I'm a financial planner, and there are 3 questions I wish my clients would ask (2024)

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• I answer a lot of questions as a financial planner about how best to manage money, but there are three questions I wish clients would ask more often.
• First, ask me (or any financial planner you're considering) what "fiduciary" means to them. This will tell you whether or not they're giving advice that's in your best interest.
• I also wish clients would ask about succession planning among financial advisers, and the total cost of having your money managed.
• SmartAsset's free tool can find a financial planner to help you take control of your money »

As a financial planner, it's no surprise that I spend a lot of my time answering questions and dispensing advice to help people make better choices with their money.

While everyone's circ*mstances look different, there are some questions that seem to come up over and over again. To address those common queries, my firm has a dedicated page on our website to answer the usual questions we receive about working with an adviser.

Even so, there are still questions that I think everyone should be asking a financial planner, but very few people do. So, in an effort to make your planner search less cumbersome or strengthen the relationship with your current adviser, here are three questions you should ask.

A fiduciary is someone you hold in high confidence or trust. A professional who works as your fiduciary is legally and ethically responsible for having your back through thick and thin while always placing your interest above all others — including their own.

A fiduciary does and suggests what is best for you at all times. You might think that's the default role for someone you're paying to give you financial advice ... but unfortunately, it's actually on you as the consumer to seek out and verify that your adviser is a fiduciary 100% of the time because not all of them will work for you in this capacity.

Part of the reason people get confused is that this industry has too many "F" words. No, not that word — I'm talking about words like fee-based and fee-only, which are used to describe how advisers get paid (and they are not the same thing, despite how similar they sound).

When working with a planner, it is always good to ask them what the word "fiduciary" means to them and their company (because the company can have different views from the adviser). It's also good to look for Certified Financial Planners, because these professionals are bound to a fiduciary standard whereas others in the industry may not be.

In 2017, the average age of financial advisers in the United States was 52. Over the next 10 years, roughly 37% of all advisers are expected to retire.

You might think, "So what?" But if you're in your 20s, 30s, or 40s, you have far more than just 10 years of wealth management to consider. Therefore, you need to clearly understand how your accounts will be managed should your current adviser leave the profession, retire, or even die.

Ask about your adviser's business continuity plan, including their back-up business locations (for events such as natural disasters and pandemics), back-up data plans (for data loss or breaches), and succession plans that detail who the key contact person will be should your main adviser be unable to serve you.

Even if your adviser has all their business continuity documents and plans in order, choosing a firm that works in teams (rather than just relying on a single adviser) can secure your safety even more.

There's no replacement for years put into a relationship, building trust, and getting to know you as not just a client but as a person — and by working with an entire team, you ensure that you build a solid relationship with multiple professionals who understand and care for you.

When people ask questions about cost, they usually think in terms of fees a planner charges directly to them as a client. But that only scratches the surface of what a real discussion around adviser fees should include.

The average financial planner will charge around 1% or higher to manage your investment portfolio. Knowing this fee is very important, but it's not the only cost to consider.

Most planners building an investment strategy for you will manage your portfolio in three ways: with individual investments (stocks), exchange-traded funds, or mutual funds. All three can have underlying costs that you should also factor in to calculate your total cost, especially if you're trying to compare one adviser's pricing to another's.

For most portfolios built using individual stocks, you will need to know the underlying trading cost (if any) and how often the portfolio is turned over in a year. With ETFs and mutual funds, you would want to know the annual expense ratios assessed by each.

Based on Morningstar's research, the average expense ratio for active funds was 0.66% in 2019; passive funds were 0.13%. Therefore, knowing how your adviser will manage your portfolio is crucial in your decision making.

Lastly, the cost discussion does not stop here. If your adviser is more commission- or transaction-based, those costs should be adequately compared to that of an ongoing service model (fee-only or fee-based).

By asking your adviser these three questions, you can be sure to get the information you need to make a great decision about who can best serve you. Understanding their answers can solidify the relationship with your current adviser, help you determine if it's time to move on to someone else, or help differentiate advisers from each other as you shop around for your lifetime financial partner.