What should I ask my financial advisor?

[Kristy4]

I feel a bit stupid having to ask this question, but I'd rather feel stupid here than go in unprepared. I've decided to try and get my money matters in order, so I set up an appointment with a fee only financial planner that a friend recommended to me. The thing is, I have no idea what sort of questions I should be asking. How can I know if I should really trust his advice? What are some of the important questions I should be asking to make sure he's making decisions in my best interest? I'm really clueless, but I don't want to be so that's why I'm asking.

[lorraineb]

What is the main reason that you're going to the financial adviser? Is this a general look at all your finances, or are you going for specific information. If you're willing to share your budget numbers here, you can probably get equivalent information for free if you are just looking for general information.

[mholl95]

Good questions from lorraine, and you may not even need a planner if you're pretty young and don't have a whole lot of money saved. But just in case, here are a handful of items that popped into my head.

1. Ask if they are a certified financial planner. Check their credentials. (Note: There's a web site that you can check to see if they are in good standing, but I forget the name.)

2. Ask them to show you how they performed with their own investments. And compare their results to the S&P 500 index, which is a no-brainer target.

3. Ask them how they are compensated. You'll want to be on the watch for planners who are more interested in getting you into all kinds of investments just to increase their commissions than setting you on the right path.

4. Make sure they are a full time planner and not someone who also sells insurance, accounting services, tires, mufflers, etc...lol

5. Ask for references.

6. And if you're as bold as me, ask to see their FICO credit score. Not their whole report, just the part that shows their name, score, date, and credit bureau name. (Would you trust someone to manage your money if they can't manage their own?)

cheers
michael

[Retired To Win]

Financial advisors are very proficient at asking questions. The person you are going to see is going to have (or should) a whole prepared list of questions to ask YOU in order to get a picture of where you are and where you want to go financially. So just let them ask their questions. From your answers the financial advisor will develop a set of recommendations that you can then pick apart with your own questions.

[disneysteve]

Financial advisors are very proficient at asking questions. The person you are going to see is going to have (or should) a whole prepared list of questions to ask YOU in order to get a picture of where you are and where you want to go financially. So just let them ask their questions. From your answers the financial advisor will develop a set of recommendations that you can then pick apart with your own questions.

Are you suggesting that OP shouldn't go in there with a list of question to ask the advisor?

I think you definitely need to grill this person. You need to be convinced that they can do something for you that you aren't able to do on your own. Personally, I can't imagine what that might be, but if you are going to pay someone else to manage your money, they damn well better be able to get a better return than you can get on your own at lower cost. Otherwise what's the point of paying them.

All you really need is 3 funds - a total US stock index fund, a total international stock index fund, and a total bond market index fund. Lots of folks here would be happy to answer any financial question you might have for free.

[feh]

What is the main reason that you're going to the financial adviser?

I also think this is the first question that needs to be answered.

Ideally, you should manage your finances yourself. Start by clicking on the link in my signature.

[snafu]

I suggest 1st verify credentials as Certified Financial Planner, how many years in private practice, which firm in gained experience for how many years. How much money do you need to start, what your Risk tolerance is.
I would ask their top 10 stock recommendations/ sectors and why. What percentage do they take?

[jIM_Ohio]

I would focus on being able to state your goals, why they are important to you, and what methods are available for you to invest with that advisor.

I would ask who the custodian of the money is? This is likely a bank or broker
I would ask what fees the custodian assesses you
I would ask what fees the advisor charges
I would ask what other fees exist.

I would ask "what is the total compensation the advisor receives for giving you advice"

It is very VERY very important to word the question like that, it should uncover hidden fees (they have to disclose it if you ask it)

Most people focus on fees, I would focus on how the advisor gets paid.
That tells you where the advice is coming from.

as a disclaimer, I own my own fee-only financial planning firm.