5 Key Questions to Ask a Financial Advisor

 

Question #1. Are you primarily a financial planner or an investment advisor?

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• Background: There are wealth managers / investment advisors, and there are financial planners.

 

• Why it matters: The former type of advisor has a narrower purview--investments--than do financial planners, who consider all major aspects of a financial plan, not just investments: insurance, estate planning, and household budgeting, to name a few. 

 

•  Tiffany Kent is both a CERTIFIED FINANCIAL PLANNER ™ and an Investment Advisor.  In our option, the best investment advisors think holistically and comprehensively about client's financial plans. 

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Question #2. Are you a fiduciary?

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• What is a fiduciary? Being a fiduciary simply means that the advisor must put their clients’ interests ahead of their own when consulting on portfolios and plans.

 

• Why it matters: It seems obvious that anyone proffering financial advice should adhere to such a standard, but as things stand today, there is no uniform standard.  The good news is that many financial advisors already adhere to a fiduciary standard. Investment advisors who are registered investment advisors--or work for firms organized as registered investment advisors--are already fiduciaries. Certified financial planners are required to act as fiduciaries when offering financial advice. (The CFP board expanded fiduciary requirements for all certified financial planners in all financial-advice contexts in October 2019.) 

 

• Wealth Engagement LLC is a registered investment advisor and Tiffany Kent is a CERTIFIED FINANCIAL PLANNER ™, and therefore, she is a fiduciary.  Check the background of Wealth Engagement's professionals on FINRA's BrokerCheck.

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Question #3. How do you charge for your services?

 

• Background: One of the first questions to ask is whether the advisor is fee-only, fee-based, or commission-based.

  • Fee-only means that the advisor is compensated by charging fees for various services and is never compensated with commissions.

  • Commission-based advisors obviously accept commissions for recommending products.

  • Fee-based advisors may charge primarily fees for services they provide, but may also accept commissions. (People frequently confuse “fee-only” and “fee-based”; there is a difference.)

 

• Why it matters: Receiving commissions for products can introduce conflicts of interest, incentivizing advisors to recommend products that aren't necessarily in clients' best interests. The fee-only model is cleaner.

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• Wealth Engagement LLC is a fee-only advisor, therefore, has no conflicts of interest.​

 

Question #4. What designations/credentials do you have?

 

• Background: If you're seeking a financial planner, look for the following:
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  • Certified Financial Planner (CFP): A certified financial planner is a financial planning expert accredited by the Certified Financial Planner Board of Standards. In order to use the CFP designation, planners must complete an educational program, pass a comprehensive exam, and log extensive financial planning-related work experience.
     

  • Chartered Financial Consultant (ChFC): Much like the better-known CFP, this is a broad financial-planning designation. Chartered financial consultants must complete an educational program and a series of exams, while also logging related work experience.
     

• If you're seeking investment advice, first and foremost, look for the following:​​
   

  • Chartered Financial Analyst (CFA): Individuals with this designation qualify as financial experts accredited by the CFA Institute. In order to use the CFA designation, advisors must log substantial work experience involving investment decision-making and take courses on subjects such as economics; financial reporting and analysis; ethical standards; equity and fixed-income investments; and portfolio management. They also must pass a series of rigorous exams requiring substantial study time.
     

• Why it matters:  CFA's are not CFP's and CFP's aren't CFA's.  

 

• Wealth Engagement LLC:  Tiffany Kent is the Founding Partner of Wealth Engagement LLC and as a CERTIFIED FINANCIAL PLANNER ™ Tiffany strongly believes in order to invest for the long term, one must have a financial plan which helps the advisor and client partner together and navigate the ups and downs of the stock market.

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• Tiffany is a former Vice President and Financial Advisor at Bernstein Private Wealth Management where she provided a range of sophisticated wealth planning and investment services. Prior to Bernstein, Tiffany constructed client portfolios and managed a $200 million equity long-short portfolio as an analyst, portfolio manager and partner at several investment management firms.  Before that, she worked at Goldman Sachs as an Associate in investment banking. Tiffany holds a BA in Economics from the University of California, Berkeley, and an MBA from Harvard Business School. She is a CERTIFIED FINANCIAL PLANNER ™ and served as Board Chair of the Harvard Business School Club of Atlanta.

 

Question #5. What’s your backup plan?

  

• Why it matters: Who would step in and offer assistance if the advisor could not do so for a period of time, due to death, illness, or even a long vacation?​

 

• Wealth Engagement LLC:  Richard Lurie is Wealth Engagement LLC's, Chief Compliance Officer.

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