Be fully informed when starting a relationship with an adviser

Deborah Leahy

November 2011

If you’re like most people, you have a variety of financial goals. You might be able to achieve all of them on your own—but you will probably find it a lot easier if you get a little help from a financial adviser.

But how do you choose the right one? For starters, ask your friends, relatives and co-workers to suggest someone. Then interview some of the people they recommend. What questions should you ask?

What are your qualifications? Make sure you are talking to someone who, at a minimum, has all the required licenses for selling securities.

What type of experience do you have? Find out how long someone has been an adviser, but don’t rule out a person with only a limited amount of experience—a new adviser is often enthusiastic.

An adviser’s longevity is less important than whether he or she has had experience working with someone like you—someone in your financial situation, with your goals and your investment preferences.

What is your investment philosophy? Try to learn if someone favours a specific style of investing or a particular class of investments. These styles or classes may be well suited to some investors but inappropriate for others. If you believe the person you’re talking to has a “one size fits all” mentality, look elsewhere.

How will you communicate with me? There’s no one “right” way of communicating with clients. You need to feel comfortable that someone will always be available to answer questions, review accounts, evaluate your situation and make appropriate recommendations. If you are interviewing someone who has a partner or an assistant, find out whom you are likely to be communicating with, should you decide to become a client.

What services do you provide? Find out how a prospective adviser can help you. Some people sell investments only, while others offer investments and insurance.

Keep in mind that you don’t need to be a “one-stop” shopper when it comes to obtaining a wide range of services. You might want to ask a prospective adviser if he or she has developed working relationships with legal and tax advisers. This “team” approach can be quite beneficial to you, especially when you get into the area of estate planning.

How are you paid? There are several ways: fees, commissions, salary or some combination of these methods. One way isn’t necessarily any better than another, but you should have a clear understanding of what type of compensation is used.

Your association with an adviser is one of the most important business relationships you’ll have, so make sure it’s a good one—right from the start.

Deborah Leahy is a financial adviser with Edward Jones, specializing in assisting seniors.