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How to Evaluate Your Financial Advisor

Some things in life are a lot easier when we reach out for help from someone who knows what they’re doing.

Want to sell your rental property? Use a real estate agent who knows the market.

Got a toothache? Go to the dentist and actually floss every morning like they suggest.  

Weird noise under the hood of your truck? We know it’s tempting to tinker with it on your own, but leave it to a mechanic.

Yep, we go to professionals for help with all kinds of life situations, and when it comes to having a plan for your money and retirement goals, finding the right financial advisor can be a game-changer. You want someone who’s not only knowledgeable about the market, but who will also communicate well and take the time to understand your short- and long-term financial goals.

If you’ve been working with a financial advisor for at least a year or two, it’s a good idea to take a step back and evaluate how you’re doing with your investing goals and how your advisor is helping you meet those goals (or not).

Let’s look at some questions that will help you evaluate your financial advisor and how healthy your investment strategy is.

Questions to Evaluate Your Current Financial Advisor

Maybe you already have a financial advisor but you’re having some second thoughts about working with them. Maybe they’re not very engaged, or they don’t communicate with you as often as you’d like. Maybe you’re looking for a more practical long-term plan for your retirement goals?

If you’re wondering if it’s time to start looking for a new advisor, here are some questions to ask yourself.

1. Am I happy with my financial advisor’s communication with me?

A great financial advisor takes the initiative to communicate with you, based on your preferences. And if you have to leave a barrage of voicemails and unreturned texts before they finally get back to you, that’s not a good sign!

Every time you meet with your financial advisor, you should feel more knowledgeable and more empowered to make good decisions about your investments. That’s one way to spot the truly great financial advisors: They’re great teachers!

If your current investment pro responds to your questions and concerns with eyerolls and hurried, half-hearted answers, it’s probably time to part ways.

2. Does my financial advisor take the time to understand my long-term goals?

Maybe you’re investing because you want the freedom to retire early, start your own business, give generously, leave a legacy for your kids and grandkids—or all the above. Do those details come up when you meet with your financial advisor? Whatever your high-definition dream for retirement is, make sure your pro understands your vision for the future.

Working with a financial advisor who shares your values and understands your financial journey is important.

If you’ve been working with an advisor for years now and it feels like they’ve forgotten your goals or changed their investing philosophy, set up a meeting to discuss it. Share your concerns. You’ll be able to tell by their response if it’s time to find someone else to work with.

3. Does talking with my financial advisor make me feel more knowledgeable or more overwhelmed?

Listen, you should never invest in something you don’t understand. That’s why it’s important to have an advisor who can break down complicated investing jargon into plain English. One of a pro’s main responsibilities is to teach you about investing so you can make your own decisions. If they’re just telling you what to do with your money without explaining the details in a way you can clearly understand, they’re not doing their job.

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Market chaos, inflation, your future—work with a pro to navigate this stuff.

If your current financial advisor is lacking in any of these areas, it’s time to look for a new advisor. The great news is that finding top-rated pros doesn’t have to be complicated when you know what you’re looking for.

Questions to Regularly Ask Your Financial Advisor

Maybe you have a financial advisor you enjoy working with—that’s great! But it’s important to meet regularly to talk about how your investments are performing and make any changes if you need to.

Take a look at these questions you can ask your financial advisor when you meet for your regular check-in. They can help you know if your wealth-building strategy is on track.

1. How are my current investments working toward my goals?

Investing can feel like the world’s longest waiting game—but you still need to regularly check in on your strategy. As a whole, are your investments on track? Do your mutual fund selections still make sense with your long-term goals? Do you need to make any adjustments to diversify your investments?

Never feel guilty about checking in with your financial advisor when you have questions about your investments’ performance. Again, set your communication expectations with your advisor early. Answering questions is part of your advisor’s job.

2. What’s missing from my financial plan?

Life changes all the time, and those changes can impact your financial plan. Maybe it’s time to start saving for your kids’ college. Maybe your aging parents had recent health issues and you want to be prepared to help. Maybe you’re well beyond investing 15% of your income in retirement accounts and you want to get into real estate investing.

As your finances shift with time, you need to discuss these changes with your advisor.

3. When should I rebalance my portfolio?

Every year, you should look at your investments and make sure your four mutual fund types—growth, growth and income, aggressive growth, and international—are equally balanced. Over time, certain funds will overperform, taking up more room in your portfolio.

Maintaining balance in your portfolio helps you take advantage of market growth without taking on unnecessary risk if the market changes.

4. When should I readjust my investment strategy?

Just like it’s important to regularly rebalance your funds, it’s also important to periodically evaluate your investment strategy as a whole. Are your funds overperforming? Underperforming? Should you make changes to your investments?

Based on your goals, your advisor may recommend increasing your savings rate. Or if you’re maxing out your available tax-advantaged retirement options, it could be time to start investing in a taxable account as well. If your financial advisor truly understands your goals and hopes for the future, they can offer great advice about your next steps.

5. How will my investments affect my taxes?

Did you know your financial advisor can also help you understand your tax situation? That’s right. A financial advisor or tax professional can help you make informed decisions about everything from which tax breaks to take to how taxes impact your estate planning. Just remember to keep the whole picture in mind: Don’t make choices about investing based on the tax impact alone.

6. Am I protecting my assets?

Talk with your advisor about your current insurance plans and any changes you’ve made recently. Why is having the right insurance coverage so important to your wealth-building plan? Let’s say a health situation causes you or your spouse to need long-term care. If you don’t have long-term care insurance, you could drain your retirement savings in just a few years.

All it takes is one unexpected disaster, like a health crisis or a car wreck, to cut into your future earnings or even deplete your nest egg. That’s the last thing you want after working so hard to build wealth and leave a legacy for your family.

Having the right insurance is crucial, so don’t forget to review this when you meet with your pro.

7. Do you have all my current personal information?

Make sure your advisor is up to date on the changes in your life. Maybe you moved this year, had a child, or switched jobs. Not only do you want your advisor to have your most recent contact information, but you also want them to know about the life changes that may impact your financial situation.

How to Find a Financial Advisor

Are you happy with your current financial advisor or investment professional? Great! Keep investing for the long term and meeting regularly with your pro.

Maybe you already have an advisor, but these questions have made you realize your current pro isn’t a great fit for you and your needs. It’s important to find a pro you can trust, and that may mean it’s time to move on.

If you’re looking to make a change or just getting started with investing, try the SmartVestor program. It’s a free way to find top-rated investment professionals in your area. Looking for a pro shouldn’t be complicated. With SmartVestor, you can interview as many pros as you want to find the best fit for you.

Find your pro!

This article provides general guidelines about investing topics. Your situation may be unique. If you have questions, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros. 

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About the author

Ramsey

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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