What are the questions you would ask a Financial Advisor ?

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confusedinvestor
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What are the questions you would ask a Financial Advisor ?

Post by confusedinvestor » Sat Apr 28, 2018 6:07 pm

Folks, Need to find a FA to protect my family should sometime happen to me, Here are the top 6 question (not 15) s I'm thinking to ask a prospective FA to evaluate a FA ? What do you think? What questions would you ask?

Questions to ask FA:


1. What is your Investment Philosophy and how often do you evolve it ?
2. How do you explain Risk to your clients and how do you measure Risk Tolerance ?
3. What are your two wish list features presently not available in typical planning software (eg eMoney, RightCapital, MGP) ?
4. What are 4 lines you typically check on your client's tax return ?
5. If we call you as your client during 2008/09 to sell all my stocks and go to cash, how would you help me to stick to my plan ?
6. In high-level, How is your portfolio different from a typical 3 Fund (Total/Int/Bond) portfolio ?

ps: I appreciate all the feedback! Note: Advisors/Firms Fees (Hourly/AUM/Minimums etc) are typically noted in ADV-2 per regulations. So you would know their fees prior to the call..
Last edited by confusedinvestor on Wed May 02, 2018 10:41 pm, edited 1 time in total.

2pedals
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Re: What are the questions you would ask a Financial Advisor ?

Post by 2pedals » Sat Apr 28, 2018 6:18 pm

Your client is retired with significant assets that can be used in retirement. What are the key components of the Investment policy statement that you will incorporate? What withdrawal strategies will you recommend?

confusedinvestor
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Re: What are the questions you would ask a Financial Advisor ?

Post by confusedinvestor » Sat Apr 28, 2018 6:23 pm

Excellent, this question is already part of my original question list of 10 and 12.
Note: My question 12 is tricky, given the year i cite, 1992 which is before Trinity was in inception !.
2pedals wrote:
Sat Apr 28, 2018 6:18 pm
Your client is retired with significant assets that can be used in retirement. What are the key components of the Investment policy statement that you will incorporate? What withdrawal strategies will you recommend?

CedarWaxWing
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Re: What are the questions you would ask a Financial Advisor ?

Post by CedarWaxWing » Sat Apr 28, 2018 6:25 pm

Show me your own complete investment portfolio... not necessarily values, but the components and proportions.

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arcticpineapplecorp.
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Re: What are the questions you would ask a Financial Advisor ?

Post by arcticpineapplecorp. » Sat Apr 28, 2018 6:33 pm

These are questions for OP, not for an advisor:

Why don't you just use Vanguard's personal advisor service instead?
Is there something you hope to gain by using an advisor rather than using Vanguard's PAS?
If so, what?
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

2pedals
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Re: What are the questions you would ask a Financial Advisor ?

Post by 2pedals » Sat Apr 28, 2018 6:38 pm

Do you believe in market timing?
How often should an asset allocation be balanced and when should it?
Do you recommend factor investing? Why?
Financial advisor fees vary and Robo-advisors cost less, why shouldn't I use a Robo-advisor instead? How are your fees structured?


confusedinvestor
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Re: What are the questions you would ask a Financial Advisor ?

Post by confusedinvestor » Sat Apr 28, 2018 6:39 pm

VPS is a complete waste of 30 bps. VPS dont understand how to evaluate my tax return from long term withdrawal strategy.
arcticpineapplecorp. wrote:
Sat Apr 28, 2018 6:33 pm
These are questions for OP, not for an advisor:

Why don't you just use Vanguard's personal advisor service instead?
Is there something you hope to gain by using an advisor rather than using Vanguard's PAS?
If so, what?

confusedinvestor
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Re: What are the questions you would ask a Financial Advisor ?

Post by confusedinvestor » Sat Apr 28, 2018 6:41 pm

Awesome - I will add this as Question # 16.
CedarWaxWing wrote:
Sat Apr 28, 2018 6:25 pm
Show me your own complete investment portfolio... not necessarily values, but the components and proportions.

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arcticpineapplecorp.
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Re: What are the questions you would ask a Financial Advisor ?

Post by arcticpineapplecorp. » Sat Apr 28, 2018 6:45 pm

confusedinvestor wrote:
Sat Apr 28, 2018 6:39 pm
VPS is a complete waste of 30 bps. VPS dont understand how to evaluate my tax return from long term withdrawal strategy.
How do you know that? Have you discussed this with them?
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

confusedinvestor
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Re: What are the questions you would ask a Financial Advisor ?

