Don’t Be Shy when interviewing financial advisors
This article appeared in the November 2017 edition of Nevillewood Living.
In our society, there is no shortage of providers of financial services and advice. Many are very pleasant to deal with, some are talented, a few of them are both. This landscape can make the process of choosing a financial advisor somewhat overwhelming, particularly for those with little or no experience in this area.
Of course, a referral from your CPA or attorney can be very valuable. Nowadays, however, asking your attorney or CPA for a referral will very likely result in three names given to you, leaving the rest of the interview process up to you. How do you decide among multiple candidates?
One very helpful technique is to have a fixed
set of questions that you can ask each candidate during each interview. In this
way, you will create a "level field" that should enhance your ability
to evaluate and compare the candidates.
Here are some examples of questions you may want to
1. Why should I do business with you instead
of a competitor?
2. What is your investment philosophy?
3. How do you define risk, and how do you
manage it for clients?
4. Do you believe you can beat the market?
5. How often do you trade?
6. How are you compensated?
7. After inflation, taxes and fees, what is a reasonable estimated return on my portfolio over the long term?
8. Do you earn more to recommend certain products or
9. Which professional credentials do you
have, and what are their requirements?
10. Do you focus solely on investment
management, or do you also advise on taxes, estates and retirement, budgeting
and debt management, and insurance?
Do not be afraid of asking as many questions as you need
to get: the information you require to make an informed decision. This will
likely be one of the more important choices in your life, so this is not the time
to be shy. Also be wary of advisors who balk at your questions. A good
financial advisor will have nothing to hide and should welcome your
The opinions voiced in this material are for general
information only and are not intended to provide specific advice or
recommendations for any individual. All performance referenced is historical
and is no guarantee of future results. All indices are unmanaged and may not be
invested into directly.