Let Me Clarify
It’s Your Money, Not Your Advisor’s

My last post was about the important questions and overall responsibility of your advisor to gather the right information, but let’s be honest, there are a lot of questions that you should be asking, too!

Let me clarify.

One of my pet peeves is hearing someone say that they never pay attention to their finances. For those who have an advisor, sometimes people haven’t met with them in a number of years. Or if you’re new to working with an advisor, they haven’t even been to the office after beginning to work together. I certainly understand that not everyone gets as excited as I do about financial planning, but at the end of the day it’s YOUR money; not your advisor’s.

Of course, there are some people out there that are as much a financial expert as I am a mechanic (disclaimer: not at all!) and there’s nothing wrong with that. But, just like making sure you understand what your mechanic is fixing and that you’re not getting ripped off, there are at least a few specific questions that you should be asking before you begin working with an advisor. And if you already have a relationship with one, now is the time to ask!

Are they a fiduciary? If you’ve been paying attention, this has become a huge topic in our industry. And in my humble opinion, for a good reason. Did you know that without being a fiduciary, your advisor simply needs to provide recommendations that are “suitable” to your situation? As a fiduciary, on the other hand, we are required to gather all necessary information so that we can provide you with the very best recommendations and alternatives.

How does your advisor get paid? Financial planning has come a long way, so if you aren’t fully aware of how your advisor gets paid, now is a great time to ask. Common forms of compensation are commission-based, fee-based, or fee-only. These directly impact the type of relationship you have with an advisor and should help you determine if there could be any conflicts of interest for selling products versus acting in your better interest.

What services will you be offering? The main thing you’ll want to find out from this question is if the person you’re working with will only be focusing on investments or if they will be helping you with all of the other areas of financial planning. You may want to dive even further to determine if he or she will be providing you with written financial plans, cash flow statements, retirement reports, etc. to better decide if the services cover what you are looking for; and if the price is justified.

What certifications or designations do they hold? To be honest, I find this to be an interesting question, depending on the responses that you get. On one hand, you want to find out what areas your advisor specializes in and if there are certain standards that he or she must hold themselves to (like the fiduciary responsibility of being a CFP®). On the other hand, it’s not uncommon to find an advisor that has alphabet soup after their name. Even tougher will be finding out if the designations that they have are truly beneficial to the level of service they provide. Most important will be working with someone who is required to continually educate themselves and hold themselves to a higher standard.

Obviously, when deciding to work with professionals across just about any field, you want to be sure that you are on the same page with each other’s roles and that you can trust them. Hopefully these few questions can at least get you headed in the right direction when it comes to your financial planner.

As we embark on this clarifying journey together, I encourage you to submit any ideas, topics, or questions to info@clarifywealth.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual. “Let Me Clarify” is a weekly blog containing Chad Baxter’s insights and thoughts about a variety of topics. To learn more about Chad, click here


This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation. Clarify Wealth Management and LPL Financial do not provide legal advice or services. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.