Post by confusedinvestor » Sat Apr 28, 2018 6:51 pm

Yes, I did.
arcticpineapplecorp. wrote:
Sat Apr 28, 2018 6:45 pm
confusedinvestor wrote:
Sat Apr 28, 2018 6:39 pm
VPS is a complete waste of 30 bps. VPS dont understand how to evaluate my tax return from long term withdrawal strategy.
How do you know that? Have you discussed this with them?

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Clever_Username
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Re: What are the questions you would ask a Financial Advisor ?

Post by Clever_Username » Sat Apr 28, 2018 8:32 pm

confusedinvestor wrote:
Sat Apr 28, 2018 6:39 pm
VPS is a complete waste of 30 bps. VPS dont understand how to evaluate my tax return from long term withdrawal strategy.
Will this be a problem for OP though? My reading is just that OP needs someone to make periodic withdrawals and rebalancing to send out to survivors.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_

Dottie57
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Re: What are the questions you would ask a Financial Advisor ?

Post by Dottie57 » Sat Apr 28, 2018 9:13 pm

2pedals wrote:
Sat Apr 28, 2018 6:38 pm
Do you believe in market timing?
How often should an asset allocation be balanced and when should it?
Do you recommend factor investing? Why?
Financial advisor fees vary and Robo-advisors cost less, why shouldn't I use a Robo-advisor instead? How are your fees structured?
Rather than asking “Do you believe in market timing?” , I would ask “How would you implement market timing?”? The first question might be leading....

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munemaker
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Re: What are the questions you would ask a Financial Advisor ?

Post by munemaker » Sun Apr 29, 2018 12:02 am

"Why am I even here talking to you?"

venkman
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Re: What are the questions you would ask a Financial Advisor ?

Post by venkman » Sun Apr 29, 2018 12:10 am

1. How are you compensated for your advice--by a yearly percentage of AUM, or strictly on an hourly basis?

That should tell you everything you need to know.

confusedinvestor
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Re: What are the questions you would ask a Financial Advisor ?

Post by confusedinvestor » Sun Apr 29, 2018 1:27 am

Good points, but, I already know how a FA fees are structured as those are available per the SEC website's his/firm's ADV-2.
Dottie57 wrote:
Sat Apr 28, 2018 9:13 pm
2pedals wrote:
Sat Apr 28, 2018 6:38 pm
Do you believe in market timing?
How often should an asset allocation be balanced and when should it?
Do you recommend factor investing? Why?
Financial advisor fees vary and Robo-advisors cost less, why shouldn't I use a Robo-advisor instead? How are your fees structured?
Rather than asking “Do you believe in market timing?” , I would ask “How would you implement market timing?”? The first question might be leading....

confusedinvestor
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Re: What are the questions you would ask a Financial Advisor ?

Post by confusedinvestor » Sun Apr 29, 2018 1:32 am

I'll only set up a call with a FA once I read his/firms ADV-2 publicly available. I'll know their hourly fees, AUM %, current AUM, etc - everything in ADV-2. No point in asking questions on fees which I already know, unless he wants to discount those.
venkman wrote:
Sun Apr 29, 2018 12:10 am
1. How are you compensated for your advice--by a yearly percentage of AUM, or strictly on an hourly basis?

That should tell you everything you need to know.

KSActuary
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Re: What are the questions you would ask a Financial Advisor ?

Post by KSActuary » Sun Apr 29, 2018 8:39 am

Why do clients want to see an advisor's portfolio? You may not have the same investment risk profile.

Random Walker
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Re: What are the questions you would ask a Financial Advisor ?

Post by Random Walker » Sun Apr 29, 2018 8:50 am

KSActuary wrote:
Sun Apr 29, 2018 8:39 am
Why do clients want to see an advisor's portfolio? You may not have the same investment risk profile.
Yes, everyone has different ability, willingness, need to take risk. Also different ratio tax deferred to taxable investments. That being said, one would expect the advisor and client to have different asset allocations. But the advisor should definitely be recommending for the client the same investment vehicles he uses himself. The relative amounts of individual vehicles will differ.

Dave

dbr
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Re: What are the questions you would ask a Financial Advisor ?

Post by dbr » Sun Apr 29, 2018 9:54 am

KSActuary wrote:
Sun Apr 29, 2018 8:39 am
Why do clients want to see an advisor's portfolio? You may not have the same investment risk profile.
Presumably to see if he is an honest sucker or thinks his clients are suckers for things he would never buy himself.

Calygos
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Re: What are the questions you would ask a Financial Advisor ?

