If you’ve ever interviewed a financial ‘adviser’ and asked the questions about financial planning, how they manage money, investment returns, and their fees during an initial introductory meeting, you very likely heard a lot of terminology that you didn’t understand.

Perhaps they spoke about employing a tax efficient core satellite strategy. Or about portfolios that use various indexes, ETFs, select stock and bond mutual funds, and precious metals. And how about the DOW, S&P 500, Russell 2000, total stock market, and certain bond indexes?

But how much of this terminology did you actually understand? How many additional questions did you need to ask to get an idea of the services?

The Correct Approach

A financial adviser who is open to helping you might go about the interview differently. For instance, they might say something like this:

“First, let me ask you a question. What is your level of experience in working with a financial planner and your level of knowledge about investing?”

If you are interviewing a potential financial planner and/or investment adviser, be sure to communicate your level of experience in working with other advisers.

Also, the potential new adviser/planner should be asking what you liked or disliked about your previous adviser if you had been working with someone. If you have not been working with someone, it’s prudent to say why you are seeking someone at this time.

Disclose Your Needs and Goals

My first question to a prospective client was most often: “Please tell me why you are here?” This is a very important open-ended question, and listening to the answer allowed me to gain insight into what was really important to the client.

A professional financial planner/adviser MUST know about you and what is important to you BEFORE they can make any financial recommendations. If they are not asking about YOU and are only interested in the amount of money you have to invest – or in telling you about themselves and how they manage investments – head for the door!

Many people have been working in their own careers and have not been directly involved in financial planning or investing – the exception being determining which investment options to choose in their 401(k)s or other retirement accounts.

Others may have had a more active role in investing, self-directing their IRAs and personal portfolios using an online investment brokerage firm. As a result, they may be more familiar with financial terminology but still need guidance and education about long term financial matters affecting their lives.

Access to Knowledge Isn’t Everything

So, let’s get back to basics. In today’s online access to information, most anyone who can use a computer can research financial terms and other financial data to help with gaining a better understanding of various financial topics including investment concepts or particular investment choices.

However, there are several areas that may create problems: personal bias and objectivity! Knowledge is good, how to use that knowledge is what really matters!

What to Expect from Your Interview

When you interview an investment planner, you should know the following:

• How they will develop a long-term investment plan that works specifically for you.
• What investment tools they have at their disposal, and how they will explain why they recommend each one of them.
• Whether they have return data on the investments they utilize.
• How they are paid, and how you will be charged for investment management.

A financial planner should understand that most of their clients will know little about investing. It’s their job to act in your best interest and to be committed to helping you have a better understanding of your financial situation. If you don’t receive answers to your questions, but only financial goobblygook, you’re better off trying your luck elsewhere.

Bottom line: Planning is not a single event; it is a long-term process providing greater understanding of financial issues that impacts people’s financial wellness and to helps them make better financial decisions. A long-term business relationship benefits both you and your adviser. 

Have you interviewed a financial adviser? Were you able to understand what they told you? Have you found it difficult to communicate with one adviser and decided to go to someone else? Does your financial adviser put your goals and needs first? Please share your experience with the community!