3 Essential Questions to Ask Any Financial Advisor

Photo by Amy Hirschi on Unsplash

For many Americans, the reason they’ve spent years investing in a 401(k) without so much as a breath of input from a financial advisor is simple: they don’t know where to look or what to ask.

As research consistently reveals, working with a financial advisor nets investors an average of 1.5% to 4% in additional annual returns. Planning for retirement without the benefit of a financial advisor’s keen insights has grown more and more irrational.

The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns. Still, research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.

A recent Vanguard study found that, on average, a $500,000 investment would grow to over $3.4 million under the care of an advisor over 25 years. In contrast, the expected value from self-management would be $1.69 million, or 50% less. In other words, an advisor-managed portfolio would average 8% annualized growth over 25 years, compared to 5% from a self-managed portfolio.

So, why do some Americans continue to walk the financial road alone and not work with a financial advisor?

The conundrum is understandable, but its remedy is easier than you might think. A qualified financial advisor will be able to confidently answer the following three questions:

1. Are You A Fiduciary?

A qualified financial advisor is called a fiduciary. This means that they are legally obligated to act in your interest. A fiduciary advisor will provide you advice that is best for your unique situation.

Financial advisors who are not fiduciaries may recommend products, funds, or other strategies that provide them with a kickback — and may not be the best for your financial situation.

A confident “yes” to this question is the only answer to accept. Click here to find a fiduciary advisor near you.

2. How Much Do I Really Need to Retire?

A savvy financial advisor will not give you a number off the bat. To determine how much you’ll need to retire, they’ll need to listen carefully to your lifestyle, plans for retirement and risk tolerance. Then, and only then, will they be able to help you determine a target size for your nest egg.

3. Am I Getting the Most Out of My Social Security?

If double-checking your social security benefits sounds like an unusual assignment for a financial advisor, it won’t be to one who truly cares about your financial wellbeing. A skilled fiduciary will help you evaluate if you are well-positioned to maximize your hard-earned social security benefits.

The Simple Way to Find a Qualified Financial Advisor

This no-cost tool helps make it easy to find a reliable, reputable advisor so you can make an informed decision and choose the right one for you. Now you can get matched with up to three local fiduciary investment advisors that are vetted and subject to SmartAsset’s due diligence criteria. The entire matching process takes just a few minutes.

The free quiz asks about your financial goals, then matches you with three fiduciary financial advisors. You can compare your advisor matches based on their specialty, pricing and more. You even earn a free consultation with each of our matches, so you can compare them and be fully prepared to pick a financial advisor.

Click here to get started.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. The content was purely for informational purposes only and not intended to be investing advice.