Post by Calygos » Sun Apr 29, 2018 9:59 am

dbr wrote:
Sun Apr 29, 2018 9:54 am
KSActuary wrote:
Sun Apr 29, 2018 8:39 am
Why do clients want to see an advisor's portfolio? You may not have the same investment risk profile.
Presumably to see if he is an honest sucker or thinks his clients are suckers for things he would never buy himself.
If he's not honest, he'll just show a made-up portfolio anyway. Kinda like keeping multiple résumés tuned to different job opportunities, except they're fake and only designed to get a response (i.e. avoid the HR bitbucket).

dbr
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Re: What are the questions you would ask a Financial Advisor ?

Post by dbr » Sun Apr 29, 2018 10:00 am

Calygos wrote:
Sun Apr 29, 2018 9:59 am
dbr wrote:
Sun Apr 29, 2018 9:54 am
KSActuary wrote:
Sun Apr 29, 2018 8:39 am
Why do clients want to see an advisor's portfolio? You may not have the same investment risk profile.
Presumably to see if he is an honest sucker or thinks his clients are suckers for things he would never buy himself.
If he's not honest, he'll just show a made-up portfolio anyway. Kinda like keeping multiple résumés tuned to different job opportunities, except they're fake and only designed to get a response (i.e. avoid the HR bitbucket).
I guess there is that. I suspect being an honest sucker is the more common case.

Jack FFR1846
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Re: What are the questions you would ask a Financial Advisor ?

Post by Jack FFR1846 » Sun Apr 29, 2018 10:10 am

I would ask "In the current lineup, what's your favorite BMW color?".
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JoeRetire
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Re: What are the questions you would ask a Financial Advisor ?

Post by JoeRetire » Sun Apr 29, 2018 10:18 am

The questions you ask should be relevant to your individual situation.

Here's a good list to draw from:
https://www.edelmanfinancial.com/educat ... al-advisor

dbr
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Re: What are the questions you would ask a Financial Advisor ?

Post by dbr » Sun Apr 29, 2018 10:19 am

I suspect that the criterion for passing the test is that if they don't throw you out of the office, then you know you have a winner. Seriously, the kind of person you want giving you advice will understand exactly where you are coming from and agree with the questions. The other people will know they are cooked and not waste time on you.

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Re: What are the questions you would ask a Financial Advisor ?

Post by tibbitts » Sun Apr 29, 2018 10:21 am

confusedinvestor wrote:
Sat Apr 28, 2018 6:51 pm
Yes, I did.
arcticpineapplecorp. wrote:
Sat Apr 28, 2018 6:45 pm
confusedinvestor wrote:
Sat Apr 28, 2018 6:39 pm
VPS is a complete waste of 30 bps. VPS dont understand how to evaluate my tax return from long term withdrawal strategy.
How do you know that? Have you discussed this with them?
Maybe your strategy is overly complicated and represents a degree of theoretical optimization and tweaking that nobody else in the real world actually cares about.

Regarding your initial post in this thread, you said Need to find a FA to protect my family should sometime happen to me

With some notable exceptions, for example if you have kids or a spouse with special needs, nobody is as important as you're making out. Your family members will make their way in the world just fine without you. Maybe not in exactly the same way you would, but in their own way. In the case of minor children, at some point you have to trust the people/person you leave behind to care for them.
Last edited by tibbitts on Sun Apr 29, 2018 10:24 am, edited 1 time in total.

JoeRetire
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Re: What are the questions you would ask a Financial Advisor ?

Post by JoeRetire » Sun Apr 29, 2018 10:23 am

confusedinvestor wrote:
Sat Apr 28, 2018 6:07 pm
Folks, Need to find a FA to protect my family should sometime happen to me, Here are the top 15 questions I'm thinking to ask a prospective FA to evaluate a FA ? What do you think?
To be honest, some of them see rather odd. Will you be hiring a professional? Or just finding a friend to provide random advice? Many of the questions seem more appropriate for the latter.
2. You are a fiduciary per your adv-2 but Are you really a fiduciary at Heart ?
What kind of meaningful answer would you expect for this question? Can you imagine any fiduciary claiming not to be a "fiduciary at Heart"?
5. Can you define Risk in 1 sentence, please ? and, How do you quantify your own risk tolerance w/o using Riskalyze ?
Why one sentence? What if they use two sentences?

dbr
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Re: What are the questions you would ask a Financial Advisor ?

