Should You Meet With a Financial Planner and What Should You Discuss?

How often have you met with your financial planner? Never? Many people are afraid of contacting a financial planning professional sometimes because they don’t think they have enough to invest or because they are afraid they will be sold products they don’t need.

On the other hand, there are so many considerations when planning for retirement, from taxes to the products you buy to secure lifetime income, and you need the best tools to guarantee success.

This article will prepare you for what happens when you meet with a financial advisor, if you choose to do so, including questions to ask an advisor during the interview process, at your first meeting, and during your annual review. We will also give you a heads up on the types of questions an advisor will be asking you as well as common terms used by advisors and their definitions.

Planner , Robo Advisor or Do it Yourself Online Planning?

Financial advice has changed dramatically in the last decade as technology has disrupted what used to be a completely in-person industry.

Many people plan successfully with a robust and flexible tool like the Boldin Retirement Planner.

There are differences between robo-advisors and planning tools, however, and it pays to know what you’re getting before you put your money down. Robo-advisors are usually brokerage and investment firms that hold your accounts and keep your assets under their management. A planning tool lets you connect your existing investment accounts to a free or flat-fee platform that gives you the freedom to create a budget, add outside sources of income like Social Security, and run scenarios based on changes in your life and the economy.

Using a flat-fee tool guarantees that you’re getting an unbiased look at what the future holds based on your current situation. In fact, the financial advisors that work for investment firms use similar tools when creating your retirement plan.

But even the most robust tool can’t discuss your plan with you face-to-face (yet). At some point you may want to add in-person advice to your toolbox. If you do, be prepared with the right questions.

For more insight on robo-advisors read, “Robo-Advisors: Should You Automate Your Retirement Savings and Investments?”

Do Not Be Shy About Asking Questions

Don’t be shy about asking questions, and do not worry if you need to ask the question a few times.  Keep asking for clarifications or more information until you genuinely understand their answer.

You are not supposed to know everything they know.  Financial planning is complex and it is absolutely okay if it is not your area of expertise.  You are hiring them for exactly that reason – you need their expertise.

It is okay if you don’t understand their first answer to your questions: just be sure to keep asking until you do understand the answer.

And, if the advisor makes you feel dumb, find someone else to work with!

9 Questions to Ask a Financial Planner During the Interview Process

As the population ages and life expectancies rise, demand for financial planning services will increase significantly.  In fact, the number of personal financial advisors is expected to grow 27% from 2012 to 2022, much faster than the average — 10.8% — for all occupations, according to the Bureau of Labor Statistics (BLS).

At the launch of the Bureau’s decade-long outlook in 2012, there were more than 220,000 financial advisors in the U.S. By the end of 2022, there will be more than 280,000.

The good news is that you have a range of financial advisor options, but sifting through the credentials of the thousands of financial planners out there can be daunting for anyone, especially those who are seeking retirement advice.

“Trust is obviously an important part, but unlike other professions like law, medicine, accountancy, etc., the barrier to entry in the financial planning profession is relatively low, so it’s important to make sure the person you’re working with really knows their stuff,” says David Blanchett, head of retirement research at Morningstar Investment Management.

Consider the following questions when choosing which advisor is right for you:

1. Are You a Fiduciary?

Fiduciary responsibility is an important concept when searching for a financial advisor.  According to Investopedia, the definition of a fiduciary is: “A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets for the benefit of the other person rather than for his or her own profit.”

“If an advisor is a fiduciary he or she is required to put your interests before his/hers,” says Judy McNary, of Broomfield, Colorado-based McNary Financial Planning, LLC. You want the advisor’s recommendations to be objective and not tied to their own compensation.

“Clients should be sure they are working with an advisor that is obligated to work in the best interest of the client,” says Alan Moore, a certified financial planner with Serenity Financial Consulting LLC in Milwaukee, Wis.

It also wouldn’t hurt to ask if your advisor can sign a Fiduciary Oath, pledging to put your interests first, according to Austin Chinn, a certified financial planner with California-based Fountain Strategies, LLC.

2. What is Your Educational or Professional Certification Background?

A certified financial planner (CFP), certified financial analyst (CFA) or personal financial specialist (PFS) are the primary designations that are recognized, so the advisor should have one of these, McNary says.

There are also special designations for planners specializing in accounting, taxes and retirement.  You may want to research the specific designations given to you by the advisor.

