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Top Questions to Ask Your Financial Advisor

Optimize Team January 26, 2023

Finding the right advisor to assist you in creating a financial plan can be challenging. For investors, it can be difficult deciding whom to trust with your wealth, and it is important to know exactly what to expect. Here is a list of basic questions you can ask a financial advisor to see if they fit your needs.  


Q1. How Often Will You Meet?

One of the most important questions a client should ask an advisor is how often the two parties will meet. Some advisors will only meet with clients when important deadlines are approaching. Often, clients feel more comfortable meeting with advisors regularly, as allowing an advisor to handle one's wealth requires a high level of trust that takes time to build.

Another part of this question deals with the frequency of communication. If meetings are not scheduled as often as a client would like, how often will they receive updates from the advisor? Many clients expect monthly reviews and performance reports, which advisors can use to help alleviate the anxiety of clients. Newsletters are great pieces advisors can distribute as well, to keep their clients updated on essential topics in the financial world.


Q2. What is your asset allocation strategy and what returns can I expect?

Every advisor has a different investment strategy. Some even have multiple strategies based on the risk tolerance of each client. It is important to understand to what extent a client’s portfolio will be diversified, and the types of returns to expect. While the return percentage can never be guaranteed, understanding why a portfolio is structured in such a way can be very beneficial for the client.


Q3. Which custodian does the Advisor use?

It is very rare for an advisor to not have a legitimate third-party custodian bank to store client funds. These custodians are trusted financial institutions that will hold a client’s money, eliminating the threat of an advisor using the funds for fraudulent activity.


Q4. What is the cost of your services? What are the tax implications? 

The cost structure of a financial advisor can vary. Some advisors may use a commission structure, while others may use a fee-based model. Depending on the client’s situation and the types of investments they are looking to make, the best fee structure will differ on a case-by-case basis. Tax implications are another important question to ask an advisor. Clients typically ask more about their returns and often overlook the associated taxes and additional charges they may incur. 


Q5. Are you a Fiduciary?

In essence, a fiduciary is someone who is legally obligated to put the client’s interest ahead of theirs. For example, some advisors may try to sell products to clients that will earn the advisor a higher commission, whereas a fiduciary will always choose the best options for a client based on their situation.      


Q6. What Services Do You Offer?

The range of services offered by a financial advisor can vary. Whether they are independent or associated with a larger firm, many advisors will provide additional services apart from portfolio management and retirement planning.