Top 10 Questions to Ask Your Advisor

Plenty has been written about the first interview with a potential financial advisor. But, while feeling a “match” is important – the second meeting, much like a second date, is where you see their true colors. Your follow-up meeting with a prospective advisor is meaningful because it’s the perfect opportunity to dig deeper. 

During your second meeting with a financial advisor, you start to learn specifically how you’d be working together. From walking through how their approach to planning can benefit your specific situation, to whether the potential relationship will meet your expectations, asking these 10 questions during a follow-up conversation with an advisor can make all the difference. 

Why is a Second Meeting with a Financial Advisor Important?

During a follow-up or second meeting with your potential financial planner, your financial planner will discuss their recommendations and assessment of your unique situation with you in greater detail. You can then decide whether you want to proceed or not with implementing that plan and moving forward with the advisor. Additionally, it will be an opportunity to dive into specific costs, benefits, and relationship types

Planning Focused Questions 

  1. Do you have a sample financial plan you can send over? 

Understanding the quality and value of the financial plans a financial advisor creates can be the difference between a lackluster advisor and one who empowers your financial future. By looking over a sample, you create an idea of what to expect from the plan the financial planner or financial advisor creates. 

  1. What exactly makes you a fiduciary advisor

While you should have covered this during your first meeting, it’s a question you don’t want to have any doubts about. A true fiduciary financial advisor is solely focused on your best interests. 

  1. Who is your custodian?

A custodian is a bank or reputable brokerage where your investments will actually be held. A big red flag here is if the advisor is his or her own custodian (an example is Bernie Madoff.) If your financial advisor is independent, they are likely to work with a large reputable custodian such as Schwab, Fidelity, TD Ameritrade, or Pershing. 

  1. If I hire you and another economic crash happens, what’s your plan?

Note that you shouldn’t have to ask this question. If during your first call the financial advisor hasn’t made it clear that they are positioning you for time in the market instead of timing the market, they’re not it! An important benefit of hiring a financial advisor is you’re not panic-stricken and worrying but instead focusing on the long term, holistic financial plan you’ve put in place with your advisor.

Relationship Focused Questions

  1. What would the process look like if I decide to hire you?

This is an essential second interview question, so consider saving it for when you’re seriously considering hiring the advisor. Look for a very well thought out process for onboarding you as a client. If they dilly dally or talk in circles, it’s a clear flag they’re trying to “close” you instead of entering into a fruitful relationship.

  1. If I hire you, will I be working with you or somebody else? 

Carefully evaluate your expectations around the relationship. In some cases, a financial advisor may work with a team or another advisor. If they are, you’ll want to get to know who else will have a hand in your finances. Remember that if you’re interviewing them with the expectation that they will be working directly with you, there should be no doubt about how the relationship will be structured. 

  1. If I hire you, will I have to sell my current investments? Will there be tax implications?

If you own investments outside of an IRA or other tax-qualified account, ask if the advisor requires you to sell everything and purchase selected investments. What are you are looking for here is will there be tax consequences in making the transition to the advisor managing your assets.

  1. If I hire you, what are my all-in costs?

During a second meeting, most people ask about fees that they will be paying the advisor, without being aware that there are other costs associated with entering into a client-advisor relationship. In addition to paying the advisor an “advisory fee,” you will want to know what the underlying “investment expenses.” These are the fees you will pay for the financial products that the advisor picks on your behalf. 

Some advisors may seem less expensive than others in terms of advisor fees, but the investment expenses may actually be higher. Consider all-in costs while determining if the advisor you’re interviewing is right for you. 

  1. What happens to our relationship if you retire or leave the firm?

significant number of financial advisor relationships last at least 10 years. Once you’ve found the right financial advisor for you, they’re usually for the long haul. That means it’s important you feel comfortable 

  1. Where at other types of professional services do you have as part of your network (such as accountants, estate attorneys, insurance representatives, mortgage specialists, etc)?

Holistic financial advice rarely exists in a vacuum. Asking this question allows you to evaluate your potential advisor’s network. If they’re unable to provide examples of other potential experts for you to refer to, you may find yourself grappling with finding another expert should the situation arise. 

Top 3 Tips For Your Second Meeting with A Financial Advisor

  1. Ask them to walk through their recommendations for your financial situation, don’t be afraid to ask a lot of specific questions. Make sure you understand the recommendations fully before agreeing.

  2. Read the ADV and other documents the advisor may have sent over after your first call. Review the materials to make sure you know what you’re getting into. If they haven’t sent over any important information, request it. 

  3. Always make sure a potential advisor’s qualifications match your expectations. While an advisor can seem like the perfect match during a first meeting, digging deeper to ensure they are a fiduciary, independent advisor with no ties to a broker-dealer can make all the difference. 

Disclosure: This blog is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.

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