5 questions to ask a financial professional before you consider working with them

Whether you've been investing for years or are just getting started, having a financial professional can be valuable. How do you start? These five questions can help you have a thoughtful discussion with potential financial professionals to find the match that works best over the long-term.

Many people start their search by gathering recommendations from friends, family and colleagues. Once you have a short list of prospects, you can set up meetings. The following questions to ask a financial professional will help you find your match.

A financial professional may operate according to two standards: the suitability standard or the fiduciary standards. The former requires that any recommendations are suitable, but not necessarily the best, for clients. The latter, on the other hand, requires a legal and ethical obligation to act in the best interests of their client at all times. It’s a higher standard of care and includes duty of loyalty, duty of care, transparency, and legal obligation.

You may also use publicly available records to check a prospective financial professional’s disciplinary record with the CFP Board or by using the broker check tool from FINRA, says Carina Diamond, a certified financial planner in Akron, Ohio, and a CFP Board Ambassador.

Financial pros can be compensated in several ways:

• By the hour or on a monthly basis (like a retainer)
• A flat fee based on the specific services they’re performing, like developing a financial plan.
• A percentage of the amount of assets they manage for you (or the assets under management (AUM) model).
• A commission on the investments and products you buy
• A hybrid of these compensation options.

People ask about certifications, disciplinary history, typical clients, and performance metrics. Look for the appropriate insurance licenses and securities registrations, as well as any professional designations; the two most common are Accredited investment Fiduciary (AIF) and Certified Financial Planner (CFP^®). Each has their own standards for education, exams, ethics, experience, compliance, and recertification. You can also ask about specific areas of expertise, from retirement planning to tax optimization.

A financial professional may be able to create a plan for you that’s informed by their years of experience and their understanding of the market, as well as your goals and risk tolerance. Their plan may align with the one you were considering, or it may differ greatly. So before you tell them your preferences are set in stone, ask them how they would go about achieving your objectives. Another question to ask a financial professional: What form will the financial plan take? The goal here is an understanding of their technique and method so you know what to expect.

Does your financial professional prefer email, phone or in-person meetings? What mode of communication do you prefer? If you have a random quick question, can you text them? You'll want to know the best way and time to get in contact with your financial professional, so you'll feel supported.

Depending on your preference, you may want to chat with your financial professional once a month or a few times a year, but the important part is to solidify a cycle of communication so you're getting the consistency and guidance you need, says Lynnette Khalfani Cox, author of Zero Debt. Also, if you expect same-day responses, ask your financial professional how quickly he or she will get back to you when you need something.

The more open you are with a financial professional, the better equipped they are to help you. “You want someone who is empathetic and has the emotional intelligence to work with you,” Diamond says.

“If you don't feel comfortable telling them very personal things about your life, like goals, problem areas and fears, they're not the one,” Cox says. “You have to trust your gut. You have to have a level of connection where you are comfortable telling them the whole truth, and you will be better served if you do.”