10 Questions to Ask Your Adviser

With no further ado, here are 10 questions to help you see if an investment advisor cares about your money as much as you do.

Note: these are add-ons to basic questions like “how do you get paid?” and “what are your credentials?

 

  1. What rate of return are you projecting for a balanced portfolio in the years ahead?
    Much more than five or six per cent suggests an advisor is blue-skying in order to land you as a client.
  2. To what extent do you sell your firm’s own products?
    The more advisors sell “proprietary products,” the more likely they are to recommend investments on the basis of generating fees and commissions.
  3. What should I expect from you beyond recommended investments?
    The preferred answer here is big picture financial planning, which is the foundation on which an investment strategy is based.
  4. What do you think of the move by regulators to require investment firms to show clients exactly how much they’re making and paying in fees?
    The preferred answer is something along the lines of “I’m okay with that. After all, it’s the client’s money.”
  5. What do you think about the suggestion that advisors should have a fiduciary duty toward clients (an obligation to put client needs first in all aspects of the advisor-client relationship)?
    Anyone who takes issue with this concept is suspect in terms of how much they can be relied upon to care about your money.
  6. When selecting investments for me, how much emphasis do you put on cost?
    Fees don’t have to be the top consideration, but they should be in the top two or three. An advisor who scoffs at the importance of fees is essentially saying it’s okay to waste your money.
  7. What do you think about guaranteed investments?
    Aside from guaranteed investment certificates (GICs), this is a category that conscientious advisors avoid because it’s full of expensive products that guarantee nothing more than a return of your investment capital on maturity. A GIC will do better than that.
  8. How does what you’re recommending for me compare to what you invest in?
    You know your advisor cares about your money if she’s putting it in the same places that she herself invests.
  9. What have you been recommending lately to clients?
    Good advisors start with an effective plan that should require only modest adjustments over time. Advisors who talk about the next big thing may just be trying to sell you something.
  10. How are you different from other advisors?
    Listen for anything that sounds like “I care more about your money, and here’s how I demonstrate that.”

What questions do you ask your advisor?

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