5 Questions to Ask a Financial Advisor


An investment advisor and insurance professional’s goal is to help clients reach their financial goals so they can enjoy their retirement to the fullest. That said, it helps when people have realistic goals concerning retirement and the willingness to make the choices needed to work toward achieving those goals.

That all begins with the choice of a financial advisor. It is up to you to do your homework, ask the right questions and make an informed decision when picking the person or group to help you manage your money.

Financial advisors likely aren’t going to share all the information about themselves or how they conduct business on their websites, but there are a handful of questions you should ask before moving forward.

If the financial professional you’re talking to is reluctant to answer these five questions, you might want to consider moving on to the next name on your list.

1. What investments or companies do you recommend?

If an advisor recommends a specific type of investment or a specific company or companies, it’s possible they are only offering a handful of the options out there.

Reject a cookie-cutter approach. A financial advisor should offer a broad and diverse range of investment approaches, and more importantly, should customize recommendations to each client.

2. What’s been your approach over the last five or 10 years?

It is reasonable to have a conversation about an advisor’s track record of recommendations before making your decision. How they answer could be a red flag. An answer may come easy if they only offer a one-size-fits-all approach to investing. Press them for specifics on how they would add value to your bottom line with specific, customized choices for your investments.

3. What are your fees?

There is more than one way to pay for financial management, and each has pros and cons.

Fee only

This is a one-time flat fee for a financial plan. When paying a flat fee, it’s important to understand what value you’re receiving for the fee you’re paying.

Fee based

This typically is a percentage fee levied on your portfolio in return for professional management. Fee ranges vary but generally average between 1 percent and 2.5 percent of the total value of the investments. One of the most important components to deciding whether a fee is low or high is what value you’re getting from paying the management fee.

Commission based

Some advisors prefer to earn a commission after recommending a fund or investment to their client. There is a criticism of possible conflict of interest since the commission is paid by the company whose products the adviser sells. That doesn’t preclude an advisor from making sound decisions regarding your portfolio, but you should stay vigilant that your needs are being met.

All of these are viable options for paying a financial adviser. When asked, a potential adviser should offer all of them or a blend of fees based on your personal preferences.

4. What’s the minimum investment you will accept?

You certainly should discuss whether a potential advisor requires a minimum investment before you agree to work together. A minimum investment will allow an advisor to build a more customized plan for your money. If you don’t meet the minimum requirements, hopefully, the advisor can offer you another solution, such as directing you to a colleague who has waived those requirements.

5. How are you different from other advisors?

If an advisor cannot answer this question, we recommend you walk away. An advisor should be able to provide distinctions tailored to you and your needs rather than offering a one-for-all plan.

One of the most important keys to your financial success leading to a comfortable and confident retirement is to align yourself with a financial advisor who shares your goals and vision and who is able to provide a plan to help you meet them.

For other ideas on questions you should ask an advisor, think about asking: “How long will my money last?” or “How much retirement income may my 401(k) provide?

By Chris Hobart, Copyright 2016 Kiplinger Washington Editors

Kim MacCormack contributed to this article.

Registered representatives offer securities through Mutual of Omaha Investor Services, Inc.  Member FINRA/SIPC. Investment advisor representatives offer advisory services through Mutual of Omaha Investor Services, Inc.
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