Important Questions to Ask Your Financial Advisor

All above-reproach financial advisors want you to know how they operate. They welcome detailed questions about the ins and outs of the investments they suggest and the expenses you will incur. Despite the awkward feelings, you aren’t being disrespectful by asking.

What are the tricks to get started? The way you ask the question can make a big difference. No need to be confrontational, just be transparent. Ask straightforward, curious questions. Work to create safety for the other person.

  • “I’d like to be clear about how you’re compensated for the work you do for me.

How much of your compensation comes from my direct payments to you, how much from fees on my investment, and how much is paid to you by the investment product?”

Again, your goal is to create a conversation that allows them to just tell you about their arrangements—no accusations from you, no defensiveness from them. Another neutral question might be:

  • “I’ve heard that it would be helpful for me to know if my advisor is a fiduciary or not? Can you explain the difference, and are you?” (Fiduciary means your advisor agrees to put your interests ahead of their own.)

They may make it hard for you, “Don’t worry about it. The fee isn’t coming out of your pocket.” This is the wrong answer. You may not write a check or hand over your credit card, but you are indeed paying. A Wall Street Broker laid it out this way. “An investor who paid 2% in fees each year would give up more than $178,000 over 30 years, almost as much money as the $180,000 deposited in the account during that time.”  That amount of money is probably worth being a bit uncomfortable over!

If their answer is vague, they change the subject or don’t give you exact amounts, you’ll need to be even more straightforward. Again, keep in mind that a straightforward approach is the one that highest quality professionals prefer you always use, and they will also use it back. Try these questions:

  • “I always want to know how my finances work, so please explain in detail the way you get compensated.”
  • “I’m uncomfortable with not knowing the details. Please make them clear for me.”
  • “How much money will you personally make in cash commission now, if I select this product? And how much will you make later, in any sort of ongoing or trailing commission?”
  • “Are you earning more from selling me this product than you might if you put me in a similar product from a different company?”
  • “Is there a bonus you are eligible for that comes as a result of this sale? Is your bonus less likely if you don’t make this sale?”

It may be uncomfortable to ask questions but it’s your right to know. For some people a light tone might be more comfortable, “Where are you going to go if you win the incentive for selling this product?”

Try asking your questions in writing.

Writing your question may be more comfortable. As a bonus, a written answer creates accountability for the advisor and lets them know you’re on top of things. If you don’t get a straightforward answer the first time, ask again until you do. Keep politely asking until you clearly understand.

If you feel uncomfortable and stuck, think about any question you might use to open up the conversation:

  • How often do you monitor my investments?
  • Why does this product benefit me?
  • I don’t understand this portfolio. Please explain it to me.
  • Please explain why you have me in this alternative allocation?

 Still stuck? You can ask your other advisors for help. Request that your attorney and other advisers talk with one another. They should all be willing to keep each other in the loop. If someone isn’t, you can ask the others to help correct that situation immediately. (Many of the best advisors suggest having your team work together all the time—so efforts are coordinated in your behalf.)

It’s easy to let things slide and stay with a professional who may not be working in your best interests.

If you’re working too hard, it may be a clue that your advisor is not the best fit for you. If after a couple of tries you can’t get the information you need, it may make sense to interview another advisor to find someone who is easier to talk to.


Money conversations can be uncomfortable—so we tend to avoid them, approach them with trepidation, or use language that’s pushier than necessary. We can help you help you get more comfortable talking about money and craft conversations that work in your best interest.

We coach key personnel, train teams and work with people of wealth on dealing effectively with the emotions raised by money-related issues. You can get more comfortable so formerly awkward conversations no longer feel awkward.

For more information on fiduciary responsibility:

  1. Watch an interview I did with a fee only advisor, Gavin Morrisey.

  1. You can also check out John Oliver’s Fiduciary and The Retirement Challenge on You Tube. Language is crude at moments so don’t watch with young kids. I wonder if John Oliver can have clear, open conversations with his financial advisors?!

Is Your Financial Advisor Working in Your Best Interest?

Not all financial advisors are created equal. Nor are their fees. The issue that you may need to discuss with your advisor is how they receive their fees and how that may affect whether they lean toward serving your best needs or theirs.

