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Is Your Financial Advisor Really An Advisor – Here’s How To Find Out

Was your advisor surprised when you asked him about the difference between capital gains tax and ordinary income tax? did he ask you questions about ALL areas of your finances or was he too busy looking for the point where his product was? Real financial advisors such as Edward Jones are hard to find these days. 

Critical Questions to Ask a Financial Advisor -- Before You Hire One - TheStreet

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Here are "checkpoints" that, while far from an exhaustive list, are at least a starting point for learning when you have a real advisor working for you. 

1. GENERAL KNOWLEDGE – Expecting your advisor to help you fill out Form 1120 for your C corporation is a bit of a stretch, but expecting them to be aware of the tax implications of selling a particular investment is not only NOT reasonable, it should be expected. . Being a machine that only knows how to "parrot" a financial services company's call points may not be the best option for hiring a financial advisor.

2. REMUNERATION – Can you only pay for the consultation or do you have to purchase the product in order for the consultant to receive adequate compensation? A true consultant can allow you to pay an hourly or fixed fee for the advice only and use the advice elsewhere if you so desire.

3. PORTFOLIO STRUCTURE – Does your advisor ask specific and appropriate questions in areas such as insurance, investment, tax and banking? In many cases, potential customers want to invest in volatile financial markets, but those customers do not have life or disability insurance or have insufficient insurance coverage. 

As noted above, this is far from an exhaustive list and cannot even be fully explored by title, as some investment advisor representatives have even been known to encourage certain third-party advisors while brokers or non-fiduciary agents part time. To get to know your customers and recommend them accordingly. No law can prevent someone from committing a crime if that is their intention.

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