Are You Getting The Highest Value from Your Financial Advisor? 3 Questions to Ask

I think you know by now that my ultimate goal is to provide you with as many resources to help you thrive financially and reach your money goals. I believe in a world where everyone has more than enough, and in the case of my Profit Boss® family, I want you to be able to live with not just enough – but abundance.

So, I have three really important questions I need you to ask.

These questions have everything to do with the fees you pay for your financial services. Very recently, dozens of financial advisors are under review for claims of overcharging their clients for mutual funds. This sort of practice adds zero value to a client’s life. And it got me thinking about how my own community could benefit from better understanding the value financial advisor fees should add to the relationship.

As a fee-only fiduciary financial advisor, I don’t earn any separate fees or commissions for selecting particular funds or products for my clients to invest in. In fact, I have absolutely no financially compensated relationship with any bank, brokerage house or financial institutions. My clients simply pay a predetermined fee for my services based on the assets my firm manages, period. With those fees come a comprehensive array of services, education, and ongoing support.

So, here are the three questions I want you to ask yourself right now to make sure you are getting the highest value for whatever fees you pay for your financial services.

Does my financial advisor earn any commissions?

Let’s start here. Does your financial advisor earn any commissions on the financial products he or she recommends? If so, you are already paying too much for too little. When a financial advisor earns commissions for the financial products he or she recommends, their advice is inherently tainted with conflicts of interest – conflicts to your best interests. Also, commission-based products tend to cost more because they typically have much higher internal expenses and management fees.

Is my financial advisor transparent about the fees he or she charges?

Financial services, just like any service, comes with a cost attached to it. As long as your financial advisor clearly discloses and explains the fees associated with the services he or she provides, that’s a good sign. Different financial professionals can specialize in different areas of finance and the types of services they provide may vary greatly. Therefore, be clear on what your financial advisor charges and how you, the client, benefits from the fees you pay.

When you work with an independent fee-only fiduciary financial advisor, you will receive a copy of what is called a Form ADV. This legal document outlines the fees financial advisors charge. Review the Form ADV and then have a conversation with your financial advisor if you have any questions relating to his or her fee schedule. Ideally, you want your financial advisor to demonstrate the value and benefit of his or her level of service.

Is my financial advisor a fee-only fiduciary financial advisor?

Lastly, ask what type of financial advisor you work with. Is he or she a fee-only fiduciary financial advisor, which means your financial advisor is only paid based on the fees he or she charges and, as a fiduciary, must make recommendations that are in your best interest? Or is your financial advisor a broker or something else entirely?

Integrity and honesty are two non-negotiable qualities you likely want your financial advisor to possess. The fee-only fiduciary model, like you find with financial professionals who hold the CFP® (CERTIFIED FINANCIAL PLANNERTM) designation, I must abide by a clear code of ethics when it comes to serving clients’ financial well-being. It makes all the sense in the world to expect as much from your financial advisor.

Understanding the value you receive for the fees you pay is good practice no matter what kind of service you enlist, including financial services. Be sure to revisit some of my recent resources: