Questions to Ask A Prospective Financial Professional

Questions to Ask A Prospective Financial Professional

April 01, 2022

What to look for and what’s not important

If you are shopping for a financial professional, you need a good checklist of questions to ask. What you are looking for is someone who handles clients like you – and who is financially wise.

As you assess a professional who manages your assets, for instance, do yourself a favor: Don’t rely on his or her investment record. Clients have differing needs. A money manager whose investment performance touched the stars last year may falter this year.

More important nowadays may be how skillful a financial professional is at preserving your assets. That may range beyond market forecasts into such realms as insurance. Losing the ability to work and generate income, because of a sudden disability, can be more ruinous to your financial well-being than a slide in the stock market. This list of questions to a prospective professional will help you decide whether the person is a suitable fit for you:

What Don’t You Do?

Some financial professionals are strictly asset managers. They run your portfolio and do no planning. Others are wealth managers and their mandate is broader: They help plan the risk in your life. Within these categories are specialists in such areas as insurance and estate planning. You may hire a professional to help you draw up an investment plan aimed at pursuing enough assets to see you through retirement. But the financial professional may know zilch about creating a trust to pass along wealth to your grandkids. So, you will need another expert for that.

Who Is Your Typical Client?

Let’s say you are starting out and have a net worth of $50,000. It may not make sense for you to hire a financial professional who typically handles multi-millionaires.

You may want to find a financial professional who focuses on your occupation. Say you are a doctor: A professional who knows about malpractice insurance and practice partnerships could be more appropriate for you than one who mainly deals with corporate executives.

Or you may want a financial professional specializing in your life stage. Perhaps you are widowed. Or a new parent. Or divorced.

What Clients Don’t You Want?

One professional may not want anyone with under $100,000 to invest. Another may only want those people. Beyond asset size, goals and styles also are important.

What Is a Recent Client Success Story?

Guiding clients as they work to unknot a problem, helping mitigate calamity or managing their holdings are key ways that financial professionals help out. If a prospective professional can point to specific stories where he or she helped develop a client’s success, it may offer you comfort the financial professional can aid you too.

What Is the Worst Thing You Have Seen Someone Do Financially?

To err is human. Sometimes, a financial professional is called in to help repair problems people have created for themselves. Sometimes, clients go against a professional’s counsel and drive into a ditch. Clients, after all, are not required to follow professional financial advice. This question can help you gauge an financial professional’s nose for trouble.

Believe it or not, there are professionals who told their clients to retreat into defensive positions prior to the 2008 market debacle, to lighten up on debt or to back out of heavy real estate exposure. On a smaller scale, some financial professionals may warn clients to avoid questionable moves like keeping most of their assets in employer shares or chasing hot stock tips.

Bottom Line

Asking a prospective financial professional these questions can help you decide whether you can work together. And remember, it is a partnership.


Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This article was prepared by RSW Publishing.