Valenti Hanley PLLC

What are some questions to ask a potential investment advisor?

Keeping your investments in order is sometimes a challenge. It is imperative that you find a financial advisor who is right for your needs. This is especially true if your investments are complex or if your financial situation is complicated.

When you are considering working with an advisor, there are some important questions that you need to ask them to ensure they are doing what's best for you. These questions can give you an idea of what to expect:

  • What is your fee schedule? Some advisors charge a flat fee or hourly fee, but others charge a commission based on the value of the assets you have under their care. Typically, a flat or an hourly fee is what works best for many investors.
  • Are you a nonfiduciary or a fiduciary? A nonfiduciary has to recommend products that are suitable for you, but they don't have to stick to ones that are ideal for you or the lower cost. A fiduciary has to work solely in your best interests.
  • How much access will I have to you? You need to know that you will be able to contact your advisor when necessary. Find out what this will entail if you don't have an appointment. Are these issues handled via phone calls, emails or other methods? Additionally, you need to ask how often you will have meetings with the person.
  • Who is the custodian over the accounts? Bernie Madoff didn't use a custodian and you see what happened to those investors. A custodian, such as a brokerage, holds your investments, which provides an extra layer of security for you.
  • What type of asset allocation do you suggest? You need a diversified portfolio, so you want a person who is going to invest in a variety of companies. Discuss what types of companies you want to include, such as large-, mid- or small-cap companies, or domestic or international.

Even if you take the time to fully vet out the advisor, you should keep a close eye on what is going on with your investments. If you notice any unethical behavior, you might decide to explore your legal options.

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