What To Ask

What to ask when interviewing a Financial Advisor

Before you hand over your financial future to an investment advisor, make sure you’ve picked the right one for you!

Selecting an advisor to care for you and your family’s financial security and help you meet your life goals may be the most important relationship you have (after of course your significant other!) so you want to make sure you choose one that meets your needs and style.

These are some of the key questions to ask an advisor face-to-face.  The answers will give you a sense of whether the advisor will serve your needs best.

What are your qualifications?

Find out what formal training the advisor has undergone to manage your investments. Good advisors continually upgrade their knowledge and skills through continuing education.  There are many associations and designations, some basic and some very specialized.  Have them explain their designation and what was required to achieve and maintain it.  For Example, The Certified Financial Planner designation requires passing a 6 hour exam, a minimum of 2 years of experience, and 30 hours a year of professional development to maintain it.

How many years have you been in the business and do you have an area of specialization?

You cannot underestimate the importance of years of experience.  Investment markets are challenging and having been exposed to many years of markets can only be better. Some advisors specialize in one or more areas such as financial or financial life planning and investment, or just investment.  Each advisor may have other skills relevant to what you need such as detailed cash flow planning, real estate, insurance, small business and estate planning.  Some focus on specific segments like seniors or high net worth investors. Still others restrict their practice to retirement and estate planning. Ask questions about the segment to understand the perspective and depth of the advisor. Make sure your interests line up with those of your advisor.

Do you prepare written financial plans for your clients and if so, what is included?

Although many advisors offer this service, quality can vary widely. A complete financial plan should cover every aspect of your finances: budgeting and cash flow, retirement planning, estate planning, tax planning, insurance, and anything else you need to live comfortably in the present and plan for the future.  However, you may not need a comprehensive plan and if not, the advisor  needs to be able to accommodate you.  Ask to see a sample plan.

What is your investment process?

Ask what investments the advisor selects and why.  How are portfolio’s built and monitored.  There are many different investment products and strategies. Each can work but what is more important is the advisor’s investment process and skill in the products he/she chooses.

How are you paid?

There are many fee models: commission only, commission plus fee, fee only, percentage of assets, etc.  Each has their pro’s and con’s.  Ask how the fee is charged, are there any restrictions within a specific method, what is included and ensure you are comfortable with your advisor’s form of compensation.

How does your team operate?

Often, you aren’t just hiring an advisor: you’re hiring a team. Ask how the different roles and responsibilities of each team member would affect you and who handles administrative issues such as a name or address change, for example, as opposed to who answers investment/portfolio questions.

How often would we meet for a portfolio review and what is covered?

Once or twice a year is fairly standard. Make the frequency and type of regular contact you expect clear from the outset.  Ask if the advisor uses an agenda, is there a pre-meeting package you can review and prepare questions and exactly what is covered each year?

When and how would I receive reports on my investments, and what form will they take?

Many investors prefer to receive a written report, usually in the form of a statement, on a semi-annual basis.   What other reports are available: progress towards goals, long term cash flow projections, investment allocations and performance, etc?