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10 Questions (and more) to Ask Before Choosing Your Financial Advisor

  1. What do you think is a reasonable, real after-tax return for an investor with average risk tolerance? For one with a low risk tolerance? How have the portfolios of your existing clients performed since the credit crisis began? Over the past five years?

  2. How do you get paid?  Do you offer breakpoints?  What does a typical fee structure look like for one of your A – Clients?

  3. How do you find the best deal on insurance? Do your brokers deal with a number of insurance companies, or do they tend to do business with only one? How often should I put my insurance business out to bid?

  4. What did you advise your clients to do as the credit crunch unfolded? At what point – if ever – did you recommend that they modify their portfolios? How have you positioned them to withstand further deterioration in the financial sector and in consumer credit

  5. What should I do with my real estate holdings? Is there any way to hedge my exposure to any future downturn in the real estate market? Should I try, or is this futile?

  6. What’s your view on inflation? What would be the consequence for me of a resurgence of asset-price or consumer-price inflation? How do I hedge my portfolio against such an eventuality?

  7. Who should be my main point of contact among my financial, legal and accounting advisors? Will you coordinate with my lawyers and accountants, or do I need to make three calls when I only want to make one?

  8. Where will my money reside? Do you hold client’s funds in your company’s accounts or do you use a bank as a custodian?  Who will create the statements for my portfolios?

  9. How often will I meet with you? How often will I receive performance reports for my portfolios?  Is there a charge for scheduling review meetings?

  10. Should I hedge my concentrated stock positions? My exposure to my own company? Is there any way to do so on a tax-efficient basis that doesn’t attract too much attention from the Internal Revenue Service?

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