Questions To Ask Your Financial Advisor


So, you’re hiring a financial advisor and entrusting your life savings with her. As with any professional on whom you rely for expertise, how do you know if you’re in good hands?

To find out, don’t be shy. Ask these questions and ensure the answers you receive are satisfactory.

1. What are the fees?

  • Is it a fixed amount per year, an asset under management fee or some other arrangement?
  • Are there additional fees such as investment sub-advisors, mutual fund expenses, sales loads, etc.?
  • Is there a published fee schedule and how are the fees disclosed to you?
  • Is the same fee paid on all assets, including cash and fixed income investments?
  • Are the fees negotiable?

2. What services are included/excluded?

Are other financial planning services such as retirement projections, tax preparation, annuity analysis, mortgage analysis, Roth conversion recommendations, budgeting, and financing college included or are there additional fees to do that work?

3. What is the investment strategy and philosophy?

  • Will the firm use low-cost index funds, actively-managed mutual funds, and/or active stock trading?
  • Is a sub-advisor used to do the investing? If so, why and who is it?
  • What tax minimization strategies are used?
  • What is the approach toward alternative investments such as crypto, real estate, commodities, metals, private equity, etc.?

4. How is performance presented?

  • What benchmarks are used to assess performance?
  • Why these and over what time period?
  • What has the firm’s performance been over 10- and 20-years compared to its relevant benchmarks?
  • Is the reported performance net of all fees?

5. Is the advisor acting as a fiduciary?

If not, why not? If so, is that in writing?

6. What expertise and credentials does the advisor have?

Has the advisor achieved a CFP (certified financial planner) designation? If not, why not and what relevant training and credentials have been obtained?

7. How does the advisor deal with conflicts of interest?

Conflicts are not unusual and if they occur, how are they communicated and resolved with clients?

8. Has the advisor or her firm faced any disciplinary proceedings from any regulatory authorities?

If so, have them explain the circumstances.

Are these awkward questions? Perhaps, but it would be more awkward to have your life savings in their control and not know the answers. Be skeptical and wary but when you receive satisfactory answers, have confidence that you’re in trustworthy hands with your chosen advisor.

Do you want a second opinion or need help asking these questions and deciphering the answers? Get in touch to learn about my Financial Advisor Assessment service.