3. What Types of Clients Do You Generally Work With?

“You don’t want to be the biggest or the smallest client for an advisor,” McNary says. “If you’re the biggest, your situation may have complexities he or she is not prepared to handle. If you are the smallest, you may not get the time and attention you feel you deserve.”

You should also ask if the advisor focuses on a certain age group, Chinn says.

4. How Are You Compensated?

Fee-only means the advisor has a flat fee, an hourly fee, or a quarterly Assets Under Management (AUM) fee, based on the investments they are managing for you, so you’ll always know exactly what you are paying.

Two of the best-known organizations of fee-only advisors are the Alliance of Comprehensive Planners and the National Association for Personal Financial Advisors, McNary says.

Fee-based is murky; the advisor charges a combination of a flat fee plus a commission. In this situation, you’ll need to ask more questions about what they’re actually getting paid, she says.

Commission-based advisors have a conflict of interest because they are paid based on what products they sell you. If the advisor is paid based on commission, ask how he or she manages and discloses this conflict with you.

“If you are not comfortable with the answer, seek a different advisor,” McNary says. “After all, it’s your money.”

5. What Areas of My Financial Life Will We Discuss?

“Some advisors just focus on investments, while others provide more comprehensive services,” Moore says. “Be sure the advisor provides the services you are looking for.”

Retirement planning is the type of service that will be kind of all-encompassing.  If a retirement plan is what you are interested in, then you will want to make sure that the advisor can handle much more than just investments.

6. How Long Have You Been a Financial Advisor?

“I know several advisors that had completely different careers and by just taking a brokerage license exam, they are now qualified to act as an advisor,” says Tracy St. John, a financial advisor with Kansas City-based Financial Avenues, LLC. “As a consumer, I would want this individual to also have some experience before hiring them.”

In addition to these questions, there are several others you should ask. Blanchett, St. John and Cynthia Petzold, a certified financial planner with CommonWealth Financial Planning LLC in Roanoke, Va., suggest asking the following:

•  What is your financial planning process?
• Can you help me with other things besides investments? taxes? estate planning?
• What are your thoughts on annuities?
• Have you had any disciplinary proceedings for misconduct?
• How do you stay current on financial planning issues?
• What is your process of keeping my data secure and confidential?
• What makes you different from the other advisors that are nearby?

The book, “Conscious Finance: Uncover Your Hidden Money Beliefs and Transform the Role of Money in Your Life,” written by Rick Kahler and Kathleen Fox, has a whole chapter dedicated to finding and working with advisors. Consulting it can provide some additional insight.

7. Can You Help Me With Retirement Planning?

“Clients need to have begun to process how much longer they want to work and what their spending will likely look like in retirement,” says Spencer Hall, managing partner of Knoxville, Tennessee-based Retirement Planning Services, LLC. “The advisor should help them address Social Security benefit timing optimization, pension election decisions, if applicable, the projection of resources over time [and any] special needs.”

Additionally, clients should understand the assumptions made in the retirement planning process, including income, inflation, expenses, retirement age and social security strategy, Moore says.

Blanchett also suggests asking the advisor to explain his or her retirement planning process and the kinds of models the advisor uses.

And be sure to address the issue of health care in retirement. Ask questions relating to health insurance, life insurance, and annuities.

St. John suggests also asking:

• What makes you qualified to specialize in retirement planning?
• Have you taken any courses or gotten specific credentials related to social security, retirement income planning or elder care planning?
• What planning areas do you cover if I hired you for pre-retirement planning?
• Once I have retired, do you have a system for helping me determine how to receive a “retirement paycheck”?  If so, can you explain your process?

8. What Will the Next Steps Be?

It is important for you to understand the process you will undergo with the advisor.

Petzold says clients should ask:

• What information do you need from me in order to get started?
• How long will it take you to develop your recommendations?
• How specific are your recommendations? Can I implement them myself?
• What happens next? What if I have questions during the process?
• How often will we meet?
• When should I contact you?

9. Do you think you would be a good advisor for me? Listen carefully to this answer and make sure it hangs well with your own goals and expectations.

What to Expect a Financial Advisor to Ask You

To feel confident and prepared for meeting with a financial advisor, it is useful to know what they will be asking you.  Ideally, you think about these questions and have answers prepared.

