Sat Dec 07 2024, by Tyler Gardner

5 Essential Questions to Ask Your Financial Advisor Before Hiring Them

If you are planning on working with a financial advisor, here are the five questions you need to ask them before doing so.

I'm Tyler, a former financial advisor and portfolio manager, and now I create financial content for free so you don't have to pay for it.

1. What Are Your Fees?

If they charge you a percentage of your assets under management, simply ask them what is twice as hard about investing $2 million versus $1 million, because it’s going to cost you twice as much.

2. Do You Get Compensated for Certain Funds?

If they do, ask them to explain why exactly it is in your best interest to be put in those funds versus low-cost index funds.

3. Do You Manage Investments Yourself?

Ask them if they even manage the investments themselves or if they outsource them. If they outsource the investments and they're an investment manager, you might ask them, 'What would you say you do here?'

4. How Do You Invest Your Own Money?

My personal favorite. Ask them to show you how they invest their money. They're under no obligation to do this, but if they don't, there's your sign.

5. How Do They React to You Managing Your Own Money?

Finally, if you're already working with an advisor and you want to see how they really feel about you after your 20-year friendship, tell them you're interested in managing your own money next year and you'd love their help teaching you. See how they respond. You'll learn all you need to know about whether they actually care to help you get one step closer to where you need to be.

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