15 Questions to Ask a Financial Advisor

By Brett R. Pernicano on October 29, 2020

The federal regulation that was intended to protect retirement investors from dubious financial advice is in jeopardy. In June 2020, the Department of Labor (DOL) issued a reproposal of the long-debated fiduciary rule that was years in the making. As of the fall of 2020, this revised version is still being debated.

The purpose of the rule is to require financial professionals to act in the best interest of their clients. That might seem like something that isn’t necessary to legislate, but brokers, insurance agents, and others in the financial industry are not held to such a standard. They can recommend investments that promote their employer’s financial bottom line and do not put the interests of their clients first.

To ensure that you are getting the best advice, it’s important that you know which questions to ask a financial planner or financial advisor. By having an in-depth conversation with your future financial professionals, you’ll be able to see if your goals align and if you’ll make a good team together. Whether you’re looking for guidance on developing an investment strategy or need help with estate planning, your potential advisor should be able to confidently talk to you about their services before working on your financial future.

With that being said, knowing exactly what things to ask a financial advisor can be tricky. At Dowling & Yahnke Wealth Advisors, we want to help you prepare for your financial future as much as we can. That’s why we’ve created this guide to suggest key questions for your financial team.

Regardless of what happens to the DOL’s fiduciary rule, you need to ask questions to boost the chances that a financial professional will always act in your best interest. Asking questions can also increase the chances that you’ll find an advisor who will be an excellent fit for your needs.

Here are 15 questions to ask a financial advisor:

  1. Are you a fiduciary? In other words, are you required by regulation to put your clients’ interests ahead of those of your firm and its employees?
  2. How do you charge for your services? Are you a fee-only advisor (only charging a fee as a percentage of assets under management)? That’s almost always preferable because it is more transparent regarding what the client is paying for advice. Or are you compensated by commissions or a combination of fees and commissions (fee-based)?
  3. In addition to what I pay you, what other costs will I have to absorb?
  4. If you aren’t a fee-only advisor, are you eligible for bonuses for your work? How can you earn them?
  5. Does your company offer contests for selling investment products?
  6. Do you specialize in certain types of clients?
  7. How do you develop your investment recommendations?
  8. How would you describe your investment philosophy?
  9. Will you be creating an Investment Policy Statement (IPS) for me? (An IPS contains an investor’s financial goals as well as the plan on how to reach them. The document is essential for long-term investors.)
  10. What is the average portfolio size that you handle?
  11. What specific services do you provide?
  12. How often will we have meetings?
  13. What custodians, broker dealers, and mutual fund providers, such as Vanguard, Schwab and Fidelity, do you use in your practice?
  14. Have you ever been disciplined for illegal or unethical behavior?
  15. Can you give me three client references?

Still don’t know what to ask your financial advisor? Our team of experts can help! For more tips on financial planning, asset allocation, retirement planning, or investment advice, contact our advisors at D&Y Wealth Advisors today.

To see how D&Y answers these questions, read here.


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