HerMoney Classic Mailbag: Financial Advisors 101
HerMoney with Jean Chatzky
Deep Dive
What are the key questions to ask when vetting a financial advisor?
Key questions include: Are you a 100% fiduciary all the time? How long have you been established as a fiduciary advisor? Who are your typical clients? Do you have a specialization? What credentials do you hold? How many clients do you have? What is your client retention rate? These questions help assess the advisor’s expertise, trustworthiness, and alignment with your needs.
Why is it important to find a financial advisor who is a fiduciary?
A fiduciary is legally obligated to act in your best interest, avoiding biased recommendations or high-fee products that benefit them more than you. This ensures unbiased, transparent advice tailored to your financial goals.
How often should you meet with your financial advisor?
Typically, you should meet with your advisor once or twice a year in person or via Zoom, with additional quarterly touchpoints. During major life changes or financial decisions, more frequent communication may be necessary.
What are the options for younger individuals or those with lower net worth to find financial advisors?
Many advisors have no minimum asset requirements, and some specialize in helping younger clients or those with lower net worth. Resources like WealthRamp and employer-sponsored retirement plans can also provide access to financial advice.
How can you find financial advisors specializing in the FIRE (Financial Independence Retire Early) movement?
Advisors who specialize in FIRE help clients retire early by focusing on aggressive saving and smart investing. Platforms like WealthRamp can connect you with advisors experienced in this niche.
What is the best way to break up with a financial advisor?
You can simply say, 'I’ve decided to make a change. Thank you for your help.' It’s a professional relationship, and you owe no detailed explanation. If needed, you can add that circumstances have changed and you hope they respect your decision.
How can you find a financial advisor who is also skilled in tax planning?
Some financial advisors are also CPAs or work closely with tax professionals. Look for firms that have in-house CPAs or advisors who collaborate with your existing tax preparer to ensure seamless financial and tax planning.
What percentage of financial advisors on WealthRamp are people of color?
About 2% of WealthRamp advisors are people of color, reflecting broader industry underrepresentation. Efforts are ongoing to increase diversity in the financial advisory field.
Why is specialization important when choosing a financial advisor?
Specialization ensures the advisor has expertise in specific areas like special needs trusts, stock options, or divorce planning, which can be crucial for tailored financial advice that meets unique needs.
- Always ask if the advisor is a 100% fiduciary.
- Inquire about their experience as a fiduciary advisor (5+ years is recommended).
- Ask about their client profile and specializations to ensure compatibility.
- Check credentials (CFP, CPA, CFA), client count (avoid advisors with excessively large client loads), and client retention rate (high retention rates are indicative of positive client experiences).
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