The Sum Up: 11 Questions to Ask Financial Advisors

Hiring a financial advisor is one of the best things you can do to build a secure financial future for yourself and your family. That said, hiring the wrong advisor can cost you time and money and cause you stress.

US News recently published an article with questions to ask a financial advisor before you commit to hiring them. We want to share that information with you with some of our own thoughts. Here are the questions we recommend.

How Did You Get into the Financial Services Industry?

This first question is one you might expect to hear in a job interview, and we put it first because you should think of the initial meeting with a potential advisor as an interview. If you move forward, they will be working for you, managing your money. 

The answer to this question can tell you a lot about the person you’re interviewing. Are they passionate about helping clients increase their wealth? What is their philosophy of financial management? You will know by the way they answer whether they’re a good fit for your needs.

How Long Have You Been Working as a Financial Advisor?

This question works well as a follow-up to the first if the advisor hasn’t already told you about their experience. A person who is new to the industry may still be effective, but it’s useful to know how much time they have spent helping clients manage their money.

Keep in mind that they may have prior experience that’s relevant. For example, some financial advisors had previous careers in other areas of the financial sector. Those experiences can be helpful to their clients, so don’t rule someone out simply because they’re new to the job.

Are You a Fiduciary?

It’s unlikely you’ll meet any financial advisor who will tell you up front that they’re in it for the money. That said, you do need to know that the person you hire is going to put your financial well-being ahead of their own. That’s why you need this question.

A fiduciary financial advisor has a legal obligation to act in your best interest. A non-fiduciary could potentially recommend an investment because they’ll earn a commission on it. We strongly recommend that you hire a fiduciary.

Who Is Your Typical Client?

Asking about typical clients is a good way to get a feel for whether an advisor is right for you. If you’re interviewing someone who mostly works with millionaires, you may find that they don’t give as much attention to you and your portfolio as they would to someone who’s earning them more money.

Learning about typical clients can also help you find a good philosophical match. You want someone who will take work within your preferred parameters and risk levels. In most cases, it’s best to hire an advisor who is accustomed to working with people like you.

Who Will Be My Primary Point of Contact?

If you need to ask a question about your money or rethink your investment strategy, will you be able to get your financial advisor on the phone? You’ll need to know if the advisor will be personally involved with you or if they’ll be delegating your portfolio to an associate.

A good follow-up to this question is to ask to meet the person who will be handling your account if it’s not the advisor. You can also ask to meet any support staff even if the advisor says they’ll handle your money personally. It never hurts to know everybody on the team.

Can You Explain an Investment Concept to Me?

A big part of your financial advisor’s job is helping you learn about money management and financial planning. We like this question because it gives you the opportunity to evaluate a potential advisor’s ability (and willingness) to teach you something new.

You may want to review a list of financial or investment terms ahead of time and pick one you don’t understand for this question. The way they answer will tell you a lot about what it will be like to work with them.

Do You Have Experience That Will Help Me Achieve My Financial Goals?

If you were an employer hiring someone for any position, you would ask whether they had experience that would help them do the job well. The same principle applies here.

Let’s say you have a short-term goal of paying off debt, a medium-term goal of buying a home and the long-term goal of retiring by the time you’re 50 years old. You should ask the financial advisor what experience they have helping other clients attain similar goals and how they will help you do the same.

How Are You Paid?

We understand that it can sometimes be uncomfortable to talk about money but it is crucial to know how your financial advisor expects to be compensated before you agree to work with them. Many advisors work on commission while others work on a fee basis.

Keep in mind here that no fiduciary financial advisor can act in a way that conflicts with your best interests. Working with a fiduciary minimizes the chances of anything untoward happening but you should still make sure you understand the commission or fee structure before you sign a contract.

Can You Give Me an Example of a Time You Made a Mistake and What You Learned From It?

We’re adding this question because we think it’s an essential one. There’s a reason potential employers ask about mistakes and failures. Before you work with someone, you need to know how they will react if things don’t go according to plan.

Be wary of any advisor who tells you that they’ve never made a mistake or misstep. Even if they’re just getting started as a financial advisor, they should be able to share a mistake in a previous job or some other area of life. You want someone who will be straight with you if an investment doesn’t work out, not somebody who plans to hide behind an illusion of perfection.

Hiring a financial advisor can help you choose and achieve your financial goals. Asking the questions we have listed here will enable you to choose the best financial advisor for your needs, now and in the future.

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