What to Ask a Financial Advisor
By Bob Rubin
September 24, 2018
I hear the word fiduciary. What does it mean and are you one?
If someone is acting as a fiduciary, they must put your interests ahead of theirs. Period. In context, brokers and financial advisors at firms such as Merrill Lynch and Morgan Stanley generally work with their clients under a suitability requirement. While they still make recommendations for investments that suit your age, gender, marital status, assets and income, among other things, they DO NOT have to put your interests ahead of theirs. Make sure your advisor is working FOR YOU, and not for the stockholders or upper management.
How many clients do you have? Do you specialize in any one type of client?
The answers to these questions will help determine if this advisor fits your life. If she has 800 clients and you’re one of the smallest, you may not get the attention you need and deserve. If an advisor is overloaded, they may not be able to focus on your goals. Make sure your goals and your financial advisor’s skillset match. Would you hire a pool guy to fix your plumbing because both involve water? Wouldn’t you want a specialist?
I want to change the way I am handling my finances so that I can get better results. I want to pay more attention to my money, but not that much more. I am trying to change my relationship with money. Can you help me? Are you trained for this?
These are open ended questions designed to see how your advisor thinks. Do they respond with questions to find out what these statements mean? If this is part of what you expect from your financial advisor, beyond products and services, you’ll need to know if you are philosophically in sync. Does this person make an effort to understand how to help you modify your behavior?
I have assets in many different institutions. I don’t necessarily want to move anything to you. Can you still help me? Can you keep track and render an opinion on all my assets?
In some cases, you may seek advice, but want to leave your assets where they are. Sometimes you can’t, as with a 401k. Will this advisor help you under these circumstances? Does he have technology to securely collect information on your assets? Will he be able to do this and make recommendations on your assets remotely and inexpensively?
I am scared of how high the market is. I feel my investments are risky but I’m not really sure how risky, and I don’t know how to figure that out. Can you help me?
Does your advisor engage in conversation to measure your risk tendency? She should be looking to match your investments to your inclinations for risk, helping you understand how and why one investment is more or less risky than another and – overall – helping you to get comfortable with your investments.