Questions to ask a financial advisor, keyed to their filing
Ask how the firm is paid, who its typical client is, what happens to your money day to day, and whether there is anything in its disciplinary history. Every one of those has a filed answer on Form ADV, so you can compare what you hear in the meeting with what the firm told its regulator.
A first meeting with an advisor can feel like a sales call you're not quite prepared for. It helps to walk in with a few questions, and it helps even more to know that the firm has already answered many of them in writing. Here are twelve, each paired with the part of the filing where you can check the answer.
About how they're paid
- "How are you paid, all in, for working with me?" Ask for a dollar figure for your situation. Check it against the firm's compensation arrangements (Item 5.E) and the fee schedule in its Part 2A brochure, Item 5.
- "Do you or anyone at the firm earn commissions on products you might recommend?" If Item 5.E lists commissions, the answer is yes, at least sometimes.
- "Is there a minimum account size or minimum fee?" Account minimums are in Part 2A, Item 7; a minimum fee, if any, is usually in the Item 5 fee schedule.
About whether you're a fit
- "Who is your typical client?" Compare the answer with Item 5.D, which shows the firm's clients and assets by type.
- "How many clients does each adviser work with?" The firm's client count and number of advisory employees (Item 5.B) give you a rough ratio.
- "What exactly will you do for me?" Planning, portfolio management, or both? Item 5.G lists the services the firm offers.
About your money day to day
- "Where will my money be held?" With an independent custodian, usually. Item 9 of Part 1 and Item 15 of Part 2A cover custody.
- "Will you make trades without asking me first?" That's discretionary management, shown in Item 5.F.
- "What happens if you retire or leave?" Worth asking at smaller firms especially.
About trust
- "Are you a fiduciary for everything you'll do for me?" Registered investment advisers owe a fiduciary duty. Someone who is also a broker may act under a different standard for some products.
- "Is there anything in your or the firm's disciplinary history I should know about?" Compare with Item 11 and BrokerCheck.
- "Can I have your Form CRS and brochure?" SEC-registered firms that serve individual investors must give you Form CRS, and registered advisers must give you their brochure. A state-registered firm has a brochure but may not have a Form CRS.
Clear, unhurried answers are a good sign. So is an advisor who asks you plenty of questions back. If an answer doesn't match the filing, it's fair to say so and ask why.
Bring the filing with you
Open the firm's AdvisorCensus page before the meeting. Every item referenced above is laid out there in plain language, with a link to the full record on the SEC's IAPD site.
Common questions
What is the most important question to ask a financial advisor?
How are you paid, all in, for working with me? Ask for a dollar figure on your situation, then check it against the firm's Item 5.E arrangements and its Part 2A fee schedule.
Should I ask if they are a fiduciary?
Yes, and ask whether that applies to everything they will do for you. Registered investment advisers owe a fiduciary duty; someone who is also a broker may act under a different standard for some products.
How many advisors should I talk to?
Two or three is common. The point is less to find a winner than to notice which conversation felt clear and unhurried.
Sources
- SEC, Form ADV Part 1A (the form itself)
- SEC, Investment Adviser Public Disclosure (IAPD)
- SEC Investor.gov, working with an investment professional
Written from the public record and the regulators' own instructions. AdvisorCensus is a directory built from Form ADV filings; nothing here is investment advice. Spot something wrong? Tell us.