Choosing a wealth advisor is an important life decision and should be treated as such. There are certain things one should know when making that decision in order to receive the best advisor. Coming prepared with a list of questions will help mitigate the process and give one a clear understanding of how a particular wealth advisor operates. Below are a list of basic questions to ask in order to learn more about an advisor’s experience, how the overall experience will be, and how assets are handled.
If need be, how fast will I be able to gain access to my money?
Knowing how fast you will have access to your money may not be on the top of your mind while starting to invest, but it will be when you actually need it in an emergency. Ask this question solely to know how long you will have to wait in an emergency situation. Having this knowledge ahead of time may influence how you allocate funds.
How are you compensated?
Gain an understanding for how your wealth advisor is compensated. The old way of compensation was per transaction. This model gave life to unnecessary trades in order to make additional money. Most firms now compensate advisors using annual fees of around 1% of assets. This gives your advisor more incentive to make trades in your best interest rather than for the sake of making a trade.
What safeguards are in place to protect my assets?
Overall, this question is in place to understand how the business works. Will you be protected from fraud or negligence? Additionally, gaining knowledge on their reaction to 2008’s recession will give you a glimpse of how they will handle your money in a downturn.
What is your experience?
Do not be afraid to ask for credentials. Be sure to know what certifications, additional trainings, and insurances they have. On top of that, gain an understanding of what kind of investing they have done before and learn where they have had successes and failures. The more information you gather about their past will give you a look into what decisions they will make when it is your money.
What does your ideal client look like?
This is not a make or break question, but rather a glimpse into what makes a particular advisor tick. What kind of investments in ordinarily excite them? Gaining a better understanding of what kind of portfolio they like to work for can provide you with the tools to make a decision if you both will be a mutual fit. The more aligned you both are, the happier you will be.
Vetting a wealth advisor is an important part of the process. You want to make sure you are well informed to make a sound decision. It is better to take longer to find an advisor than to rush into something and find yourself with unanswered questions and mismatched ideals.