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Readers from the blog that are considering hiring a new financial advisor are often very hesitant. They are intimidated and frankly don’t know what to say or ask. Ever feel like that?
When someone asks me what is the #1 question that should be asked when interviewing a financial advisor, this is what I tell them…(Watch the video to find out)
Jeff Rose, Certified Financial Planner™ from Illinois. Jeff is also an Iraqi combat veteran, In-N-Out burger addict, and loves to do Crossfit.
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Jeff Rose is a CERTIFIED FINANCIAL PLANNER™ professional and founder of Alliance Wealth Management, LLC.
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{ 8 comments… read them below or add one }
This is one of the best videos I’ve ever seen on a finance blog. I’ve not seen it said more clear and to the point than that. As you allude to, I think it is more important that you get a good, clear and honest answer, than it is how they are actually paid. Fabulous video.
Thanks for sharing! When looking for a financial advisor, I only rely on the referrals of friends and relatives who have used the service.
I tried my best to guess this question before I watched the video..almost had it! Jeff, what would your second question be?
@Evan
Ooooh…that’s a good question.
I think the second question would be based on investment selection/strategy. How do they go about choosing the investments for my specific portfolio.
At a close 2nd would be expected service.
Great question. As a former commission-based adviser, it’s a question that would have had me stumbling for words. It’s also the reason I ultimately changed careers. When you work for commission, you are encouraged by your firm to push products that earn the highest commissions, not products that are necessarily ideal for your clients.
Seems to me the first question you should ask them is if they act in a fiduciary capacity in their relationship with you.
@ John
Fair point. As a fiduciary myself, it’s hard for me to disagree. My only concern is how many consumers/clients actually know what a fiduciary really is? I would safely assume not many.
Knowing specific obligations of a fiduciary will certainly serve your interests well in an interview with a potential adviser. It would definitely show them that you’re knowledgeable enough to be on guard against self-serving advisers.
I especially like Jeff’s insight about the method of payment because it cuts to the heart of how the adviser will be motivated and also let’s you know your exact obligation to him. I like that a straightforward answer has to come. Anybody can give promises, smiles, and handshakes, but how they are paid and how they manage the investments are the basis of the advising relationship.
Similarly when it comes to credit cards, you will get a flurry of advertisements about perks and small incentives, but the interest rate may be much more valuable to know.