When it comes to finding the right financial planner, knowing the right questions to ask can save a lot of time and money. It's also a decision that can affect your life for years to come. We asked Aaron Webb, attorney at Hall Booth Smith and CEO of his own company, Senior Life Planner, for some advice on how to make an informed decision.
Interview at least three financial planners or advisors and let them present their expertise. Ask them all the same questions and track their responses so you have a fair way to compare them. Most times, professionals in the financial planning space will tend to have a niche, or area of expertise, but that's not always made clear. Sometimes you have to ask specific questions.
Seek references and reviews
Financial planners have to be good sales people to sell you on what it is they can provide. Talk to a current customer to make sure that what they promise matches what they can do in real life. When you make a financial relationship like this, it's just as important as with a doctor or lawyer. You want to do your homework before you enter the relationship, and one of the best ways to do that is with existing customers.
You can also check with the Better Business Bureau for complaints and ratings. When someone is unhappy with their financial planner, it's typically a serious situation. For the most part, a good financial planner will work hard to resolve differences before a complaint gets filed. So if you have someone with complaints, even if they resolve those issues later, that should be a warning flag.
Ask explicitly how fees work
When you go to a financial planner, they make money off the money you give them to invest. They're either going to take a percentage of the money you give them to invest on a quarterly basis, or they are going to receive compensation from the financial investment company. Everybody does it slightly differently. Either you're going to pay out of pocket, or they're going to be paid as your investments perform. For me, I think it's better not to pay out of pocket, but to let the performance pay. They're incentivized to work better. But it's an individual choice. The last thing you want to do is pay out of pocket, then have them come back and ask for more money later. This helps make sure there are no surprises down the road.
Get clear on communication styles
Some financial planners just want you to fill out a form. You fill out a questionnaire and they just send you electronic information to keep you updated on how your money is performing. But some people prefer to have a face-to-face conversation. So that's important. Some of your best financial planners may not be local -- they may be in another city or state. But if in-person conversation is something you need in this relationship, you don't want to hire the person in another city or state.
Let the internet help
Use the internet to search words and phrases like "best financial planner in Chattanooga for seniors." These days, an internet search can reveal a lot more in a quicker timeframe than you can find in other searches. It's part of the new best practice. Simply do a search and see what pops up -- you can see both complaints and praises. It's a fast, easy way to do a little homework that typically covers about 60% of the search process for you.
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