Different groups of people have different financial needs. Business owners need assets that are more liquid and products to lower their liability. High earners need tax-minimization strategies. In the same way, women need specific products and services that fit their circumstances and goals.
While women are more likely to be the financial decision-makers in their families, they tend to have lower financial confidence across the board, particularly in the areas of investing and financial education. A Women and Wealth Initiative study found that 56% of women increase their confidence by working with a financial advisor. (1) With so much at stake, choosing a financial advisor is not a decision to take lightly. The financial advisor you choose to handle your family’s wealth will have a significant impact on your investment strategy, the fees you pay, and your confidence in your financial future.
When embarking on your advisor search, ask potential candidates these 10 questions:
1. How Much Experience Do You Have?
Experience is essential when you’re working with a professional of any kind, especially someone handling your finances. Don’t be shy about asking an advisor about their industry experience. It will give you peace of mind to know what market conditions they’ve experienced and how many years they’ve been working in the industry.
Currently, 73% of women say they are unhappy with the financial services industry because advisors do not attempt to understand them and their needs. (2) No matter how much experience an advisor has, if they don’t have a track record of working with women, they might not be best suited to help you. Search for an advisor who wants to do more than just manage your investments, but who will listen to you, take the time to understand your goals and priorities, and educate you on essential financial concepts without using jargon or sales techniques.
2. Do You Hold Any Credentials?
Credentials and education play a critical role in your advisor’s competence. There are hundreds of designations in the financial services field and some are more applicable to your needs than others. (3) Some of the most important and useful designations include Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), Certified Public Accountant (CPA), and Masters in Business Administration (MBA).
3. What Financial Planning Services Do You Offer?
Not all financial advisors can provide comprehensive financial planning. Be sure to ask a financial advisor what services they provide and whether or not they have a specialty. For example, if you have children and know that you will need help with college and financial aid planning, find an advisor who specializes in that. Or, if you are curious about socially responsible investing, don’t choose an advisor who has little experience or knowledge in that arena.
4. What is Your Planning Philosophy?
It’s important to work with an advisor who shares a similar planning and investing philosophy as you. Multiple studies show that women take less risk with their money. (4) They seek stability over chasing returns and tend to stay the course when the markets go wild. Their goal isn’t to accumulate wealth as much as it is to achieve financial peace of mind. (5) Talk with an advisor about how he or she guides clients’ investing and financial decisions so you can have confidence that your needs and investment personality align with their philosophy.
5. Do You Have Many Clients Like Me?
Some financial advisors specialize in serving a specific demographic or level of investable assets, so you’ll want to find this out before choosing an advisor. Women approach money differently than men, and women in different circumstances have different financial needs. Whether married, divorced, widowed, old, young, a mother, a professional, or a housewife, you should work with someone who understands you and strives to serve you the way you deserve.
You face more risks to your financial future and need someone who can create a plan that addresses those threats.
6. Who Will Be Working With Me?
At some firms, you may work with different financial advisors depending on your appointment time or you may initially meet with a firm partner and end up working with a junior advisor. Other firms may pair you up with one financial advisor with whom you’ll work consistently one-on-one. This is important to know ahead of time so you can make sure you’re going to get the personal service you’re expecting.
7. How Much Do You Charge?
Financial planning and investment costs can be confusing. Too often, financial advisors don’t readily disclose their fees. Fee-only financial planners are compensated directly by their clients for the services they provide and may be paid hourly, as a retainer, a flat fee, or a percentage of assets (AUM). For more information on the differences in compensation, click here.
Many women feel underserved by the financial planning industry. As such, they are more likely to want to know how much they are paying and whether the services are worth the price. (6)
8. Do You Receive a Commission?
Some financial advisors (many are with big Walls Street firms) earn their income from sales commissions. The problem is that advisors working on commission may be inclined to sell you expensive products that you may not need or understand.
9. Are You a Fiduciary?
An advisor who serves as a fiduciary accepts responsibility to put his clients’ interests first and foremost in all decisions. A fiduciary is supposed to avoid conflicts of interest and remain unbiased in her recommendations and advice. There are many financial advisers now who accept fiduciary responsibility, so there is no need these days to settle for less.
Only 30% of women are financially literate, according to a 2015 Standard & Poor study on global financial literacy. (7) This lack of financial understanding leads to only 10% of women expressing a high level of confidence that they will be able to retire comfortably (8) and 40% of women are uncomfortable even talking about money. (9) These factors put women in a vulnerable position. They desperately want to learn more about money and investing, but are worried they will be taken advantage of. Working with a fiduciary can ease some of these concerns.
10. Have You Ever Violated Any Standards or Laws?
It’s a good idea to research an advisor’s credentials and run a background check with regulatory agencies. Some advisors may have been subjected to disciplinary action if they violated any laws or if a client took action against them. You can look up an advisor’s professional history by visiting FINRA’s BrokerCheck. This database will also show you the years of experience an advisor has and the licenses and credentials he or she has.
Take your time and trust your intuition when selecting your advisor. The relationship should feel right and you should never feel pressured to make a decision quickly. An advisor should be happy to answer these questions and any others you may have about how they operate.
Richard Archer is a financial advisor and the President of Archer Investment Management with more than eighteen years of industry experience. Largely working with successful individuals and couples, he specializes in providing comprehensive investment guidance and personalized care and attention to each client. Along with holding a Bachelor of Science in Economics and a MBA, he is a CERTIFIED FINANCIAL PLANNER™ certificant and a Chartered Financial Analyst®. He combines his advanced industry education and knowledge with his genuine care for people to provide clients with an exceptional experience. To learn more about Richard, connect with him on LinkedIn or visit www.archerim.com.