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What Questions Should You Ask Your Financial Planner?

By Matthew Frankel, CFP® - Jun 26, 2021 at 8:31AM

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If you're thinking of hiring a professional, here are some of the right questions to ask.

A financial planner can help manage your investment strategy, create a budget, and assist in several other areas of your financial well-being. But it's important to know what you're getting into. In this Fool Live video clip, recorded on June 16, certified financial planner Robert Brokamp discusses some things you should ask your financial planner before you get started.

Robert Brokamp: I have a question from Foofoofoolin. "I'm planning on meeting with the CFP in the next couple of weeks to discuss future retirement three years from now, what kind of questions should I ask?" First of all, I have to promote the upcoming episode to Motley Fool Answers. Now, the one that was published yesterday featured Matt Frankel. Matt and I talked about how to pick a discount broker as well as how to pick a robo-advisor. If you are looking for someone to just manage your portfolio, low-touch, low-cost. Next week's episode, which will be published next Tuesday will feature one of our financial planners for Motley Fool Wealth Management, and we're going to talk about how to pick more high-touch financial planner. I just want to promote that. Just to give you a brief answer now though, Foofoofooling, the No. 1 thing to do before you go in is to figure out what is it you want. Do you just want someone to give you a onetime second opinion on everything you're doing? In that case, you want to look for someone who charges by the hour or by the project.

Or do you want someone to manage your investments? In that case, you are going to be paying an asset under management fee. Average is around 1%. I know we have another question about that later that I'll probably talk to, or do you want everything, someone to manage your investments and do the financial planning, your retirement planning, college planning, all of those types of things. The most important thing for you to do is figure out what you want. Then ask No. 1, how are you going to get paid, because you want to understand whether they are fee-only, which means you charge somewhat the same fee regardless of what advice they give or are they getting paid by commission, in which case, you might wonder whether they are suggesting things that are better for you or for them. You want to make sure that they can provide the services that you are looking for. I think it's also important to ask whether they work with people like you.

If you're a business owner, you want to find a financial planner who has experience with business owners. Some people specialize in young professionals, some people specialize in people who are on the verge of retirement like you are, Foofoofooling. That's another question to ask. I would also ask about how long you've been in the business, and for your designations. Now you say this person is a CFP? That's a good sign. They had to take several classes, they had to pass a somewhat rigorous exam, and they have to have a certain number of years of experience in the market. There are a lot of other designations that are not so rigorous so I would ask about that as well.

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