What To Ask Your Advisor

Here are the questions you should ask me (or any advisor).

Hiring a financial planner can feel very scary. Do I need one? Where the heck do I even look? How do I know if he or she is trustworthy?

Then, if you manage to muster up the courage to make an appointment (hard enough in and of itself), the experience of sitting with a financial professional can feel intimidating. Is this person rich? Is he/she sitting there judging me for my mistakes? What do I say to this person?! Do I make small talk, or jump right in?! Ah!

Take a breath. Drop your shoulders. Smile. Calm down. You haven’t signed your life away, you haven’t divulged private information, you haven’t even said anything to this person yet!

Now you’re ready: Pull out your list of questions. Here is what you should ask any potential advisor.

I have adapted the following from Jason Zweig’s “Commentary on Chapter 10: The Investor and His Advisers” of The Intelligent Investor by Benjamin Graham (Revised Edition, 2006, pp. 276—277).

  1. Why are you in this business? What is the mission statement of your firm? Besides your alarm clock, what makes you get up in the morning?

  2. What is your investing philosophy? Do you use stocks or mutual funds? Do you use technical analysis? Do you use market timing?

  3. Do you focus solely on asset management, or do you also advise on taxes, estate and retirement planning, budgeting and debt management, and insurance? How do your education, experience, and credentials qualify you to give those kinds of financial advice?

  4. What needs do your clients typically have in common? How can you help me achieve my goals? How will you track and report my progress? Do you provide a checklist that I can use to monitor the implementation of any financial plan we develop?

  5. How do you choose investments? What investing approach do you believe is msot successful, and what evidence can you show me that you have achieved that kind of success for your clients? What do you do when an investment performs poorly for an entire year?

  6. Do you, when recommending investments, accept any form of compensation from any third party? Why or why not? Under which circumstances?

  7. How much, in actual dollars, do you estimate I would pay for your services the first year? What would make that number go up or down over time?

  8. How many clients do you have, and how often do you communicate with them? What has been your proudest achievement for a client? What characateristics do your favorite clients share? What’s the worst experience you’ve had with a client, and how did you resolve it? What determines whether a client speaks to you or to your support staff? How long do clients typically stay with you?

  9. Do you consider yourself financially successful? Why? How do you define financial success?

  10. How high an average annual return do you think is feasible on my investments?

  11. Will you provide me with your Form ADV (if relevant)?

  12. Have you ever had a formal complaint filed against you? Why did the last client who fired you do so?

  13. If you weren’t working full time as a financial advisor, what would you like to do instead?