Advising Clients since 1980
Selecting an Advisor
Originally written in 1949 and revised in 1972 by Benjamin Graham, The Intelligent Investor remains one of the most influential books ever written on the subject of investing. Warren Buffet, widely considered the best investor of the 20th century, was a student and employee of Benjamin Graham and described The Intelligent Investor as “by far the best book about investing ever written.” This book has been recently updated by Jason Zweig and has annotated the text with extensive commentaries for each chapter. Of interest to every investor are the questions you should ask you investment advisor and questions a qualified advisor is likely to ask you.
What is important is that you and the advisor select one another and to increase the likelihood of a good fit and met expectations. With over 660,000 registered representatives (stock brokers) and over 800,000 individuals licensed to charge fees for financial advice, the challenge is finding one you can work with and believe will place your financial welfare before their own. The above questions are a good start to discovering who you will feel comfortable working with over the long term.
Questions an Advisor May Ask You
Why do you feel you need a financial adviser?
What are your long-term goals?
What has been your greatest frustration in dealing with other advisers?
Do you have a budget?
Do you live within your means?
What percentage of your income or assets do you spend each year?
When we look back a year from now, what will I need to have accomplished in order for you to be happy with your progress?
How do you handle conflicts or disagreements?
How did you respond emotionally to the 2000-2002, 2008-2009 and 2018 bear markets?
What are your financial fears? Your financial hopes?
What rate of return on your investments do you consider reasonable?
Questions to Ask Your Investment Advisor
Why are you in this business?
What is the mission statement of your firm?
What is your investing philosophy?
Do you use stocks or mutual funds?
Do you use technical analysis?
Do you use market timing? (a “yes” response to questions 5 or 6 is a “no” signal to you)
Do you focus solely on asset management or do you also advise on taxes, estate and retirement planning, budgeting and debt management, and insurance? How does your education, experience and credentials qualify you to give advice in those areas?
How do you choose investments?
What investing approach do you believe is most successful? What evidence can you offer that you have achieved success for your clients?
What do you do when an investment performs poorly for an entire year? (any adviser who answers “sell” is not worth hiring)
Do you, when recommending investments, accept any compensation from any third party? Why or why not? Under which circumstances?
How much do you estimate I would pay for your services the first year? What would make that number go up or down over time? (if fees will consume more than 1% of your assets annually, you should probably shop for another adviser)
May I see a sample account statement? (If you don’t understand it, ask the adviser to explain it. If you can’t understand his/her explanation, he/she is not right for you)
Do you consider yourself financially successful? Why? How do you define financial success? How high an average annual return do you think is feasible on my investments? (anything more than 8% to 10% is unrealistic)
Will you provide me with your resume, your Form ADV and at least three references? (if the adviser or his/her firm is required by the Securities and Exchange Commission (SEC) to file an ADV and he/she will not provide you with a copy, get up and leave - and keep a hand on your wallet as you go)
Have you ever had a formal complaint filed against you? Why did the last client who fired you do so?
Specific Investment Products & Strategies
If you have additional interest, please click on one of the following underlined links: 1) Personal Investing; 2) Retirement Investing; 3) Investment Strategies; 4) Stocks; 5) Bonds; 6) Mutual Funds; 7) Exchange Funds; 8) Private Investments; 9) Alternative Investments; 10) 529 College Plans; 11) Coverdell Plans; 12) Fiduciary Investing; and 13) European Investing for more detailed information about each option.
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This page is updated regularly so check in from time-to-time to see new articles and updates. You can click on any underlined words on each page to view a specific link or in the left margin of each page to explore a specific wealth management topic.
Charles M. Bloom, Registered Principal offers securities and advisory services through Centaurus Financial, Inc. - Member FINRA and SIPC - 775 Avenida Pequena, CA, 93111 (mailing address: 3905 State Street Suite 7173, Santa Barbara, CA, 93105) - CA Life Insurance License No. 0A52786 - Centaurus Financial, Inc. and Shoreline Wealth & Investment Management are not affiliated companies.
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