Post by dbr » Sun Apr 29, 2018 10:25 am

confusedinvestor wrote:
Sat Apr 28, 2018 6:51 pm
Yes, I did.
arcticpineapplecorp. wrote:
Sat Apr 28, 2018 6:45 pm
confusedinvestor wrote:
Sat Apr 28, 2018 6:39 pm
VPS is a complete waste of 30 bps. VPS dont understand how to evaluate my tax return from long term withdrawal strategy.
How do you know that? Have you discussed this with them?
I'm curious what the details are and what was lacking in their response. One of the points of unclarity about VPAS is how or what tax management they do. There seems to be conflicting reporting on that.

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Re: What are the questions you would ask a Financial Advisor ?

Post by LarryAllen » Sun Apr 29, 2018 10:30 am

I would narrow down your questions significantly. Most FA's, with any kind of business, aren't going to want to mess around with someone with so many questions. Narrow it down to 4 or 5 good questions (not what book they like). The reality is, as pointed out ad nauseam on BH, it's not rocket scientist stuff here. You just want someone to help steer your family in the BH mode I think. Find an hourly, relatively young, FA, and a back up or two and focus on something else. I have done that for my family. I actually leave 3 names in my notes and tell them to pick the one they are most comfortable with.

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arcticpineapplecorp.
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Re: What are the questions you would ask a Financial Advisor ?

Post by arcticpineapplecorp. » Sun Apr 29, 2018 11:31 am

dbr wrote:
Sun Apr 29, 2018 10:25 am
confusedinvestor wrote:
Sat Apr 28, 2018 6:51 pm
Yes, I did.
arcticpineapplecorp. wrote:
Sat Apr 28, 2018 6:45 pm
confusedinvestor wrote:
Sat Apr 28, 2018 6:39 pm
VPS is a complete waste of 30 bps. VPS dont understand how to evaluate my tax return from long term withdrawal strategy.
How do you know that? Have you discussed this with them?
I'm curious what the details are and what was lacking in their response. One of the points of unclarity about VPAS is how or what tax management they do. There seems to be conflicting reporting on that.
I agree with the fact VG doesn't seem interested in tax loss harvesting to the extent most bogleheads do, but I'm wondering what the OP is referring to regarding "evaluate my tax return". Presumably you know what your highest tax bracket is/will be in the event you die (though changes to tax law not withstanding). So why don't you just indicate in a letter to your family "Here's how much to take out per year from X accounts" and if so inclined why you're instructing this (i.e., if you take out more than X amount you'll be in a higher tax bracket and will pay more in taxes on the Y amount over X"?

I'm not sure what it is you're trying to have an advisor help you with, with respect to your tax return. Can you elaborate more?
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

bling
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Re: What are the questions you would ask a Financial Advisor ?

Post by bling » Sun Apr 29, 2018 12:21 pm

if you know the difference between a good and bad question to ask a financial advisor, you don't need one.

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unclescrooge
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Re: What are the questions you would ask a Financial Advisor ?

Post by unclescrooge » Mon Apr 30, 2018 5:19 pm

confusedinvestor wrote:
Sat Apr 28, 2018 6:07 pm
Folks, Need to find a FA to protect my family should sometime happen to me, Here are the top 15 questions I'm thinking to ask a prospective FA to evaluate a FA ? What do you think? What questions would you ask?

Questions to ask FA:

1. What is your favorite investment book and why ?
2. You are a fiduciary per your adv-2 but Are you really a fiduciary at Heart ?
3. What is your Investment Philosophy and how you evolve it every 5 yrs ?
4. Do you have a financial advisor for yourself ? If not, why not? If yes, why do you?
5. Can you define Risk in 1 sentence, please ? and, How do you quantify your own risk tolerance w/o using Riskalyze ?
6. What are the fundamental differences of these 2 Portfolios ? Which 2 Asset Classes are missing from both of these Portfolios ?
a. Portfolio A = 25% VTI + 25% VXUS + 50% BND vs Portfolio B: 50% VT + 50% BND
7. How would you convince my 10 yrs old twins to invest in Roths vs spending $25 they earned mowing my neighbors lawn ?
8. What are your 2 wish list features currently un available in all processional financial planning software you have used (eg eMoney, RC, MGP, etc) ?
9. What are 4 lines numbers you check on your client's tax return and why?
10. If you have 1M today at 45 yrs of age, what would be your ideal ratio of pre vs post vs taxable account values and why?
11. If I call you as your client every quarter during 2008/09 to sell all my stocks and go to cash, how would you convivence me to stay in the market ?
12. How do you calculate SWR for your client on 1992 ?
13. What advise would you give to a DIY ?
14. Have you heard of Bogleheads ?
15. Given all these questions, why do you think I'll not be a good fit as your client ?
Why is the advisor's risk tolerance relevant?

