5 questions to ask during your first financial planning meeting
Once you have made your first appointment with your financial planner, some of the hard work is done. You’ve found the right planner for your needs and budget, researched your financial planner, and gathered all the things you’ll need to bring for your first date.
There are some things you should know about everything financial planner that you are considering in advance to make an appointment. Make sure the person you are considering is a paid financial planner, or someone who is only compensated by the amount you pay, and not by commissions on the products they sell. Also make sure that the planner is a trustee – someone who should have your best interests and results in mind when making choices and recommendations for you.
Once you’ve made an appointment, you might already have a list of specific things you want to know. But, there are a few basic questions you should ask on your first date to get the most out of your new financial planning relationship.
1. How much do you charge and what will the total cost be?
It is essential to be clear about all the costs and charges associated with financial planning. Get an idea exactly how much the planner you are considering charges for each service they offer, and what you should expect to get in return.
For anyone hiring someone to manage the investments, financial planner Malik S. Lee wants its customers to take this issue a step further. “When people ask about costs, they usually think in terms of the fees that a planner bills them directly as a customer. But that only scratches the surface,” he writes for Insider.
Often times, the accounts and funds that planners invest your money in also have costs. These costs could include trading fees and expense ratios. Find out about the fees on the accounts, and of course, the management fees that the financial planner will charge. Management fees alone are generally 1% to 2% of the value of your portfolio, reports Insider’s Tanza Loudenback.
Have the financial planner add up all of these costs so that you are well informed and better able to compare their costs to those of other planners you are considering.
2. How many clients do you have?
Having a lot of customers who already trust them might seem like a good thing, but it can cause problems for your experience.
Zoe Financial CEO Andres Garcia-Amaya surveyed more than 1,300 financial planners looking for financial planners to hire to join the company. He found that this question often revealed not only how much free time they had to offer, but also how attentive their service was.
“A lot of banks have advisers who have 600 or 1000 clients for each advisor”, Garcia-Amaya previously told Insider. “Most likely, this person is an amazing salesperson, but as soon as he wins [your business,] you will never see them. “
3. What are your backup or succession plans?
Lee writes that one question his clients do not ask enough at their first meeting, this is what happens if their senior planner retires, dies, or otherwise leaves the company. This is something that, as a financial planner himself, he deems essential for clients to know.
“Ask about your advisor’s business continuity plan, including their business backup locations (for events such as natural disasters and pandemics), data backup plans (for loss or breaches of data) and succession plans that specify who the key contact person will be if your senior advisor is unable to serve you, ”Lee writes.
Knowing these things ahead of time can help relieve stress if they are ever needed. It will also help you ensure that the planner you are working with is forward thinking and responsible for their own planning.
4. Who is your typical customer?
This question is meant to reveal something important about your financial planner – who they are most comfortable working with. Their response will give you an idea not only of how they will work with you, but also if they have the strengths and experience tailored to your needs.
For example, a financial planner who works primarily with retirees might not be a perfect fit for someone who needs help with a student loan. Asking this question will give you an idea of who they are most comfortable working with and whether you are a good match for their skills.
5. What are our next steps?
Towards the end of your first date, start making a game plan for your next steps. Maybe you’ve got all of your questions answered, have a clear path ahead, and just want some help with following your goals and staying accountable. Or, you may have other questions that you haven’t even answered. Wherever you are at the end of the first date, plan how you want the relationship to go.
You can request another appointment to set a deadline. You can also decide on a check-in routine with your financial planner and ask them how best to reach them if you have further questions. Decide what works best for you and how it works for your planner as well.
Make a specific, concrete plan – set dates for follow-up and write down the tasks the planner gives you in writing. This will help you get the most out of the money you spent on your first financial planning date.