With so much at stake, how can you determine if the professional you are considering will give you sound, unbiased advice that’s in your best interest?
AARP and the North American Securities Administrators Association (NASAA) today are launching a tips tool designed to help you answer that question.
Interview an Advisor is a free, interactive online tool that suggests questions to ask a prospective professional financial advisor. The tips tool also includes a sample script to help you interview advisors you are considering.
“Many of us could benefit from working with a financial advisor, but don’t know what questions to ask when hiring one,” said Kathy Stokes, a senior advisor at AARP. “This tool takes the mystery out of the conversation. It walks users through specific questions to ask to help them make an informed decision on whom to hire.”
One of the most important questions the tool suggests asking an advisor is whether he or she is required to act as a fiduciary. A fiduciary is someone whom you trust to act in your best interest. In the case of a financial advisor, that’s someone who will recommend investments that will benefit you, not that will generate higher fees for the advisor.
The U.S. Department of Labor (DOL) had issued a fiduciary rule requiring financial professionals who manage retirement savings accounts to act in consumers’ best interests. But DOL has delayed the implementation of that rule until July 1, 2019, so investors need to question financial professionals closely about whether they adhere to the fiduciary — or trust — standard.
Here are some other questions the tool suggests:
- What licenses or professional designations do you hold?
- Will you break out all of your fees and commissions?
- Have you ever been disciplined by a regulator?
- Are you limited to offering only the investment products offered by the brokerage firm with which you are affiliated?
Interview an Advisor is accessible on any smartphone, tablet or computer, and you don’t have to be an AARP member to use it.