Financial Advisor Checklist

Checklist for a Financial Advisor

This financial advisor checklist was first published as a resource on my company’s website. It lists 16 questions that we found very important in evaluating a new or your current financial advisor. We have received many complements on it so I thought I would re-publish it here for your benefit. All 16 questions are listed in this post but if you want a nicely formatted PDF file you can go to the Phillip James Website and download it here. You should be able to answer “Yes” to each of these questions. If not, further discussing should probably take place. 

Checklist for your Financial Planner

Or Financial Advisor, Investment Manager, or Wealth Manager (It works for all of them)

  1. Do you feel like your advisor has your best interests at heart?
  2. Does your advisor have credentials such as a CFA, CPA, or CFP?
  3. Does your advisor have a college degree in a relevant field?  Finance, Economics, or Accounting?
  4. Did your advisor create a financial plan before investing your money?
  5. Can your advisor explain their investment philosophy?  Or are they just picking stocks or mutual funds?
  6. Do the funds you own charge less than 1% annually (expense ratio)?
  7. Are your funds free of Loads?  Or has your advisor invested you class A, B, or C share mutual funds?  Did you know that paying loads are completely unnecessary in today’s investment world?  (check your account statements)  
  8. Are your funds passively managed?  Or did your advisor invest you in actively managed funds with high expense ratios?  75% of passively managed funds beat their comparable actively managed funds over a 15 year time period.
  9. How old is your advisor? Will they be retiring before you? You don’t want to switch advisors at a critical time.
  10. Do you know how your advisor is compensated?  Remember, no one works for free. Are they compensated through commissions?  Are they Fee-Only?  Are they Fee-Based (not the same as Fee-Only)? 
  11. Can you identify all of the costs of working with your financial advisor?  Annual expense ratios, Mutual Fund Loads, Annual Account Maintenance Fees, Referral Fees, and Commissions.
  12. Do you understand all of the investments and insurance policies your Advisor has recommended?  Or has your advisor tried to sell you an Annuity or Permanent Life Insurance product that you don’t completely understand?
  13. Do you feel comfortable with your Advisor?  Or have they put you in an uncomfortable position by asking for friends and family contact information for referrals?  
  14. Is your advisor held to a Fiduciary Standard?  Only 15% of all Advisors are   held to this high of standard. (Read about the Fiduciary Standard here)
  15. Does your advisor also prepare taxes?  Having these services in one place creates efficiencies and saves you money.
  16. Does your advisor have a clean record?  Or has your advisor been subject to disciplinary action?  You can check for yourself at: http://brokercheck.finra.org/Search/Search.aspx
  17. Do you understand exactly what it takes to achieve a successful retirement and accomplish all of your goals?

There you have it. Use this list when interviewing a prospective financial advisor or even bring these questions to your next meeting with your current advisor.