• 6-Minute Article
  • |
  • May 24, 2018

The Financial Professional Questionnaire

Key questions to ask when looking for and working with a financial professional.

Smiling retired woman featured in an article about the financial advisor questionnaire
Questions this article can help you answer:
  • What should I look for in a financial professional?
  • What should I discuss with a financial professional?
  • What should I think about before hiring a financial professional?

Finding a financial professional is a lot like finding a doctor, a home remodeler, or another service provider. You search the internet, ask friends, check industry registries, or follow up on advertisements. Once you’ve identified candidates, you can direct questions to the financial professionals  themselves. The questions you’ll ask to narrow down your options are unlike those you'll ask anyone else. And the answers the financial professionals provide are potentially more important. Finally, once you’ve hired and are working with a financial professional, getting the most out of that relationship requires consistently asking the right questions.

Financial professionals and finance experts provided their take on the questions you should ask yourself and your potential or current financial professional. Here are their most commonly mentioned questions and explanations of why those questions are essential.


Questions to Ask When Looking For a Financial Professional

Do I know whether I will have enough money to retire comfortably?

Having a handle on your current situation will help you better assess your future needs and convey them to a financial professional. Without a complete picture of your current situation and your goals and aspirations for the future, a financial professional cannot serve you effectively. Your financial professional will devise a strategy for your retirement based on your holdings, goals, and financial outlook.

Do I know how much I currently pay in fees for my investments – without any guidance?

In order to accurately assess the value of a relationship with a financial professional, consider how much you currently pay in fees for self-directed investments. Also, if you’re thinking of switching financial professionals, you need to know exactly how much you’re paying your current financial professional. Consider that a financial professional will provide you with insight, expertise, and guidance you won't get from self-directed investments.


Questions to Ask When Interviewing a Financial Professional

What services do you provide?

It’s important to know what a financial professional can and cannot do for you. The financial services industry is vast, and anyone from tax preparers to fund managers may dispense financial advice, which may not always be in your best interest long term. Creating a budget, setting up a savings plan, choosing insurance, planning for retirement, allocating assets, selecting investments, managing taxes and more can all fall under the purview of a financial planner or financial professional. Find a financial professional whose services match and, preferably, exceed your requirements.

Have you experienced any client disputes or regulatory issues?

A financial professional’s record of client disputes and involvement with regulators are good topics for early questions. Ask the financial professional about previous issues with unhappy clients or regulatory infractions, but also run the financial professional's name through BrokerCheck, a registry maintained by the Financial Industry Regulatory Authority (FINRA) to learn more about the background and experience of brokers, financial professionals, and firms. In addition, ask about their education, certifications and employment history, and request references from current clients.

How and when will we communicate?

Many financial professionals reach out to their clients weekly or more often through newsletters, podcasts, blogs, emails, and other means. Your financial professional should also regularly communicate directly with you through a face-to-face, phone or video meeting annually, semi-annually, or quarterly, as well as any time a special situation comes up. A special situation could be many things, including high levels of market volatility, tax filing season, or the approach of your planned retirement date. You should also be able to contact your financial professional any time you feel the need, which may happen when you’re considering a major expense, experiencing a life change such as divorce or inheritance, or simply wanting to discuss options.

Who will I be working with if I become your client?

Ideally, you’ll work regularly with the person who recruited you or to which you were referred. If not, you'll want to identify and meet with the person or persons you ‘ll be working with, especially if you’re working with a larger firm. Some firms may ask you to work with a team. Meet the people on the team and make sure you're comfortable with them before deciding. Also ask about business continuity planning – what happens and who you'll be working with if the financial professional you signed on with retires, leaves the firm, or is otherwise not available.

What is your approach to investing?

There are almost as many approaches to investing as there are financial professionals and investors. Contrarian financial professionals aim to profit by going against the trend with out-of-favor investments, while momentum financial professionals look for investments that are rapidly appreciating in value. Similarly, some financial professionals emphasize investments that offer guaranteed income streams, while others search for opportunities to generate outsized rewards in exchange for equal amounts of risk. To help ensure you are comfortable in the relationship, select a financial professional whose philosophy is similar to your own.

How do you charge for your services?

Don’t be shy about inquiring about how you’ll pay for the advice you’re going to get. Financial professionals may receive flat one-time fees for basic services such as preparing financial plans, ongoing annual fees based on a percentage of the total amount they’re managing, or earn commissions paid by you or the company that provides the investments.


Working With Your Financial Professional

What solutions have you recommended to clients in my situation?

Financial professionals tend to specialize in the types of investments they recommend. Some emphasize individual stocks and bonds, while others prefer mutual funds. Some like private equity investments better than publicly listed securities. Some appreciate the tax benefits of investments such as annuities, while others like tax-exempt municipal bonds. No matter what your financial professional's specialty, the options recommended to you should be the best for your particular needs and goals. Also, it's a good rule of thumb not to invest in anything you don't understand well enough to be comfortable with. You may have to ask your financial professional to explain a given investment vehicle.

What are you most concerned about, and what should I be concerned about?

Once you have a financial professional, it’s important to pick his or her brain about the things that could affect your retirement plan. This will also give you a sense of how up-to-date and in the know your financial professional is with what’s happening in the world and how it can affect your portfolio.

What are my blind spots or weaknesses as an investor?

A key component to a successful relationship with your financial professional is having he or she know they can be honest with you. Opening the door to their feedback can help you see your finances more clearly and make the best choices. If you want to make a change, be sure to ask your financial professional, “Is this a good decision?” “Do you think there is a bias that is negatively affecting my choices?” “Is there anything I’m missing here?

How could I be making more money?

It’s important to encourage your financial professional to constantly stress test your portfolio and retirement plan. You’re paying him or her specifically so your investments work as hard as they can and it’s not a “set it and forget it” endeavor. Make sure your financial professional is optimizing your investments across the board.