Broker Check

5 Questions to Ask Yourself When Looking for a Financial Advisor

March 23, 2023

So you’re looking for a financial advisor. You’ve got specific financial objectives in mind, with the end goal being your family’s financial independence long into the future. But where do you start?

questions to ask your advisor

You can look in directories, use search engines, and ask friends and family for personal recommendations. But even when you’ve narrowed your options down, it can be difficult to know what’s right for you. Do you know what the different financial advisor credentials mean, for example? And how do you know your financial advisor will be trustworthy and truly looking out for your best interests?

Putting your family’s wealth and financial well-being into the hands of a professional is an important decision, so it’s worth making sure you know exactly what you’re looking for. As established financial advisors in Dallas, we’ve put together five questions to ask yourself:

Why Do I Need a Financial Advisor?

No, this isn’t a trick question. While many people seek the services of financial advisors to create a comprehensive financial plan to protect and grow their wealth, it may be that you have a specific need in mind. It could belegacy planning,tax planning or even specific support foryour small business. Understanding exactly what you want from a financial advisor relationship from the start means you can make sure that they have the correct skills and specialities to deliver what you need.

Maybe you just need help prioritizing financial options or understanding how to make smart financial decisions  - guidance for things like growing your retirement savings, paying off debt or understanding your insurance options. But your financial roadmap is likely to include significant future events that may require specialized advice.

What Credentials Does My Financial Advisor Need?

To ensure you choose an experienced and knowledgeable financial advisor, look for professional designations like CFP®, CFA, CDFA® or CIMA. 

The following are just a few credentials a financial advisor can seek, each indicating a different specialty or skill set. If you’re looking for a specific area of expertise, as we’ve already mentioned, make sure your financial advisor has the right credentials.

Certified Financial Planner (CFP)®

Not only do advisors with the CFP® designation have to pass a rigorous certification exam on various aspects of financial planning, from taxes and insurance to retirement planning and estate planning, they’ll also have undertaken compulsory work experience.  

Chartered Financial Analyst (CFA)®

Achieving CFA® certification comes with three exams and at least three years of qualifying work.  CFA® 's are less involved in general financial planning and more focused on stock analysis and investments.

Certified Investment Management Analyst (CIMA)

The CIMA designation indicates individuals who achieve high levels of investment expertise, with a minimum of three years of professional experience and ongoing recertification.

Certified Divorce Financial Analyst (CDFA)

A CDFA, as the name suggests, gives in-depth support to divorcing couples and their attorneys at what is usually a stressful time.  They’re required to have extensive knowledge of and experience in factors like asset distribution and tax planning, and must pass a specialist exam to become certified.

Should My Financial Advisor be a Fiduciary?

You 100% want to make sure your financial advisor is a fiduciary, as it means they’re bound both legally and ethically to act in their client’s best interests. Fiduciaries’ two main duties are a duty of care (making good faith decisions based on all the information available before making financial recommendations) and a duty of loyalty (not putting anything else, such as their own or financial products’ interests, above their clients’ best interests).

Ultimately, working with fiduciaries means all of their support will be transparent, honest and committed to serving your unique needs and goals.

How Will I Know My Financial Advisor Will Meet My Needs?

You want to make sure that your financial planner is taking the time to understand you and your goals. It’s not that easy to determine whether an advisor is going to do that until you start working together, but consider how the initial contact goes. What questions do they ask you? A financial advisor who asks things like what your goals are, what you expect from the relationship and what you need from them is an advisor who wants to identify exactly who you are and what they need to do to meet your needs.

At BFS Advisory Group, we believe that every aspect of your financial journey is as individual as you are. Whether you’re just starting out and looking to grow your wealth or preparing to pass along your legacy, whatever we recommend will match your individual goals in order to help you achieve exactly what you want with your wealth.

How Much Will It Cost Me to Work with a Financial Advisor?

Advisors generally charge in two ways. One way is to charge an hourly or flat fee for financial planning services. Hourly fees are typically lower than $500 per hour, and flat fees are generally $2-10,000 per year or per plan. These fees are determined by both your needs and your planner's expertise and experience, and can be significantly higher for complex plan design or large asset bases. 

The second way is to charge a fee on the total assets under management (commonly referred to as "AUM") that your advisor manages for you. A common annual fee for portfolios up to $1M is 1%. Most advisors will lower this fee as your household investments cross certain thresholds. 

You may need financial planning services, or investment management services, or both. Many advisors bundle the services together once a client meets a certain minimum fee. The bottom line is that your advisor should clearly articulate her fee schedule and the services she provides for those fees before you start working with her.

We’re a team of financial advisors in Dallas with five core values: integrity, empathy, future focus, independence and authenticity, and we’re ready and waiting to put your wealth to work.Contact us today to start the conversation.