When searching for a financial or investment advisor, it’s important to ask the right questions and to listen for the right answers. Beyond some of the obvious questions (How are you compensated? What services do you provide? Do you work with people like me?), consider asking a potential advisor how they invest their own money.
- Do you own the same investments that you’re recommending to me?
- Are your personal investment and retirement accounts managed with the same strategies you’re proposing for me?
- Does your personal investing philosophy match your professional investing philosophy?
- How has your investment philosophy changed over time?
You’ll want a potential advisor to have skin in the game, to put their money where their mouth is. Unfortunately, many advisors are paid to sell financial products. They profit regardless of how the product performs. The firm wins, the advisor wins, the client loses. “Two out of three ain’t bad,” in Wall Street parlance.
At P&A, we invest our personal and retirement monies in the same stocks, bonds, mutual funds, and ETFs that we utilize for our clients. And while some of the companies and funds have changed over the years, our overriding investment philosophy is still the same. We still want our clients to be fully invested to an agreed upon investment mix (asset allocation) that allows them to sleep at night, and we strongly discourage them from trying to time the market.
When markets experience success, we enjoy the ride right alongside our clients. And when markets go through one of their inevitable setbacks, we feel the pain, too. So, as you look for the right advisor to guide you on your financial journey, look for one who eats his or her own cooking.
Here’s a list of other questions to ask a potential financial advisor, as well as our answers.