Working with a financial advisor is a big (and exciting) step. Every financial advisor has different specialties and interests, so before you select a financial partner, here are 5 questions you should ask.
The word fiduciary is thrown around so much in the financial industry that it can seem like a buzzword, but it’s not. It’s critical to determine how the person you’re working with operates and will be compensated.
A fiduciary is legally obligated to put the client/beneficiary’s needs ahead of their own. They go out of their way to disclose conflicts of interest and are legally required to disclose any fees related to their services.
Not all financial advisors are held to this standard, meaning they can recommend unnecessary products or services to receive a commission or another form of payment.
Every advisor must meet a certain standard of conduct: suitability or fiduciary. The suitability standard means an advisor must make investment recommendations suitable for a client’s age, income, risk tolerance, financial goals, and other needs. The fiduciary standard has higher expectations and requires an advisor to place the client’s interests and needs ahead of their own, no matter what.
As you ‘shop’ for potential financial advisors, we recommend looking for independent businesses. Independent advisors generally offer a more holistic approach to money management and form close relationships with their clients.
If your potential financial advisor is a fiduciary, you’ll need to ask some follow-up questions:
This may not seem like the most critical question, but how an advisor gets paid can affect their financial decision. Advisors use various fee structures: fee-only, fee-based, and commission-based.
We recommend working with a fee-only advisor to receive the most unbiased and objective financial advice to avoid potential downfalls.
Finance can be broad—your needs change and develop further as you age. Beyond age, there are numerous circumstances, like selling a business or building equity, that an advisor can help with.
Working with a financial advisor specializing in your interest will ensure you receive the best service possible. At Toberman Becker Wealth, we support our clients through every step of the financial journey, but we specifically focus on business owners, retirement planning, and proactive tax and estate planning.
Credentials distinguish the leaders in the industry, so you can be sure you’re in the right hands. Let’s break a few of those down quickly:
Investment knowledge isn’t the only marker of a strong financial advisor but is a critical area to evaluate.
Ensuring that you and your advisor are aligned on core values, and philosophy can help build trust and provide more confidence in the long-term plan you build together.
Toberman Becker Wealth was founded on a comprehensive, holistic approach to investing. A comprehensive investment strategy focuses on long-term investing and prioritizing time in the market, not timing the market. We will assess your risk tolerance, risk capacity, time horizon, asset allocation, asset location, and goals before making any recommendations.
Tax planning is also essential to a robust investment strategy. Interweaving ongoing tax planning into your investment strategy will optimize how you use your money.
The relationship between an advisor and their client is built on trust and communication, so it’s essential to understand how your potential advisor operates. Inquire about their process for onboarding, ongoing management, portfolio reviews, and updates.
Set communication expectations and know who your day-to-day contact will be. By having a primary point of contact, you’ll be able to form a strong relationship with your advisor. You’ll want to know what their preferred method of contact is and what their communication style is like. For example, if you want to email your advisor, you should be able to do that without waiting a month for a response.
You can also ask your potential advisor more questions about their financial planning process, how they create written plans if they are comfortable working virtually, how they handle change, and more. Don’t be afraid to ask questions of high value to you!
Finding the right financial advisor based here in St. Louis may take some time. You could ask your advisor hundreds of questions, so write down the ones that mean the most to you. Learn more about our philosophy and services at Toberman Becker Wealth.
Craig Toberman is a Partner at Toberman Becker Wealth – a fee-only, fiduciary financial advisor based in St. Louis. He assists families and businesses with strategic financial planning and long-term wealth management. He has over a decade of experience in financial services and has crafted custom financial plans for hundreds of families and businesses.