What to ask a financial advisor

So you have a financial advisor. You’ve worked hard, used a budget, and managed your money. You have assets, and savings. Maybe you’re considering investing, or you’re already investing but you want to refine your investment strategy. Or maybe you’re just feeling like your financial life has gotten so complicated that you need professional advice to sort it out. That’s a smart move: if you know you need help, it’s always a good idea to look for it, and to get it from someone qualified.

But how do you make the most of your financial advisor? What do you need to know, and what questions should you ask? 

What to Ask a Financial Advisor?

To give you a head start, we asked 13 financial professionals a simple question:
What’s the #1 question that people should ask their financial advisor, but usually don’t ask.

Let’s look at the answers.

Lawrence Solomon
Client Advisor
Mercer Advisors

What is the required rate of return on their portfolio?

In other words, what is the minimum rate of growth they will need on their investments to achieve all their financial goals. Clients and advisors will discuss portfolio performance and clients will often ask if their investments beat a benchmark or market index like the S&P 500, but this not really the most important or relevant question. Measuring investment results against a benchmark only tells you the desired rate of return, not the required rate of return!

Portfolios should be managed to achieve the client’s financial goals with the highest probability of success, not just to beat the market or an index. Figuring out the returns they will need to achieve a comfortable retirement or a college education for their kids can only be determined by developing a comprehensive financial plan that takes these goals and all their income, expenses, savings, and assets into account. Building the financial plan and coming up with the required rate of return and the best mix of assets to achieve it is the most important job the advisor has, and it’s something clients rarely ask for.

Lawrence Solomon is a nationally known Client Advisor at the Washington, DC office of Mercer Advisors. He is a Certified Financial Planner (CFP) with over 20 years of experience advising clients and families on financial planning, investing, and just about everything else with a dollar sign in front of it.

Nick Cantrell

Nick Cantrell
Founder, Wealth Advisor
Green Future Wealth Management

How do I incorporate my values into my investments, and not just into my financial plan?

Oftentimes we see clients who feel passionately about certain issues, nonprofits, or churches or places of worship who have carefully considered how they would like to support these organizations through charitable giving during their lifetime or a specific bequest as a portion of their estate plan. When we look at their investment portfolios, however, their assets are completely misaligned with their values. Should a client who is a strong supporter of The Audubon Society hold investments in companies that have poor environmental records, or are involved in fossil fuel burning? Should an investor who feels passionately about racial justice issues own companies with a poor track record of hiring and promoting diverse employees?

Clients should ask if there is a way in which they can support the causes that matter most to them by incorporating those values into their investments, not just their charitable giving or estate planning.

Nick Cantrell is the Founder and Wealth Advisor at Green Future Wealth Management. He has provided values-based financial management services for over a decade. Nick holds the FINRA Series 7, 63, and 65 licenses and is life, health, and variable insurance licensed. He is also a Certified Financial Planner™ professional, Chartered Financial Consultant®, a Chartered SRI Consultant, and Chartered Life Underwriter®. He has been on Forbes Magazine’s “Top Next-Gen Wealth Advisors” list for 3 years in a row.

Billie Christofi

Billie Christofi
Director
Reventon Finance & Investments

How have you helped other people?

People should ask their financial advisors for examples of how they have helped other people.

Testimonials are one thing, but asking for examples of how someone has helped someone progress with their financial goals is important to know that their advice has benefited people in the long term.

Billie Christofi has been with Reventon since 2011 and is an advocate for financial education and money coaching for all clients. She holds a certificate IV in financial services.

James Lee

James Lee
Founder
StratFI

How many clients do you have?

When I receive clients that are moving from another financial advisor, they almost all have the same complaint: They didn’t receive enough attention.

An easy way to avoid this problem is to simply ask “How many clients do you have?”

Most financial advisors can comfortably manage up to about 100 active client relationships. Beyond that, they need to bring on additional advisors, each of whom can handle up to 100 relationships.

There are exceptions to this rule, of course, but if you think about it… it kind of makes sense.

Brokers earning commissions are compensated primarily for “new” business and spend more of their time marketing. The result is that successful brokers may have hundreds (sometimes thousands) of clients, but close relationships with only a fraction of those.

Fee-only fiduciary advisors have an advantage over commission-based advisors in this respect; they are usually paid to provide ongoing service.

A second question to ask is “What is the average portfolio size that you advise for clients?”. You’ll want to be “average” or slightly “above average” in this respect.

James Lee has been a financial advisor for over 30 years, and is the founder of StratFI, an investment advisory firm focused on anticipating market developments. He is a Certified Financial Planner, Chartered Financial Analyst, and Chartered Market Technician. Mr. Lee has authored two books, Foresight Investing: A Complete Guide to Finding Your Next Great Trade and Resilience and the Future of Everyday Life.

Mark Clure

Mark Clure
Principal
Enso Wealth Management

What is your real value to me?

Let’s pretend that you are meeting someone for the first time. The conversation flows something like this; Who are you? What do you do? Why do you do that? How do you do it? If those questions and answers generate interest the conversation will continue.

