Key Questions

Questions to Ask When Selecting a Financial Advisor

Choosing the right financial advisor is a crucial decision that can have a significant impact on your financial future. To help you identify a professional who aligns with your goals and values, it is essential to ask thoughtful and targeted questions regarding their services, experience, and approach.

Below are recommended questions designed to give you a clearer understanding of each advisor’s qualifications and how they may support your unique financial situation.

Regulatory Status and Investment Approach

Determine whether the advisor is an investment advisor representative of a Registered Investment Adviser (RIA) with the Securities and Exchange Commission (SEC) or the State of Ohio. This can indicate the scale of asset management they handle.

Alternatively, ask if the advisor provides investment advice under the SEC Broker Exemption.

Understanding the Advisor's Background

Ask about the advisor’s background and information about their firm. Inquire specifically about their experience, qualifications, licenses, and degrees.

Clientele and Firm Structure

Request information about the advisor’s average client profile.

Find out how many clients the firm or local branch serves and what kind of back-up coverage exists.

Clarify whether you will be working directly with the advisor or with an associate.

Asset Custody and Accessibility

Ask whether the advisor will take custody of or have access to your assets. (Taking custody means the investment manager could potentially access your account with or without your approval. Many advisors make investment decisions but do not have custody, except for fee debiting purposes. Typically, assets are held at firms like Schwab, Fidelity, or another brokerage.)

Investment Decision Process

Ask how investment decisions are made for clients.

Inquire about any financial incentives or third-party payments the advisor may receive for recommending certain financial products or investments.

Communication and Fees

Discuss how the advisor communicates with clients.

Ask about the types of charges you can expect and how these fees are accessed.

Clarify whether the advisor receives ongoing income from any mutual funds they might recommend, such as 12(b) fees, commissions, or other payouts, in addition to the fee they charge you.

RIA vs. Broker

A Registered Investment Adviser (RIA) representative is legally required to act as a fiduciary, placing the client's best interests ahead of their own. In contrast, a broker who provides investment advice under the broker exemption permitted by the SEC has an obiliation to serve the client, but their primary duty is to their employer.

Self-Assessment Questions

Do you understand what the advisor explained?

Do you fit within their typical clientele?

Are you comfortable with the advisor and their firm?