Ask Ed: Financial Planning Questions And Answers
These are questions you should ask any financial advisor you are working with or considering retaining to handle your money. These questions and answers can be found in a valuable book written by Ed Mahaffy titled “How To Select A Financial Advisor: The Least You Should Know”. At the bottom of this post you can request a complimentary copy to download this 170 Page book as our gift to you. It is a valuable book we recommend EVERYONE READ!
Question: Is your firm a Registered Investment Advisor(RIA), a broker-dealer or both?
Answer: NAPFA believes that any financial advisor offering comprehensive financial planning services should be registered as an investment advisor with either the Securities and Exchange Commission(SEC) or with the state regulatory agency within the advisor’s state. Information pertaining to both SEC Registered Investment Advisors (and the vast majority of state registered investment advisors) is set forth on Part I of the advisors Form ADV(see www.sec.gov). Unlike other investment professionals, only Registered Investment Advisors owe a fiduciary duty under law to their clients. Employees of broker-dealers do not owe the same duty of client care.
Question: How long have you been offering financial planning services?
Answer: There are more than 100 certifications or designations financial advisors can obtain, but they cover a wide range in terms of education, experience and ethics requirements. Make sure your advisors credentials indicate a broad-based education in financial planning topics and a requirement to put the interests of the client first.
Question: Will you provide me with references from other professionals?
Answer: The financial advisor should be willing to share the name of another financial professional with whom he/she has worked. From this other financial professional, you might be able to learn more about your prospective advisor’s abilities and strategies for recommending prudent courses of action. Privacy laws severely limit an advisor’s ability to share client information.
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