September 23, 2014 4:31 am
1. Are we on the same page?
Have you communicated your investment goals clearly to your financial advisor? With a clear goal in mind, outline long-term objectives, as well as your approach to investing. Setting these expectations will help you avoid searching for a new advisor or worse – potentially damaging your portfolio.
2. How will you achieve my financial goals?
Whether you’re seeking to gain returns or minimize your taxes, it’s important that your financial advisor informs you exactly how he or she is going to make those goals a reality. Be wary of false promises – no matter what your advisor tells you, the stock market is unpredictable. Another red flag: your advisor has not reviewed your tax returns.
3. Can you explain this better?
Financial advisors often use professional terms that may or may not resonate with the average investor. While it’s great that they know their stuff, don’t be afraid to ask that he or she explains everything in detail. If a financial plan seems too complex, even after an explanation, request that the plan be condensed so that you adopt a feasible strategy that meets your needs and understanding.
4. What other resources do you have?
It’s perfectly acceptable to ask your advisor to direct you to other sources of financial information. Ideally, your advisor will have a list of websites, books or pamphlets to further educate you about your investment options.
5. How often will you contact me?
To keep the lines of communication open, establish a schedule with your advisor for quarterly phone calls, annual meetings, etc. Be sure to state which method of communication you prefer, and whether you want your spouse to be involved in the conversation.
Source: Consumer Reports
Published with permission from RISMedia.