I recently ran across an interesting brochure that was put out by the Certified Financial Planner Board of Standards (CFP Board). This is the group that grants the Certified Financial Planner (CFP) certification. In the brochure, they list ten questions that you should ask when choosing a financial planner.
Ten questions to ask your financial planner
- What experience do you have?
- What are your qualifications?
- What services do you offer?
- What is your approach to financial planning?
- Will you be the only person working with me?
- How will I pay for your services?
- How much do you typically charge?
- Could anyone besides me benefit from your recommendations?
- Have you every been publicly disciplined for any unlawful or unethical actions in your professional career?
- Can I have it in writing?
This list is a great start, as it gets at issues such as whether or not the advisor’s experience and philosophy are appropriate for your needs, as well as whether or not their fiduciary interests are in line with your own, etc.
I would, however, add at least one question to this list… As uncomfortable as it may seem, I would ask a bit about their personal financial situation. Most importantly, are they currently carrying consumer debt?
While some might view that question as out-of-bounds, or perhaps even judgmental, I’m not particularly interested in taking advice from someone who isn’t “walking the walk.” Of course, you might not get a straight answer when you ask, but you can tell a lot by how they react.
What do you think? Does this list cover all the important bases?