20 (or so) Questions for a Prospective Financial Advisor

If you’re a regular reader of Physician’s Money Digest, you know that we’ve often discussed the pros and cons of working with an advisor. It is undoubtedly a big decision, and one that requires a lot of thought about your financial goals, your investing style, and your level of trust in putting another person in charge of some financial decisions.

But even after you’ve made the decision to work with an advisor, many people struggle to choose the right advisor. Here, then, are 20 questions you should ask your advisor before cementing the relationship. Keep in mind that if you meet a person who answers every one of these questions exactly how you’d like them to, that might in itself be a little suspicious. If they’re being truthful, please forward me their contact information. If not, find a different advisor. One way to tell is to simply ask for references and then be diligent about contacting those references. Working with an advisor can be as important a relationship as working with a physician, so put the same rigor into your choice that you would in choosing your own doctor.

Experience

1. How long have you been an advisor?
2. Have you worked with physicians before? Other people at my income level? Those who face similar life and career situations?
3. Are you specialized in any specific area of financial advice?
4. Do you have references I could contact?

Qualifications

1. What is your education level?
2. How do you stay current? For example, do you take continuing education courses and keep your licenses up to date?
3. Do you have any industry affiliations, awards, or other credentials you’d like me to know about?
4. Will I be working only with you, or will you refer me to others at your company if there are areas in which you lack expertise or licensure?

Services

1. What categories of financial planning do you offer?
2. Do they include retirement planning or estate planning? Investments? Life insurance and long-term care insurance?
3. Do you have experience with education funding plans?

Compensation

1. How are your fees calculated? Are you commission-based or transaction-based?
2. Are you held to a suitability standard or a fiduciary standard?
3. Is there a minimum level of investment I need to meet? Or a minimum level of fees I will be required to pay?
4. Are there potential conflicts of interest I need to be aware of? Incentives to sell one company’s products at the expense of products that may work better for me?

Additional questions

1. How do you prefer to work with clients?
2. How much contact do you typically have with them?
3. How will you keep me informed about investment performance and changes in the markets that impact me?
4. How often will we review and adjust my financial goals?
5. Give me an example of how you would explain a financial concept or product to me.
6. What happens if you leave your current firm?
7. Have you ever been disciplined for professional actions you’ve taken?
8. What privacy measures do you and your firm practice?

Obviously, you can prioritize these questions according to what’s most important to you. And this is not by any means a comprehensive list. But it should be enough to get you started. The important thing to remember is that just like in any job interview situation, interviewing an advisor is a two-way process. The best advisor-client relationships are ones in which there is a cultural fit and a mutual trust.