19 Questions (blog) (2)

One of my favorite blog posts of all time is one from Jason Zweig titled “The 19 Questions to Ask Your Financial Advisor.”  Admittedly, if we couldn’t answer the questions in the way he suggests are “best answers,” I might not be such a proponent of them.  When I think to, I will print out the original blog post and give it to prospective clients. Here are his 19 questions, along with his “best” answers in parentheses, and here is the link to his original blog post.

Ask me or my partner Tim how we would answer these questions, and put them to your current financial advisor, too.

  1. Are you always a fiduciary, and will you state that in writing? (Yes.)
  2. Does anybody else ever pay you to advise me and, if so, do you earn more to recommend certain products or services? (No.)
  3. Do you participate in any sales contests or award programs creating incentives to favor particular vendors? (No.)
  4. Will you itemize all your fees and expenses in writing? (Yes.)
  5. Are your fees negotiable? (Yes.)
  6. Will you consider charging by the hour or retainer instead of an annual fee based on my assets? (Yes.)
  7. Can you tell me about your conflicts of interest, orally and in writing? (Yes, and no adviser should deny having any conflicts.)
  8. Do you earn fees as adviser to a private fund or other investments that you may recommend to clients? (No.)
  9. Do you pay referral fees to generate new clients? (No.)
  10. Do you focus solely on investment management, or do you also advise on taxes, estates and retirement, budgeting and debt management, and insurance? (Here the best answer depends on your needs as a client.)
  11. Do you earn fees for referring clients to specialists like estate attorneys or insurance agents? (No.)
  12. What is your investment philosophy?
  13. Do you believe in technical analysis or market timing? (No.)
  14. Do you believe you can beat the market? (No.)
  15. How often do you trade? (As seldom as possible, ideally once or twice a year at most.)
  16. How do you report investment performance? (After all expenses, compared to an average of highly similar assets that includes dividends or interest income, over the short and long term.)
  17. Which professional credentials do you have, and what are their requirements? (Among the best are CFA [Chartered Financial Analyst], CPA [Certified Public Accountant] and CFP, which all require rigorous study, continuing education and adherence to high ethical standards. Many other financial certifications are marketing tools masquerading as fancy diplomas on an adviser’s wall.)
  18. After inflation, taxes and fees, what is a reasonable estimated return on my portfolio over the long term? (If I told you anything over 3% to 4% annually, I’d be either naive or deceptive.)
  19. Who manages your money? (I do, and I invest in the same assets I recommend to clients.)

*Jason Zweig is not affiliated with LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The forgoing is also not a recommendation to buy or sell any individual security named.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Strategence Capital, a registered investment advisor and separate entity from LPL Financial.

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