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Taylor Larimore
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Re: What are the questions you would ask a Financial Advisor ?

Post by Taylor Larimore » Mon Apr 30, 2018 5:50 pm

confusedinvestor:

This would probably be my first question:

Will your recommended stock funds (or individual stocks) beat the stock market?

If the advisor says "yes," politely say "goodbye" and leave immediately.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: What are the questions you would ask a Financial Advisor ?

Post by Bacchus01 » Tue May 01, 2018 7:22 am

confusedinvestor wrote:
Sat Apr 28, 2018 6:07 pm
Folks, Need to find a FA to protect my family should sometime happen to me, Here are the top 15 questions I'm thinking to ask a prospective FA to evaluate a FA ? What do you think? What questions would you ask?

Questions to ask FA:

1. What is your favorite investment book and why ?
2. You are a fiduciary per your adv-2 but Are you really a fiduciary at Heart ?
3. What is your Investment Philosophy and how you evolve it every 5 yrs ?
4. Do you have a financial advisor for yourself ? If not, why not? If yes, why do you?
5. Can you define Risk in 1 sentence, please ? and, How do you quantify your own risk tolerance w/o using Riskalyze ?
6. What are the fundamental differences of these 2 Portfolios ? Which 2 Asset Classes are missing from both of these Portfolios ?
a. Portfolio A = 25% VTI + 25% VXUS + 50% BND vs Portfolio B: 50% VT + 50% BND
7. How would you convince my 10 yrs old twins to invest in Roths vs spending $25 they earned mowing my neighbors lawn ?
8. What are your 2 wish list features currently un available in all processional financial planning software you have used (eg eMoney, RC, MGP, etc) ?
9. What are 4 lines numbers you check on your client's tax return and why?
10. If you have 1M today at 45 yrs of age, what would be your ideal ratio of pre vs post vs taxable account values and why?
11. If I call you as your client every quarter during 2008/09 to sell all my stocks and go to cash, how would you convivence me to stay in the market ?
12. How do you calculate SWR for your client on 1992 ?
13. What advise would you give to a DIY ?
14. Have you heard of Bogleheads ?
15. Given all these questions, why do you think I'll not be a good fit as your client ?
If you know the correct answers to all these questions, why would you be talking to a FA?

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DaftInvestor
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Re: What are the questions you would ask a Financial Advisor ?

Post by DaftInvestor » Tue May 01, 2018 7:27 am

Bacchus01 wrote:
Tue May 01, 2018 7:22 am
confusedinvestor wrote:
Sat Apr 28, 2018 6:07 pm
Folks, Need to find a FA to protect my family should sometime happen to me, Here are the top 15 questions I'm thinking to ask a prospective FA to evaluate a FA ? What do you think? What questions would you ask?

Questions to ask FA:

1. What is your favorite investment book and why ?
2. You are a fiduciary per your adv-2 but Are you really a fiduciary at Heart ?
3. What is your Investment Philosophy and how you evolve it every 5 yrs ?
4. Do you have a financial advisor for yourself ? If not, why not? If yes, why do you?
5. Can you define Risk in 1 sentence, please ? and, How do you quantify your own risk tolerance w/o using Riskalyze ?
6. What are the fundamental differences of these 2 Portfolios ? Which 2 Asset Classes are missing from both of these Portfolios ?
a. Portfolio A = 25% VTI + 25% VXUS + 50% BND vs Portfolio B: 50% VT + 50% BND
7. How would you convince my 10 yrs old twins to invest in Roths vs spending $25 they earned mowing my neighbors lawn ?
8. What are your 2 wish list features currently un available in all processional financial planning software you have used (eg eMoney, RC, MGP, etc) ?
9. What are 4 lines numbers you check on your client's tax return and why?
10. If you have 1M today at 45 yrs of age, what would be your ideal ratio of pre vs post vs taxable account values and why?
11. If I call you as your client every quarter during 2008/09 to sell all my stocks and go to cash, how would you convivence me to stay in the market ?
12. How do you calculate SWR for your client on 1992 ?
13. What advise would you give to a DIY ?
14. Have you heard of Bogleheads ?
15. Given all these questions, why do you think I'll not be a good fit as your client ?
If you know the correct answers to all these questions, why would you be talking to a FA?
OP answered this in the first statement - see bold/underlined above. I've considered the same thing - finding an FA for my spouse that she can trust should something happen to me (my spouse has no desire to learn personal finance - I take care of it all).

