1. "May I have a copy of your ADV?"
You only want an advisor that is an Independent Investment Advisor Representative with an Independent Registered Investment Advisory Firm. Please note the word "Independent." That's much different than a wire house. The way to quickly get to this point is to ask them for a copy of their ADV- this document fully explains who the company is and the background of the advisors as well as services they provide and fees. I would specifically want to know if financial planning services are available for a separate fee. This is an objective plan that you purchase and can take to any advisor and implement any or all of the recommendations. If you get any hesitation about their ADV, or if they do not provide objective financial plans separately for a fee then beware! Please move on to the next advisor.
2. "What are your qualifications?"
Independent Investment Advisors' qualifications are important. Find out if they also have been licensed in insurance, securities, mortgage field, or real estate. Ask how long they have actively held licenses in those fields. In my opinion five years minimum is a good starting point. The education required for these licenses and ongoing continuing education is extensive. I doubt you want your nest egg being managed by someone just getting started with you as the guinea pig, so find out how much experience they have an independent Investment Advisor Representatives- just how long have they been in the financial industry? Do they have roots? Do they own their own building or do they lease space? Or, can they pick up and leave for Guatemala at a moment's notice without any notification? Are they involved in their community? Think of the things that are important to you as an individual as well, such as do they participate in charities, the Church, or the Chamber of Commerce?
3. "What is your process?"
What is the advisor's investment philosophy? What you want to ask is, "Are you a one-man-shop who thinks he is the next Peter Lynch?" Are you going to entrust all your $Money with someone who thinks he can outperform the top portfolio strategist in the world? The advisor's answer should be: "We analyze our clients' needs, goals, and objectives and create tolerance to risk. We offer the top portfolio strategists who have a disciplined approach and have a long history of success available in an open architecture platform." You want the best strategists available for the amount of $Money you have to invest because your goal is to give yourself the best chance for long-term success. If an advisor wants to "sell' you something at your first meeting, you are probably going to want to move on down the road.
4. "What market is your specialty?"
Whether you are a doctor, small business owner, or farmer, you want to work with an advisor who already understands your industry's market, business, and special needs. Ask if the advisor ahs a breakdown of his or her clients profiles. In our case at ChappelWood Financial Services, we have an Ideal Client Profile so our clients know who and what we specialize in.
5. "How are you compensated?"
Advisors are paid in various ways. Payment can range from hourly or a fee-based percentage of assets managed to a commission, a retainer, or a flat project rate. The advisor's ADV should spell this out for you as well. The answer to your question should be, "I can be compensated by all these methods. It is based on the needs and suitability of each client and the solutions to their unique situation You will know the recommended solution, the options, and the cost to you before we ever proceed with any implementation."
6. "Do you have a team approach?"
Most seasoned, financial professionals have a team of people they call on as needed for their clients. When the need is small, this can be a professional courtesy where there is no cost involved. But, when extensive services are required, you should pay for their advice as needed. It is comforting to know you have their experience to draw on. Don't be fooled because someone you interview has many advisors in one office, as they may just be leasing office space. Bigger is not always better. You may receive much more personal service in a smaller firm. The majority of our business comes from dissatisfied wire house clients. I couldn't tell you one client that has come to me from an independent Investment Advisor Representative. That is clear confirmation to me that this method is meeting the needs of investors today. Also be aware that many wire houses have begun Registered Investment Advisor arms that would not be considered Independent.
7. "Have you ever filed personal or business bankruptcy?"
Legally, as an Independent Registered Investment Advisor Representative (RIA), this is require to be disclosed. Who would know if it's not disclosed? You should ask the question. If they have filed bankruptcy, do you really want them managing your $Money if they cannot manage their own? Is there any reasonable explanation? It's your $Money. You be the judge. Don't take advice from broke people.
8. "What can you tell me about your E/O (Errors and Omissions) policy?"
A trusted financial advisor should carry this insurance policy in the event of an inadvertent error or possible omission, which can cost a client. Make sure your advisor has this coverage. This insurance is as important to a financial advisor as home-owner or car insurance is to the average person. Not having this E/O policy is just irresponsible.
9. "How many clients do you have?"
The answer should be no more than 150. If they brag about 500 or 1000, beware! How could they possibly monitor your account and provide you premier service?
10. "Do you have a guarantee?"
It might read similar to ChappelWood Financial Services guarantee. Ask us for more information.