Relationships of all sorts (business and personal) work best when there’s a solid foundation of trust. That includes your working relationship with your financial professional. Clients have a right to know how much they charge, the services they provide, and the possibility of added expenses or hidden fees.
Sometimes clients need to be proactive in getting this information before they start receiving financial or retirement planning advice. Here are 10 questions to ask your financial professional about how they conduct and charge for their business.
1. How Do You Get Compensated?
The first question out of the gate should be whether your professional is fee-only, commission-based, or a hybrid. Fiduciary professionals are legally bound to a fee-only structure. Otherwise, their recommendations may be influenced by an incentive to push specific financial products.
2. What Does Your Fee Structure Look Like?
Does the financial professional charge a flat fee, an hourly rate, or a percentage of your assets under management (AUM)? Ask for a straight, clear breakdown of their financial fees, including pros and cons.
3. Do You Earn Commissions or Outside Compensation?
Some professionals may be tied to insurance companies or mutual fund managers that want them to sell their products. While that isn’t strictly illegal, it may muddy their objectivity and lead to a conflict of interest. Professionals are required to disclose this information so their clients can make proper decisions. At Emerj360, our services are not based on commissions to avoid any conflicts of interest.
4. What Services Does Your Fee Cover?
Get clear on what your professional provides in exchange for their fees: financial planning, retirement planning, estate planning, tax services, or other responsibilities. They should align with your goals.
5. What Additional Costs Might I Expect?
Administrative charges, trading fees, fund expense ratios, and other hidden charges may accompany your primary fee. Clear up additional costs that might not be obvious in your primary agreement.
6. How Do You Disclose Your Expenses and Fees?
How your financial professional communicates their policies matters. Some itemize their charges on monthly or quarterly statements; others issue summaries at the end of their fiscal year. Ask about report frequency and how easily understood they are; if they’re not, keep asking for clarification.
7. Do You Offer a Written Fee Schedule?
“Get it in writing.” That’s standard, across-the-board advice for almost anything involving an exchange of money. A printed fee schedule reduces miscommunication and allows you to shop for a financial professional objectively.
8. Do You Offer Discounts or Fee Breakpoints to Long-Term Clients?
Some financial professionals offer bundled services at a discount or take lower percentages of AUMs as your investments grow and appreciate. Ask whether the professional rewards customer loyalty with these and other benefits.
9. Are You a Full-Time Fiduciary?
Not all fiduciary financial professionals are that way 100% of the time. They may have side occupations or interests as broker-dealers, insurance agents, bank consultants, or dual-registered professionals. Find out their status and remember that fiduciaries, like the financial professionals at Emerj360, are required to put your interests above their own.
10. Do You Safeguard My Best Interests When You Recommend Products?
You’re entitled to know why your fiduciary might recommend certain products or services. Ask the financial professional how they select certain financial vehicles, what criteria they look for, and whether a less expensive product may suffice.
Fiduciary Financial Professionals Who Put Your Interests First
At Emerj360, we provide clear financial guidance to clients looking for objective and fair financial and retirement planning. When you contact our team, we get to work forming a framework for growing and managing your wealth and unique financial situation.To schedule a meeting, call 833-637-5360 or book online here.
