A leading financial-planning newsletter recently canvassed dozens of advisers to get their thoughts on how you should go about interviewing them. In screening an adviser, you goals should be to:
- determine whether he or she cares about helping clients, or goes through to motions
- establish whether he or she understands the fundamental pinciples of investing as they are outlined in this book
- assess whether he or she is sufficiently educated, trained and experienced to help you
Here are some of the questions that prominent financial planners recommended any prospective client should ask:
Do you use technical analysis? Do you use market timing? (A "yes" to either of these two questions is a "no" signal to you)
What do you do when an investment performs poorly for an entire year? (Any adviser who answers "sell" is not worth hiring?)
Can I see a sample account statement? (if you can't understand it, ask the adviser to explain it. If you can't under his explanation, he's not right for you.)
How high an average annual return do you think is feasible on my investment? (Anything over 8% to 10% is unrealistic.)
Will you provide me your resume, your Form ADV, and at least three references? (if the adviser or his firm is required to file an ADV, and he will not provide you a copy, get up and leave-and keep one hand on your wallet as you go.)
Do you, when recommending investments, accept any form of compensation from any third party? Why or why not? Under which circumstances? How much, in actual dollars, do you estimate i would pay for your services the first year? what would make that number go up or down over time? (If fees will consume more that 1% of your assets annually, you should probably shop for another adviser.)
- The Intelligent Investor, Benjamin Graham
- The Intelligent Investor, Benjamin Graham
