Meeting a financial advisor for the first time can feel intimidating, but with the right questions, you can break the ice and start the appointment on a positive note. During the meeting, you can ask your advisor about their qualifications and investment approach and get a feel for how they communicate with clients, their investment philosophy, and financial planning process.
To kick off the meeting, you can use an icebreaker question.
The Icebreaker
An icebreaker is a fun, lighthearted question that initiates a conversation. It helps break up awkwardness or tension and build a rapport with your financial advisor from the beginning of the meeting.
If you could have any financial superpower, what would it be?
Why this is a good icebreaker: It starts the conversation in a lighthearted and engaging way with a finance-focused response.
Answer example
“The power to predict market trends with 100% accuracy. This superpower would allow me to make the best and most profitable investment decisions, ensuring my clients meet their financial goals with little to no risk”.
19 Revealing Questions to Ask a Financial Advisor in the First Meeting
When meeting a financial advisor for the first time, asking the right questions to determine their skills, qualifications, approaches, and strategies can help you learn whether they align with your investment philosophy.
The following questions to ask during your first meeting give you insight into these elements and ensure you work with the right financial advisor for you at the first meeting.
1. Can you explain your pay structure and how it affects your recommendations?
What this question reveals
- A financial advisor’s pay structure determines whether they are fee- or commission-based. Fee-based advisors charge clients a flat fee or hourly fee, whereas commission-based advisors earn money based on the products they sell.
Check for signs of untrustworthy behavior
- Look for evasiveness, non-specific answers, and other signs that the advisor’s responses are vague or unclear. If their pay structure isn’t clear, concise, and easy to understand, this may be a red flag.
Answer example
- “My pay structure is fee-based and calculated according to the number of assets I manage for my clients. The more assets I manage on your behalf, the more I earn. My client’s interests always come first, so my recommendations are solely based on what is best for them.”
2. What is your conflict of interest policy, and how do you manage potential conflicts?
What this question reveals
- Fiduciary standards require personal financial advisors to make unbiased investment decisions that are in the best interests of their clients. A robust conflict of interest policy indicates that the advisor operates with integrity regarding investment management.
Check for signs of untrustworthy behavior
- Be wary of a financial advisor who offers a vague or joking response to this question or does not provide examples of conflict of interest management. Being dismissive of conflicts of interest may indicate ethical concerns regarding their investment practices.
Answer example
- “I have a clearly defined conflict of interest policy. I have to disclose any personal conflicts to my clients, and if a conflict arises, I have a fiduciary duty to put your interests first. I will always work to find a fair, ethical solution, involving you in the discussion”.
3. Can you explain any past disciplinary actions or legal issues?
What this question reveals
- Financial advisors are subject to disciplinary actions, including legal consequences, if they do not follow the CFP Board’s Code of Ethics and Standards of Conduct. A past violation or unwillingness to disclose it may indicate untrustworthiness.
Check for signs of untrustworthy behavior
- Be alert to evasiveness or nervousness when the financial advisor replies. If you question their truthfulness, consider searching for them on the SEC’s Investor Alert database.
- If the financial advisor informs you of a past disciplinary action, look for transparency in their answer and decide if you want to work with them based on the action’s circumstances and resolution.
Answer example
- “No financial regulatory body or entity has ever disciplined me, and I have never been sued or involved in legal issues in the financial services industry. My priority is to work with the utmost integrity and in my client’s best interests.”
4. What are your relationships with financial product providers?
What this question reveals
- Some financial advisors have relationships with product providers in the financial industry. An advisor should provide upfront disclosure regarding these arrangements to adhere to ethical standards.
Check for signs of untrustworthy behavior
- Look for a transparent explanation of product provider relationships, conflicts of interest they may create, and how the financial advisor maintains impartial fiduciary responsibility.
Answer example
- “While I have strong relationships with select financial product providers, they do not influence my recommendations. I work with multiple competing providers to ensure you use the product that fits your goals and preferences.”
5. How do you ensure that clients receive impartial advice?
What this question reveals
- Advisors have a legal duty to offer impartial advice to clients to make financial decisions. They should offer sound financial advice that is not swayed by personal interests or biases.
Check for signs of untrustworthy behavior
- Ask the financial advisor to explain their fiduciary duty and how they maintain impartiality when offering advice. Watch for dismissive answers, as these may indicate a lack of respect for established standards.
Answer example
- “I take my fiduciary responsibilities seriously and always offer impartial advice to my clients. All advice I provide is in your best interests and based on personal financial planning goals you share with me during the planning process.”
6. Can you run me through a past incident where you had to make a difficult decision for a client?
What this question reveals
- Advisors must be capable of making difficult decisions for clients, including conflict of interest issues and managing investment options. Your advisor’s example shows their decision-making process and resolution capabilities.
Check for signs of untrustworthy behavior
- Be wary of advisors who overstate their capabilities, such as statements implying they’ve resolved significant challenges quickly or easily. A financial advisor who says they haven’t had to make difficult decisions may be inexperienced and may not be the right financial advisor for you.
Answer example
- “A former client invested heavily in a well-performing tech start-up. Unfortunately, the company’s finances began deteriorating, and I had to make a difficult decision: I advised my client to pull out of the deal and sell before accumulating too many losses. At first, my client believed in the start-up but listened to my unbiased advice. They appreciated my honesty and foresight when it became apparent that this was the best decision.”
7. What steps do you take to ensure the security of your client’s assets?
What this question reveals
- One of the essential skills of an experienced financial advisor is asset protection services. They must demonstrate why the client can trust them to manage and protect their assets efficiently and what methods they employ, including keeping documents confidential.
Check for signs of untrustworthy behavior
- Be wary of an advisor who does not offer specifics on how they keep your assets secure, dismisses security concerns, or does not provide information on how to identify suspicious behavior, scams, or fraud.
Answer example
- “As a trusted financial advisor, the safety of my client’s assets is one of my top priorities. I monitor all client accounts for suspicious activity and will protect your data using secure investment platforms that use two-factor authentication and encrypted software.”
8. How do you handle client requests for changes to their portfolio?
What this question reveals
- A financial advisor’s role is to help clients build diversified portfolios based on their preferences. Advisors should have a transition plan in place for making changes to client portfolios.
Check for signs of untrustworthy behavior
- Be wary of advisors who do not have procedures for changing portfolio investments or are resistant to moving assets based on client requests.
Answer example
- “I take requests for changes and additions to my clients’ portfolios seriously. If you request changes, I will analyze the new investment opportunity, review your risk exposure, and ensure the change aligns with your strategy. I then provide my opinion on the investment, offering honest advice to reconsider if it doesn’t seem like a good fit”.
9. How do you measure your own KPI and that of your clients?
What this question reveals
- Financial advisor KPIs measure metrics such as the number of households served, assets managed, revenue generated, average client age, revenue per client, and net profit per client.
Check for signs of untrustworthy behavior
- Be cautious of advisors who don’t track KPIs, as this can indicate a lack of organization and effectiveness. Also, be wary of advisors who over-focus on personal KPIs for their firm or do not have an objective process for measuring and collecting data.
Answer example
- “I measure my performance and successes based on quantifiable indicators of my client’s portfolio growth, such as revenue rates and client satisfaction. I make it a point to check in with my clients at regular intervals to review the performance of their portfolios, gather their feedback, and ensure their investment goals are met.”
10. How do you stay current with market developments and changes in financial laws and regulations?
What this question reveals
- Advisors must stay current with industry trends and financial laws and regulations issued by the SEC and state whether they practice. They may view Investor Alerts and Bulletins on investor.gov or engage in continuing education with the CFP Board.
Check for signs of untrustworthy behavior
- Your financial advisor should offer a list of ways they stay current on these topics and provide examples of a few new laws or regulations. They should also share updated certifications they’ve received.
Answer example
- “I keep myself up-to-date on the latest market and regulatory changes to ensure I provide my clients with the most accurate financial advice possible. My preferred way to access financial news is through mobile applications and tools like Google Alerts. I also attend conferences, complete CFP courses, and speak with industry experts to broaden my knowledge and ensure I have the latest certifications.”
11. How often do you review and adjust your investment strategy and portfolio?
What this question reveals
- Advisors should help clients adapt their investments over the long term by conducting periodic reviews and adjusting their strategies to specific needs and stock market fluctuations.
Check for signs of untrustworthy behavior
- Avoid working with a financial advisor who makes adjustments too often, as many investment strategies take years to show their full results. Also, be wary of an advisor who does not have a standard timeline for reviewing and adjusting investments, as this can indicate a lack of attention or experience.
Answer example
- “It depends on my clients’ investment portfolios and strategies. I review client portfolios once a quarter and make adjustments based on how the investments are performing at that time. This allows me to ensure your portfolio aligns with your goals and takes advantage of possible market opportunities.”
12. How do you manage risk, and what measures do you have in place to protect my investments?
What this question reveals
- One of the essential roles of a financial advisor is to assess and manage investment risks, taking measures to protect their client’s portfolio while also considering their risk tolerance. The answer provides insights into their preferred mitigation methods and whether they fit your needs.
Check for signs of untrustworthy behavior
- One of the most evident signs a financial advisor is giving you bad advice is when they describe a given investment option as having “little to no risk.” All investments carry risk, even relatively safe ones; an advisor insisting on the low risk of a particular option may be steering you toward an option that benefits them without consideration for your other investments.
Answer example
- “Managing risks for my clients is a core aspect of my financial planning process. One of my preferred methods to mitigate risk and protect my clients’ investments include portfolio diversification between multiple asset classes and industries. Additional risk mitigation methods include market condition monitoring and adjusting my client’s portfolio according to their preferred level of risk tolerance.”
13. Can you provide a detailed explanation of all fees associated with your services?
What this question reveals
- Advisors should have a transparent fee schedule regarding their services. A reputable financial advisor should provide a clear and concise breakdown of their fees, rates, commissions, and other costs.
Check for signs of untrustworthy behavior
- If the advisor’s fee structure is hard to understand, ask them to explain it. Vague or evasive answers may indicate an attempt to overcharge you through hidden or unclear charges.
Answer example
- “I provide my clients with a transparent fee structure detailing the costs of all my services. My fees include an annual advisory fee, transaction fees for portfolio adjustments, and specific investment products. I can provide further clarification if you need more information regarding my fees.”
14. How do you handle disputes or complaints from clients?
What this question reveals
- Asking a financial advisor about their experience handling complaints and disputes is a good way to assess their interpersonal capabilities and professionalism.
Check for signs of untrustworthy behavior
- Exercise caution if your advisor has no specific process for investigating and resolving complaints or disputes. Infrequent contact and ignored communications may indicate the advisor has poor interpersonal skills and is not an ideal candidate to handle your portfolio.
Answer example
- “If one of my clients has issued a complaint or is in dispute with me, my priority is to take their concerns seriously and resolve it as quickly and fairly as possible. My resolution process includes a review of their current situation, open and honest dialogue, and clear language to ensure their full understanding of the situation.”
15. Can you discuss a time when you had to deliver bad news to a client?
What this question reveals
- Financial advisors must have the skills and tact necessary to deliver bad news to their clients. Hearing an example of a situation where an advisor had to communicate an undesirable event allows you to gauge their communication skills and trustworthiness.
Check for signs of untrustworthy behavior
- Red flags to look for include an advisor delaying or avoiding sharing bad news with clients until it’s too late to enact a potential solution. They can also include not presenting all the facts and context regarding a negative situation so you can make an informed decision.
Answer example
- “While delivering bad news to my clients is never easy, I consider it a crucial part of my job. I believe transparency and clear communication are critical in these situations. I remember when the market took a downturn, causing a former client’s portfolio to drop in value. I scheduled a meeting with my client and explained why their portfolio value dropped, what happened to the market, and what I could do to help them weather the storm. My client offered thanks and appreciation for my proactive and honest approach.”
16. What resources do you use to make investment decisions?
What this question reveals
- Financial advisors use resources such as investment research publications, financial market data, independent financial research, and portfolio management software to make investment decisions. This question helps you better understand your advisor’s decision-making process and how they will grow your portfolio.
Check for signs of untrustworthy behavior
- Look for a detailed explanation of the resources the advisor uses to make investment decisions, including research, data sources, and outside experts. Not using external resources may indicate a reckless financial plan rather than one based on data.
Answer example
- “I use several resources, including market data and analysis, macroeconomic indicators, and industry-specific news and research. I also consult with my reliable network of industry experts. I will use a combination of my experience and data-backed resources to make investment decisions that align with your goals and risk tolerance.”
17. Do you have any outside affiliations or business interests?
What this question reveals
- Asking an advisor about their business interests or outside affiliations can alert you to any conflicts of interest in cases of complex financial circumstances and give you insight into other areas of their professional and personal associations.
Check for signs of untrustworthy behavior
- Be alert to signs of hesitation, evasiveness, or inconsistencies in the advisor’s answer. If you suspect dishonestly, check for discrepancies between their answer and available public records, such as a Google search or online publication.
Answer example
- “I am an independent financial advisor and do not have any outside affiliations or business interests that could create a conflict of interest. My priority is always to act in my clients’ best interests and provide them with impartial advice. If a conflict of interest should arise, I will communicate it to you immediately so you can consider the information when working with me.”
18. What is your strategy for dealing with market volatility?
What this question reveals
- Advisors should have a robust strategy for navigating market volatility to reduce risk to their clients’ portfolios. This may include diversification, risk management techniques, dollar-cost averaging, and alternative investments.
Check for signs of untrustworthy behavior
- A lack of confidence or inability to name investment strategies to deal with market volatility may indicate that the financial advisor does not have the experience needed to manage your portfolio in a volatile market.
Answer example
- “I use a multi-pronged approach to dealing with market volatility. I take a long-term perspective and help my clients understand how this can benefit their portfolios. One specific strategy I use is diversification, which means I will spread your investments across different asset classes and regions to reduce your overall risk.”
19. How would you approach my investment portfolio if tax planning is important to me?
What this question reveals
- Financial advisors must consider tax implications for their clients when creating wealth-building strategies. For example, they may need to consider net investment income tax, tax-efficient mutual funds, capital gains taxes on investments, or taxes on retirement account withdrawals.
Check for signs of untrustworthy behavior
- Short, non-specific answers or the inability to explain their strategies for including tax planning in the investment process are red flags that they may not have the expertise necessary to help you minimize your potential tax liabilities.
Answer example
- “If tax planning is a priority, I will work with you to understand your financial situation, including your income, assets, and liabilities. I will develop a customized investment strategy that uses tax-efficient options, such as using tax-advantaged accounts or selecting investments that generate lower tax liabilities.”
FAQs
Here are the answers to some common questions about meeting your financial advisor for the first time.
Bring your financial statements, your budget (income and expenses), insurance documents, debt summary, and investment information. Also, consider bringing a list of questions to ask and a copy of your financial goals to guide the discussion.
To prepare for the meeting, identify your goals for working with an advisor and gather your financial information for them to review. Consider reading client reviews and testimonials before the appointment to understand what services they offer and what to expect when working with them.
Your advisor will ask questions about your financial goals, current situation, and investment risk tolerance. They may also ask about the timeline for reaching your objectives, if you have major financial events coming up, or if you’ve worked with an advisor before.
Look for an advisor with appropriate credentials, such as a Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA), who has experience with the type of financial issues you need guidance on. Look for someone with reasonable fees and whose communication style and investment philosophy align with yours.
During the first meeting, you should be upfront with your advisor and tell them all the facts about your current financial situation. This allows them to have a complete view of your finances and advise you on an approach that works for your goals and personality.
There is no set amount of money or assets you need to have before using a financial advisor. Some advisors have a minimum requirement, while others take on clients with smaller asset portfolios. Check with potential advisors to determine if you meet their requirements during an initial meeting.
They will look at your bank statements and other financial records to get a full picture of your financial situation.
The number of financial advisors you work with is a personal decision. Working with one advisor allows you to create a trusting relationship and benefit from their investment strategy. Having multiple advisors can also benefit your portfolio if you require specific expertise.
Your frequency in meeting your advisor depends on your financial goals and personal needs. For less-involved long-term strategies, you may need to meet with them just a few times per year. If your finances or goals change or your strategy requires an active approach, you may need to meet more often.
