Advisor's Perspective

Choosing a Financial Advisor: Key Questions
to Ask

We help acheive what matters most to you.

When it comes to managing your finances, finding the right advisor can make all the difference. With the myriad of options available, it’s crucial to navigate this decision wisely. To ensure you’re making an informed choice, here are some essential questions to consider when evaluating a potential financial advisor.

1. How much am I paying for advice?

Transparency is key. A reputable financial advisor should be forthright about their fees, detailing exactly how they get compensated for their services. Whether it’s a flat fee, an hourly rate, or a percentage of assets managed, understanding the cost structure ensures that you’re comfortable with the financial arrangement.

2. Is my advisor a broker, insurance agent, or both?

It’s important to clarify the role your advisor plays. Brokers and insurance agents might have inherent conflicts of interest, as they can earn commissions from selling financial products. On the other hand, a fee-only advisor is compensated solely by the fees you pay, reducing the likelihood of biased recommendations.

3. What are the explicit and hidden fees in my advisory relationship?

Beyond the primary fees, inquire about any potential hidden costs. Some advisors may have associated charges for transactions, account maintenance, or other services. Understanding the full scope of expenses can prevent unwelcome surprises down the road.

4. Are my advisor’s product recommendations based on a commission?

This question gets to the heart of potential conflicts of interest. Advisors who earn commissions on products they recommend might not have your best interests at the forefront. Seek out advisors who follow a fiduciary duty, meaning they’re legally bound to act in your best interest, helping you avoid products that could benefit them more than you.

5. Am I going to be sold an insurance policy or annuity?

Insurance policies and annuities can be complex financial products with varying degrees of suitability. Some advisors may push these products due to their commission structure, even if they don’t align with your financial goals. A good advisor should thoroughly explain any recommended products, ensuring they meet your needs rather than their sales targets.

CONCLUSION

In conclusion, choosing a financial advisor is a significant decision that can shape your financial future. By asking these pertinent questions, you empower yourself to make an educated choice that aligns with your goals and values. A transparent, fee-only advisor who places your interests above all else can provide the unbiased guidance you need to achieve your financial aspirations. Remember, it’s not just about finding an advisor, but finding the right advisor for you.
Kevin Byrne, CFP®, MS is the owner of Byrne & Company Wealth Management, LLC (BCWM) and is a Registered Investment Advisor in Washington State.  BCWM is a Fee-Only financial advisor and a member of NAPFA.  www.byrneandcowealth.com.

Contact us today for an introductory meeting and let us help you steward your finances well.

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