5 Questions to Ask When Searching for a Financial Planner

J Wade Lopez

J. Wade Lopez, CFP®, MSFS Abingdon, Virginia. August 31st, 2022

If you’re considering or actively looking for financial planning advice, or have a financial advisor you’re not enthusiastic about, here are the relevant questions you need to ask when interviewing a new advisor.

These are not the customary questions people on podcasts and websites tell you to ask. Those questions include: What services do you provide? What is your investment philosophy? How do you get paid? And what are your qualifications, designations, and credentials? Those are fundamental questions, but they’re not critical if you’re genuinely looking for a long-term relationship and not just kicking the tires.

Did you know that the average age of a financial planner is around 58, according to industry statistics? That may be alarming if you believe it’s essential for your financial planner to outlast you. Your advisor’s age is very relevant to what I like to call a firm’s strategic health. Strategic health refers to the business and its staying power. Your advisor’s age is germane because this profession has a tremendous failure rate. Thus, it’s important to know whether the firm and the team supporting the advisor will be just as efficient if the advisor gets ill or dies.

Some in my profession will disagree with me because planners won’t admit that how they operate their business is as important as their professional competency. I have known many competent financial planners who are no longer in the industry that would have blown through the questions above with flying colors.

Instead, here are my five different questions (really three with two quick follow-ups) that will help you decide if the person you’re interviewing truly has what it takes to last. The questions will tell you if they have that entrepreneurial spirit necessary to run a business and the wherewithal to make the hard decisions that truly benefit their clients, their team, and themselves for the next ten years.

Question #1: Do you have a client-service process? A well-thought-out client-service process will allow the planner and his or her team of professionals to spend their time and energies focused on critical issues. It enables them to run their business rather than the business running them.

Question #2: Is the client-service process the same for everyone? Most advisors fail in their attempt to be all things to all clients, no matter the client’s size, needs, or justification. They think treating everyone the same is the golden rule. Unfortunately, it is not. Every client has their own unique set of circumstances and complexities that deserve the appropriate attention and target approach.

For example, small-net-worth clients often do not have the complexities, challenges, or estate issues that high-net-worth clients have. The high-net-worth client will almost always require more labor and will pay more for those services.

Question #3: Do you have a succession plan? It’s a simple question and it should have a straightforward yes or no response.

Question #4: If the answer to the previous question is yes, your next question is, “Can you elaborate and explain how it would work in the perfect world”?

At that point, sit back and listen. Anyone with a succession plan will be able to spell out precisely what would happen. Some planners will even introduce you to the existing team members and or equity partners that will be personally handling your relationship in the event of their untimely demise or illness.

If the answer is no, then they have highlighted their lack of business planning and weak understanding of the critical value that comes from ensuring the business’s continuity.

Question #5: Since I am showing you mine, will you show me yours? In other words, you want to know that they eat their own cooking.

Let’s first clarify that confidentiality is a given for both you and the advisor. You will be expected to share personal financial information at some point, and it will likely be uncomfortable. You are doing this so that the planner/team you hire can discover your needs and design an effective plan to meet those needs by deploying tactics that address them according to priority and desire.

The advisor’s reply should sound like, “Mr. or Mrs. Prospect, I can assure you that I follow my own financial planning process. I am more than willing to show you my financial plan and demonstrate how it is collaborative, defined, and simple to use so you too can easily track your progress and chart your successes”.

So, when a financial planner says they’re looking for a long-term relationship, make them prove they truly understand what you expect that commitment to look like from your side of the table.

Read More By J. Wade Lopez, CFP®, MSFS

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Investment advisory services are offered through Concord Wealth Partners, an SEC Registered Investment Advisor.

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