40 Curveball Questions to Ask A Financial Advisor


This guy is about to throw his financial advisor a curveball. Photo by North Charleston.

So, you’re thinking about paying a financial advisor a hefty sum of money. Sometimes 300 dollars an hour or more, as revealed in my post on financial advising rates. And you want to be sure you’re getting your money’s worth — you’d like to keep this guy (or gal!) on their ambiguously gendered toes… which means that you need some curveball questions to ask a financial advisor.

And, like usual, I’ve got you covered. Just like I had you covered when it came my last two lists: 31 powerful financial advising quotes and 7 must-read financial advice websites.

Remember: only you can prevent yourself from being taken in by the next Bernie Madoff… which brings me to the first question you should ask every money guy you meet.

1. How do I know that you’re not the next Bernie Madoff?

If you ask the jokers over at Forbes what you ought to ask a financial advisor, they’ll tell you it’s all about the credentials. Just ask ’em how many letters they’ve got after their name, that’s how you know how much you can trust ’em.bernie-madoff

Except, you and I, we know better. Bernie Madoff was a former chairman of the NASDAQ stock exchange: hard to think of a more impressive vetting than that. And, oh yeah, by the way, in case you forgot, he also ran the largest Ponzi scam in history.

My preferred strategy: ask an advisor if she’s the next Bernie Madoff, or if she’s planning to become the next Bernie Madoff. Of course, she’s going to say no. I don’t know any questions to ask a financial advisor that will 100% prevent Madoffs…

But watch how much they flinch. And if you get a funny feeling, get out of there.

2. What sort of financial advisor are you?

As I mentioned in my post on financial advising rates, there are a bunch of different types of financial advisors, and this affects how much you can trust them to do what’s best for you and your money.

In summary: make sure that their financial fate is tied with yours, and that they make money when you make money. Most advisors will do this by charging 1% of the assets they manage.

3. How much do you charge?

That brings me to my next question, how much do you charge? Remember, for a fee-based planners, market price is between 150 and 350 dollars. If they take a cut of the assets, 1% is the standard.

All this (and more) has been covered in the post on financial advisor rates.

And it’s probably one of the questions for a financial advisor that you care the most about. At least until you see the rest of these.

If they’re charging anything too different from that, well, I’d suggest getting the hell out of there. Who knows what scam they’re trying to pull?

4. Do you have a financial incentive to sell me anything?

Like if the tell you that, hey, I don’t charge a dime for my financial services. I just do it out of the goodness of my heart.

Right. Like that’s fooling anyone. Depending on the advisor, they might make money by selling you different things, like an annuity. Which means that they aren’t working for you — they’re a salesman, and they want to sell you something.

Which means that you should treat them like a salesman, and politely hang up the phone, or end the meeting.

Seriously. They don’t have your best interests in mind.

5. Do you have a fiduciary duty to your clients?

Speaking of best interests, ask them if they have a fiduciary duty. A fiduciary duty is a legal duty to act solely in another party’s interests.]

You know, sort of like, as a kid, you’d make another kid swear on his mother’s grave that he wouldn’t still all of your money?

It’s basically like that. I mean, people try to dress it up in fancy language, but at the end of the day, having fiduciary duty is like a man giving you his word. But Bernie Madoff had fiduciary duty.

So this isn’t a guarantee.

6. If I would earn more by paying off debt, while you would earn more by advising me not to, what would you do?

Even if you get a financial advisor that makes money when you make money, this can still lead to perverse incentives where the advisor is better off when you don’t pay off your debt. And instead grow your assets.

Even when it’s in your best interests.

That he or she just gave you their word on, their fiduciary duty.

7. When was the last time you actually advised a client to pay off their debts?

If your financial advisor isn’t asleep, she’ll tell you: oh, of course, I always advise to my clients that they pay off their debt in such a situation. But how can you really believe her?

Ask her when the last time she actually did that was. If she stumbles, maybe she’s a liar.

If she doesn’t, ask her about the last three times. That oughta stump her. And if doesn’t, you may have found the one.

