Truth is, the right questions to ask are the ones you want to ask. If there’s something you feel like you should know, it’s your right to get answers! But perhaps you’re having trouble determining what you should know in the first place. To help with that, here are 19 questions posed by Jason Zweig of the Wall Street Journal that everyone should ask their current or prospective advisor.
It’s not an end-all-be-all list; there might be other questions you want to ask as well. But all advisors should readily answer these questions, and those answers will help you discover that understanding and trust. We’ve included WealthPoint’s answers so you can get to know us a little better!
1. Are you always a fiduciary, and will you state that in writing?
Yes! We have a document called our Fiduciary Commitment that we will sign and give to clients as a reminder that we’ll always be acting in their best interest.
2. Does anybody else ever pay you to advise me and, if so, do you earn more to recommend certain products or services?
No. We don't get paid by any third parties (i.e. investment providers). Our incentive is to take care of clients.
3. Do you participate in any sales contests or award programs creating incentives to favor particular vendors?
No. We choose vendors based on how well they can help us serve clients and help clients achieve their goals, and nothing more.
4. Will you itemize all your fees and expenses in writing?
Yes, every client gets a copy of our fee schedule. Clients also get a detailed invoice with every quarterly report we produce. We have transparent discussions with prospective clients regarding fees before committing to a working relationship.
5. Are your fees negotiable?
We have a pre-determined fee schedule. While in rare cases there may be exceptions, we feel that our fees are very competitive and fair. Questions about fees are often questions about the value and services provided by the advisor in exchange for those fees. See answer 10 for more information on this!
6. Will you consider charging by the hour or retainer instead of an annual fee based on my assets?
We only charge annual fees based on assets. By nature, our comprehensive planning process aligns with this type of fee. This has led to great long-term relationships with clients, in which we act as a partner throughout life.
7. Can you tell me about your conflicts of interest, orally and in writing?
We strive to avoid conflicts of interest, and when they do arise, we will fully disclose and fairly manage them in the client’s favor.
8. Do you earn fees as adviser to a private fund or other investments that you may recommend to clients?
9. Do you pay referral fees to generate new clients?
No. We feel referrals should be earned for doing good work, not because you pay someone.
10. Do you focus solely on investment management, or do you also advise on taxes, estates and retirement, budgeting and debt management, and insurance?
As comprehensive financial planners, we cover investment management, retirement planning, budgeting and debt, college planning, wealth protection, tax planning, estate planning, and more.
11. Do you earn fees for referring clients to specialists like estate attorneys or insurance agents?
No. We do have relationships with specialists and refer clients to them as needed, but we are not paid to do so. We simply work with these people because they are great at what they do and take care of our clients. We’re also happy to work with clients’ existing specialists to make sure the whole team is on the same page.
12. What is your investment philosophy?
We believe a steady, diversified, low-cost investment plan produces the best results in the long-term. We have an “evidence-based” philosophy, meaning that we leverage Nobel-prize winning academic research to build portfolios. We do not believe in stock picking, manager selection, market timing, or anything of the sort.
13. Do you believe in technical analysis or market timing?
No. We do not believe short-term market fluctuations can be accurately forecasted with any consistency.
14. Do you believe you can beat the market?
No. We believe that markets are efficient. Evidence shows that “beating the market” cannot be sustained over the long-term. We want our clients to participate in market returns in a diversified tax efficient manner while minimizing costs.
15. How often do you trade?
Not often. We mutually agree with clients on an investment plan that fits their goals and risk tolerance and let that plan guide our trading. If the investments fluctuate to the extent they no longer fit within the parameters of the plan, only then will we trade (we call this “rebalancing”). We may trade for tax or cash-flow purposes if the plan calls for this, but we are never “active” traders.
16. How do you report investment performance?
Every client gets a quarterly report that covers investment performance, after fees, over various time periods, both short-term and long-term. This includes performance of the portfolio as a whole and individual securities. We also have a client portal that can be accessed at any time with up-to-date performance numbers.
17. Which professional credentials do you have, and what are their requirements?
All of our advisors are Certified Financial Planners™ (CFP®). This designation requires a college level education in the areas of investing, retirement planning, risk management and insurance, estate planning, and tax planning. In addition, it requires 6,000 hours of experience doing real-life financial planning work, and to top it all off, a comprehensive exam must be passed to earn the designation. Having advisors with this background allows us to provide knowledgeable, accurate, and comprehensive advice.
18. After inflation, taxes, and fees, what is a reasonable estimated return on my portfolio over the long term?
Different people need different portfolios based on their circumstances, so it’s impossible to answer this question so broadly. We’re happy to privately discuss what type of portfolio might be the best fit for you, the associated risks, and possible expected returns.
19. Who manages your money?
Personally, all my accounts are tied to WealthPoint! This way I can control my plan, but also leverage the expertise of the other advisors in the office. Even for financial professionals, it can be very helpful to have another set of eyes watching over things. We also invest in the same securities as our clients (we “eat our own cooking”).