Are you aware that many advisors are not required to make the choice that is most financially beneficial to you? Want to know if yours is? Ask whether they are following the fiduciary standard or the suitability standard. Find that tough to ask? There’s that sticky stuff we feel around money.

Let’s start from the beginning.

  1. Many advisors at brokerage firms are paid commissions to sell you products that the firm makes money from.
  2. Some of these advisors are good. Unfortunately, many are just good sales people whose advice is influenced the commissions they get paid.
  3. What makes an advisor money may not be the best choice for you. It may cost you more to buy a product that is no better for you than one that would leave more money in your account (for college, retirement or whatever you are saving for).

You need to ask your advisor which standard they are operating under—fiduciary or suitability. The question might feel to them or you like an accusation because money seems to do that to questions. This is a very important question to get comfortable asking.

  1. The fiduciary standard for Registered Investment Advisors (RIA), or an ERISA appointed Fiduciary, requires that the advisor put your needs ahead of theirs. The fiduciary standard requires that you hear about lower-fee options, if the lower-fee product is of equal quality. Advisors who are fiduciaries must:
  • Put the client’s best interest first.
  • Act with prudence; that is, with the skill, diligence and good judgment of a professional.
  • Not mislead clients; provide full and fair disclosure of all important facts.
  • Avoid conflicts of interest. And if conflicts are unavoidable, they must fully disclose and fairly manage in the client’s favor.
  1. Broker dealers, insurance salespersons or any other financial company advisors are required to apply a suitability standard.
  • They must know you and your financial situation.
  • They must recommend products that are suitable for your situation.
  • They can sell you products that result in them receiving a higher commission than for a comparable product.

If you’re not comfortable asking about fees and professional standards, you could lose a lot of money. The higher fees you pay may be invisible today, but result in dramatically less compounding over the time you own the stock, bonds, or other investment vehicles. Your discomfort may cause your portfolio to be worth thousands, or tens or hundreds of thousands less than it could be.

The other question you need to be able to ask is whether your advisors is fee only or fee based.

Fee-only advisors (look for RIA or ERISA) don’t sell products, don’t accept commissions and operate as fiduciaries.*

Fee-based advisors can sell you investment products for commission.

Again, discomfort in asking questions can cost you way too much!

More information:

  1. Watch an interview at the end of this article that I did with Gavin Morrisey about fees you may be paying your advisor that benefit him/her more than you—and what you can do.

Gavin is former Senior Vice President, Wealth Management at Commonwealth Financial Network and now managing partner at Financial Strategy Associates, a financial services firm in Needham, MA. He and his firm are independent, fee only advisors who will answer any and all your questions.

  1. Check out John Oliver Fiduciary and The Retirement Challenge on You Tube!
  2. Search the Web: There’s a lot of information how financial advisors get paid. In fact, that search led me to many interesting videos and articles.

Don’t avoid money or fee related conversations. If you want to talk with your advisor but feel uncomfortable, we can help you craft a conversation or email that is respectful and helps protect you.

Whether you’re an attorney, or other service professional thinking about raising fees, a dental office aware of the benefits for patients and your business if your team could talk more comfortably about costs, a parent who wishes he/she could talk with adult children about inheritance plans or family business, an adult child who fears approaching the conversation with parents for fear of seeming greedy, we can help you craft conversations that matter. Let us help you get more comfortable talking about money.

Kind of a P.S.

I know this article was long—and yet here’s more. More reasons to be wary. For those of you who have the bandwidth to keep going:

When I was doing research for this article, I came across these powerful and disturbing information-articles that highlighted kickbacks, contests, incentives for advisors. Here is just one of them. The bold is my emphasis.

From CNBC confessions from financial advisors    Friday, 20 Jun 2014

Most investors know their financial advisors take a percentage for managing their portfolios, but they probably didn’t know the mutual fund industry is also giving these advisors commission for pushing specific equity mutual funds, unbeknownst to investors.

I’m not talking about front-end load fees. I’m referring to commissions and bonuses that financial planners get after they put their clients into these funds.

