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What to ask your Financial Consultant - Understanding Investments, Financial Firms, & Plans

Posted by Shanna Tingom, AAMS® on Oct 5, 2017 5:51:00 AM

If you’re ready to meet with a financial advisor but you’re not sure where to start, you’re in the right place.

At Heritage Financial Strategies, we understand a one-size approach doesn’t work when it comes to investing which is why we encourage our clients and prospective clients to ask the financial consultant many questions.

At your first appointment, we will discuss our firm and the results of the online ris assessment that we sent you prior to our meeting. That will help us get to know you and help you get to know us so that we recommend a strategy that works for you, your spouse, and your desired level of risk.

Choosing a Financial Consultant (Financial Advisor)

Just as not all financial plans are alike, neither are financial firms. Before selecting a financial advisor, do your research and don’t be afraid to ask questions. If they’re not willing or don’t know how to answer your questions, they may not be the right fit for you. Keep in mind that financial firms are not all the same.

  • Banks may offer investment services but they are not a traditional investment firm. They’re really in business to offer banking products like checking and savings accounts, mortgages, other loans, and a limited number of investment options. Even though you may purchase investments from a bank, no investments are FDIC insured; they’re covered under the Financial Industry Regulation Authority (FINRA).
  • Investment firms, while focused solely on investing and highly regulated by FINRA, they are often limited in which products they can offer clients.
  • Independent advisors like Heritage Financial Strategies, are small financial firms with oversight companies where investments are placed. They are FINRA regulated, have flexibility of how to market and manage their business, and freedom to choose from a wide variety of investment products.

Types of Investment Products

Over the years I’ve had clients approach me with ideas of stocks or funds in which they’d like to invest. My first question is almost always, “Why do you want to make this investment?” Just because your college buddy wants you to do it isn’t a good enough reason. It has to make sense for your portfolio.

A portfolio can be made up of a variety of investment products including, but not limited to, stocks, bonds, mutual funds, and/or annuities.

If you’re thinking about investing in one of these or other products, I encourage to ask your financial consultant questions like:

  • Is the investment from a captive company?
  • What are the payout terms?
  • What does the company do with profits?
  • What is the commission and how is it paid?

Communicating with Your Financial Consultant

It might sound strange to say that you need to ask your financial advisor if you can ask questions but it’s probably one of the most important! If they aren’t willing to answer questions like what their investment philosophy is or why they became an advisor, you may want to avoid them. You have to be able to communicate with them!

Questions to ask your financial professional include:

  • How do you get paid?
  • How much does it cost to work with you?
  • What is your education and training?
  • How often will we meet to discuss my portfolio?
  • What happens to my account if something happens to you?

In addition, you’ve got to be willing to share your current financial status including how much you’ve saved for retirement, your accurate amount of debt, and your estate plan. Read more in my article 10 Things to Tell Your Financial Professional.

Financial advisors, financial firms, and our clients are not all the same. There is no one-stop shop so it’s important to ask questions and understand your investment portfolio.

If you’re interested in learning more, contact Heritage Financial Strategies at 480-397-1184.

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