24 Questions to Ask a Prospective Financial Advisor

August 11, 2016
DMD Staff

A financial advisor is only as good as the advice they give. Use these questions to help determine if an advisor is right for you.

If you’re a regular reader of Dentist’s Money Digest, you know that we’ve often covered the pros and cons of working with an advisor. It is a big decision, and one that requires a lot of thought about your financial goals, your investing style, and your level of trust in putting another person in charge of some financial decisions.

Yet, even if that decision is in your rear-view mirror, many people struggle with how to choose the right advisor. Here, then, are some questions you should ask your advisor before cementing the relationship.

One way to tell is to simply ask for references and then be diligent about contacting those references. Working with an advisor can be as important a relationship as working with a physician, so put the same rigor into your choice that you would in choosing your own doctor.

Experience

1. How long have you been an advisor?

2. Have you worked with dentists before? Are you familiar with the unique financial and career challenges dentists face?

3. Do you work with others at my income level?

4. Are you specialized in any specific area of financial advice?

5. Do you have references, preferably from other dentists?

Qualifications

6. What is your education level?

7. How do you stay current? For example, do you take continuing education courses and keep your licenses up to date?

8. Do you have any industry affiliations, awards, or other credentials you’d like me to know about?

9. Will I be working only with you, or will you refer me to others at your company if there are areas in which you lack expertise or licensure?

Services

10. What categories of financial planning do you offer?

11. Do they include retirement planning or estate planning? Investments? Life insurance and long-term care insurance? Dental practice succession planning or sales planning?

12. Do you have experience with college education funding plans?

Compensation

13. How are your fees calculated? Are you commission-based or transaction-based?

14. Will the new DOL regulations establishing a fiduciary standard impact you?

15. Is there a minimum level of investment I need to meet? Or a minimum level of fees I will be required to pay?

16. Are there potential conflicts of interest I need to be aware of? Incentives to sell one company’s products at the expense of products that may work better for me?

Additional Questions

Those are the main nuts and bolts questions. But you should also assess the chemistry between you and any potential advisor. Consider asking:

17. How do you prefer to work with clients?

18. How much contact do you typically have with them?

19. How will you keep me informed about investment performance and changes in the markets that impact me?

20. How often will we review and adjust my financial goals?

21. Give me an example of how you would explain a financial concept or product to me.

22. What happens if you leave your current firm?

23. Have you ever been disciplined for professional actions you’ve taken?

24. What privacy measures do you and your firm practice?

Obviously, you can prioritize these questions according to what’s most important to you. And this is not by any means a comprehensive list. But it should be enough to get you started. The important thing to remember is that just like in any job interview situation, interviewing an advisor is a two-way process. The best advisor-client relationships are ones in which there is a cultural fit and a mutual trust.