Questions To Ask Your Financial Advisor

Questions Which Help Financial

Advisors Judge Suitability of Investments for Clients

personal financial advisorHiring the right person for managing your investment portfolio would be the most decisive factor to success of your endeavors. You can be sure that you are hiring the right person if the person has required qualification, experience and expertise in providing financial advice and managing investments for clients. Additionally, good financial advisors also ask right questions to judge client's financial situation and try to develop a plan of action accordingly. As such in the following sections we will look at some questions that you can expect an advisor to ask and queries you need to put forward on your part.

Questions to Judge Suitability of Investments

#1 – Questions Asked by Advisors

Right at the onset, advisors generally ask few questions to develop a clear idea about requirements you have. Advisor's main aim here is to clearly understand risk tolerance and investment objectives you have. In this context some of the questions advisors ask fall in the following broad categories:

  • Questions about risk tolerance
  • Questions about suitable investments
  • Questions about conflict of strategies

Questions – To Comprehend Your Risk Tolerance Level

Finance professionals tend to evaluate risk in several different ways. As for instance, risk in the form of portfolio volatility or as a lower return than client is expecting. Likewise, by having knowledge of your viewpoint on risk, the advisor will be able to properly judge your risk tolerance level and work accordingly. It is important to mention here that the risk tolerance level will greatly depend on your willingness as well as ability to take risks. Few common questions advisors generally ask to judge your capacity and willingness to bear risks include:

  • Can you specify the amount of decline that you are ready to accept in portfolio in any given year?
  • What do you think would be a substantial loss?
  • How much is your present saving and income level?
  • What will be the effect of losses on lifestyle you have?

An experienced and knowledgeable personal financial advisor will try to properly understand level of your risk tolerance and create an investment plan accordingly.

Questions – To Determine Suitable Investments

An advisor would also ask specific questions to understand the type of investment(s) which would be appropriate for you. These questions would include:

  • Have you fixed any particular time horizon to accomplish your financial goals?
  • What type of tax situation you are in?
  • What is the total value of assets that you would like to be managed?

Questions – To Avoid Conflict of Strategies

It will be necessary for your personal financial advisor to ensure that legal/tax strategies are completely in-line with your investment strategies. Some of the queries you can expect in this context would consists of:

  • Are you presently working with any other advisor, like, an estate attorney or an accountant?
  • Are there any legal/tax strategies being used currently which may affect your financial investments?
  • Will it be possible to co-ordinate with other advisers you are working with?

#2 – Questions Asked by Clients

Similar to questions being asked by a personal financial advisor to know your financial position, it will be your responsibility to ask some important questions to know how your investment portfolio would perform. Let us go through the details here.

Questions – To Judge Performance of Investment Portfolio

Few important questions you need to ask your personal financial advisor about performance of investment portfolio would include:

  • How performance of portfolio will help in accomplishment of investment goals I have?
  • In which form I will earn the returns, in the form of capital gains or income?
  • What are the obligations, features and risks associated with investments that you want to suggest?
  • Is there any benchmark for measuring performance of my portfolio?


To summarize it can be said that a personal financial advisor can develop a clear understanding of your needs by asking the right questions. Similarly, by making appropriate inquiries you can ensure that you are hiring the right person to manage your investments.

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