The industry and SEC call these payments “commission” but in reality, they are a “kickback” or “incentive” for financial planners to push specific equity funds, even if they are not in their client’s best interest. This payment structure raises ethical and legality concerns on whose interest is being served: the financial planner or the client.

Even more disconcerting, most investors don’t know this is happening.

I’ve seen how this works following two decades of working on Wall Street for well-known brokerage firms. This payment structure to financial planners is hidden behind a smokescreen that is covered by layers of payments through different sources. First to the brokerage houses, then to the brokers.

This hidden-fee structure was addressed in the Dodd-Frank reforms, which went into effect on January 1, 2014. Under Dodd-Frank, disclosures for “commission” or “kick-back fees” are now required for pension and 401k retirement accounts, but accounts that aren’t regulated by the Employee Retirement Income Security Act were excluded from the new law.


From Inertia to Implementation-Getting Clients Unstuck

Until clients agree to implement a plan for their finances, estates, dental health or other professional services, we, the professionals, aren’t able to move ahead. You may have gathered the data, crunched the numbers and worked out a reasonable and perfectly logical course of action, but sometimes everything stops for no apparent reason.

The problem is simple but not easy. In many situations and for many clients there is an emotional or social need that isn’t met and that void drags the whole process to a standstill. The client may not realize they’re stuck, and you may not realize it either— but stuck they are and stuck they’re likely to remain unless you’re able to discover the unmet emotional need and address it if you can.

Many unsigned agreements and never-implemented plans are sitting in a folder waiting for someone to ask a good question or two, listen to an answer that may seem irrational and stay with the client until that person is ready to hear more data. Explaining the logic (again), demonstrating what we know and how brilliant we are “should” work, but it doesn’t. When clients won’t move, we need to find another path. Ideally, we create the situation where the client asks for more information.

I was asked by a financial advisor to try to unstick a client. As is often the case, both the client and the professional are stuck. In our first meeting, Peter, the wealth advisor who was referred by a client of mine, explained his frustration with his client Jack.

“Jack inherited $5 million of a poorly performing stock, which he won’t diversify or sell. This position is a major part of his portfolio.  He is a bright, practical man. He’s married, has no children. He hopes to retire in 5-7 years. Holding onto this stock could keep him from a successful retirement and he won’t listen to reason.”
I asked Peter what he knew about this inheritance.

“Jack’s grandfather left it to him.”

When I asked for details, Peter admitted he hadn’t asked for any more than that. Knowing how complex family ties can be, my emotional radar pinged me.

It takes time to develop a relationship where a person trusts that you really care—we all know when someone is trying but not really interested. This is one of those times when only the real deal will work. The initial step is to ask sincere, curious questions and then listen to the answers. This step takes time, but it is an investment that pays dividends when clients decide to trust you and begin to implement.

Peter asked that I coach him before the meeting, and attend in case he needed my assistance. My initial suggestions were for us to create some good questions he needed to ask and that he show he heard the answers by rephrasing them back to the client or reflecting on the emotions involved.

At the client meeting Peter introduced me matter-of-factly as their financial behavior and transition specialist and after a brief catch-up, he followed our plan and asked about the stock.  “Can you tell me more about the stock you inherited from your grandfather?”   And then he quietly waited for Jack’s answer.

After a bit of reflective listening and a couple of focused questions, Peter learned that Jack’s grandfather told him not to sell the stock until he had children.  Jack had pledged to his grandfather that he would abide and didn’t want to go back on his promise even though he and his wife had no children and wouldn’t have any.

Peter didn’t know what else to say or ask, so I spoke to Jack and reflected on the emotional bind.

“What a dilemma for you:   If you sell the stock, you break your word to your grandfather, but it makes no sense to hold on to it. Quite a bind.”

 Jack said, “I do feel trapped but honoring my vow is paramount.”

I asked what he thought his grandfather might say now, given the stock company’s accounting scandals and Jack’s age.

“Times are different now. I don’t know what he’d say.”   I sensed his increased receptivity and asked if his grandfather would think it advisable to hold the stock forever, given that he and his wife Marie were not going to have children.”

