Boca Raton, Florida
Financial Advisor, Attorney, & 610 WIOD Business Radio Host, Keith Singer of Singer Wealth Management in Boca Raton, Florida offers these 12 important questions to ask a financial advisor before saying, "you're hired."
1. What is your experience in the financial services industry?
Find out how long the prospective advisor has been licensed. How long have they actively been assisting clients with their planning needs? Obviously, experience in the financial services industry is a good thing for any advisor to have. The more experience an advisor has, the better they are able to serve you.
2. Are you currently licensed to offer investment advice?
Intuitively, most consumers would assume that their financial advisor is licensed to sell investments or offer investment advice but that is not always the case. Many financial advisors are only licensed to sell insurance products. Because these advisors are limited in what they can offer or discuss with clients, their advice may be limited as well. It's best to get advice from an advisor who has a full set of tools at their disposal.
3. Do you routinely offer investment advice to your clients?
Some financial advisors who previously were insurance only advisors may have recently become licensed to offer investment advice. Obtaining a license to offer investment advice does not necessarily mean that the advisor is experienced in offering this advice, so ask your advisor what percentage of their practice consists of offering investment advice or managing investments. It's best to work with an advisor who not only has all of the tools but knows how to use them as well.
4. Are you currently licensed to offer insurance products to your clients?
Many investment advisors are not licensed to offer insurance products or do not routinely assist clients with this type of planning. So ask them not only if they are licensed to sell insurance products but is that a significant part of their practice.
If income guarantees or principal protection is important to you, it's best to work with an advisor who is proficient in the insurance world.
5. What is your education?
Did the advisor obtain a college degree? Is the degree related to offering financial services? It's probably best to work with an advisor who not only is intelligent but educated as well.
6. How are you compensated?
There are several ways advisors are compensated. One is by commission only. That means your advisor gets paid based on the number and size of the transactions they do for you. In this situation your advisor is supposed to recommend only products that are suitable for you. There could be many products which are suitable for you, and your advisor could be biased towards recommending the products with the highest commissions. Of course there are many commission-based advisors who are very ethical but, unfortunately, not all are.
Another way to compensate your advisor is to pay them a fee. When an advisor is managing your money for a fee, they are held to a fiduciary standard. That means they must only make recommendations based on what is in your best interest. This is obviously a more transparent way of compensating your advisor and results in fewer potential conflicts of interest.
7. Have you ever been sued or involved in a securities arbitration proceeding?
In the financial services industry there is a mandatory arbitration process for clients who have been mistreated by their advisors. If your advisor has been sued by a client, it’s a potential red flag. If former clients were awarded a judgement or the advisor has been sued numerous times, that means that they did not act properly and caused their clients harm. In this case proceed with extreme caution.
8. Have you ever declared bankruptcy?
If you are interviewing someone to help you with your finances you want to work with someone who has at least been able to manage their own finances successfully.
9. Have you ever been disciplined by FINRA or the state?
Sometimes advisors break rules or act improperly. In those cases they could be disciplined by FINRA or the state. These disciplines include suspensions, fines, and revocation of their license. Obviously it is prudent to avoid advisors with extensive disciplinary histories.
10. Do you have any specialties in your practice?
Many advisors develop a specialty where they gain an extra level of expertise related to that specialty. For example, some advisors work mainly with people who are still working and are in the accumulation phase. Some advisors specialize in working with people in or near retirement. Others may focus on high net worth families. Each of these groups may have their own unique issues. It's probably a good idea to work with an advisor who has expertise with the areas of planning that most concern you.
11. Do you have any advanced designations related to financial services?
The main advanced designation for financial planners is called the CFP(Tm). Less than 10% of financial advisors have this designation. Advisors proficient in insurance planning have the CLU. Another common designation is called ChFC. Finally, JD (law degree) and CPA are other designations which are difficult to obtain and may assist an advisor in their practice. An advisor who has the ability and the commitment to obtain these designations may be able to provide a higher level of advice.
12. What other financial organizations are you affiliated with?
Who is the advisor employed by? Does this employment create any potential conflicts? For instance, if an advisor works for a company that also offers products, is there a potential conflict in their advice? Is the advisor a representative of a broker dealer or registered investment advisory firm? The more independence your advisor has, the less likely any potential conflicts exist.
About Keith Singer
To interview Keith Singer contact national publicist Tandaleya Wilder at SheGotGameMedia (305) 520-9703.