10 Questions To Ask A Financial Planner

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In my previous article I highlighted seven possible signs to look for that might indicate you may need a financial planner.
After recognizing that working with a planner is a very good idea and a worthwhile investment, the next logical step is to find the right professional. This can be done in various ways, asking at your bank, getting a referral from a friend or family member, or searching the Internet. Regardless of how you will find a possible financial planner, you will have to sit down with the individual to evaluate if he or she is the right individual for your planning needs. After all, you need to know who you are entrusting your money to, with the hopes of seeing positive returns on your investments.
Below are 10 questions to ask a financial planner before allowing the individual to invest your money.

1.    What are your qualifications?
Quebec is the only province in Canada where financial planners must be accredited. As a result, you have the right to ask if the individual has a certificate issued by the Autorité des marchés financiers (AMF).  Planners will have the abbreviation, “F.PI” on their business cards to indicate that they are qualified.

2.    What services do you offer?
Selecting the right planner to work with will depend upon your needs and wants. With this in mind, you should ask the individual what type of services he or she provides. For example, if your preoccupation is having a sufficient amount of money after age 65, you should be learning about what services are offered for retirement planning.

3.    What’s your approach to financial planning?
Since you are going to entrust someone with a sum of money, you should know about the planner’s approach to saving and investing.   Although you will have the final say on where and how much money is going to be invested, it is a good idea to know if the planner believes in taking an aggressive or conservative route in order to grow their clients’ money and via which products.

4.    What experience do you have and with whom?
In a perfect world, you would like to have a financial planner with decades of experience; unfortunately, this is not always the case.   When talking to the potential planner, you should discover how long the individual has been working in the financial services and planning sector. In addition, you may want to ask about the planner’s experience working with investors such as yourself and the amount of funds that you are prepared to invest.

5.    Will you be the only person working with me?
Depending on what your specific needs are in terms of financial planning and investing, you should ask the planner who else will be working to help grow your money. If you decide to work with a bank or a large financial services consultancy firm, there is a chance that the planner you’ll be talking to is just one member of a team that will be managing your investments. It is best to obtain the names of two other members of the team in case you are unable to reach the lead financial planner. If you select to use a planner that works alone, you may want to find out about the products he or she is offering and from which financial institution and company.

6.    How will I pay for your services?
Working with a financial planner is not free. Planners should be forthcoming with an answer regarding how they will be compensated for their services. There are three possible options that they could choose from. 1) From the cost of the product (management fee paid by the bank or mutual funds), 2) Percentage of assets under management (management fee paid by the bank or mutual funds), and 3) Fee-for-service (fee paid by you, the client).

7.    How much do you charge?
Before getting into the details about how much money you wish to invest, inquire about the financial planner’s fees. During the discussion,  the financial planner should be able to provide you with an estimate of possible costs based on the work to be done. If you select to work with an independent planner, he or she can charge you by hourly rates or flat fees or a commission on products that are being recommended.

8.    Do you have a record of past performances?
A great way to evaluate a financial planner is by performances of their clients’ portfolios. Although the planner will not show you their clients’ statements, they should be able to provide you with an idea of the type of investments that they have been recommended to clients and some of the performance indicators that are simple to understand.

9.    How can I regularly track the performance of my investments?
It is essential for you to know how your investments are performing at any given time. As a result, it is important to ask the planner how you can access current and or past portfolio reports. Can they be available via the web or do you have make a request in writing to have documents mailed to you?

10. Do you have a follow-up schedule? If so, when will you do so?
One of the most common criticisms that financial planners hear is that they do not do follow-ups with clients once an initial investment is made. Be sure to discover if your potential planner do follow-up meetings to give you a personal performance update. If he or she does, ask about the frequency of meetings. In the event that the planner does not do follow-ups, be sure to know how to contact the individual either by phone or email.