OP: this is a lot of questions - some FAs might actually want to charge you to answer them all - I guess that would be an indicator :)

dbr
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Re: What are the questions you would ask a Financial Advisor ?

Post by dbr » Tue May 01, 2018 8:17 am

DaftInvestor wrote:
Tue May 01, 2018 7:27 am


OP: this is a lot of questions - some FAs might actually want to charge you to answer them all - I guess that would be an indicator :)
I would really have to want that customer's business very badly to actually bend over and address those questions. Some of them verge on insulting.

Maybe a better way to address the technical details is to ask for a description of how the FA goes about generating a financial plan and what kinds of things are addressed by the plan. If something is conspicuously missing one could ask.

SueG5123
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Re: What are the questions you would ask a Financial Advisor ?

Post by SueG5123 » Tue May 01, 2018 8:27 am

My next-door neighbor is a FA, and I giggled at the idea of asking him which book on investing he last read. Or ever read. He doesn't read at all, including newspapers, doesn't watch TV news, and the entirety of his views are formed only by intensely biased opinions of "the rich people" he has on his roster of clients. He's a great neighbor--friendly, do anything to help you--but I wouldn't go near him professionally for all the tea in China! He's a salesman, not a FA.

Seriously, I doubt you could find any FA who would submit to responding to more than two or three questions.

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Re: What are the questions you would ask a Financial Advisor ?

Post by BigOldBear » Tue May 01, 2018 8:40 am

I would ask if he manages his client’s investments through a 3rd party custodian (e.g. Fidelity, Schwab, or TD Ameritrade), or through accounts within his own company.

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Re: What are the questions you would ask a Financial Advisor ?

Post by bloom2708 » Tue May 01, 2018 8:46 am

If I was the advisor and a new client started asking me these questions, I would probably end the meeting right there.

These are not the droids you are looking for.
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NotWhoYouThink
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Re: What are the questions you would ask a Financial Advisor ?

Post by NotWhoYouThink » Tue May 01, 2018 9:06 am

Financial advisor is a pretty vague term. What is the help you expect your family to get from this person of firm?

For investment management, either Vanguard PAS or any of various all-in-one funds would do.
For financial planning, a periodic meeting with a planner that charges by the hour would do. If you want someone to work with your family after some future event, you should meet with that person a few times before that event to evaluate his/her ability to advise.
For tax preparation, an accounting firm would do.


Or maybe after you are gone your family will turn everything over to E. Jones because they are friendly and helpful and probably closer to home than the nearest Starbucks. There's really not much you can do about it.

For my family, I've written a brief explanation about where the money is and why, and the person most likely to read that explanation knows where to find it. Playing "gotcha" with a bunch of loaded questions to arbitrarily chosen fund salesmen doesn't appeal to me.

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Re: What are the questions you would ask a Financial Advisor ?

Post by MotoTrojan » Tue May 01, 2018 9:52 am

What happens if the FA passed or retires? I’d either setup my portfolio in a way where simple instructions can extract cash, or use PAS. Maybe put your efforts into finding a good CPA for withdrawal advice. Less risky for family to find a new CPA than a new FA with a bulletproof way to eliminate risk.

confusedinvestor
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Re: What are the questions you would ask a Financial Advisor ?

Post by confusedinvestor » Tue May 01, 2018 9:30 pm

That is an excellent advise, thanks MotoTrojan.
MotoTrojan wrote:
Tue May 01, 2018 9:52 am
What happens if the FA passed or retires? I’d either setup my portfolio in a way where simple instructions can extract cash, or use PAS. Maybe put your efforts into finding a good CPA for withdrawal advice. Less risky for family to find a new CPA than a new FA with a bulletproof way to eliminate risk.

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Re: What are the questions you would ask a Financial Advisor ?

Post by confusedinvestor » Tue May 01, 2018 9:38 pm

Which questions do you think are verge of insult ?

Then I'd certainly take those off. My goal is to find a technical CFP (not CFA) with good Tax knowledge (either EA/CPA) who charges yearly fixed retainer fees (not AUM model).

I'm going to reduce my original 15 questions to maybe 5 max, given the feedback I got.
dbr wrote:
Tue May 01, 2018 8:17 am

I would really have to want that customer's business very badly to actually bend over and address those questions. Some of them verge on insulting.

Maybe a better way to address the technical details is to ask for a description of how the FA goes about generating a financial plan and what kinds of things are addressed by the plan. If something is conspicuously missing one could ask.

