There are a ton of financial advisors. How do you know how to pick a good one? It’s important to get the right information before you engage. Here is a list of 40 questions to ask a financial advisor in New Jersey.
Before we get started, if you’re a New Jersey resident (or thinking about moving to or retiring in New Jersey), take a moment to check out our other blogs:
A checklist for moving to Morristown, NJ from NYC
5 must-know benefits of retiring in Morristown NJ (aside from Bruce Springsteen)
What is the average income in New Jersey? [2022 update]
And now for the feature presentation…
Financial advice in New Jersey
Living in New Jersey can get expensive. Here’s why New Jersey residents may benefit from working with a New Jersey financial advisor who knows the ins and outs of the New Jersey tax code, estate laws, and other influences on financial planning.
There are certain tax considerations that are unique to New Jersey. Your financial advisor should know how to advise you about the:
· New Jersey “double tax”
· New Jersey inheritance tax
· Tax free bond interest in the state of New Jersey
· Full or partial tax exclusions for New Jersey residents
· New Jersey inheritance tax
· New Jersey estate tax
· New Jersey property tax rebates
· and much more!
Moreover, there are lifestyle considerations that would apply if you are thinking about retiring in New Jersey – or, if you are a New York resident considering moving to New Jersey. General familiarity with what people tend to earn in New Jersey and what it’s like living here is a huge plus – and a New Jersey financial advisor likely can offer you valuable insights on these topics
Questions to ask a financial advisor in New Jersey
If you are looking for a financial advisor in New Jersey, you’d want to know about the following topics. We’ve grouped our list of what to ask a financial advisor in New Jersey into these general categories below.
· What it will cost you
· The standard of care they follow
· How they manage their practice
· How they deliver services
· How they deliver value to their clients
· How well they control risks that you may be subject to
What it will cost you
How are you paid?
Do you invest in mutual funds that carry a 12b-1 fee?
Do you include financial planning in the cost of your services, or is it billed separately?
What do you project would be my yearly costs, all inclusive?
Are you also licensed to sell insurance?
Do you sell proprietary products?
There are financial advisors in New Jersey of all types: commission-only (brokers), fee-only, and hybrid (commission and fees). It’s important to make sure that you understand the implications of the compensation method for financial advisor you choose. This article by Investopedia does an excellent job of covering the topic of broker vs. investment adviser.
Standard of care
What are the conflicts-of-interest present in your business model?
Have you or any of your employees ever been subject to disciplinary action?
Are you a fiduciary? If so, what percentage of the time are you a fiduciary?
Can you sign the fiduciary oath?
Do you get paid for referrals you make to any other service providers?
With the varying types of financial advisor firms in New Jersey, there are varying levels of care that go along with it. The highest standard of care is the fiduciary standard which requires the advisor to put your best interest before theirs at all times; but not all advisors are required to follow that standard 100% of the time. There can be conflicts-of-interest that result in your interests being secondary to the advisors; know this beforehand and evaluate if it’s worth it, or if you wish to be served by a true fiduciary.
Practice management
Will you still be my financial advisor if I move out of New Jersey?
Can you help my relatives/friends with wealth management if they live outside of New Jersey?
Where will my assets be held?
How many clients do you work with?
What is your client to advisor ratio?
What types of clients do you typically work with?
How do you track/manage your processes? Is there a direct of operations?
You want to look for high organization. If a wealth management firm doesn’t seem to have it all together in a cohesive way (operationally, process-wise, and personnel-wise), it’s best to pass. There are plenty of wealth management firms in New Jersey that do have it all together; no need to risk it with one that doesn’t.
Service delivery
How often do you communicate with clients and through what mediums?
How do you meet with clients?
How many team members will be assigned to my account?
How do you invest?
What is your investment style?
Do you outsource the management of my investments or do you manage the money inhouse?
Which services do you outsource vs. provide in house?
Don’t assume that every financial advisor in New Jersey runs their business the same way. Some offer high touch wealth management services while others are less hands on. It’s extremely important to understand the advisor’s communication style, because this is highly personal and will be a key driver of how well you mesh (or don’t!)
Value
Do you have references I can talk to?
What is the main value driver of your services?
How is your firm different from others?
What are your credentials?
You want to get a clear idea of what the focus of their practice is, how the advisor is different, what their strengths and weaknesses are versus other financial advisors in New Jersey, and what their professional qualifications are. The CFP® designation is common but there are other financial advisor designations as well.
Risk management
What is your disaster recovery plan?
What’s your backup policy in case you or your team members get sick?
What are your cybersecurity policies?
How do you protect your clients from the tax implications of the recommendations you make?
How will you manage the risk in my investment account?
One of the main value drivers of service that a financial advisor could offer you is how well they protect you from all the things, investment and finance related or not, that could happen to you, your assets, and your family. Make sure they have all the bases covered, and that it is documented and part of the processes.
Working with a New Jersey financial advisor
As financial advisors in Morristown, NJ, serving clients across the country, we encourage you to peruse the other financial and investment blogs on our site and contact us if you wish to discuss your personal financial situation.