Let’s further pretend that you are speaking to a financial advisor and the conversation did continue. The next logical questions are “what makes you different?” and “why should we do business?” Those two questions are wrapped in the question “what is your real value.” The answer to “what is the real value” are the outcomes that the financial advisor provides, and do those outcomes resolve the issues that you face. The outcomes provided answer the questions “what makes you different?” and “why should I do business with you.”

That’s really the core of this.

Mark Clure, CFP®, is author of the best-selling book, True Wealth, The GUIDE Process for Finding and Financing Your Ideal Life. As a Principal at Enso Wealth Management, in Mt Shasta, California, Clure is passionate about helping clients with their financial goals and fulfilling their life’s purpose. He has 26 years financial industry experience and enjoys skiing, mountain biking and time with his family. 

Eboni Moss

Eboni Moss
Owner and Business Coach
The Master Resource

Who are the players that will work on my account?

The number one thing that people should ask their financial advisors but never do is who are the players that will work on their account?

Regardless of the size of their investments or portfolio, everyone wants to feel like they are getting the attention of their service provider so the expectations for the points of contact need to be communicated. There is a chance that the main advisor will oversee the account but will have other colleagues that handle the day to day tasks. This is the same in tax. The Partner runs the team, but the Manager and Senior Associate will handle the day to day tasks and communication.

To avoid being surprised when someone else reaches out with questions or responds to their inquiries, it’s best that they know who is a part of the team upfront. Just as importantly, if the team changes, that they are also made aware of that shift.

Eboni Moss is a CPA, licensed in FL and GA, with 15 years of experience in public accounting, focused on taxation. She is also a business coach focused on entrepreneurs working to scale their company.

Warren Ward

Warren Ward
Founder & CFP®
Warren Ward Associates

How much will this cost?

The number one thing that’s never asked is ‘how much will this cost’? It’s estimated that 95% of those providing financial advice are licensed as salespersons – stockbrokers and/or insurance agents – not true advisors. The other 5% are Registered Investment Advisors and are required to state their fees openly and clearly.

Since sales agents are primarily taught to ‘close the sale’, I’ve heard the question answered: ‘you don’t pay me, the insurance company does’ (disingenuous, as the fees can only come out of the money used to purchase the investment) or a nebulous ‘pennies on the dollar’. Since the state of the art in the investment advisory world is one penny on the dollar, often less, what sounds like a little is actually a lot.

Warren Ward is the founder and Sr Planner at WWAFP, a Columbus Indiana ‘fee only’ planning firm. In addition to being a NAPFA Registered Advisor, he is a member of the Indiana Society of Accountants and the Columbus Economic Development Board. He is also a local expert on college financial aid issues.

Arvind Ven

Arvind Ven
CEO and Founder
Capital V Group

Can you walk me through your investment philosophy and strategies?

While that is a good question, people should not run and do that by themselves for several reasons:

Risk tolerance / Risk profile can vary significantly even among people with seemingly comparable financial situations. That also varies with age. They should never chase certain strategies or ‘glamorous’ stocks just because a friend or someone in their family told them to. Having a financial plan and sticking to it is key especially during times of volatility.

For example, the very first thing that we do with a prospective client is to gauge their risk profile (with a detailed questionnaire) while learning more about their financial status, goals and expectations.

Many people don’t understand their own true risk tolerance. Walking them through their ‘risk score’ while analyzing their existing portfolio is eye opening to them in terms of risk level mismatch between where their portfolios currently versus they should be based on their risk tolerance.

Arvind Ven is the CEO and Founder at Capital V Group, a Registered Investment Advisory firm in Cupertino, CA. He holds an MBA from MIT and is a Registered Investment Advisor offering securities and advisory services. 

Chad Willardson
President and Founder
Pacific Capital

Are you a fiduciary?

Maybe you’ve heard the buzz over the past few years about the word “fiduciary.” But do you actually know what it means? Fiduciaries are required to provide “the highest standard of care and trust” for their clients.

A fiduciary professional must act in the beneficiary or client’s best interest at all times. For a fiduciary financial advisor, this role may mean recommending a financial strategy that results in reduced or no compensation, simply because it’s the best option for the clients.

I spent nearly nine years at a global investment bank in the private wealth management division. Managers held mandatory meetings with all staff multiple times a week. Behind the scenes, there was regularly some kind of “focus” for the firm that advisors were incentivized to sell to clients. Once the banks bought most of the investment firms (2008– 2010), an increased focus on banking products and cross-selling initiatives spread like wildfire in the industry. Now, on top of the firm initiative to sell investment funds, there were crossselling incentives to promote specific credit cards, mortgage loans, and even money market funds that paid higher internal fees to the bank.

Many large firms want to leave their clients in the dark by sharing as little information as possible. They have confusing, complicated fee structures that leave their clients having no idea how much they are paying to invest their money with these large banks. The results of hiring a flat-fee fiduciary advisor include unbiased financial advice through a personalized, goal-structured investing approach.

Chad Willardson is a multi-awarded Certified Financial Fiduciary, Accredited Wealth Management Adviser, and Chartered Retirement Planning Counselor. After 9 years at Merrill Lynch, where he ranked in the top 2% of over 16,000 Financial Advisers, he founder Pacific Capital, where he currently serves as President. He is the author of the best-selling book Stress-Free Money: Overcome These Seven Obstacles to Find Financial Freedom.

