Questions You Should Ask Your Financial Adviser

By on February 23, 2011 in Current Events, Retirement with 4 Comments

I have previously written an article about questions you should ask your financial planner. In the article, I mentioned that the website of the  Securities and Exchange Commission (http://www.sec.gov) was a great place to go for information on investments.

The SEC has a brochure that will be very helpful when choosing a financial adviser, as well as questions to ask about investment products and how to handle problems if they arise. The brochure is Ask Questions: Questions You Should Ask About Your Investments…and What To Do If You Run Into Problemshttp://sec.gov/investor/pubs/askquestions.htm

The SEC’s list of questions is more comprehensive than mine, so I am including it (with minimal editing and with a comment or two) below. Keep in mind that not all questions will fit all situations.

  • Are you registered with our state securities regulator? (Note: you can find your state securities regulator from the North American Securities Administrators Association at http://www.nasaa.org).
  • Have you ever been disciplined by the SEC, a state regulator, or other organization (e.g., FINRA or a stock exchange)?
  • How long has your firm been in business?
  • How many arbitration awards have been filed against your firm?
  • What training and experience do you have?
  • How long have you been in the business?
  • What other firms have you been registered with? What is the status of those firms today?
  •  Have you personally been involved in any arbitration cases? What happened?
  •  What is your investment philosophy?
  • Describe your typical client. Can you provide me with some names and phone numbers of your long-term clients?
  • How do you get paid? By commission? Amount of assets you manage? Another method?
  • Do I have any choices about how I pay you? (e.g., by the transaction or flat fee)
  • Do you make more money if I buy this investment rather than another? If you weren’t making extra money, would your recommendation be the same?
  •  Are you participating in a sales contest? If they respond that they are, ask them if the purchase is really in your best interest, or if they are simply trying to win the contest.
  •  After they have told you how much the investment will cost, ask them how much you would get if you sold it that day.
  • Where do you send my order to be executed? Can we get a better price if we send it to another market?

The list even contains two questions to ask if your adviser changes firms:

  • Did they pay you to change firms?
  • Do you get anything for bringing me along?
  • The above lists are only questions to ask your broker or adviser. There is a longer list of questions to ask about investment products, including mutual funds, and a shorter list of questions to ask about the progress of your investments. Finally there is a section with advice on how to handle problems.

    The SEC and our state securities regulators can help keep us out of trouble. We should take advantage of their information and assistance.

     

     

    John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. The book is written in an easy to understand question and answer format and covers all areas of federal benefits from the perspective of an employee at various stages of their career. Order your copy at shoplrp.com.

    © 2016 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

    About the Author

    John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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