LexION Blog

3 Smart Questions to Ask Your Financial Advisor

After a while, every financial advisor starts to sound the same on paper. Sorting through all the advisors out there to find the right one for your investment needs can be confusing, and even intimidating. It’s your wealth that’s on the line, after all.

Thankfully, you can sort through the pack and find the right one for your goals by asking the right questions.

Without further ado, here are three questions to ask your financial advisor, to make sure they’ll help you achieve your goals:

What’s my investment strategy?

If you don’t understand the rationale behind the investment choices and decisions in your portfolio, it’s high time to have a conversation with your advisor. It’s incredibly important that you have an investment strategy that works in light of your risk tolerance, needs, and goals.

One of the best ways to outline this is through an investment policy statement – a document that puts your strategy in writing. This not only ensures you and your advisor are one the same page, but can serve as a reminder to stick to your plan when the market becomes turbulent.

Are you a fiduciary?

Much like a doctor, a fiduciary advisor is legally required to act in your best interests at all times. This is one of the most important questions to ask your financial advisor because the fiduciary status is optional. Unfortunately, a big portion of Wall Street – including advisors and brokers – are under the less stringent suitability standard, which means their advice only has to be “suitable” for a client. That gives leeway for commission-based investment recommendations and hidden fees.

Is your advisor separate from your custodian?

Individuals that trade and manage your assets on your behalf shouldn’t actually house your money. Keeping your investments and your financial advisor separate is a good way to maintain checks and balances over your investments. This way, the money manager will be able to trade on your behalf, but won’t be able to move or remove money in your account.