Jeremy Britton

Jeremy Britton
CFO
BostonCoin

There are many questions I wish that all clients would ask prospective financial advisers.

After almost 30 years in the industry, there are many questions I wish that all clients would ask prospective financial advisers. An overview would include:

1) Which stocks, shares, property or managed funds do you currently own? Nobody sane would hire a fat personal trainer or a sick doctor, so do not hire a financial adviser who does not practice what they preach. A licensed adviser should have a public register that shows what investments they hold, so you can see what they invest into, and see if there are any conflicts of interest.

2) To who are you ultimately responsible, or who pays you? An adviser who is remunerated by a bank, insurance company or large financial institution may have conflicts of interest or limited in the advice they can provide. Aim to seek an independent financial adviser who works for you as the client, and can provide advice for and against major institutions without bias.

3) What is your succession plan, or who will look after me when you go? Many investors will have superannuation or stock portfolios that go on for 20-30 years. You must ensure that someone will still be around to take care of your investment for its lifetime.

There are many other great questions to ask, these are just a start.

Jeremy Britton has been a financial advisor since 1992, and authored the award-winning book Who’s Taking Your Money? (and how to get some of it back!). He is the CFO of BostonCoin, the world’s first cryptocurrency ETF.

Joshua Gerstler

Joshua Gerstler
Chartered Financial Planner
The Orchard Practice

Will you help me achieve my goals?

Some potential clients are very focused on investment performance.

The question they should be asking is “Will you help me achieve my goals?” or “How will you help me achieve my goals?”

The focus should be on you and your objectives e.g. Paying school fees; Being able to stop work at a certain age; Achieving a certain lifestyle; Making charity donations.

Joshua Gerstler is a Chartered Financial Planner and the owner of The Orchard Practice. An award winning boutique Financial Planning business in Borehamwood, UK.

Kim Klein
Senior Financial Strategist
Wealth 4 Life Australia

Are you happy with your life?

The job of a “Real” Financial Advisor is to help you to have your best life. Their job is to help you make smart decisions about your money so that you can enjoy your life both now and in retirement. 

This question is an easy way to see: 

1. Are they good at what they do – are they on track to achieving their goals – are they doing what makes them happy! 

2. Do they practice what they preach – The old saying applies here “those who can do, those who can’t teach”. Do you want a teacher/coach or a mentor as well? 

Obviously not every aspect is perfect all the time, but you want someone who not only knows; how to set goals, track goals and continuously act on their goals, but who also knows how to have fun along the way, after all we are all only on this planet for a short time, so we need to make the most of it!

Kim Klein is a Certified Financial Planner (CFP) and a member a member of the Financial Planning Association. She has over 15 years of experience in the financial planning industry and has clients throughout Australia. Kim focuses on helping clients reduce stress and address conflict and worry over financial issues.

Garret N. Sorenson

Garrett N. Sorenson
Relationship Manager
AAFMAA Wealth Management & Trust

What makes you qualified to work with me?

People should always ask their Financial Advisor, “What makes you qualified to work with me?”

The benefit to this question is there isn’t necessarily a right or wrong answer. It’s more about what you as the client need from your advisor to ensure you are getting the best advice possible. Some people might want to work with a Certified Financial Planner (CFP). Others might want to work with a Chartered Financial Analyst (CFA) or a Certified Public Accountant (CPA). What’s really important is knowing that your advisor understands you and your unique situation.

For instance, I work solely with veterans and the military community. Being a veteran myself helps me understand and relate to the specific questions or experiences that my clients go through. You might work as a pilot and need someone that understands the aviation industry more. Or, you might be a physician and want to work with someone that understands your unique circumstances.

Another thing might be the specific problem you are having. For example, you might have high school kids getting ready for college, and you need an expert in FAFSA or helping pay for college tuition. Maybe you’re starting a new job, and it comes with an extensive benefits package that includes Qualified Stock Options or large bonuses. Having an advisor you know deals with these things every day, compared to someone that might not be as experienced in these areas, can play a huge part in helping you manage these complex situations.

Make sure they are an expert in understanding you and not just a generalist in the field.

Garrett N. Sorensen served in the Army for nearly 10 years, including deployments to Afghanistan. Since leaving the Army in 2018 he has worked in the financial planning industry, first with Abound Wealth Management and currently with AAFMAA Wealth Management and Trust. He specializes in helping veterans and members of the military community achieve their financial goals. He holds an MBA in Accounting and Finance and a Certificate in Financial Planning from Belmont University.

Which is the Right Question For You?

There you have it: questions you should ask a financial adviser that you may not have thought of, direct from 13 financial professionals. You may choose to ask all of them – and a good financial adviser should have no problem answering any of them – or you might choose only a few. Read the questions and their explanations, consider your goals and your relationship with your advisor, and decide which ones are most appropriate for you. Never be afraid to ask. After all, it’s your money and your future!

Over to you… What’s your #1 question to ask a financial advisor? Let us know in the comments below!