Questions to ask your Advisor

Are you a fiduciary?

This important question should only have one answer, yes.  As an advisor under the Investment Advisers Act of 1940, your advisor will have both the Duty of Care and the Duty of Loyalty to abide by.  Simply put, having a Fiduciary duty means we, as advisors, have a legal, ethical, and moral obligation to put your interest ahead of our own. 

What are your qualifications? 

Does your advisor have decades of experience, or did they just start last week? Do they carry well-established credentials and certifications like the CPA, CFA, RMA®, or the CFP ® or did they just pass a test that allows them to sell stocks or bonds?  Listen to the answers given and make sure your potential new team has the experience and credentials necessary to help you obtain your financial goals.

How do you get paid and what fee's am I charged?

There are several ways advisors get paid.  Making sure you work with a "fee-only" planner is critically important.  A fee-only advisor sits in the same boat, paddling in the same direction, and is always working for your best interest.  Many non-fiduciaries, and brokers, work for commissions and do not get paid simply for their advice but rather for selling you a product.    

Transaction costs, 12b-1 fees, loads, expense ratio, or revenue-sharing agreements are all fees that can have a long-term impact on your overall portfolio return. It's important to know what and how much those are and understand the long-term impact this can have.

Are there any "handcuffs" or Lock-Up periods on your money?

Pay special attention to any product or contract that "locks you in" for a set period of time.  Often these types of investment vehicles come with stiff fees or penalties if you need to withdraw your assets sooner than the contract end date. 

Who is your custodian?

Your Custodian, the firm that custodies, or safeguards, your investment assets and does regular reporting, including tax statements should be independent of your advisor and be a "household name" in the investment world.  This seemingly simple question can protect against unscrupulous "advisors" looking to take advantage of unknowing clients.