“After looking at this from another point of view, I can hear my grandfather telling us to think for ourselves and not ‘be sheep’.” He added that, in fact, his grandfather might be upset if he didn’t diversify.  “But I did give him my word,” Jack said, still ambivalent about how to proceed.

“So he might want you to diversify, but it’s still hard to change the agreement.”

When I saw signs that Jack looked relaxed, I asked, “Would it be helpful to have Peter take another look at the numbers?”   He agreed and after just a few minutes, Jack decided to sell a fifth of the stock.

After underscoring Jack’s agreement to diversify $1,000,000 of his stock, Peter was eager to work out the details, but I could see that Jack needed time to come to terms with his decision. To Peter’s initial dismay, I asked if Jack wanted to continue today or schedule another appointment.

Emotions play a positive role in all decision making and we ignore them at our peril. We need to invite client history and feelings into our calculations and assist them to find a path toward implementing plans that are in their best interest. Ask questions, listen carefully and trust that your clients will know when you are really interested. Listening shows your interest in them. Questions show your interest in them. Present a plan that reflects all their needs—financial and emotional.

And, of course, we are here to help when you’re stuck. Contact us to strategize more effective questions you or your team members can ask. We can also help you develop other communication strategies that encourage positive momentum. Simple tweaks can make a real difference.

Making Meaningful Holidays Last All Year

Whether family income is $25,000 or $2,500,000, it is possible to fashion more meaning, purpose and fun in holiday celebrations. So this year be intentional about what you want to accomplish and find ways to involve your whole family, or work team. Here are a few things I’ve found important to keep in mind:

People Who Spend Money To Do Things Feel Happier Than Those Who Spend Money To Buy Things

Think about what you might do this year as a family. Listen to each person and decide on something that would be good for everyone. You might try an immersion program to learn a new language, cooking lessons, a play in New York, or a sports event.

Give Others an Experience

You can also create a cost-free experience by serving food at a homeless shelter, inviting a person in need to a holiday meal, or helping at a local animal shelter. These and many other activities create memories that last.

Share with Others

Giving to others is both a responsibility and a pleasure. Involve your children in your philanthropy by communicating what you do, “I’m going to donate money this year to support things I care about. Usually I give money to _________, _______, and _______. This year I’d like to hear where you think a donation would do the most good.

Children can get a quiet lesson in limited means, can help look for what actually works, and learn that certain organizations only exist because people give support, etc. Find a place they can donate their less used toys and electronics-
and give them the personal joy that comes with giving.

Bring it to Your Workplace

If your workplace holiday party is getting stale or too rowdy, create a different atmosphere-Invite families, bring in some simple entertainment, invite a few non-profits to join you and present gifts from you and your employees, together wrap small presents for a nursing home or hospital to give out.

Holiday traditions were created over the years by families and communities doing things that felt meaningful and fun. And each generation has a responsibility to bring fresh energy and renewed awareness to the celebration. What might you do differently this year?

I also discussed this topic in the most recent episode of my monthly cable TV show, Shrink Rap. Click this link to watch it:

Raising Your Fees

A Surprise Followed a Fee Increase

A couple of years ago I carefully researched both my business costs and consulting fees in my field and service area. It was clear that after four years it was time to adjust them up a bit.

Even after all these years of helping individuals and professional practices deal with the emotional and business aspects of money in general and fees in particular, I noticed I wasn’t as relaxed as I would have liked. I walked myself through the same process I encourage my clients to follow and prepped myself to start announcing the increase to take effect the first of the year. Continue Reading

Tips for Working with Wealthy Clients

It’s not easy for most of us to work with clients who have much more money than we do. When Amanda Mills and Syble Solomon asked me to write a section of their book based on the money-related coaching and consulting I’ve done for the past 15 years, I was honored. And, it’s been rewarding to help other professionals learn what I have-that being affluent doesn’t automatically grant confidence, freedom from worry (even about money), and the majority of other problems of living.

Here’s a peek into the recently published book, Bringing Money Into the Conversation. The article this month captures the essence of what I wrote for this readable and useful book. I wanted to share some tips I’ve found valuable regarding attitudes, behaviors and emotions when working with people with wealth. Let me know what you think. Continue Reading