10 Best Questions to Ask Your Financial Advisor

September 20, 2022
for People

Working with a financial advisor can be very beneficial for the success of your financial goals. As the client, you should communicate with your financial advisor about your personal financial goals. Some of the questions below will help prepare you to discuss these topics with your financial advisor.

Are you a licensed financial advisor?

To legally give financial advice, a person must be licensed and regulated

How do you get paid?

Financial advisor fees can be complicated. Some advisors charge a fixed fee, some charge a percentage of your assets under management (AUM), and other advisors charge commissions. Beware that commission-based models aren’t typically favorable for clients! Each advisor with an AdFi profile is required to list the fees they charge – check out our article on pricing models.

Are there hidden fees?

Beyond the fee you’re paying your advisor, understand what “hidden fees” you’ll incur. Some examples include mutual fund fees or investment product fees.

What are my all-in costs?

Understanding how you pay your advisor and also the “hidden fees” will help you understand your all in costs. Ask your advisor to show you how much you will be paying each year or each quarter. 

What qualifications do you have?

Determine what qualifications an advisor has and what they mean. Some advisors with a CFP® or CFA designation means they dedicated years to achieve that status, which means they have a certain specialization. Note, a qualification or designation doesn’t mean an advisor is more or less capable but be sure to ask the advisor if they hold any. With the AdvisorFinder marketplace you can browse based on qualifications!

How will our relationship work?

Some advisors meet once a year, some meet quarterly, and others meet with their clients as often as the client wants. Understand what you’d like and make sure it aligns with the advisor you’re talking to.

What is your investment philosophy?

Understanding an advisor's investment philosophy will help you determine if your goals align with their philosophy. For example, some financial advisors may follow an investment strategy for years. How does the advisor's philosophy align with your personal financial goals?

How will my assets will be invested?

Understanding how your money is being invested is crucial. Your financial advisor should be transparent with you and able to explain your investments simply. If it’s overly complicated, that may be a sign of concern.

What benchmark will we be using?

Based on how your assets are being invested, your portfolio will have different performance benchmarks. A benchmark is a measurement of how your portfolio is performing. If you’re constantly underperforming against the benchmark, or overperforming, be sure to find out why. You may be taking on more or less risk than you want!

Do you have an independent custodian?

As a client, you should be able to quickly check out the performance of your account and your holdings. That ability is given to you by a custodian – usually an independent firm that “holds” your investments. If your financial advisor chooses to not disclose the custodian or acts as his or her own custodian, that is something to be concerned about. AdvisorFinder helps you understand this by transparently displaying custodian info on each advisor profile.

If you have any questions or feedback, please get in touch with us: team@joinadfi.com