs are met.

Fiduciaries often charge easy-to-understand management fees that are based on the investment money you allow them to handle. They usually deduct 1 to 1.5 percent of your assets under their management.

However, if their business model is somewhat vague when they explain it, this might be a red flag. There is a chance that these financial advisors are paying a commission every time you sell a stock or mutual fund. Each transaction may cost a different amount. This could also mean that you will be paying hidden fees that would have otherwise be avoided.

How do you use technology to my benefit?

The reason to ask this is that even with advancements in technology in the past few years, a lot of financial advisors still choose to use portfolios that are based on answers given by their clients.

It is always best if advisors use some handy tools commonly found online to help keep track of their client’s financial life. That can include a flow of daily information on your family’s economic behaviour including changes to your account balances and holdings.

The advisor must have access to this information for them to design a portfolio that will help you better to achieve your financial goals.

How can you help me with taxes?

Aside from giving financial advice, financial advisors must also be able to help you optimise your portfolio for your taxes. They must be able to help you decide whether to allocate investments to taxable accounts or a non-taxable account.

They should also be able to help you out with select mutual funds. Some funds have a high internal turnover that can potentially lead to capital gains taxes. Overall, a good financial advisor should be able to help you maximise your tax potential and not just only give you advice.

What other services can you provide?

There is more to finance than savings, investments, and bonds. Ask your financial advisor if they can provide other types of financial services. This can include help with your 401 plan, assistance in planning your estate, charitable giving, as well as your children’s college funds.

Help in any of these parts of your finance can help you keep your finances in order.

Now, if you’re looking to buy a car but your financial advisor thinks it isn’t the right time because of its expense, ask him about a car finance company that is flexible with payments. That way, you can get what you need without damage to your current financial status.

Related post

Leave A Comment