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Choosing a financial advisor: questions you need to ask

1. Are you a fiduciary?

Fiduciaries are legally required to place clients’ best interests first. Stockbrokers and mutual fund salespeople (like those in banks) typically aren’t.

2. What are the total costs I’ll pay to work with you?

Don’t simply ask “What is your fee?” A good advisor will also provide you, clearly, in writing, the costs of the investments they recommend.

3. If I follow your recommendations, what’s in it for you?

Some advisors earn commissions on the investments they recommend. You want an advisor who’s not influenced by their compensation.

4. How long have you been an advisor? At this firm? Where were you before?

Advisors have been known to jump firms for signing bonuses (to bring their clients with them). Avoid career-changers with only a year or two of experience. Pick a longtime advisor whose career is stable. 

5. If something happens to you, what happens to me?

Who serves you if your advisor goes on vacation or is hospitalized? You want others in the firm to be familiar with your situation, too.

6. Why did you become an advisor?

The best advisors have a personal story. Ask them to tell you.

7. What are your career aspirations?

Hire someone who loves being a financial advisor. It’s their calling. Not someone who wants to join management.

8. What kind of clients do you work with?

Ask this before you discuss your specific situation. If their typical client sounds like you, they could be a good fit. Don’t ask for references. Advisors won’t provide unhappy ex-clients’ names. Instead, visit sec.gov/check-your-investment-professional.

Questions 9-11. What is your investment strategy, and what, if any, changes did you make during or after the 2008 recession and COVID-19 pandemic?

These three situations are related. Advisors should articulate a strong point of view on how money should be invested. An advisor who says, “It depends on the client,” is likely an order taker, not a true advisor. You don’t want that. You also want to know if their investment strategy remained consistent from 2007 to 2020, even with 2008’s financial crisis and COVID-19. If not, why – and when – did they change their advice? If what they recommend now is drastically different, you should wonder if you can trust what they advise today. Don’t hire someone whose advice lacks long-term consistency.

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