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10 Questions to Ask your Financial Advisor

Updated: Mar 3



As your wealth increases and you begin to focus more on your financial goals and developing the plan to achieve them, you may ask yourself – Can I do all of this on my own or do I need the guidance of a financial advisor? As you go through this decision-making process, in our opinion there are ten important questions that you can ask before selecting and working with an advisor.


1. What experience do you have?

Find out more about the experience the individuals you will potentially be working with have and if they have expertise in the areas that matter most to you.


2. What are your qualifications?

There are quite a few designations and licenses held by financial professionals and it is important to know what they mean. The Financial Industry Regulatory’s designation database can provide additional insight into what those designations are, the education or any other requirements needed to hold them, and whether there are any published disciplinary actions against a particular financial advisor. Many advisors will directly provide information regarding their record to you with the Form ADV (the uniform form used by investment advisers to register with both the Securities and Exchange Commission (SEC) and state securities authorities).


3. What financial planning services do you offer?

Each person has their own set of individual, unique financial planning needs. Whether you are planning for retirement, future educational needs, or for your estate, you want to make sure your advisor is well-versed in the topic that is important to you and potentially has a network of professionals, such as estate planning attorneys or CPAs, who can provide additional assistance if necessary.


4. How will our relationship work?

This involves asking the advisor about their process as well as their accessibility. It is important to know how you will interact with your advisor, how often you will be meeting with them, and how available they are by phone or email outside of regularly scheduled appointments. Make sure that the expectations match your needs.


5. What types of clients do you typically work with?

Many advisors work with clients whose asset level fall within a specific range and sometimes their clients share similar characteristics, qualities, and needs (i.e. they may work in similar industries or are at similar life stages). It can be helpful to find out what type of client an advisor typically works with to make sure that they can meet your needs.


6. Will you be the only financial advisor working with me?

In some instances, you will be working with one financial advisor and other firms may take more of a team-based approach. Asking up front what to expect can avoid issues later on and make sure you know what to expect.


7. What is your investment philosophy?

It is important that either the advisor’s investment philosophy is consistent with yours or that the advisor has conviction for their strategy and that it can add value to your portfolio. This is a lot easier when markets are doing well, but it is when the markets take a turn for the worse that you want to have confidence that your advisor will help you stay the course and not deviate from your investment plan.


8. How will I pay for your financial advisory services?

There are various ways that investment professionals get paid, so it is important to differentiate if an advisor works on a fee-only basis, meaning that you are paying the advisor solely for their guidance and expertise, and they are not receiving kick-backs from any of the investments they are recommending. A fee-only advisor is typically paid as a percentage of the assets they manage, on an hourly basis, or a flat fee for services. Regardless, the fee is determined at the initiation of the relationship, so both the client and advisor feel comfortable about this going forward. Other financial professionals earn compensation that is fee-based. In this situation, the advisor may charge both a fee for the advised delivered and can receive payments based on the product sold. Simply having a Broker Dealer affiliation is enough that you cannot call yourself fee-only. Sometimes this option gives the appearance of being lower cost, because the commissions are credited towards the fee, but typically this is not the case.


9. How much do you typically charge?

Although what you pay may depend on your needs and the assets you bring into the relationship, it is important to have a clear understanding about how much you will be paying. The advisor should be able to provide an estimate along with when you can expect to pay so that the two sides are on the same page regarding this.


10. Do others stand to gain from the financial advice you give to me?

This goes along with the question – “Are you a fiduciary?” Fiduciaries always work in the best interest of their clients and follow the fiduciary standard. Non-fiduciaries only need to recommend investments or products that are suitable, they may not necessarily be the lowest-cost or most ideal option for you. This may be the most important question because you want to be certain that your advisor is looking out for you and your best interest and not putting their interests’ first!


Now that you know what questions to ask a potential advisor, you are prepared to start the conversation and begin thinking about your goals! Be sure to check out our related posts: “When to Start Thinking about Wealth Management Services” and “The Benefits of Working with a Financial Planner” for information on getting started and contact us for a free consultation to discuss your particular goals.


Contact the Peninsula Wealth Team for a free consultation to begin building a financial and investment plan customized to your goals.



Office Address: 350 Townsend Street, Suite 411, San Francisco CA 94107 | P: 415-678-5360 | Email: team@peninsulawealth.com

 

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