Selecting Investment Professionals

Interview Your Candidates

When you interview investment professionals, here are some questions you'll want to ask:

  • What experience do you have working people who are like me?
  • What licenses do you currently hold? Are you registered with a state, the SEC, or FINRA? If so, in what capacity?
  • What relevant professional designations do you hold?
  • Do you have any special areas of expertise?
  • How long have you been with your current firm? Where did you work before?
  • What investment products and services do you recommend to your clients? Why?
  • Are there any products or services you don't recommend? Why?
  • How much will I have to pay for your services? What is your usual hourly rate, flat fee, or commission?
  • Are you compensated any other way for handling my account? If so, how and how much?
  • Do you or your firm impose any minimum account balances? If so, what are they? And what happens if my portfolio falls below the minimum?
  • How frequently will we meet to discuss my portfolio and the progress we are making toward my investment goals?
  • How will you communicate investment performance results to me?
  • For brokerage firms, is your firm a member of SIPC?
  • Who else in your office will handle my account?
  • Have you or your firm ever been disciplined by the SEC, FINRA, a state securities regulator, or another federal or state financial regulator?
  • Have you ever had a professional license revoked?

You might also want to ask whether the professional will provide a list of clients you can contact as references. However, the professional is not required to do so and there may be company policies about privacy issues that prevent him or her from sharing this information.

Remember, too, that in an interview both people normally want to know something about the other. You should be prepared to answer some or all of these questions:

  • How much money do you have in savings and investment accounts? Where is that money—in the bank, in mutual funds, individual securities?
  • How much do you plan to add to these accounts each year?
  • Do you have specific financial goals?
  • Do your goals have specific time frames?
  • How much investment risk are you comfortable taking?
  • What other investment professionals are you working with?
  • Do you have life insurance? How much?

At the initial interview, obtain a copy of the account agreement, fee structure, and any other documents you would be asked to sign if you were to open an account. That way, you can take the paperwork home to read carefully at your own pace, and make comparisons if you are considering investment professionals at several firms. If the prospective professional pushes you too hard to open an account on the spot, this might be an indication that he or she will be overly aggressive in pushing you toward certain investment decisions in the future.

Be cautious of any investment professional who promises you above average account performance or says you'll be making risk-free investments. Nobody can guarantee that your investments will grow at a particular rate or that you won't lose money.

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