Interviewing Financial Advisors

Questions that head the list

There are 275,200 personal financial advisors in the United States, according to the Bureau of Labor Statistics. The size of this profession reflects data from 2020, which is the base year of the government agency’s 2020-2030 employment projections. What’s more, the occupation is growing at an annual rate of 5%, somewhat slower than other jobs.

Last year, 38% of Americans worked with a financial advisor, while 54% said that they didn't have a financial representative, according to Nonetheless, the number of Americans considering a financial advisor increased substantially compared to 2020.

But how does one approach a financial advisor and what are the key questions to ask?

Paul Ragone, president and wealth manager at Tennessee-based Integrity Wealth Services started with a captive firm before quickly transitioning to become independent. With more than 20 years of experience as a financial advisor, Ragone said, “The absolute first question I would ask a financial professional would be, ‘What happens to me if you go to a different firm?’”

Paul Ragone Ragone, who is an Accredited Wealth Management Advisor (AWMA) and an Accredited Asset Management Specialist, (AAMS), maintains that most prospective clients have done some degree of research on the financial professional before the first meeting. As such, the answers to the most common questions are probably already known.

“What most prospective clients don’t know is that if the financial professional works for a captive firm and then leaves, they may be assigned to another advisor,” Ragone told Advisors Magazine in a recent interview. “Or even worse, [they could be] added to the file cabinet of other ‘orphaned’ clients with no advisor at all serving them.”

Ragone added: “A financial professional/client relationship should be a long one built on trust and that’s hard to do when your account becomes assigned to someone that the client knows nothing about.”

Daniel Colvin is a senior advisor with Minnesota-based Fiat Wealth Management and he believes there are two important questions to ask when considering financial advisors.

“First, are you a fiduciary?” Colvin emphasized. “A fiduciary is legally obligated to do what’s in the best interest of the client,” he explained, “and interviewing for a financial planner is an important process that should start with that simple question.”

Once professional standing is established, other questions can then probe deeper into the advisor’s personality.

“The next question is: ‘What’s your why?” Colvin said.

“When we make the decision to partner with a client, it is far from a transactional event,” he acknowledged. “That said, when forming a long-term relationship, it’s important to know who someone is as a person.”
Colvin summarized: “In order to know if that advisor is ‘the right fit’, it’s beneficial to understand what motivates them and, finally, why they are in the industry.”

A recent article in U.S. News & World Report expanded on Ragone’s and Colvin’s line of questioning. In fact, the article provided 10 questions to ask a financial advisor before hiring anyone:

• Are you a fiduciary?
• What are your qualifications and how do they benefit me?
• Do you have a specialty or certain area of expertise?
• Is there a team supporting you? If so, who will be my primary point of contact?
• How long have you been helping clients?
• Who is your typical client?
• How are you compensated?
• Can you explain a financial concept to me?
• What types of investments do you use in your clients' accounts?
• What's important to you?

The yay or nay answer to the fiduciary question is pivotal, and fact is, most industry observers agree it should be one of the first asked—if not the first.

One is James Rukstalis, president, CLU, ChFC, CFP® at J.R. Financial & Insurance Services in Santa Clara/San Jose, California, who rattled off several related questions in a recent interview.

JR headshot round“I would ask first and foremost, where do your fiduciary obligations lie?” he said, adding, “Are you independent or are you a captive agent? What licenses do you have? What is your education? Qualifications?”
Rukstalis added: “You want to see if this person has put in the effort to learn, to know what they're doing, and then what are the tools and methods that they use.”

And if someone is not qualified, or a poor fit for a particular client—keep looking, is his advice.

“I find that working with a financial planner, is quite like working with a doctor, working with a lawyer, or a dentist,” Rukstalis said. “You're looking for somebody who's professional, who's ethical, who has a fiduciary obligation to the clients and who isn't trying to sell them a product, but rather help them with how they approach financial decisions and life decisions.”

If you find someone like that, then the investments side of the equation will happen naturally, according to Rukstalis.



Follow Us

Subscribe to Our Newsletter

What's Next, Updates & Editorial Picks In Your Inbox

© 2017-2021 Advisors Magazine. All Rights Reserved.Design & Development by The Web Empire