Questions to Ask Before Changing Financial Advisors
By Dragan Mark Filipovic, CFAFounder and Chief Investment Officer
Investors do not usually change financial advisors on a whim. The question tends to appear after a life event — approaching retirement, receiving an inheritance, selling a business — or after a quieter realization that the relationship no longer feels as clear as it once did.
You do not need to make a change simply because you ask these questions. Retirement and other transitions can be an appropriate time to make sure you understand the answers.
Who will actually manage the investments?
In some firms the person who meets the client is not the person who manages the portfolio. That arrangement can work. It should not be a surprise. If you are evaluating a relationship — existing or new — ask who makes the investment decisions and whether you will work directly with that person.
Is the advisor acting as a fiduciary?
A fiduciary standard requires advice that is in the client's interest. Not every financial relationship is structured that way. The distinction matters when products, proprietary funds or sales incentives can influence what is recommended.
How much are you paying?
Ask for the advisory fee in dollars, the underlying investment expenses, and any other costs that reduce what remains invested. A relationship that looks inexpensive as a percentage can still be expensive once every layer is added together.
Clarity about who does the work, how they are paid and how risk is evaluated is more useful than a polished presentation.
A practical checklist
- Who will actually manage my investments?
- Will I work directly with that person?
- Is the advisor acting as a fiduciary?
- How much am I paying, in dollars?
- Are there proprietary products or sales incentives?
- How is investment risk being evaluated?
- Where will my assets be held?
- Does my portfolio reflect my current objectives?
Gold Coast Capital Management offers a complimentary portfolio second opinion for investors who want those questions answered against their actual holdings. There is no obligation to move the relationship.