Community Resource Federal Credit Union
Community Resource Federal Credit Union

We all want to make sure we are getting the most value from our financial advisors. In order to do that, it is important that we ask the right questions. When you strategically ask the right questions to prospective financial advisors, you can quickly filter out those who don’t meet your needs. Here is a list of questions to ask a financial advisor – in the first interview, during your retirement planning sessions, and in your year-end reviews.

Your First Financial Advisor Interview

1. How Will Our Advisor-Client Relationship Work?

With these questions, you are trying to understand how often you’ll speak with your advisor in person, online, or over the phone. Two things you want to make sure you understand are, 1) how much time your advisor needs from you and, 2) how much time you need from your advisor. It is most likely that your advisor will ask you to set aside time to meet with them for planning discussions and financial decision-making. If you can’t fit these conversations into your schedule, the amount of time it takes to get things started will increase. However, if you are the person needing more contact and reassurance from your financial advisor, make sure the financial advisor you choose is open to unscheduled conversations.

2. How Do You Get Paid?

Advisors earn through stated fees, commissions, or both. You pay the stated fees and other partners pay commissions. The reason commissions are an important topic of conversation is they have the potential to create conflicts of interest. Your advisor should be recommending the products that will best benefit you and meet your needs, regardless of the commission opportunity. If an advisor earns commissions, do not be afraid to ask how they handle conflict of interest. You want someone who is willing to be transparent about these types of issues.

3. What is Your Investment Philosophy?

Most investment strategies fall into two categories: buy-and-hold or market timing.

Buy-and-hold investors choose stocks, mutual funds, and other assets that have long-term potential. Usually, these investors choose a stable portfolio and look for long-term gains in assets. This strategy is generally a lower risk but less exciting.

Market timers are looking for short-term gains. They buy stocks and other assets that are poised to grow quickly. Market timers trade often and their success depends on them making the right decision at the right moment.

4. How Will Your Investing Strategy Affect My Tax Bill?

If your advisor is managing your money in a taxable account, you’ll pay taxes annually. Your earnings will cover those costs, but taking money from your investment account reduces the potential wealth you will grow in the future. Most ethical advisors are well aware of this and are mindful of this as well. Make sure your advisor follows a tax-efficient investing strategy and gives estimates of the tax costs before making recommendations.

Questions To Ask Your Advisor About Retirement

1. When Can I Retire?

To make this estimate, your advisor must project the growth of your savings, estimate the income you will need in retirement, and assume an annual withdrawal rate in order to support that income. Take the time to study those assumptions and make sure that you totally understand and agree with them.

2. What Will My Income Be in Retirement?

You may have a vision of what you want your retirement life to look like. Make sure your advisor understands that vision and that their projections align with it as well. If you plan on living the life of luxury in retirement but your advisor only planned on you retiring with the basic needs being met, you will have a problem. If your thoughts on a retirement lifestyle are not in agreement, ask your advisor to rework your plan with different income assumptions. Then you will be able to see how that affects your retirement schedule and the longevity of your savings.

Questions to Ask Your Advisor During the Annual Review

1. How Has My Net Worth Changed? What Drove the Change?

This is a question that your advisor expects you to ask and will be prepared to answer. Ask your advisor to walk you through your net worth change step-by-step. It is important for you to know which assets appreciated during the year and which assets lost value. You have every right to ask why an asset had a loss during the year. If you still own that asset, ask how it contributes to your plan going forward if you hold on to it.

2. How Are My Investments Performing Relative to the Market?

Market performance is meaningful in your net worth change. If the stock market dropped over the last year, your net worth has probably dropped as well. However, if the market has done well, you should see gains in your account. If there are significant deviations between your year-end results and the stock market over the last year, you have cause for concern. Ask your advisor to explain why there is such a large difference.

Check Assumptions and Keep Talking

During the interview process with your potential advisor, you’ll check your assumptions and expectations about the relationship against the advisor’s expectations. Make sure you find someone whose desire to connect matches yours.

Once you make your decision on who you want to work with, check their assumptions. Their assumptions will determine how they personalize your plan and influence your results. Being on the same page helps you build your wealth and reach your financial goals for the future.

Above all, keep the lines of communication open with your financial advisor. Life happens which causes circumstances to change and your financial plan must be able to evolve with those changes. Knowing the right questions to ask will help you get to where you want to be in the future.

For additional information visit this article: 16 Important Questions You Should Be Asking Your Financial Advisor



Brock, C. (2022, September 2). 16 Important Questions You Should Be Asking Your Financial Advisor. Forbes. Retrieved September 13, 2022, from

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