7 Questions to Ask Your Financial Adviser

Now is the time to be proactive about your money.


In the aftermath of the market meltdown of 2008, now is the time to be proactive about your money. Many investors are beginning to question their adviser's worth, and an incredible amount of 'do it yourself-ers' are looking for help also.

Finding the perfect adviser is not an easy task. Here are seven questions you should ask before hiring someone to help grow your nest egg. You could even ask these questions of your current adviser.

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What designations do you hold? Designations show an adviser's commitment to the industry and a quest for knowledge. While there are many initials someone can have after their name, a few of the most important ones are CFP (Certified Financial Planner), CFA (Chartered Financial Analyst), CPA (Certified Public Accountant), ChFC (Chartered Financial Consultant), and CIMA (Certified Investment Management Analyst).

How many staff do you have? Having a team is important. A few years ago I asked a new client why he left his old broker. He told me that his old adviser did not have an adequate team. Every time the adviser went on vacation, the client could not get any information about his money. He also told me that the straw that broke the camel's back occurred when he needed some important information for a mortgage he was applying for. Since his broker was not in the office, the client had to wait a week to get the mortgage done. He almost lost his lock in at an incredible rate.

What is your account minimum? A well-run financial planning business will have an account minimum. The business partners are in business to make money, and their client relationships must have a certain value. The most successful firms know exactly how much money their clients must have to make the relationship profitable. And let's face it, you want your adviser to be profitable so that he is in business for many years to come, and can serve you for that entire time. Typical account minimums start around $100,000.

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What is your investment management process? Every financial planning and investment company should have a process regarding how they choose investments, when they get in, when they get out, and what to do if the market tanks. Unfortunately, not many do. The best firms will have a process and be able to articulate it in great detail.

Do you have any complaints against you? The longer an adviser is in the business, the greater the chance he will have a complaint. But you should know if and why there was a complaint registered against him. You can also check with FINRA.org, SEC.gov, and CFP.net to see if there have been any past issues you should be concerned about.

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Who will have custody of my assets? A broker that has custody of his clients' assets gets you a step closer to being 'Madoffed.' Remember, Bernie Madoff was the adviser and the custodian of his clients' money. This allowed him to falsify statements, and swindle many people out of billions of dollars. You always want your investment adviser and your custodian to be separate and distinct.

Can I talk to a few of your clients? Talking to an adviser's clients is important. But the questions you ask are even more important. Ask questions such as: Does the adviser pro-actively call you or do you have to initiate the call? How did your account perform in 2008? What kind of information and correspondence did you receive from the adviser when the market tanked in 2008? These kinds of questions will give you a great picture of how the adviser will treat you in the worst of times.

Remember, hiring an adviser could be the best move you make. But without doing a little homework, it could be your worst mistake.

Good luck and happy investing.

Kelly Campbell , CFP® and Accredited Investment Fiduciary, is founder of Campbell Wealth Management, a Registered Investment Advisor in Fairfax, Va. Campbell is also the author of Fire Your Broker , a controversial look at the broker industry written as an empathetic response to the trials and tribulations many investors have faced as the stock market cratered and their advisers abandoned their responsibilities to help them weather the storm.