11 questions to ask your financial advisor

11 questions to ask your financial advisor

5 mins readLast updated January 16, 2023by Kate Morgan

There’s no short supply of questions to ask your financial advisor during annual review, even more so if it’s the first time you’ve worked together. From queries about your working relationship to queries about tax, here are 11 questions you should ask your financial advisor when you first sit down to discuss your finances.

1. What are your qualifications?

Knowing that your financial advisor has the proper education and history is essential.

You need to be sure they’re capable of handling what you need them to handle.

Accountants and advisors can have many different qualification initials listed after their names.

Check the Financial Industry Regulatory Authority’s professional designations database to find out what they mean/confirm what you’re told.

You can also do the same with the advisor’s record via a Form ADV. 

2. What are your costs?

Before an advisor takes you on, you must understand their costs and know that these align with your financial services budget.

An advisor is legally required to tell you what they charge, but how they charge can vary.

Some might charge per hour while others charge a fixed fee or a percentage of the value of your investment.

While your advisor may not be able to tell you precisely what you’ll be required to pay if the fee isn’t fixed, you should be given an indication/upper limit at minimum. 

3. What services do you offer?

This is one of the most important questions to ask a financial advisor.

While most professionals in the financial services and accounting industry offer similar services, there is a range of products from across the whole market, and it could be that there’s someone specializing in the area of help you require.

Your advisor should be candid about their services and whether they’re suited to assist, giving you an extensive and detailed service list. 

4. Are you a fiduciary?

Fiduciaries are required by law to put client interests first.

They cannot earn commission from investment products they recommend to their clients, which ensures they’re trustworthy, never pointing you in the wrong direction because it favors them.

Financial advisors working for brokerages are unlikely to be bound by fiduciary duty, which is vital to remember as you feel out your relationship with your advisor in that first meeting. 

5. What will our working relationship be like?

This question will give you an insight into how much access you will have to your financial advisor.

Knowing how often you’ll likely meet and whether the advisor is available for calls or emails outside of scheduled meetings will help you understand what you can expect from your professional relationship.

This may also sway you as to which advisor you go for, especially if you want flexibility in your communications. 

6. What are my all-in costs?

This is another of the most important questions for a financial advisor as you figure out whether or not they’re a good match for your needs.

Initial price estimates are hugely important, but so are all those other fees and little details.

Be vigilant about making sure you know the complete and total all-in costs.

Otherwise, an untrustworthy advisor might creep costs up without your knowledge, eventually putting you in a position where you can’t afford the help you’ve already utilized.

7. Are there any tax implications if I invest with you?

The more information, the better. That should be your constant mantra as you determine what to ask a financial advisor.

One of the most common reasons that people in the US turn to a financial advisor is for help with their taxes, so tax questions are, of course, a must in meeting one.

Have your tax bill in mind, ask for details about taxes, fees and implications and fully explore your estimated net return according to this particular advisor. 

8. Who is your custodian?

Ideally, the financial advisor you select should hire an independent custodian (for example, a brokerage) to be responsible for holding your investments rather than acting as their own custodian and holding onto your investments in-house.

Asking this question is a hugely important safety check that should offer reassurance and mitigate the risk of being defrauded.

Exercise caution around advisors who don’t seem willing to answer. 

9. How do you allocate assets?

Having a diverse asset class will help your investments counteract short-term market volatility — but it will also set you up for success in the long term.

A good asset allocation typically includes a mix of stocks, bonds and cash.

You should also ensure you’re on the same page with your advisor about risk tolerance in the asset allocation process, as you don’t want to be pushed into taking on more risk than you’re comfortable with.  

10. What are your values and principles?

While this may seem like one of the stranger questions to ask your financial advisor in a first meeting, it can be extremely valuable to know the answer.

Finding out their investment philosophies and economic values will tell you whether or not you’ll align.

Suppose you’re interested in investing in ethical companies/funds that reflect your morals — in that case, you’ll almost certainly be looking for a financial advisor who can respect these investment desires and support your choices. 

11. Who is your ideal client?

You must know whether your wants and interests complement your financial advisor's wants and interests.

Ultimately, you want your relationship to be a successful business match and ensure the best financial outcome for all involved.

Hopefully, your advisor will be able to articulate the things most important to them in a client (and if you fit that profile well, you’ll likely work well together).  

Content writer

Kate Morgan

Kate has written for leading publications and blue chip companies over the last 20 years.