10 Questions Every Inheritor Should Ask Before Hiring a Financial Advisor
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Most financial advisors don't understand inheritors.
So, how can you find one who does?
In this episode, I give you the 10 questions you should be asking every financial advisor you interview, plus my own answers!
These questions cover the big stuff: is the advisor a fiduciary, how are they paid, what's their actual experience with people like you?
They will also let you explore what working with an advisor would look like day-to-day.
If you're an inheritor and tired of feeling lost, listen for advice on choosing an advisor to help you navigate a current or future inheritance.
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Transcript:
Hey, I'm Katherine and thanks for joining me at Heir Necessities, the podcast that breaks down complicated topics related to generational wealth and inheritance and turns them into real talk for Gen X, millennial and Gen Z inheritors.
I'm a certified financial planner, a financial advisor for inheritors and an inheritor, just like you.
Each week on the podcast, I break down a different topic related to inheritance and my hope is that you can stop trying to figure out how to manage your investments or figure out what to do with your inheritance by asking Google or ChatGPT what to do, and instead come here and get the real answers you need, jargon-free and concrete guidance that helps you move forward and plan your life and your future with confidence.
On this week's episode of Heir Necessities, I am giving you my answers to the 10 questions that you should be asking every financial advisor you interview.
If you want to read my original blog post about what these questions are and why you should be asking them, I've dropped the link to that post below. For now, let's dive into it.
The first three questions that I want you to ask are all about the background and experience of potential financial advisors.
Question 1: What Are Your Qualifications and Experience as a Financial Advisor?
What are my qualifications and experience?
I am a certified financial planner and I have been working in the wealth management industry for almost a decade.
I started working in the trust department of a big bank. I moved to working for a large RIA based here in Portland, Oregon.
At that firm, I worked as a paraplanner, a philanthropic advisor, and then an investment advisor and financial planner for my own clients. I started Sunnybranch three years ago to work specifically with inheritors.
Throughout my career in wealth management, I've worked with inheritors, first at the trust department and then working with a lot of younger clients when I was at that bigger firm in Portland.
I know the concerns that younger inheritors are dealing with. I've dealt with them myself and I've been hearing them from my clients over the past decade.
But at bigger firms that are geared towards working with our parents or our grandparents, our concerns aren't front and center, and that's why Sunnybranch exists.
Question 2: Have You Worked With Clients in My Specific Situation?
I've already started answering the second question, which is, have you worked with clients who are in my specific situation?
In my case, that's inheritors, and the answer is yes. If you are either a current or a future inheritor, it can feel like you are so alone in what you're dealing with.
You can't talk to your friends about it. You may not have family that you can talk to about it. And it feels like your situation is crazy. And I just want to reassure you, your situation might be actually insane, but it probably isn't that far out of the realm of normal.
It's just that you don't know what all these other people are going through. I do. I've seen it.
From the complex but mundane to the totally insane what the heck is going on here, I've dealt with all of it and everything in between.
It can be a huge reassurance just to enter into a space with someone who knows exactly what you're going through and more than that, knows how to help you navigate the issues that you're facing. Because if you haven't been through this stuff before, it's confusing, overwhelming, intimidating, but it's what I do.
Literally every day. It's my bread and butter and I love it. I'm always excited to hear what new clients are going through and build a game plan to help you navigate the most pressing questions and issues you're facing.
Question 3: Are You a Fiduciary Financial Advisor?
The third question is, are you a fiduciary? And the answer is yes. Sunnybranch is a registered investment advisory firm and I am a registered investment advisor. That means that I am a fiduciary and as a fiduciary, I am legally required to always put your best interests and what is best for you as a client above my own desires.
It seems like that might be table stakes, right? But for a huge swath of the financial advice industry, the broker-dealer world, your brokers at Charles Schwab, Merrill Lynch, Morgan Stanley, Bank of America, Wells Fargo, they don't have to put your best interests front and center.
They only have to recommend products that they think are suitable, which is a totally different standard. And you can decide which one you're more comfortable working with.
The next three questions center on how financial advisors are paid.
Question 4: How Are You Compensated? Are You a Fee-Only Financial Advisor?
The first question is, how am I compensated at Sunnybranch and am I a fee-only advisor?
The answer is that yes, I am a fee-only advisor, which means that I will never make any commissions or any sales charges or trailing revenue from the products and services that I recommend. If I recommend a particular investment, a particular insurance broker, a particular attorney, CPA, I am never getting paid or making financial compensation for making that recommendation. That's what it means to be a fee-only advisor.
I'm paid two different ways at Sunnybranch. For wealth management clients, that means clients whose assets I manage, I bill on a percentage of assets. That fee starts at 1%.
And then it decreases with the volume of assets that I manage. So as I manage more assets, that percentage fee gets lower and lower. For clients who don't have assets to manage or have assets to manage, but want to kind of do a vibe check, I work with you on an hourly basis. My hourly rate is $500 an hour and these hourly contracts are totally flexible.
You might sign a contract, you might need one hour of help, and then you're good, that's totally fine. Or you might want to dive into a bigger project that's going to be 15, 20, 30 hours of work, also totally okay. These hourly engagements are built because I know that as a current or future inheritor, you need help that's flexible and doesn't lock you into a particular plan.
Question 5: What Is Your Fee Structure?
Fifth question, what is your fee structure? I just explained it, but there are two options to working with Sunnybranch. One is as a wealth management client where I bill on a percentage of assets. The minimum for that service model is a million dollars in assets under management.
And the second is that we work together on an hourly basis, again, with no commitment to a specific number of hours or to working with me for any length of time.
Question 6: What Is the All-In Fee I Will Pay, Including Fund Fees?
The next question that you need to ask is what is the all-in fee I will pay, including fund fees, if I become a client?
