If you are interested in hiring a wealth management professional to help you get the most out of your money, it’s important to choose a firm that serves as your partner. Below are five questions that you should ask a wealth management professional before you hire them to help you plan for your financial future. 

#1 - Are You a Fiduciary?

A fiduciary is someone who acts on behalf of another person or entity with a legal obligation to put that person’s or entity’s interests ahead of their own. This is due to what is known as the Prudent-Person Rule, which essentially protects you from risky or questionable investments. Simply put, this rule requires a fiduciary to make financial decisions based on the simple principles of common sense and reasonable risk. Fiduciaries serve many roles, including money management, insurance provision, banking, and even financial advising. When you work with a fiduciary, you don’t have to worry about things like misplaced incentives or sales tactics because your needs are always the concern. 

#2 - How Do You Get Paid?

There are a few different fee structures used by financial firms, but the best wealth management firms are those who use fee-only structures. The term fee-only means that the wealth management firm only earns income based on the fees they charge you for the individual services they provide and they never get commissions. There are some agencies out there who earn commissions based on the products they sell to youYou should avoid this because it tends to cause the agencies to focus on aggressive sales rather than your overall best interests. 

#3 - How Much Will This Cost?

There are some fees that you’ll need to pay in addition to the ones your wealth management firm charges, so look for a partner who will break down all of the costs for you. Even things that may seem insignificant to you at first glance, such as a mutual fund with an excessive expense ratio, can erode your portfolio over time. Before you make a move with any wealth management firm, make sure that they have fully explained exactly what you can expect in terms of fees and costs. 

#4 - How Will Our Relationship Work?

You’ve worked hard for everything you have, and the last thing you want to do is hand it all over to a complete stranger who won’t answer the phone when you call or who is always on vacation somewhere when you have a question. The relationship you have with your chosen wealth management team is important, so ideally, you’ll want to work with someone who provides you with numerous channels of communication and who returns your calls or emails quickly. You should also have regular appointments with your financial advisor, even when things are going well. 

#5 - What’s Your Investment Philosophy?

This is a very important question because if your wealth management partner can’t help you manage and invest your finances in a way that aligns with your own philosophy, the partnership just won’t work. For example, if you want to focus on socially responsible investing or impact investing, it’s important that the team or individual you hire will do that for you. Look for a wealth management firm that will consult with you at no cost to discuss their investment philosophy, the products they offer, their fee structure, and more. 

Wealth management is an important undertaking, so you shouldn’t hire the first person or firm you come across. Instead, take the time to ask these questions and carefully consider the answers. This way, you can hire someone who will truly partner with you and do what is best for your financial future - not just see you as their source of income.