Diazo Insights

Top 10 questions to ask potential financial advisors

When exploring partnering with a financial advisor there are many things to consider, here are our top 10 questions to ask during the interview process to ensure you align with the best advisor for you and your specific situation.

1. Are you a fiduciary?

Fiduciaries always have a legal and moral obligation to work in the best interest of the client. Non-fiduciaries only need to recommend products that are “suitable” — even when they are not the best for your situation. Make sure you that any advisor you are working with is a fiduciary.

Click here to read more on What is a Fiduciary?

2. Do you have a specific process for financial planning?

Advisors many times will have a detailed sales process to walk you through what will happen right up until you sign your paperwork. While that is helpful, one specific question to ask when interviewing would be what does the planning process look like going forward? This will clue you in to the nature of your relationship and how the advisor works with current clients. What is the scope of their planning practice, what services do they provide? (We will cover relationship shortly).

3. What tax consequences will I incur?

Many times, when moving to a new advisor they will “implode” your tax situation by not considering what consequences can be incurred. One of the greatest costs to our potential returns can be tax implications. Taking a long look at what taxes will be due if the portfolio is completely changed can help you to understand if it needs to be a gradual process or if you can make wholesale changes immediately. Also, ensure that your advisor is tax-focused throughout their investment policy.

4. What are your qualifications/certifications?

Financial advisors come in all shapes, sizes, qualifications and experience levels. Many times, you will see initials behind an advisor’s name, and they can be confusing to say the least. Here are a couple of resources to be able to check up on some of the designations and qualifications, and whether or not they have education requirements.



5. What does our relationship look like?

As we went over in question #2, when it comes to process, digging in a little deeper here will ultimately help lead to a better result with your partnership. How often will your advisor contact you? Is he or she available only during appointments or as needed? Be sure to ask if they work with people in your situation; age, goal set, income range, asset range, risk tolerance etc. Aligning the relationship upfront will make everyone feel comfortable and set expectations for both parties.

6. What’s your investment philosophy?

For investing to be effective, having an investment philosophy which aligns with the professionals you are working with is imperative. Philosophy of the investments will be the base of your financial plan. If you and your advisor differ greatly along the lines of how the assets should look and the nature in which they are managed, there will always be a level of friction— which can leave you, the client, extremely dissatisfied.

7. How do decide my asset allocation or risk profile?

The importance of diversification we have all heard about— it’s how the portfolio is split up between stocks, bonds, and cash. Every advisor should be able to speak to you about how they arrive at this mix and what that means to your situation. For years risk was aligned with age, however in more recent years there are ways to detail risk based on the person. This analysis focuses on how you feel about risk versus a standard box you fit in with each passing year, based on the year you were born or when you want to retire. Aligning your risk profile to your specific situation will allow you to have more confidence in your portfolio and your overall plan. Get details on how your advisor will come up with your allocation and determine if that aligns with your internal risk number.

Here is how we find risk numbers for our clients:

8. What benchmarks do you use?

A benchmark is a standard or point of reference for which your portfolio can be compared or assessed. Benchmarks include a portfolio of unmanaged securities representing a designated market segment. Institutions manage these portfolios known as indexes. Some of the most common institutions known for index management are Standard & Poor’s (S&P), Russell and MSCI.

Making sure your advisor is using benchmarks that align with your risk profile and align with your overall goals, to reach your retirement or specific planning needs is paramount.

9. Where do you hold your client’s assets?

Where your assets are held will likely not matter: the fact that they hold your assets at a third party is the most important factor. This will allow you to use the custodian statement to verify your assets and will allow you to have a checks-and-balances in place. There are many great custodians available and each advisor will potentially have a relationship with more than 1.

10. Why do you do what you do?

If you take one question out of this list and make it the priority, please take this question with you, as it is the most critical in building a relationship with your advisor and the team of professionals that will help you to achieve all your goals. With this question you can get a lot of canned answers along the lines of I am here to help. Dig deep on this one and make sure the reason the advisor is in this business aligns with you. This specific question will give you more insight than all of the other questions combined. This will give you insight not only to the type of advisor someone is, but the type of person they are as well. TRUST is the most important part of any client-advisor relationship. Aligning your WHY with your advisor's WHY will lead to a strong and long-term relationship.

Tips for this process

Many times asking these type of questions will cause you some anxiety or nervousness. Remember you are interviewing them as well as they are interviewing you (if they are an empathetic advisor), to make sure you are a great fit for their business and they can truly help you get to where you want.

First and foremost you are paying someone to improve your financial situation. When looking for an advisor, keep this thought top of mind.

Diazo Wealth

As a boutique firm offering concierge services, we believe that financial planning isn’t transactional—it’s relational. At Diazo, we build wealth by building deep relationships with our clients. We create authentic connections by getting to know you and your family— and that includes helping your children and grandchildren become good stewards of wealth. Our advisors demystify financial planning without patronizing and build relationships based on trust and mutual respect— in short, it’s a partnership of equals.

Let us help design the blueprint.

Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of any topics discussed. All expressions of opinion reflect the judgment of the authors on the date of the post and are subject to change. Hyperlinks on our posts are provided as a convenience. We cannot be held responsible for information, services or products found on websites linked to ours.

Diazo Insights

We’re not just here to manage your wealth. We’re here to help you understand how your money is being invested. Whether you’re figuring out how to limit your tax burden after an inheritance or looking at the costs of launching a company, stay up-to-date with the latest articles, videos, and research on investment management, tax planning, and more. Education is empowerment, and we’re here to give you a boost.

Subscribe by email