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Re: What are the questions you would ask a Financial Advisor ?

Post by MrPotatoHead » Wed May 02, 2018 12:32 am

confusedinvestor wrote:
Tue May 01, 2018 9:38 pm
Then I'd certainly take those off. My goal is to find a technical CFP (not CFA) with good Tax knowledge (either EA/CPA) who charges yearly fixed retainer fees (not AUM model).
You are more likely to find what you want in the ChFC pool or a CPA than a CFP.

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Re: What are the questions you would ask a Financial Advisor ?

Post by AtlasShrugged? » Wed May 02, 2018 6:36 am

Questions to ask FA:

1. What is your favorite investment book and why ?
2. You are a fiduciary per your adv-2 but Are you really a fiduciary at Heart ?
3. What is your Investment Philosophy and how you evolve it every 5 yrs ?
4. Do you have a financial advisor for yourself ? If not, why not? If yes, why do you?
5. Can you define Risk in 1 sentence, please ? and, How do you quantify your own risk tolerance w/o using Riskalyze ?
6. What are the fundamental differences of these 2 Portfolios ? Which 2 Asset Classes are missing from both of these Portfolios ?
a. Portfolio A = 25% VTI + 25% VXUS + 50% BND vs Portfolio B: 50% VT + 50% BND
7. How would you convince my 10 yrs old twins to invest in Roths vs spending $25 they earned mowing my neighbors lawn ?
8. What are your 2 wish list features currently un available in all processional financial planning software you have used (eg eMoney, RC, MGP, etc) ?
9. What are 4 lines numbers you check on your client's tax return and why?
10. If you have 1M today at 45 yrs of age, what would be your ideal ratio of pre vs post vs taxable account values and why?
11. If I call you as your client every quarter during 2008/09 to sell all my stocks and go to cash, how would you convivence me to stay in the market ?
12. How do you calculate SWR for your client on 1992 ?
13. What advise would you give to a DIY ?
14. Have you heard of Bogleheads ?
15. Given all these questions, why do you think I'll not be a good fit as your client ?
confused investor....I have to tell you. If I were on the receiving end of these questions, I would not receive them particularly well. Like dbr, some of these questions verge on insulting. Are you seriously going to ask me if I am a fiduciary at heart? Really? I would politely listen and think to myself, "Do I really want this PITA? I think not." Actually, I had a much more colorful response, but LadyGeek would not like it very much. :happy

To me, questions 3, 9 are fair game. The rest is a waste of your collective time. There are better questions to ask that get right to the heart of the matter, which to me relate to the actual services that will be provided. My advice: Stop it with the gotcha crap. Focus on what the FA will deliver.

Do you have a clear understanding of my financial goals?
Will you deliver a written plan for accumulation and decumulation?
What are your fees for on-going consultation?
What is your recommendation on withdrawals from a portfolio at retirement?
“If you don't know, the thing to do is not to get scared, but to learn.”

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Re: What are the questions you would ask a Financial Advisor ?

Post by Tamalak » Wed May 02, 2018 8:31 am

I would ask:

"What am I doing here?"
"What do you want?"
"If you let me go I won't call the police"

Because there is no way I would end up in a financial "advisor"'s office unless I was kidnapped.

dbr
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Re: What are the questions you would ask a Financial Advisor ?

Post by dbr » Wed May 02, 2018 9:17 am

confusedinvestor wrote:
Tue May 01, 2018 9:38 pm
Which questions do you think are verge of insult ?

Then I'd certainly take those off. My goal is to find a technical CFP (not CFA) with good Tax knowledge (either EA/CPA) who charges yearly fixed retainer fees (not AUM model).

I'm going to reduce my original 15 questions to maybe 5 max, given the feedback I got.
dbr wrote:
Tue May 01, 2018 8:17 am

I would really have to want that customer's business very badly to actually bend over and address those questions. Some of them verge on insulting.

