“We’re looking for a financial advisor. My husband listens to your show while driving for work on Saturday mornings. My friend has suggested her financial advisor, but sounded a little ‘underwhelmed’. Are there some reasonable questions we can ask advisors we’re interviewing to help us pick the right one for us?”
Excellent question! Too many people ‘find’ their advisor by accident or even by default. You are on the exact right track when you see this process as an interview. Here is a sampling of some of the questions you might start with in your interviews:
What is your typical client profile?
- Is it someone like you?
- Are they ‘all things to all people’ – that’s a bad answer
How are you paid? What would that mean to us each year?
- Are they advisors or salesmen?
- Be sure do get a clear answer no ‘smoke and mirrors’
How often would we meet?
- ‘As needed’ is a terrible answer
- Minimum of four times a year is good
Do you own the same products you’ll recommend to me?
- ‘Yes’ is a bad answer – Does your doctor take the same medications as you?
- ‘It depends’ on your needs – is a great answer
What happens to my account if something happens to you?
- ‘We have a succession plan’ is a very good answer
- ‘I’m a one-man operation’ is a very poor answer
Are you a fiduciary?
- Yes is the only answer that’s acceptable
- Some salesmen say yes when they know the answer is no – listen carefully
How did you handle 2008?
- ‘We rode it out like everyone else’ – bad answer
- We worked with each client to respond in the best way for them (bonus points if they give you examples of how they responded)
Are you licensed to provide investment advice?
- ‘I am a Registered Investment Advisor’ – good answer
- ‘Sure” – not such a good answer (think smoke)
May I bring my attorney, accountant, son, daughter, or friend?
- ‘Of course’ – is the only acceptable answer
- No (for any reason) is a huge red flag – do not keep the appointment
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