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Important Things To Ask Your Financial Planner Before Signing A Contract

When you seek the services of a financial advisor, you are looking at someone who will manage your most valuable properties. However, just like most other potentially profit-making endeavors, there are a lot out there that would not meet your needs. Keep in mind that you will be transacting with someone who can make a huge impact your life in the long run. Not only is it crucial to hire someone you trust, but also someone competent enough. Here are some questions you should always ask a financial advisor before actually hiring one.

Are You a Fiduciary?

Sometimes, financial advisors do not really have your best interests at heart. Many are no different from salesmen who want to earn something at the end of the day. Of course, you do not want to end up with such. The best way to assure yourself that you are in good hands is to ask your financial advisor if he or she happens to be a fiduciary. If you do not get a straight yes or a no, this a red flag. Something might not be right.

It is advised that investors should only work with fiduciaries. If, however, you happen to end up with a broker or somebody who does not happen to be a fiduciary, be sure that you understand everything that is going on and what criteria are being considered when making decisions on where to invest your assets.

How Much Do I Get Charged?

“It’s not how much money you make but how much money you keep, how hard it works for you and how many generations you keep it for.”Robert Kiyosaki

Asking how much you get charged is another way of ascertaining if that person you hired has your best interests at heart, or if he or she is just out to make some cash at the end of the day. If you did not happen to see the information on your financial advisor’s website, be sure to ask if there is an initial planning fee.

Also, inquire if they charge a certain percentage of assets under management or if they have a certain commission if they get to sell you a certain product. Of course, you have to be aware of how much this service would cost you and how dedicated your advisor is to help you in a lot of critical life decisions.

What Credentials Do You Have?

Your financial advisor will be making some of the decisions that you could not make yourself, which is why you hired one to begin with. Of course, you want a financial advisor not only to be legitimate but also competent.

Many of the top financial advisors in the industries have strong backgrounds in finance and accounting. They have designations such as Certified Public Accountant, Certified Fund Specialist, Certified Financial Planner, Chartered Financial Consultant, Chartered Life Underwriter, Chartered Financial Analyst, Bachelor of Laws or a Juris Doctor. They also carry their insurance licenses with them all the time.

How Can You Manage My Taxes?


Taxes are not the kindest to you. Other than death, taxes are the only things that are sure to come. A competent financial advisor should know more than just recommend where you should put your money. One big benefit you can get out of them is how they could optimize your portfolio for tax purposes. Make sure to ask your advisor about how he or she will make decisions to allocate your investments considering tax implications.

Also be sure to ask your advisor about his or her approach to mutual funds. Some of these can get a high internal turnover and this could lead to unwanted capital gains taxes. When your advisor knows how to handle this, your taxes will be handled more efficiently and your annual returns can increase to as much as 1 percent, which means hundreds of thousands of dollars in a few decades.

Dealing with your assets, savings and taxes can be a very difficult job and this is why it is very important for you to know if the person who you will be transacting with will serve your interests and will actually make your life easier. Do you know any other questions that should be asked before hiring a financial advisor? Share with us your tips in the comments below.

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