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Answering the 5 basic questions from a new client

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As a financial advisor, you can discuss investment strategies all day long. You and your colleagues can speculate on how much XYZ country’s financial issues are affecting the U.S. markets. Or how much a recent government announcement is going to truly impact Wall Street.

But are you ready to answer simple questions from client prospects as they search for the advisor that can best serve their needs?

The Christian Science Monitor offered its best advice on the types of questions consumers should ask when searching for an advisor. The article also reminds readers that since financial planning titles are unregulated, some are meaningless when it comes to identifying competency.  They point out that a Certified Financial Planner, insurance agent, investment advisor or “the next Bernie Madoff” can all legally identify as a financial planner or advisor. This gray area makes it even more important to cover the basics in a client-advisor meeting.

So what do they cite as the top five questions a consumer should ask a financial advisor? And do you know how to succinctly answer each question?

  1. How are you compensated?  The article directs consumers to know the difference between commission, fee-only and fee-based. Each payment type has its advantages so be prepared to explain them accordingly, with an emphasis on how your fee may be a good match for their situation.
  2. What certifications do you hold? In a world brimming over with acronyms, this is an area that can overwhelm consumers quickly. Understanding this confusion will help you better describe your titles and who regulates your practice. Consumers are looking for assurance that your actions are being monitored and that your profession is being held accountable.
  3. What is your area of expertise? Do you focus on millenials? Or perhaps you have a practice that works with many white collar professions such as doctors or lawyers. A specialty in college planning may be a plus to some consumers. Understand your niche and be able to convey the importance of your experience with examples or anecdotes.
  4. What is your investment philosophy? Post 2008, this question has become even more important. Consumers are wary of markets and they need to clearly understand your strategies in aggressive or passive financial conditions. Clients also want to hear how you will assess their risk tolerance so that they are comfortable that you aren’t just applying a “one size fits all” approach to investments.
  5. What do you see as my financial goals or objectives? The article spells out what some advisors may not naturally recognize: “Many new clients are not able to state their objectives in clear terms. A good advisor can help you specify and articulate exactly what you want.” No matter the education and apparent savviness of a client, it’s always possible that they are masking an uncertainty or even feel intimidated by the planning process. This is where most advisors shine because they bring a confident and compelling knowledge that should put clients at ease.

Even if a client doesn’t exactly ask these specific questions, make sure you take the time to address them proactively as they speak to the heart of a solid advisor-client relationship.


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