Crucial Questions To Ask When Hiring A Financial Planner

by Suba on June 8, 2012 · 2 comments

It can be difficult to hire someone who isn’t in your field of expertise. It’s possible that you can be taken in not by their credentials but merely because of their smooth way of talking. This can be especially difficult if you’re hiring a financial planner, because your family’s finances isn’t something that should be taken lightly.

If you’re considering hiring a financial planner, it’s very important that you take the time to interview several candidates. Below are some of the most crucial questions to ask when hiring a financial planner.

Questions to ask your Financial Planner:

  1. Can I see your U4? – A U4 is like a school kid’s report card. You get to see the “grades” of the financial planner, plus his background. If a complaint has been lodged against him, it will shown in the U4. Having this background check can help you make sure that you’re getting a competent planner, one that has a clean record.
  1. What are your qualifications? – This should be written on his CV. And if you haven’t asked for one, at least you can get an idea during the interview. Is he a certified financial planner (CFP)? How long has he been in business? What kind of training has he received and does he have certificates to show for it? Make sure to be thorough about the qualifications. Having a good training background ensures that he does in fact, know what he’s about to do.
  1. How many clients are you handling right now? – It is possible for a financial planner to take on more clients than he is capable of handling. This means poor service and a lack of attention to detail if your financial planner is taking on too much work. You wouldn’t want to have problems with your finances in the future just because your planner didn’t have time to carefully sort things out for you. In this case, you may as well not have hired a planner at all.
  1. Can you explain this to me? – Before you beginning the interview, look for a finance concept that you don’t understand. Make sure you don’t read up about it at all so you can determine how well your planner can explain it to you. A financial planner who has the ability to explain concepts in layman’s terms means that they have a thorough understanding of the idea. As Albert Einstein said “If you can’t explain it simply, you don’t understand it well enough.”
  1. What is your professional fee? – Although this may seem like an obvious question to ask, some people can be embarrassed to ask this question thinking that it’s impolite. However, it is highly important that you find out how the planner is usually compensated. Planners either go with commission based or fee based. It is generally advised to go with a planner with a fixed rate rather than with a commission since commission based planners can choose to offer you products which you don’t really need just so they can get a premium from that particular product.
  1. Are you married? – Don’t think that it’s awkward to ask this question. After all, if the planner is entitled to know about you, then you should be entitled to know about him as well. The reason why you should get into the personal details is that you can check his family conditions. If the planner is undergoing a divorce, then that means he could possibly be mentally stressed and may have difficulty prioritizing your needs.
  1. Can I see your references? – Again, this information should be written in his CV. Make sure to call up his references and talk to his previous clients about how well the planner has served them. Although it is obvious that he would refer satisfied customers, talking to previous clients can give you an idea of what the planner’s style is.

Can You Explain This To Me?

Going back to #4, here are some “test” questions you can ask:

  • What would you recommend? Term life or cash value policies? – Be prepared to hear term. If he says cash value, it’s best to seek another planner.
  • Do you include ETFs and mutual funds? – A good answer would be yes.
  • What is better? A will or a will plus a living revocable trust? – Any planner who thinks a living revocable trust isn’t necessary should be showed to the door.
  • Should I use my line of credit or home equity loan to pay off my credit card debts? – You better hear a resounding no.

Hiring a financial planner is an activity which you should pay close attention to. After all, your finances is what will support your family in the years to come. It’s best to have the right amount when your kids enter college and when you retire. And you have your financial planner to thank for that.


Suba is the editor of Broke Professionals.

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{ 1 comment… read it below or add one }

1 Crystal @ Prairie Ecothrifter June 8, 2012 at 1:48 pm

Wow, great advice! We were thinking of hiring a financial planner next year although we may be pushing that back…I rather just keep saving in our Roth IRA’s and pay off the two mortgages we are going to have…


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