10 Personal Questions to Ask Your Financial Advisor

Yesterday I posted 10 non-personal questions to ask your financial advisor, which I thought would only be complete with 10 personal questions to compliment them.

Other professions may also have stereotypes like the smoking doctor, the bald barber, the lawyer without a will, or the serially monogamous marriage counsellor, but finance professionals probably have the most notorious reputation as those who take public transportation to their offices where they advice clients driven to them in limousines.

The best financial advice is likely to come from “do as I do”, rather than “do as I say” professionals who combine the best of their professional and personal experience in a foundation they can build clients’ plans on.

Since the heart of financial advice is personal, here are a list of 10 personal questions I would suggest asking a financial advisor, if nothing else, to get to know how they think about life and money and whether they are a model you would like to work with:

1. What insurance do you have on yourself and your family?

Even if a financial advisor doesn’t focus on insurance, they should have their insurance house in order with at least the basics covered.  As a non-insurance specialist myself (but as someone who probably who enjoys shopping for insurance far more than most), my most sincere recommendations (which I receive no commissions on) are what coverage I have bought for myself and my family.

2. What insurance have you decided you don’t need for yourself, and why?

This is the other side of the question to see how well the advisor understands insurance beyond their own needs.

3. How much of your money have you made as a financial advisor vs from other sources?

Unlike medicine or law, many of the wealthiest financial advisors made much of their money from careers before they became financial advisors, and this background helps them relate to the financial situations of those working in careers they know very well.  On the other extreme, many specialist investment advisors have extensive experience in the sector they focus on investing in.

4. Do you invest your own money the same way you invest my money?

This is a critical question which I feel is not asked anywhere near often enough.  If the advisor doesn’t invest their own money the same way they invest client money, it is very important to understand why not.

5. Are you involved in anything that might create a conflict of interest in advising me?

Conflicts of interest are often required to be disclosed, but are important enough they should be asked about directly in conversations.

6. Do you own your home?

An advisor who owns their home might seem more grounded, but there is nothing immediately wrong with one who doesn’t.  As home ownership is one of the foundational goals of financial security, this question is just as much about checking how the advisor’s views on financial security and groundedness align with yours.

7. Do you have any debt?

As most financial advisors can’t make any extra money telling you to pay off your debt, seeing whether they ask you to pay off yours is sometimes used as a simple honesty test for advisors.  On the other extreme, I also suggest asking your advisor about their views on financing insurance premiums (basically, borrowing money to buy insurance), which private bankers can make a lot of money doing but I believe rarely makes economic sense for the client.

Back on the “do as I do” of debt, if your financial advisor does have debt, it is a good topic for finding out more how they might advise clients on a similar situation to their own.  Personally, I don’t believe debt at any cost is necessarily bad, just as I don’t believe everyone should 100% abstain from caffeine or alcohol, but I believe it is important to understand and master debt and not let it master you.

8. Do you have children you are sending to school or have sent to school?  How did you choose the school and come up with a plan to pay for it?

Again, this is a personal financial goal many clients should be curious if their advisor has already solved or is solving for themselves.

9. What is your own retirement plan?

Unless your advisor is much older than you, this question may be more theory than practice, but it is still worth knowing how much retirement planning your advisor has put into practice versus their own planned norms for their age.  This may also be less relevant if your advisor is self-employed and may have to use different retirement plan structures than employees have access to, but the math of money-in vs money-out is really not that different.

10. What is your estate / succession plan like?

This is a long-term, what-if to what’s next question to get an idea of how an advisor thinks about planning for the next generation.  Many advisors will not be specialists in estate taxes, trusts, or probate, but should know enough to help you think about planning a legacy.

I happily discuss my own answers to these personal questions with clients and prospective clients who wish to get into the personal details of financial planning with me.  Feel free to contact me through the form below:

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