Zweig: Questions for Your Financial Adviser

Zweig: Questions for Your Financial Adviser

Jason Zweig is one of the few journalists I’d consider must read. He’s been peeling back the onion on the financial advice industry for years. He just published a great piece in the Wall Street Journal listing 19 questions you should ask your financial advisor, along with his answers.

I wanted to share a few important highlights:

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)

4) Will you itemize all your fees and expenses in writing? (Yes)

6) Will you consider charging by the hour or retainer instead of an annual fee based on my assets? (Yes)

7) Do you earn fees as adviser to a private fund or other investments that you may recommend to clients? (No)

14) How often do you trade? (As seldom as possible, ideally once or twice a year at most.)

16) 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 (certified financial planner), 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.)

19) Who manages your money? (I do, and I invest in the same assets I recommend to clients.)

I’ll suggest a 20th question, just to dig a little deeper into the fee issue that I believe most firms get wrong.

20) How much time do you expect to spend servicing my needs on an annual basis and are your fees reflective of that?

Based on the answer, I encourage you to calculate the proposed fee as an average hourly rate and decide whether or not it is sensible. If the advisor can’t answer the question, he/she is likely more interested with the revenue your portfolio generates than discussing the real value a relationship with a financial professional can offer.

Source: 19 Questions to Ask Your Financial Adviser (Jason Zweig)


Further Reading…

The Unjustifiable Cost of Financial Advice

Real Financial Planning

Asset-Based Colonoscopy Pricing


Tim Brennan

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