When you’re in the market for a financial advisor, you want to find one that’s going to be a perfect fit for the long run. Your relationship with your financial advisor is key to your financial health, success, and peace of mind. At Parkside Advisors, we are keenly aware that a good client-advisor relationship is crucial for long-term success. We invite you to interview us before you commit to our services. And even if we do not turn out to be the right fit, we are happy to provide some guidelines for choosing a financial advisor.
Here are a few questions we suggest asking during any interview you conduct.
- Are you a fiduciary, and if so, are you willing to sign a statement to that effect?
Let’s start with why this question is important. The fiduciary standard requires an advisor to always act in a client’s best interest, always placing a client’s interest ahead of their own. It is the highest standard to which an advisor can be held. Fiduciaries must avoid conflicts of interest whenever possible, disclose anything that has the potential to create a conflict, and operate with full transparency.Financial advisors who are not fiduciaries are likely subject to a lower standard: one that simply requires that investments recommended by the advisor are “suitable.” There is a lot more leeway in recommending a suitable investment as opposed to always acting in a client’s best interest.
- How do you handle conflicts of interest?
The answer to this question will tell you a lot about a financial advisor’s ethics and working style. The answer to the previous question is a good start, but even if the advisor is a fiduciary, it’s a good idea to ask this follow-up question. Use the answer, as well as your own intuition about the way they answer it, in your decision-making process.
- What sort of written and phone communication can I expect when I work with you?
It’s crucial to know what to expect in terms of how often you will hear from your advisor—why, when, and how. Their communication style needs to jibe with your own. If you tend to communicate primarily via email, you’ll probably sync well with an advisor that conducts communication in the same way. No matter what, though, you need to know that you will be able to reach someone on the phone during business hours. Things come up, and you’ll want immediate answers.
- How long have you been practicing?
Investments, taxes, estate planning, insurance coverage, debt management, digital security, employment benefits—the range of issues that can affect your financial success (and protect you from financial harm) is huge. The best advice comes from technical knowledge; an understanding of your life goals, resources, challenges, and emotions; and the judgement that comes from years of helping clients achieve their goals.
- Can I speak with some of your clients?
This should be self-evident: a great advisor will have a long list of clients who want to tell prospective clients about how their advisor has helped them.
- How do you determine an appropriate investment mix?
If an advisor does not discuss this in depth early on, run away as fast as you can. Same thing goes for an advisor who uses a generic “risk tolerance” questionnaire.At Parkside Advisors, we collaborate with clients to develop the investment mix as part of the financial planning process. We do not have a one-size-fits-all asset allocation. Instead, we develop the allocation based on your needs, resources, and personal preferences using sophisticated modeling tools.
- What services do you provide?
Make sure an advisor who claims to provide financial planning or wealth management services is walking the walk. There is a real difference between an advisor who values planning and wealth management, and someone who only invests your money. Speaking with references will give you a good idea of the services an advisor is actually providing.
- What is your firm’s investment strategy?
At Parkside Advisors, we practice passive investing. For more about that, read my recent blog post, Active Versus Passive Investment Management—Our Philosophy. We believe that a passive investment strategy is the smartest long-term approach to financial well-being. If you are looking for an active manager who is talking up individual stocks or making market predictions, we’re not your team. If you aren’t sure about the difference, please call us for more information about how we invest and why we’ve been so successful with our investment philosophy.
Remember, there are not necessarily right and wrong answers to all of these questions, but asking them will help you gauge whether the advisor is going to be a good fit for you. And if you’d like to call us and ask us all of the above questions, we’d be more than happy to oblige.