Skip to main content

For updates and guidance related to COVID-19 / Coronavirus, click here.

You’ve Decided to Hire a Financial Professional. Now What?

It's a brand new year, and maybe somewhere in your resolutions you've decided to start working with an investment professional.

According to a study by the Society of Actuaries, less than half of pre-retirees, and 55 percent of retirees, reported paying an investment professional to help them plan their financial future. Doing so can be helpful for some investors, particularly if you are just starting out or transitioning to a new stage of your life such as retirement.

Once you've identified some potential candidates (start by asking friends, family and colleagues who already invest for the names of people they've used), be prepared to ask your potential investment professional some important questions. Here are five things you'll want to find out:

  1. What experience do you have working with people like me? There are many types of investment professionals, and you want to work with one who is best qualified to help with your particular situation, whether it's developing a financial plan, handling an estate, saving for retirement or developing a strategy for making the best use of your assets once you are retired.
  2. Are you registered with FINRA, the SEC or a state securities regulator? This is important because only registered individuals can sell registered securities products such as stocks, bonds and mutual funds. It's also a good idea to ask how long someone has been in the business and in what capacity. Don't shy away from tough questions, such as whether they've ever had any disciplinary actions, arbitration awards or customer complaints. You can check registration status and other information for yourself by using FINRA BrokerCheck.
  3. Do you or your firm have an overarching investment philosophy? Also ask what type of investment products and services are offered, and what products or services are not offered. Many investment professionals can only sell certain products, so you want to make sure that what is available to you is also appropriate to your investment objectives.
  4. Do you or your firm impose any minimum account balances on customers? If so, what are they? Don't for get to ask what happens if your portfolio falls below the minimum. You could be subject to fees or other charges.
  5. How do you get paid? Financial professionals can be compensated in many ways. Some may receive commissions on products they buy or sell. Others get a percentage of the amount of assets they manage. Still others charge a flat fee. In addition, there can be ongoing fees and expenses with many of the products you buy. Know all the costs of making an investment or buying a financial service.

Finally, don't feel obligated to entrust an investment professional with all of your assets. Make sure you understand any investment your professional recommends and that you're comfortable with it. And if you don't understand something, ask for more information.

Subscribe to FINRA's Investor News newsletter for more information about saving and investing.