10 QUESTIONS EVERYONE SHOULD BE ASKING BEFORE CHOOSING A FINANCIAL ADVISOR

For someone who is looking for wealth management solutions, the plethora of available options can make the whole process seem overwhelming. Adding to the stress of such a decision is the weight of the consequences that it carries; while the right firm could provide years of personalized, capable performance, the wrong one can overturn years of hard work toward your long-term goals.

With so much riding on that decision, it’s imperative that you do sufficient due diligence when researching wealth management firms. An important part of that process is a face-to-face meeting with your potential financial advisor, as it can give you not only an idea of what kind of person he or she is but also an impression of whether you may be willing to trust them with your financial future. You should use the opportunity to ask pointed questions that can illuminate how they operate and how much they value a personal, client-focused relationship.

Here are 10 questions that you should consider asking your potential advisor before making your decision:

1. How often do you regularly connect with your clients?

Customized service is an important part of any advisor-client relationship, as every client’s needs are different and tend to change over time. Advisors who consistently connect with their clients are able to demonstrate that all-important commitment to growing the relationship.

2. What is your compensation structure?

A commission-based advisor will tell you that such a structure ensures they have your best interests at heart. While that may be true, it also lends itself to more risky, short-term, investment plans that maximize their own income. Instead, look for an advisor with a fee-based structure that ties its revenue to the market value of your portfolio.

3. Who handles your research?

Quite simply, reliance on traditional media outlets does not often lead to success. You want your firm to use an approach that involves their own independent research and analysis in conjunction with macroeconomic analysis, and to share those insights with you.

4. What’s your portfolio customization process?

Personalization of a portfolio is one of the most important aspects of a strong wealth management plan that is based on a client’s risk tolerance, investment time horizon, income needs growth expectations, tax situation and other considerations. With this information, the asset allocation decision can be made and the appropriate mix of equities, bonds, and alternatives selected to achieve the desired investment objectives. The best way that a firm can do this is by establishing close, personal relationships with their clients to develop a one-of-a-kind investment approach for each one.


5. How long have you been advising clients?

This is a simple but direct question that will enlighten you about their level of expertise. The longer a firm or individual has been in business, the more scenarios they have seen and been able to learn from in order to better serve their clients. By placing emphasis on hiring executives, portfolio managers, and client advisors with years of experience and vast knowledge, a firm shows its commitment to putting its clients’ assets in the most capable hands possible.

6. What professional designations do you hold?

Similar to the question about their experience, this question will give you more insight into their level of expertise. An advisor with a well-known and regulated designation has met industry standards for education, ethics and proficiency.

7. Who is overseeing your actions with my investments?

The most practical way for a firm to assure their clients that there is no bias in their investment methods is by using independent custodians to hold the account assets. Additionally, you should have full transparency into account activity, get regular updates, and be able to request special reports pertaining to specific aspects.

8. Have there been any complaints made or penalties levied against you?

Being able to trust your financial advisor is the most critical element of the relationship, so you have to know if they’ve had any history of illicit behavior. You can research this on your own, but seeing how they handle this question can give you insight on the conduct and quality of their business.

9. What ongoing training do you undergo?

Past designations and experience are obviously very important, but so are the ability and effort to adapt to changing trends in the markets. Make sure that your advisor is making the effort to stay as current as possible.

10. What kinds of clients do you specialize in?

If you have substantial investable assets, it makes sense to use a firm that specializes in affluent individuals and businesses, instead of one that is simply willing to take on any client. To better ensure that you see your wealth grow, make sure that your firm’s expertise aligns with your situation.

Getting the most information that you can about a potential financial advisor before you make your decision can have a significant impact on your future wealth.

source: popsci.com By Boston Private

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