When seeking any type of financial help, there are many questions you should ask of the potential provider, such as their qualifications, types of services offered, cost, etc. Here are ten questions to ask a financial professional, whether they are an advisor, coach, consultant, counselor, educator, mentor or planner, to find the right one for your situation.
1. What experience do you have?
Find out how long the person has been active in the financial advisory, counseling or education arena. Ask the person about the number and types of companies/organizations with which they have been associated. Ask the person to briefly describe their work experience. Choose a person who has experience counseling individuals on their financial needs.
2. What are your qualifications?
The terms "advisor, coach, consultant, counselor, educator, mentor and planner" are often used interchangeably in the financial help area. There are no federal standards or licenses for financial counseling professionals, and states may or may not regulate professionals in related fields, such as credit counselors. A person that sells financial products, mutual funds and insurance must be have the proper licenses; if they give investment advice, they must be registered with state or federal authorities.
Ask the person what qualifies them to do financial advising, counseling, coaching, mentoring or education and whether they are recognized from an accredited, independent certifying body, training organization or institution. In addition, a good rule for identifying a reputable certification is one that requires completion of a specific education program, passing a closed-book supervised exam, work experience, continuing education and adherence to ethics. If the person does hold a financial designation or certification, check on their background with the certifying body or other relevant professional organizations.
3. What services do you offer?
The services that a financial professional offers depend on a number of factors including their organization affiliation, credentials, licenses and area of expertise. A person may offer one-on-one sessions, classes, online education or ongoing memberships of some sort. A person may offer financial coaching with the anticipation of selling more services, such as life coaching, financial products and advice, income generating “systems” or internet business “opportunities,” etc. Be cautious of any claims that sound too good to be true. They probably are.
4. How much do you typically charge for services?
The fees a financial professional depends upon the services provided and the organization that they represent. Most non-profit organization offer services for free or for a nominal fee. Others may charge a fee per hour, fee to attend their workshop or ongoing membership fee to a counseling “club.” Be aware of free consultations; ask for services fees upfront before you attend a free consultation.
5. How do you get paid for your services?
As part of your financial service agreement, the person should clearly tell you in writing how they will be paid for the services to be provided.
Financial professionals can be paid in several ways:
- A salary paid by the company or organization for which the person works. The company receives payment from you or others, either in fees or commissions, in order to pay the person's salary.
- Fees based on an hourly rate, a flat rate or a sliding scale based on your income or assets.
- Commissions paid by a third party from the products sold to you. Products include investments, books, training systems and memberships.
- A combination of fees and commissions whereby fees are charged for the amount of counseling done and commissions are received from any products sold.
6. What is your approach?
Ask the person about the type of clients and financial situations they typically like to work with. Some providers prefer to develop one plan by bringing together all of your financial goals. Others provide advice on specific areas, as needed. Make sure the person’s viewpoint on personal finance is not too cautious or overly aggressive for you. Find out if the person has products to implement their recommendations or refer you to others who will do so.
7. Are you bonded and do you have any professional liability insurance?
If a person is bonded and has professional liability insurance, often called error and omissions, they are protected (and ultimately you) in the event that they responsible for errors in, or the failure of, their work as promised in your written service agreement. This insurance will pay you for any resulting judgments against the provider, including court costs, up to the coverage limits on their policy.
8. Could anyone besides me benefit from your recommendations?
Some business relationships or partnerships that a financial professional has could affect their judgment while working with you, inhibiting them from acting in your best interest. Ask the person to provide you with a description of their conflicts of interest in writing, such as receiving a referral fee from a company that provides additional services to you.
9. Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career?
Regardless of what their title is, it doesn’t hurt to check with the government and professional regulatory organizations that keep disciplinary history of financial planners, advisors, agents, credit counselors, etc. Ask what organizations the person is regulated by and contact these groups to conduct a background check. If the person is not currently licensed by a regulatory agency, check with such groups as the National Association of Securities Dealers (NASD), the Pennsylvania Department of Banking and Secuirities, the Pennsylvania Insurance Department, the Pennsylvania Attorney General and any pertinent certifying or training organizations just in case there may be past disciplinary actions or complaints.
10. Can I have it in writing?
Ask the person to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.
Click here to download a checklist for interviewing a financial professional.