“We want to know a complete picture of a client’s financial resources and get a strong sense of their core values,” Hall says. “If the advisor does not have all pertinent financial information, the advisor will not have the data to do his/her best work.”

Be prepared for advisors to ask you a number of questions about, among other things, your goals, concerns, career and retirement plans, insurance, health, dependents, debt, cash flow, how active you are or want to be in your own finances, and whether your wills or other estate documents are up to date, Petzold says.

Some questions to prepare for include:

• What has led you to investigate working with a financial planner? What is the primary thing you hope to gain?
• Which areas of your financial picture are of greatest concern to you: setting goals, retirement planning, estate planning, tax planning, college/education funding, insurance needs, cash management and budgeting, investment review, or management?
• Please provide actual statements for your investments, cash value insurance policies and annuities, bank accounts, etc.
• What does your monthly budget look like?  (Current income and expenses)
• What kind of big-ticket expenses do you anticipate in the next 10 plus years?
• What are your goals in life, not just at retirement age? Do you want to travel? Volunteer? Start a business? Give to charity?
• Are you willing to make changes to your lifestyle if needed?  In what areas are you willing to compromise?
• Who is important to you?
• What are your expectations for leaving an estate?

If an advisor is not asking these questions, he or she may not be the right advisor for you and your retirement.

“Clients should expect questions about every detail of their personal financial lives,” Moore says. “They should be 100% honest about their assets [and] debts.”

Questions to Ask a Financial Planner When Reviewing Your Plan

Once you have decided to meet with an advisor, you will probably meet to give them your information, and then the advisor will present you with a plan.

“Always ask questions if you don’t understand something,” Moore says. “You should understand every part of the financial plan.”

Ask about every detail you don’t fully grasp.

• Can I achieve my goals? Why or why not?
• When can I comfortably retire?
• Why is the advisor making these recommendations?
• What are the fees associated with any investments?  (Fees can be a big cost of many investments.)
• Has the advisor factored for inflation?  (Inflation is when the costs of things go up.  It is a particularly important concept for retirement planning because your income might not increase when costs increase.)
• What kind of returns are you anticipating on my investments and why are these adequate?  How do these compare to other returns?
• Are there any insurance changes I should consider?
• What kind of monthly income can I expect in retirement?
• How will I pay for long term care if I need it?
• How will I pay for unexpected costs?
• What is my debt situation now?  Later?
• How do these recommendations impact my lifestyle now? Later?
• Do I need to make any changes myself?
• What happens next?

3 Questions to Ask at an Annual Review With an Advisor

You should expect to meet with your financial planner at regular intervals to discuss progress on your financial plan.

1. Are You Aware of All Important Changes in My Life?

Divorce, job changes, illness, births, and other important life events are critically important to share with your advisor.  These events can have a material impact on your current finances and your financial plan. During an annual review, you should give your advisors a full update on what’s been happening in your life, Moore says.

Additionally, if you have a significant purchase or income opportunity on the horizon, those are important topics to surface.
“In short, anything about their financial picture that is on their short- to intermediate-term horizon should be discussed,” Hall says.

2. How Did I Do?

Find out how your plan is performing.  Ask about what went right with the plan and definitely ask what went wrong.

Among them, you should ask the advisor to explain how your portfolio has done and how the performance compares with your advisor’s expectations, Blanchett says.

“[Clients] should be looking at the performance of their investments versus a reasonable benchmark if they have investments with the advisor,” Hall says. “If they are making a Social Security benefit election decision or pension election decision, those should be discussed in-depth.”

• Am I closer to achieving my goals? Why or why not?
• Explain how my portfolio did and how the performance compares to your expectations.
• Am I (are we) on track with our plan?
• [This new thing] has come up — what do we do?
• I would like to [move, help the grandkids with college, provide for my brother, etc.] — how do I do that?

3. What Should Change?

Ideally, your financial plan is on track, but if it is either going better or worse than anticipated, then you will likely need to make adjustments:

• Find out what needs to change in your plan.
• Do you need to rethink any of your personal goals based on your finances?
• What could you be doing to improve the likelihood of success?
• If the advisor doesn’t ask, tell him or her what’s changed and/or what you expect to be changing in your situation and goals, Chinn says.

Your future will be better off by asking these questions.

Working with a financial advisor can be a hugely rewarding experience.  The advisor can help you achieve your financial goals as well as personal desires.