8. What if I ask one of your clients the same thing?

But, of course, you’re not just going to like, take her word for it. If you were, I would have been done with this list at fiduciary duty. Hell no! Ask her what her clients would say about this little discussion.

Does she still sound confident? If so, ask her…

9. …and what’s their phone number?

That’s right. Get a phone number for one of your potential financial advisor’s clients. Preferably more than one. You wouldn’t hire an employee without some references, would you?

Well, don’t hire a financial advisor without any either! And remember to actually call these people and check. And make sure it’s not George Costanza from Vandelay Industries.

10. What’s your track record?

Okay, okay, so say they’ve made it this far: ask ’em what kind of track record they have?

A stellar one, I bet. We’d all like to write our own reviews, eh? In that case, ask them how their clients’s portfolios have compared to the market as a whole.

And then ask them if their clients’s portfolios are still beating the market after fees are taken into account.

11. What sort of services do you provide?

Then ask them: specifically, what kind of services do you provide? And make sure that they give a thorough explanation of each one, so thorough that you could explain them to your mother the next day if you had to.

After all, why buy something if you don’t know what it is or why you need it?

12. How will they help me, specifically?

They’ve probably just told you a lot about all their fancy services. Sounds pretty nice, right?

But you want to know: how are these going to help me, specifically, not some idealized client-in-the-sky, but me?

What’s in it for me?

13. Tell me about the last client that you lost.

Congratulations. That last question was a softball, that any advisor worth her salt should be able to answer.

Now for a hardball: ask her about the last client that she lost. What went wrong, specifically? Get details. Don’t settle for vague “ums” and “ahs.” This is your hard-earned money we’re talking about.

14. …and how often does that happen?

Then, after you’re done running them through the wringer, and maybe this financial advisor is regretting taking this meeting with you and your questions to ask a financial advisor, ask them how often they lose clients.

Bonus: get the phone number of the last client they lost.

That’s really a review that they don’t get to write.

15. How do you feel about the efficient markets hypothesis?

Now let them know that you know a thing or two about economics. Maybe let on that you were an econ undergrad and, if you weren’t, at least hint at it.

Let her know that you aren’t some country bumpkin that she’s going to take advantage of. Ask her how she feel’s about the efficient markets hypothesis and, if she’s confident that it’s bunk, ask her: then why aren’t you rich?

16. And what’s your philosophy of investing?

Which segues nicely into my next question: what’s your philosophy of investing? Two keywords to look out for: value investing and index funds.

Both are a positive sign.

17. When the unthinkable does happen (a black-swan level event), how will my portfolio fare?

And then ask her, okay, what if a disaster happens, and the markets (god forbid) collapse? Do you have any plans for Armageddon? (Or should I say, “The next Armageddon”?) Will my money be safe?

And, then, after she’s assured you that it will be…

18. Then how did you do in the 2008 financial crash?

Ask her how her portfolios did during the 2008 financial crash. My bet: not good. But she probably won’t let that on, which is why you’re going to ask the next question.

19. And if I call that number you have me earlier, will they tell me the same thing?

Uh oh, you have her backed into a corner now. She’ll probably double down on the lies now, but maybe you found the one honest financial advisor in the world.

Well, two honest financial advisors in the world, if you count me.

But that brings to what might be my favorite question, which you’re going to ask, out of my questions for financial advisors, for like the third time:

20. …then why aren’t you rich?

Because if you saw the financial crash coming, and you bet on it, you should be richer than God.

In which case: why bother finding clients?

21. Do you have any example financial plans for someone with a low-risk tolerance?

Okay, if they’ve made it this far, ask them what kind of plan they’d give to someone with a low-risk tolerance. Ask to see a sample. Is it good work — does it look thorough?

22. …what about for someone with a high-risk tolerance?

And then ask them to see the same thing, but this time for someone with a high-risk tolerance. The point being: are the two plans any different?

If not, get the hell out of there.

23. …or specifically tailored for single women?

Maybe they passed the last two tests. If they’re worth their salt, they will have.

But what about specific advice for women? After all, they live longer and have different needs…

24. How much money are you currently managing?

Image of financial advisor rates. How much do financial advisors charge?

