Financial Advisor Q&A


Everyone needs a little help with some aspect of a financial plan. Whether it’s investing, tax planning, estate planning, debt management, or a multitude of other topics, money can be complicated. Asking for help from a professional when you need it is certainly a better option than making a costly mistake that you don’t realize is a mistake until it’s too late to do anything about it. But, before you commit to an advisor, it's important to do your homework!

Something to keep in mind when you hire a financial advisor, is that you’re entering a long-term relationship with someone who will know most everything about your financial life. So with that being said, when it comes to your financial future, you can’t afford to settle. GET NOSY! Here's a list of questions you should ask during the interview process:

9 Things You Should Ask A Financial Advisor

Question 1:

What do I need to know about fiduciary relationships?

Answer: Research your advisor! The term fiduciary has been used in the industry for years and has recently grabbed attention. The reasoning behind it is because in the past, an advisor can recommend something that is just ‘suitable’ for a client. The DOL has been pushing to make it a law that your advisor must act in your best interest at all times. Meaning, putting your best interests before their compensation or other considerations. This adds more scrutiny to the actual recommendation. If you have a question about what your advisor is recommending, take a step back and ask yourself if it really is in YOUR best interest. Additionally, don’t be shy to ask how your advisor is compensated. Transparency is key to a long-lasting and trusting relationship.

Question 2:

Should I ask my advisor to describe their investment approach? If yes, what details should I be looking for?

Answer: Absolutely! An effective advisor should be able to describe their overall investment approach which has been tailored to your situation very easily. Ask how they decided on the investments, why they chose them, how this will impact your family if something happens to you, how this will/can benefit your family and the advisor’s compensation in the overall strategy.

Question 3:

Sometimes I don’t know what to ask… how often should my Financial Advisor reach out to me?

Answer: This one is 95% up to the relationship you are looking for from an advisor; the other 5% is how the advisor manages their practice. You have the ability to select the frequency of the service you need or seek. Minimally, you should be meeting at least once a year, especially if you have given that advisor discretion over your accounts (ability to trade without your immediate consent).


Question 4:

Are there certifications/credentials should I look for in an advisor?

Answer: First of all, anyone can be a ‘financial planner’ which is extremely dangerous. Make sure your advisor is accredited by using To be a full service broker/advisor in this industry, your advisor needs to have passed the Series 7, Series 66/65 and State Insurance licensing. This is the bare minimum to practice as a true advisor. Then, look to see what other credentials they have gotten above and beyond the requirement. Typically, you want to align your goals with the specialty the advisor has gone to lengths to understand.

Question 5:

How often should an advisor be in touch with his or her clients?

Answer: As often as the client would like (in reason). If an advisor has hundreds of clients, plus the prep time and research time needed, it may be difficult for them to reach out when the markets are volatile. Ask about the team the advisor has around them. Typically, they should have business partners that specialize in different areas of their practice to run an efficient business geared towards clients’ expectations. For example, some have a financial planning department, insurance specialist, portfolio managers, etc. If they are lacking those parts, might be a sign they are overwhelmed and they do not have time to fully service your needs.


Question 6:

How much guidance should an advisor offer in order for me to gain full understanding of my portfolio?

Answer: One of the biggest aspects of the client/advisor relationship is trust and understanding of the services being requested. If you want financial planning, you make sure you are getting comprehensive and holistic approach that encompasses risk management through diversification of your portfolio, income distribution planning, continuity planning in case of incapacity and legacy planning. Sometimes, this doesn’t come cheap, but choose an advisor or firm that specializes in financial planning. Even some firms can provide this service free of charge while others can charge thousands.

Question 7:

What type of safeguards should a firm or broker have in place to ensure that my assets are protected from fraud?

Answer: Make sure they are members of SIPC & FDIC which help to protect the value of the accounts (not the performance) if the company is insolvent. Also, ask about the AM Best & Moody’s Ratings along with any Lipper awards or other awards that credit financial firms with being the top of their class. The higher the rating, the likelihood they will stick around when you need them. Additionally, ask your advisor about the online safeguards they have in place to keep your personal information secure.


Question 8:

Are there strategies that can help minimize my taxes?

Answer: Advisors can help with minimizing tax burdens with different strategies that are tailored to your situation. But if that advisor is not in the business of preparing taxes, they should not give out specific tax advice!

Question 9:

Should I ask my advisor what happens with my money if something were to happen to them?

Answer: This area is typically overlooked by advisors. You will have hundreds of advisors lining up to help you with your accumulation stage but not many delve into the incapacity or legacy planning since they feel uncomfortable asking the difficult questions. The advisor should have an understanding of your family dynamic and recommends a strategy that aligns with your wishes for your loved ones if something happens to you. Or makes sure the right people are in the right places if you are unable to make financial decisions for yourself. Ask an advisor about the attorneys they work with. A well-rounded advisor will make sure you have your estate planning documents in place and even insist on having multi-generational (family) meetings including the attorneys present.

A Final Note!

If you are hiring a financial advisor, do your homework first -- It’s a relationship that can affect your long-term financial health. So, make sure you interview more than one financial professional and/or firm to find someone who is easy to talk with and who understands your needs.T he time and research ahead of time are worth it -- The right adviser is out there waiting for you.

What did you think of today's article? Do you have additional questions you would add to the Q&A? Share your thoughts with us in the comment box below!


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