This is only referring to wealth management clients, clients whose assets are actually managed by their investment advisor. Because there's that one fee that we've talked about, right, I'm the fee-only advisor for wealth management clients, I bill based on a percentage of assets, but there are also additional charges for the investments that we use.
At Sunnybranch I have two options for client portfolios. One is a lower cost, lower impact investment.
Those are ESG screened index funds. They're extremely inexpensive and the expense ratio on that portfolio is very low.
But the impact that you get in terms of values alignment is also relatively low.
The other option that I have for a more values-aligned portfolio is a basket of 50 to 60 individual stocks that represent a globally diversified portfolio and that are hand-picked and held in the portfolio because of their alignment with the UN Sustainable Development Goals. This is a much higher impact and a much more research-based portfolio.
And because of that, because of the amount of research that's involved in the amount of thought and consideration that goes into actually selecting these stocks and building the portfolio, it's a little bit more expensive. That portfolio costs half a percentage point per year.
That fee is in addition to what you pay me as your wealth management advisor at Sunnybranch.
Question 7: How Will Our Relationship Work? How Often Will We Meet?
The next two questions are about how your relationship will actually work with a financial advisor. The first one is literally how will our relationship work? How often will we meet? When can I reach out to you? What should I expect from you?
At Sunnybranch, my service model is totally based on what my clients need.
I offer two standard check-in meetings per year. One is towards the end of the year, and one is more in the early spring. But beyond that, my service model is not rigid. All of the work that I do with my clients is based around the help that they need. And at Sunnybranch, I have a very high-touch service model. I don't work with a whole ton of clients.
But the work that I do with all of my clients goes very deep. And that is by design. I like being the person that does all the work so you don't have to worry about it. If you have a question, you know who to call, you know where to get an answer. You don't need to worry about the organizing and the remembering. All of that stays on my plate.
My service model is geared towards current and future inheritors who really don't want the work of managing money on their plate. They want to be able to push all of that emotional and logistical effort onto someone else that they trust so that their brains are free to focus on everything else that's going on in their lives.
Question 8: What Is Your Client Meeting Schedule? Do You Meet Outside That Schedule?
Next question is what is my client meeting schedule and do I meet outside that schedule?
I told you already that I offer those two standard meetings, but I meet with my clients way more than that. Those meetings are intended to be for clients who maybe haven't reached out in a while, just want to check in, they're dealing with other stuff and they don't have a lot of pressing money needs, just to make sure that we're touching base at least twice a year.
But for most of my clients, I'm meeting with them much more often.
When you're an inheritor, money and life are all woven together in a way that's not always easy to untangle. A lot of your life questions are going to be money questions. And I'm the person who can help you answer those questions. Not to tell you what you should do with your life, but to tell you how your money can support the personal goals that you have.
We'll be talking over email or meeting as often as you need to make sure that all of your questions are answered and all of the priorities that we have identified are getting done on the timeline that we've agreed on.
Question 9: What Is Your Financial Planning Philosophy?
The last two questions are about financial planning and investing.
The first question is, what is my financial planning philosophy?
Different advisors approach financial planning in different ways. And because I work with inheritors, I know that when you are a current or future inheritor, your life does not conform to the sort of traditional, rigid financial planning where you come in and you go through a specific process for three months and then you're done.
Your financial needs and your financial situation are constantly evolving and changing in response to factors that are beyond your control.
My goal is to not overburden you. We'll identify your priorities, we'll sort them into short, medium, and long-term goals, we'll decide which one we'll tackle first, and then I'll do all of the work I can to help you get that task across the finish line.
Once we're done on that front, then we'll move on to the next task, or you can tell me that you're ready to take a break, and we'll pick up again when you have the bandwidth.
My goal is getting things done on a timeline that works for you.
Some of the work we do is absolutely essential and needs to get done on a specific timeline, but a lot of it isn't. So I will tell you what absolutely drop dead has to get done. I'll support you through getting it done, and then everything else goes at your schedule.
And when we're working on something and then all of a sudden something else comes in that's more important, we'll pause what we're doing to address the biggest questions that you have.
I'm not trying to fit you into a rigid box of what financial planning should be. I am here to support you with answering all of your money questions and getting all of your money-related tasks off your to-do list so that you can focus on other things in your life.
Question 10: What Is Your Investment Philosophy?
Last question, what is your investment philosophy?
At Sunnybranch, I believe in a spectrum of values-aligned investments that change as you get more comfortable with investing and that are different for every inheritor. If you're interested in knowing more about what this looks like, I have two full episodes on my investing philosophy and what investing looks like at Sunnybranch.
My overarching belief about investing is that your investments should be aligned with your values and you should be able to understand your investments. They should ultimately be simple and they should work for your life.
I'm not trying to shove you into a bunch of complicated products that you don't really understand because that's what people with five or ten million dollars should be investing in.
The only thing that you should be investing in are things that you feel good about and things that you feel help move the needle in the direction that the world should be moving.
If you're curious to know more about my philosophy, I've dropped links to those episodes in the show notes below.
If you have any additional follow-up questions after hearing my answers, please reach out to me, katherine@sunnybranchwealth.com. You can send me a DM on Instagram. I would love to hear from you.
And if you're evaluating different financial advisors and you don't understand their answers to these questions, then let me know. We can chat through what they're telling you and decide what makes sense for you as a current or future inheritor.
Let’s take the next step together
Understanding how to invest a multi-million dollar inheritance isn’t easy. Inheritors can encounter a wide variety of different situations requiring knowledge and finesse to manage. If you need more help, you can reach out to Katherine Fox, CFP® and CAP®, a financial planner for inheritors, to learn how Sunnybranch can help you evaluate your financial situation and build a plan for what should come next.