Maybe a better way to address the technical details is to ask for a description of how the FA goes about generating a financial plan and what kinds of things are addressed by the plan. If something is conspicuously missing one could ask.
Looking back and taken as a whole, I would say all of them. I don't think approaching a business relationship by submitting a person to the third degree with a perjorative tone is constructive. My better suggestion is just above. One thing you don't ask that you should is for an estimate of what your investment costs would be if you hire him and follow the kind of plans he would typically recommend. It is always reasonable for any business proposal to be phrased as "What are you going to do?" and "What will it cost?" If you get a straightforward answer to those two questions and the duty performed meets your needs and the cost is one you are willing to pay, then you probably have an agreement. At the same time you have to know enough to understand that what is being proposed is adequate and that you are getting a straight answer about costs. If something is missing a direct question about that is not out of line. Example: "I understand your AUM fee, but what will be the operating costs of the funds you use?" "I understand tax loss harvesting can be important. Can you tell me more about how you do that?" Etc. If too much information is missing from what he says or if the conversation is about beating the market, "My fee is high but your investment will outperform," "II can sell you unique products that other people don't have access too," then you have gotten what you need to know. As pointed out before there is probably no way to detect a very cleverly dishonest advisor no matter what you do. Unlike plumbers and housepainters I don't know that it is possible to consult his other clients and see what he has done for them. It would be interesting for sure.

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Re: What are the questions you would ask a Financial Advisor ?

Post by confusedinvestor » Wed May 02, 2018 10:49 pm

Hi Dbr,

I edited my questions, down to 6 from 15, please let me what you think now?

There are so many CFPs in the market with wide range of skills, fees, experiences, so it is challenging to find who would be a good fit for my surviving family. My current plan is simple: 1. Save 2. Invest Savings 3 Fund and Glide down as we age 3. Bit Tax optimization by asset location + backdoors 4. Turst/Wills in Vaults 5. Give and Enjoy Life with my Kids.
dbr wrote:
Wed May 02, 2018 9:17 am

Looking back and taken as a whole, I would say all of them.

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Re: What are the questions you would ask a Financial Advisor ?

Post by dbr » Thu May 03, 2018 8:15 am

confusedinvestor wrote:
Wed May 02, 2018 10:49 pm
Hi Dbr,

I edited my questions, down to 6 from 15, please let me what you think now?

There are so many CFPs in the market with wide range of skills, fees, experiences, so it is challenging to find who would be a good fit for my surviving family. My current plan is simple: 1. Save 2. Invest Savings 3 Fund and Glide down as we age 3. Bit Tax optimization by asset location + backdoors 4. Turst/Wills in Vaults 5. Give and Enjoy Life with my Kids.
dbr wrote:
Wed May 02, 2018 9:17 am

Looking back and taken as a whole, I would say all of them.
1. What is your Investment Philosophy and how often do you evolve it ?
2. How do you explain Risk to your clients and how do you measure Risk Tolerance ?
3. What are your two wish list features presently not available in typical planning software (eg eMoney, RightCapital, MGP) ?
4. What are 4 lines you typically check on your client's tax return ?
5. If we call you as your client during 2008/09 to sell all my stocks and go to cash, how would you help me to stick to my plan ?
6. In high-level, How is your portfolio different from a typical 3 Fund (Total/Int/Bond) portfolio ?

Of these questions I guess 1. would be helpful to you and a person probably would see it as reasonable. I would delete the second part of that question, though, unless maybe a follow-up would be to ask if he ever considers variations.

2. is on an important topic but I'm not sure what you are trying to learn from it, especially "testing" your interviewee on a technical point using "measure Risk Tolerance." What sort of answer might you expect? A better question might be to to ask how he decides what asset allocation an investor should have as that is the question that is really to the point.

3 I am not sure what the point of the question is. Is there some particular response that is going to decide the issue for you one way or the other or are you just trying to communicate that the guy is incompetent until proven otherwise.

4 has the same problem of what are you looking for and if you asked me that question I would either ask for clarification of what the point of the question is or throw you out of the office. A better question would be to ask what the advisor does to maximize after tax results.

5. is actually an interesting question probably worth asking.

6. sounds again like on of those "You are incompetent and I need to hear the right answer to prove otherwise." questions. Why not say that you have read a lot about the advantages of a simple portfolio of TSM, TISM, and TB and would like to know what the advisor thinks of that and what are some examples of the kinds of portfolios the advisor typically does advise. I think asking in general for an example of what the advisor is going to deliver might be very helpful. It might be his answer is that if you like the sort of portfolio you suggest he would work with that and then that would be a good answer for you. If he starts to do a song and dance about getting better return and how your portfolio will leave you broke, then you probably have found out enough. I don't think the term "3 fund portfolio" will be universally understood.

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Re: What are the questions you would ask a Financial Advisor ?

Post by SeeMoe » Fri May 04, 2018 12:39 pm

We would simply ask the money manager for his schooling, credentials, and time in the business. Maybe a few client references. Then explain we only want a one time analysis done for a set fee. Plus his recommendations. If he agrees, then suggest you will be back for a full tune-up every , say, 5-10 years.

SeeMoe.. :wink:
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