5 questions to ask your financial adviser


By Jeff Herman, partner, Wagner Wealth Management 

Financial news and advice are everywhere: CNBC, The Wall Street Journal, Barron’s magazine, your brother-in-law, this column. There is no end to the places we can go to find opinions on what to do with our money. What recommendations should you trust?

Unfortunately, I can’t offer a perfect solution, but I can offer advice on how to talk with your financial adviser. Or more succinctly, what to ask so you can better understand the help being provided. Below are five questions everyone should ask their adviser.

How are you compensated? This question should be highest on your list, as it relates to any conflict of interest this adviser may have. Is he earning a fee on your account or a commission by providing advice on your money? It is your hard-earned money that will need to grow and last a lifetime. You deserve to understand how your adviser is getting paid. This is not a rude or challenging question. In fact, your adviser should bring it up during the initial meeting.

What is your money-management process? Does this adviser create custom portfolios, as opposed to having one model upon which all client assets are placed? There really is no right or wrong answer, but asking the question will reveal a lot about how the firm builds your portfolio.

What services are included when working with you? Some advisers specialize in investment management. Others are full-service planners, meaning they will develop a financial plan that includes tax, college, and estate planning, as well as investment management. Your age and stage of life will help determine which type of adviser is more appropriate for you.

What is your experience and/or succession plan? In our business, we are fairly heavily regulated by either the Financial Industry Regulatory Authority or the Securities and Exchange Commission. There are two areas where you can look up an adviser’s history: brokercheck.finra.org or adviserinfo.sec.gov. Either of these sites will give you a chance to see if there are any customer disputes with the broker. Additionally, what happens if sometime later the adviser you are working with leaves the business due to retirement or health issues? Is there a succession or contingency plan in place for clients? It might be good to know who would step in to help you achieve your goals.

What kind of interaction will we have going forward? After you develop an action plan, how will it be monitored? Do you want the adviser to contact you with every modification to your investments? Do you want him to just take care of it? Again, there is no right or wrong answer, but it’s important to find a good fit for your personality.

A question not listed, but one that I receive frequently, is “what am I not asking that I should know about?” This will give your broker/adviser the chance to share any forgotten or overlooked advice.

As you may have noticed, there are no recommended questions regarding account performance. Why? Performance is directly related to the amount of risk you are willing to take. Typically, the greater the risk, the greater the return.

A good financial adviser is a problem-solver. Whether you are just starting your first job, saving for retirement, or planning your estate, find someone you feel comfortable talking with and someone you can develop a trusting relationship with, for trust is the biggest component of a successful working relationship.

Jeff Herman, a 30-year veteran of the financial services industry, is a partner with Wagner Wealth Management. He can be reached at [email protected]


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