All Things Financial Planning Blog

No matter how loudly a friend sings an adviser’s praises, make a commitment to personally screen your prospective adviser or advisers. Interviewing more than one adviser can open your eyes to their respective advantages and disadvantages, thus giving you more information on which to make your hiring decision. If you are considering more than one adviser, schedule a meeting with each of them. When you arrive, keep in mind that you are in charge of the meeting (after all, you’re the CEO!). Remember that you are making a hiring decision. After introductions, let the adviser know that you have some questions that you’d like to ask after he gives you a general introduction to his practice.

Below is a list of 10 questions that will give you a pretty comprehensive idea of the behavioral competence of the adviser you are considering. Asking even a few of these questions will give you better information about the skills that really matter than you could ever learn during a typical introductory meeting with a prospective adviser.

When you look at these questions, you’ll see that many ask the adviser to tell you about specific situations they’ve dealt with. This approach is meant to give you more accurate and detailed information about what an adviser actually does. The question format makes it harder for an adviser to tell you what he thinks you want to hear.

Ten Questions to Ask a Financial Adviser Candidate

1. What are your most important values? (This can provide information on an adviser’s general orientation to values. Beware of an adviser who hems and haws when you ask this question. An adviser who is in touch with his or her own values is also more likely to act in ways that support your values.)
2. What is the one thing your clients say most often about you? (Best responses: “honest,” “trustworthy,” “keep my promises,” “do what’s best for them in the long term,” all of which speak to integrity.)
3. Can you tell me about a time when a client wanted to make a financial decision that you didn’t think was in their best interest? How did you handle that? (This can provide information on an adviser’s integrity, that is, is he or she willing to stick up for his or her principles even if it may cause conflict or result in lost business?)
4. Can you tell me about a situation in which you made a mistake dealing with a client? How did you handle that? (This can provide information about an adviser’s integrity, for example, was he or she willing to admit the mistake to the client? Also look for non-verbal behavior, such as squirming or looking away, which could indicate that you are not getting a truthful story.)
5. Tell me about how you handle your working relationship with your most difficult client. What do you do that’s different from how you act in your relationship with your favorite client? (This can provide information on client service orientation, for example, the ability to provide good service even when clients are difficult; doing what’s best regardless of personal feelings.)
6. What services do you personally provide that I might not expect from another adviser? (Can provide information on client service orientation.)
7. How do you make sure that your clients always know where they stand relative to their financial and life goals? (This can provide information about an adviser’s concern for quality and order, especially if the adviser seems animated and provides examples of his or her personal involvement in providing information, rather than speaking only about what the firm does.)
8. Can you tell me about a situation in which you worked with another professional inside or outside your firm to help meet a client’s needs? Who did you work with and what was your relationship with them like? (This can provide information on the adviser’s teamwork. How easy is it for the adviser to recall such a situation, and how involved did he or she seem to be?)
9. How have you personally responded to market volatility, and how have you communicated your thoughts and feelings about that market volatility to clients? (This can provide information on an adviser’s self-confidence. A good adviser will have emotions like anyone else, but will express confidence in his or her ability to help you prepare for any life eventuality.)
10. What kind of return can I expect if I asked you to manage my investments? (This can provide information on an adviser’s integrity. No adviser can predict the future, so beware of promises to produce a high rate of return. Also, look for responses that indicate the adviser does not think of himself or herself solely as a money manager, but also sees his role as helping you prepare for a variety of life events, and to help you make decisions that support your values and goals)

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Choosing the right financial adviser takes time and care. It’s not a simple matter to figure out in advance if an adviser has the integrity and commitment to service that will support your goals in good times and bad. But the rewards—both financially and personally—can be enormous.

This is an excerpt taken from FPA member Doug Lennick’s new book, Financial Intelligence: How to Make Smart Values-Based Decisions with Your Money and Your Life.

By Doug Lennick
Special to FPA