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Questions to ask when hiring an investment advisor - Part 3 - Services and references
Category : Selecting a Financial Planning Advisor or Investment Adviser
Questions to ask when hiring an advisor – Part 3 -- Services and references
Summary: This article
provides potential advisor screening questions about his planning
principles and philosophies, group practices, privacy, and references.
This article is one on several on the topic of investor
screening. Also, see:
about financial and investment planning principles and philosophies:
- What are your financial and investment planning principles
- Take good notes on the particular philosophies that the
advisor espouses and research anything that was not familiar to you.
Ask the advisor for materials to read that explain his financial and
- Attempt to determine whether the advisor has a
consultative style or whether the advisor expects to tell you what you
should do just do it for you without explanation. Over time, your
advisor should educate you. If, instead, his work is presented to you
as a superior “black box” that is not explained,
then the work is probably rubbish.
- If you have certain beliefs about finance, planning, and
investing, ask his opinions about your beliefs. It is important that
you both have sufficient common ground to be able to work together. At
the same time, you both must be open and willing to work to understand
the other’s knowledge and beliefs.
- What are the things that you always do? ... never do?
- How have your practices and beliefs about financial
planning and investing changed over time?
- To gauge the advisor’s general philosophy, you
might ask a question such as, “Should I be a conservative or
aggressive investor?” “Should I be an active or
- How do you work with clients during particularly volatile
market conditions? Under these circumstances, what if anything would
about financial and investment planning methods:
- What are your financial and investment planning methods?
What is your process when you work with clients?
- What sources of information and data will you consult, when
you prepare recommendations for me?
- What will you expect of me? What will I need to provide to
you and in what form?
- Because of your recommendations, what actions will you
expect me to take and what assistance will you provide in matters of
- How frequently will we meet? How frequently will we speak
on the telephone?
- How quickly can I expect that you will return my calls?
- How many clients do you have, and how much attention might
I expect from you?
about the scope of services:
- Do you provide financial and investment planning services
on a full-time or part-time basis? What other work activities do you
- What will you do for me? Do you have a particular focus in
your work with clients? What is the scope of the services that you
- The scope of services could include planning services for
estate, insurance, investment, retirement, tax planning, etc.
- Are there areas in which you are particularly expert? Are
there areas that you particularly enjoy working in more than other
areas? Are their areas in which you are particularly strong or weak?
- Do you have any practical, philosophical, or legal
limitations on the types or variety of financial products or
investments that you might recommend to me?
- How frequently would you tend to make new recommendations
or adjustments to my plan?
- If you cannot cover a particular need of mine, how will
this situation be handled?
- May I see a sample of the work that you have performed for
others? (Obviously, personally identifying information would need to be
- Concerning investments, how will you track my
portfolio’s performance, risks, tax exposure, etc?
- Do you have a website for clients with client accessible
account and portfolio information?
Questions about group practices:
- If this is a group practice, who will work directly with me?
- If someone else will lead the relationship with you, then
you should be asking that person most of your questions. If it turns
out that you will work with additional persons, you should meet with
them, although most questions should be directed to the principal who
will work directly with you.
- For any group practice, you should ask who owns and
controls the business. (Even for an advisor who appears to be
individual practitioner, it is also worth asking this question to
determine whether other parties may also have influence in the
- Concerning support staff, who are they and how might they
be involved in working with me?
- Will any agent or contractor to you participate in the work
that you perform or oversee for me?
- Under what circumstances will outside professionals, who
are not under contract to you, be involved and contribute to the work
that you do for me?
about other clients and references:
- What are the characteristics of your other clients?
- How many clients do you have? What has been the
firm’s growth rate?
- How long have you had your typical client? Have any clients
left you and why?
- How do my needs match up with the clients whom you normally
- May I have a list of four of your recent active clients
whom I can contact and discuss their views on working with you?
- Do not just get these referrals, but also actually talk
to them. If some are unavailable after you have made reasonable efforts
to contact them, then go back to the advisor for additional names.
Reference checking is important. Be certain to ask specific questions
including, for example:
- How long have you worked together? How frequently do
- What specific services has the advisor provided to you?
- How responsive is this advisor? Do you understand
clearly his or her recommendations and the reasoning behind them?
- What has this advisor done that has been particularly
satisfying? What would have liked the advisor to do differently? ...
- If I were to work with this advisor, what advice would
you like to give me?
about control of your investments:
- Will I have complete access and control over my
investments, funds, and decisions?
- Will the advisor have any form of access discretional
control over your accounts? If so, why and how will it be limited?
- How will my personal privacy and personal financial records
- Who will have access to the information that I provide to
- Would there be any problem if I were to show the plan that
you prepare for me to any other party?
These related articles may also be useful to you:
Payment of Advisors:
Regulation of Advisors: