Questions You Should NOT Ask (Or At Least Be Aware of) When Interviewing A Financial Advisor

This is a follow up to my other blog post on “Great Questions To Ask When Interviewing A Financial Advisor”. While asking the great questions are important, you should also be aware of questions where advisors can bend the truth to the answers. That’s not to say some advisors are straight up lying, but more that their answers can be told in a way that will satisfy the prospective client rather than be told in truth. I like to think that all financial advisors operate in a perfectly honest and truthful manner, but unfortunately that’s not always the case. I encourage you to ask your advisor the questions below when interviewing them as a test to see what their answer will be!

What rate of returns do you get? This question is as old as time. You’re basically asking what kind of returns or how much money are you going to make me? It’s a fair question! This isn’t a bad question to ask, it’s just asked at the wrong time.

When I am asked this question, I always respond with “it depends – my clients who are retired and in their 70’s are going to have portfolios much different than clients still in their accumulation years in their 30’s. And because their portfolios are different, their rates of return will be very different.”

And that is why the question has no answer: a comprehensive planner should be putting together a financial plan that dictates the portfolio and without doing that first, the question is impossible to answer. If you’re interviewing your advisor and they’re showing you returns without a thorough analysis of your goals, objectives, and risk tolerance, they’re just trying to sell you a product or portfolio. Be careful!

Can you get me to retire at XX years old? You can substitute the XX with any age. This is a dangerous question to ask. You’re essentially telling your advisor that if they’re able to show a successful retirement at XX age, they can have your business. Well, this will directly encourage your advisor to ‘tweak’ some of the planning numbers (higher rate of return on investments, lower inflation projections, expense projections far lower than actual expenses, etc.) to make the plan be successful.

When I am asked this question, I always respond with “it depends – without running a financial plan and doing my due diligence on aspects of your life, I can’t make any guarantees that you will have a successful retirement at that particular age. I have some clients that want to retire in Central America – their budget will be much smaller that a couple that will want to retire in Manhattan. Let’s discuss what you want your retirement to look like and then we’ll see how we can make that happen”.

If the financial advisor gives you a ‘yes’ right out of the gate without knowing much, if anything, about you, be wary. They’re just telling you what you want to hear!

Are you investing YOUR money into this portfolio? Similar to the rate of return question above, this is a fair question to ask. You would like to know if I’m ‘practicing what I preach’. Well, the issue with this question is that the advisor you’re interviewing more than likely has a different age, different goals and objectives, different retirement age, and different risk tolerance. With so many differences, there’s a good chance you’re advisor is investing their money differently and therefore not in THIS portfolio.

When I am asked this question, I respond two different ways 1) “No, my goals and objectives and risk tolerance are very different from yours and it would not make sense at this point in my financial life to be investing in this portfolio” or 2) “Surprisingly Yes, this portfolio also makes sense for my situation and I an invested in this”

Hopefully this question isn’t sealing the deal on interviewing your financial advisor. I cheated a bit with this question; I usually get this one after our relationship started and halfway into the planning process when evaluating portfolios. But nonetheless I do get this question from time to time when being interviewed.

Do you have clients you can refer me to (So I can ask them about their experience)? It breaks my heart adding this question, because there’s nothing better than a firsthand experience or review. In fact, I don’t think it’s a BAD question to ask. Once again though, the question can be altered easily by the financial advisor you’re interviewing. Your advisor can easily give referrals that will be their rockstar, A+ clients that have had 10/10 experiences.

When I am asked this question, I respond with “Yes, I would be happy to give you referrals of a few clients I work with so they can share their experience working with me – but be warned. It is in my best interest to refer you to clients I feel I have the best relationship with and how I believe have had the best experience”.

I don’t think the advisor you’re interviewing is biased for NOT saying everything after ‘yes’. It’s more to be aware that this is what your advisor will do. Even worse, what if the advisor connects you with someone who isn’t even a client (friend, family member, etc.)? How would you know?! Yikes!

Interviewing is tough! Sitting down with a financial advisor and trying to figure out if they’re right for you can be a difficult task. Asking questions is important but as you can see from above, answers can be manipulated. As mentioned above, feel free to ask your advisor the above questions to see their response! Happy interviewing!

As always, remember to consult with your tax, legal, and investment professionals.

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Jeff Branson, MBA, CFP® – Jeff is the founder of Branson Financial Planning. He spends his time acting as a personal CFO to households across the United States. He believes that financial advice should be clear, objective, and delivered in a fiduciary manner. When he’s not working, Jeff spends his time exploring beautiful Maine with his girlfriend Bianca and his golden retriever Mavrick.