Photo by Thomas Hawk.

I know I said we didn’t care about credentials. But we do care about one thing: how much money she manages. Squeeze a number out of her. And then ask her, all casual like,

25. …and how many clients?

Downplay this one. Get a number and move past.

26. How much contact do you have with your clients?

Now what we really want to know: how much contact does she have with her clients? After all, if she spends 15 minutes on you and your account per year, maybe you don’t want to be paying those exorbitant financial advising rates (although they’re not quite as bad in South Africa, as I recounted in my post on how much financial advisors earn in South Africa.)

And if she says something that sounds like a lot, do some simple math. If she does a week of work on your portfolio each year, she can’t have more than 52 clients at a time.

27. How did your last meeting with one go?

If she passes that test, ask her how her last meeting went. If she talks around it, that’s a red flag. By the time you’ve gotten to this point in the list of questions to ask a financial advisor, she’ll probably be looking something like this:


28. Have you had a lawsuit filed against you?

And now for the big guns (at least among questions to ask a financial advisor): has she ever been sued? Why? How did it end?

A lot of good people have been sued, so this isn’t 100%, but it could mean that something fishy is going on.

29. …and how many?

One lawsuit: not that bad. But what about, you know, like five?

Then you should look elsewhere.

30. Have you ever been publicly disciplined?

But lawsuits aren’t the only due diligence you need to do. Ask if she’s ever been publicly disciplined.

Because that’s the opposite of a good sign. And, out of all of these questions to ask a financial advisor, an important one.

31. Or investigated?

No due diligence, but maybe investigated. Or what about current investigations?

If the SEC is looking at someone for shady activity, you probably don’t want them managing your money.

32. Or arrested?

Your financial advisor's sordid past... maybe. Photo by A Gude.

Your financial advisor’s sordid past… maybe. Photo by A Gude.

Did you know that 40% of the male population under the age of 23 has been arrested? If a financial advisor is reckless enough to get on the bad side of the cops, they’ll probably be reckless enough to lose all of your money, too.

33. What’s the most important financial lesson you ever learned?

This potential financial advisor has been roasted, toasted, crunch, and gnashed. Now, out of the questions to ask a financial advisor, let’s ask her a softball: what’s the most important financial less they ever learned?

If it didn’t teach them something insightful and about the necessity that is humility, do you really want them managing your money?

34. What should I know about you that I’d never think to ask about?

And now a bit of a harder question: let her be the creative one. What’s something important you should know, but that you wouldn’t think to ask. Follow it up with one tougher:

35. What do you hate most about financial advising?

If they pause, it’s because they didn’t want to say: clients like you.

But don’t worry, we’ve got a doozy coming up next:

36. Do you believe in God?

Yeah, I went there. If you’re an atheist, do you really want some confused about religion trying to sort with the murkiness that is the financial system.

And if you’re a christian, do you really trust a godless man or woman with your hard-earned, money? With the sweat of your time and labor?

(Of all the questions to ask a financial advisor, this is probably my favorite.)

37. …what about ghosts?

But regardless of theological affiliated, I think we can agree that you don’t want a financial advisor that believes in ghosts. I mean, come on. I want someone who believes in the good and real dealing with my money.

And not someone betting on ghosts, psychics, and crystal balls.

38. Did you know that I googled you before this meeting?

Because you should have. And it should show.

If you came to the meeting better prepared than they did, maybe you should go to a meeting with someone else. Maybe write down some specific questions to ask a financial advisor based on, you know, specifics.

39. Why are you and your firm a better match for me than the guys down the block?

Finally, throw her a curveball by not throwing a curveball: why is she better than the rest of em? If she’s made it this far, it doesn’t really matter what she says, you know what you want to know: that she’ll put up with damn near anything. And that maybe you can trust her with your money.

Oh, and if she passed all of these, ask her one more question:

40. Will you be my financial advisor?

The questions to ask a financial advisor end with a proposal: will you be mine? Photo by Jameson Gagnepain.

The questions to ask a financial advisor end with a proposal: will you be mine? Photo by Jameson Gagnepain.

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