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11 Questions You Should Ask Any Financial Advisor You Interview Thumbnail

11 Questions You Should Ask Any Financial Advisor You Interview

Thanks for signing up for our blog! I created this list as an education piece for any electric cooperative employee to use as they interview different financial advisors.

My goal isn't that everyone who visits my site or reads my blog decides to work with me. My goal is to help you make an educated decision as you work through this process.

If you are retiring soon or just exploring a relationship with a financial advisor, be sure to ask these 11 questions during the interview process. And interview at least three advisors. That should give you a good idea of whom you want to work with and why.

11 Questions You Should Ask Any Advisor You Interview?


1. Are you a Fiduciary?

There are many "professionals" that call themselves financial advisors. However, not all are created equal. The first question you should ask any prospective advisor you meet with is "Are you a Fiduciary?"

A Fiduciary has a legal obligation to do what is in the best interest of the client. Non-fiduciaries need only to recommend products that are “suitable” — even if they’re not the lowest-cost or most ideal for you. That’s why you want to know about the fiduciary rule and ask potential advisors if they follow that standard. At 80/20 Financial we are a Fiduciary Advisor.

2. How do you get paid?

Advisors can use a variety of fee structures. To keep it simple and avoid conflicts of interest, focus on fee-only or fee-based advisors. Fee-only or fee-based advisors might charge a percentage of the assets they manage for you (1% is common), or they charge a flat fee for services or an hourly fee.

Then ask the potential advisor who pays them? As an independent advisor I work for you and get paid by you.  An advisor that works at the company you see on every street corner gets paid by that company. That's who they work for. Who do you think will give you better advice?

If you are only being "sold" an insurance product for your entire retirement solution you are dealing with a commissioned insurance salesman only.

See 80/20 Financial fees here. We are a fee-based fiduciary advisor. We get paid by YOU.

3. What are my all-in costs?

In addition to paying the advisor, you could face other fees and you’ll want to know what they are. All of your investments will have a fee as well. For example, every mutual fund has an expense ratio.

An expense ratio is a management fee that the mutual fund charges to manage the fund. This isn't necessarily a bad thing, but these fees can vary greatly.

We charge 0.75% on all assets we manage for you. Your total costs will be our management fee plus the expense ratio of the mutual funds we use to fund your retirement plan. Our goal is to keep your all-in costs around 1% total.

Ask what the advisor fees are and what the fees of the investments he uses are. You want to be vigilant. At 80/20 Financial there are no hidden fees. See our price here.

4. What are your qualifications?

Financial professionals can have a confusing list of letters behind their names. Probably the most common is the CFP aka Certified Financial Planner. Designations are good, but don't pick an advisor based on a designation alone. Work with someone you are comfortable with and whose philosophy you agree with.

Most states, including the state of Missouri, require that you pass certain licensing exams based on that states requirements. Again, ask about qualifications, but don't get hung up on the alphabet behind someone's name.

80/20 Financial Services is an Independent Registered Investment Advisor (RIA) registered in the state of Missouri (CRD# 300772). We work with electric cooperative employees in Missouri and throughout the United States. Being independent allows us to work exclusively for YOU.

5. How will our relationship work?

Put another way: How much access will you have to the advisor? You want to know how often you’ll meet and whether they are available for phone calls or emails outside of scheduled appointments.

At 80/20 Financial we require a meeting with our clients at least once per year to review and update your plan. We can and will meet more depending on your needs. We are always available by phone and you will have online access to you accounts at all times.

6. What’s your investment philosophy?

At 80/20 Financial we take the approach that your financial goals dictate your investment plan. We establish your goals and then we create a financial plan to accomplish those goals. We then devise a specific portfolio strategy that is appropriate for the execution of that plan. Goals, plan, then portfolio.

We work to ensure the money you need in the early years of retirement is safe and not subject to temporary market fluctuations, while at the same time putting the money you'll need in the later years of retirement in a position to receive the permanent market returns necessary to provide an income that increases and outpaces inflation.

7. What asset allocation will you use?

You’ve heard how important it is to be diversified, right? Your asset allocation is how you create a diversified portfolio. You don’t want someone who is just going to pick "hot" stocks for you. That's not a plan or a strategy. That's guessing.

Your portfolio will include cash, bonds and both domestic and international companies and will be allocated according to your retirement income needs.

At 80/20 Financial Services we invest your money, just like we do our own money, in various mutual funds based on what your lifetime retirement goals are. We do not advocate investing in single stocks as it relates to your retirement nest egg.

8. Who is your custodian?

Ideally, your financial advisor has hired an independent custodian, to hold your investments, rather than act as his or her own custodian — à la Bernie Madoff, the notorious financial advisor who defrauded clients through a multi billion-dollar Ponzi scheme. That provides an important safety check.

We use Shareholders Service Group a subsidiary of Pershing Financial (the largest custodian in the United States) for our custodian and clearing house. They work exclusively with independent advisors like ourselves.

9. How does Tax Planning play a role if I invest with you?

This helps ensure the advisor has your tax bill in mind when making financial decisions. And asking about taxes is a way to explore what your estimated net return might be. Taxes should always be considered in any Financial Plan. We want to pay all the taxes we are legally obligated to. However, we don't want to leave Uncle Sam a tip.

10. What is your promise to me?

Many salesman will promise you the moon and stars and some will even promise unrealistic returns to get your money. If an advisor promises you a certain rate of return, you run like the wind and find a professional that actually knows what they are talking about.

At 80/20 Financial Services, we promise to give the best financial advice we are capable of giving. We will never knowingly enable you to do something which we believe will prove to be harmful or financially fatal to you and your family. We refuse to be complicit in and we will never take money for helping a client do something we are sure will harm their retirement plan. 

If at anytime you feel we aren't fulfilling that promise then we shake hands and part ways as friends. It's that simple.

11. What is your specialty?

You don't go see a knee doctor if you have heart problems. Similarly, don't go to an insurance salesman or a stock picker if you need retirement planning.

At 80/20 Financial, we specialize in retirement planning for electric cooperative employees. That's all we do. I worked at an electric cooperative for 11 years. I know your profession and benefit plans better than any other financial advisor will. You have excellent retirement benefits available to you. I can help you maximize those benefits while creating a retirement income and investing plan that aligns with your retirement goals.

You need a plan!

At 80/20 Financial Services, we are retirement planners and we specialize in working with electric cooperative employees. We can help you answer questions like:

  • Should you take your cooperative's monthly pension or lump sum offer?
  • Do you have enough money between your R&S and/or 401k to retire?
  • Could you possibly retire at age 55?
  • Is your cooperative 401k invested correctly for your retirement goals?
  • Should you be investing in a Traditional 401k or a Roth 401k?
  • Are you contributing too much or too little to your 401k?
  • Should you quasi-retire from your cooperative?
  • Should you accept an early retirement offer from your cooperative?
  • When should you claim Social Security benefits?
  • How can you lower your tax bill in retirement?
  • How do you invest your retirement money so that you increase your income in retirement?
  • How do you create an income stream in retirement that is similar to when you were working?

Contact us to set up a consultation. The consultation is free and without obligation.

For more articles about retirement planning and investing, click here. 

Thanks for reading!

Brian Coleman/Retirement Income & Investment Planner

80/20 Financial Services is an Independent Registered Investment Advisor (RIA) registered in the state of Missouri (CRD# 300772). We work with clients in Missouri and throughout the United States. Being independent allows us to work exclusively for YOU.