1. What do you know about money?
Did you study business in college or were you focusing on chemistry or yoga studies? Do you like reading the financial news or would you rather do anything but? Do you even have a sense of your family’s financial position?
2. What are your financial concerns?
Is it fairly simple, such as finally getting around to signing up for your employer’s 401(k) plan? Or is it complicated, such as a blended family that includes a special-needs child who will require lifelong support and a multi-generational family business? You don’t need to hire a financial planner to tell you to contribute at least enough to your 401(k) to draw the employer’s match. But it would probably help to have a financial professional when multiple generations of the family are involved.
3. Are you and your spouse in agreement?
A financial professional can often be useful in helping to educate the non-financial partner in a marriage or provide assurance that you are doing the right things. A financial professional's educational and mediation services may be the key to creating a comfort level with money in the family.
4. What are your financial goals?
This may take some soul searching, but your financial plan will be different if your goal is to start your own company than if it is to retire to a golf course. Sure, goals change all the time, but it’s good to have a starting point for the conversation with a financial professional.
5. What type of value are you looking for?
A study by Morningstar, the financial information company, found that financial professionals added real value in retirement planning in the form of asset allocation, establishing withdrawal strategies, annuity allocation, asset allocation and withdrawal sourcing (using tax-advantaged strategies), and optimization relative to a client’s liabilities.
In other words, financial professionals add value with discussions and strategies about longevity, debt, and taxes. It’s more complex – and more valuable – than having a hot stock tip.
6. What kind of fee do you want to pay?
Some financial professionals charge a fee for their services while others receive commissions for the products they recommend. All financial professionals should adhere to a fiduciary standard, which means they are required to act in the customer’s best interest, not the best interests of their employers.
7. How do you find a financial professional?
Many financial planners work by referral, so ask your friends who are knowledgeable about finance for a recommendation. A referral to someone your friends trust can make the process of finding a great financial professional a little easier.
As you interview prospective financial professionals, you want to know if they usually work with clients like you, how they are compensated and what licenses and designations they hold.
Also, if you are putting off contributing to your 401(k) plan, take care of that first. In fact, some companies offer financial planning as an employee benefit, so you might not have to look very far for help. Nationwide offers resources to help you find a financial professional, including questions you can ask at the first meeting.