ByVid Ponnapalli, MS, CFP®, EA

Vid Ponnapalli is a Fee-Only financial advisor providing Customized Financial Planning, Investment Management, and Tax Services for Busy Professionals in New Jersey, New York City, and across the country.

Looking to work with a new financial advisor? Today, I will tell you the three most important questions you must ask before hiring one.

Question #1: Ask your financial advisor – how he or she is getting paid

If they say “Fee-Only”, that means

  • they have no conflicts of interest.
  • They will never accept commissions.
  • 100% of their compensation is coming from you and you only

On the other hand, If they say “fee-based” or “commission-based”, they might be making money by suggesting products to you and earning a commission from the product owner.

For example, a financial advisor may recommend a mutual fund or life insurance or an annuity product to you and get a commission from the insurance firm or the mutual fund firm.

So, by asking this question, you will be able to identify financial advisors who work in your best interest and in your best interest only!

Question 2: Ask your financial advisor – What is their Investment Philosophy

Asking this question and having a discussion about this will help you assess:

  • If your investing priorities match with those of the Advisor
  • If the advisor is thinking short-term or long-term
  • If the advisor’s portfolios focus investing only in the United States or if he or she diversifies across the border
  • Most importantly, you will know if the advisor’s investment choices are based on a solid foundation as opposed to a random selection

Question 3: Ask if tax planning and tax preparation are part of their financial planning service

This question is specifically important if you are looking for a one-stop-shop for your financial as well as tax needs.

If you are hiring the advisor for holistic financial advice, tax planning or tax strategies are generally part of the financial planning advice.

However, tax preparation may be a separate service because it requires a separate designation than that is required of a financial advisor.

Your advisor may send you to an accountant for tax preparation or in some cases, if your advisor is qualified, he or she may provide tax prep as an add-on service.

Hope this information is useful. For more tips like this, please subscribe to my YouTube channel or follow me on Social Media. Thank you!

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Thank you for your interest!