Cents and Sensibility Guy Steele

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Key questions
to ask prospective
financial advisers

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Like most people, you probably are plenty busy with your work and family. So you may not have the time and expertise needed to thoroughly understand the investment world. That's why you may want to work with a professional investment representative.

But how do you find the right one? You can start by asking the right questions. Here are a few to consider:

>> Have you worked with people in my situation?

As an investor, you have your own special set of characteristics: level of assets, stage of life, long-term goals, etc. Before you sign up to work with a financial adviser, you need to make sure that he or she is comfortable working with someone like you.

>> What are your credentials?

Inquire about a prospective adviser's qualifications. Make sure anyone you might work with has all the necessary securities licenses.

>> What is your investment philosophy?

Just like investors, investment professionals have different personalities. Some might be naturally more aggressive, while others are conservative. But the ideal adviser is someone who will provide you with guidance that's based on your risk tolerance and investment preferences.

>> How will you communicate with me?

You'll want to make sure that your broker will communicate regularly with you. Find out when you'll receive statements and how often you'll meet in person to review your portfolio. Will your adviser call with suggestions and recommendations? Are you free to contact your broker at anytime? If the broker is not available, is there someone else that he or she works with who will be familiar with your situation? It's important to find these things out as soon as possible. Remember, you're entrusting this person with your financial future -- so you have a right to expect open, honest and frequent communication.

>> What sort of resources do you have to draw on?

Find out if a prospective investment professional has access to high-quality research and technical expertise in key areas, such as investments, insurance and estate planning. In some cases, an adviser may be able to bring added expertise through a relationship with another professional, such as an attorney or accountant.

>> How do you get paid?

Investment professionals get paid in a variety of ways: fees, commissions, percentages of assets under management, or even a combination of these. You do need to know, right from the start, how your adviser is getting compensated.

>> Can you provide me with references?

A lot of people are too shy to ask for references. However, a reputable broker will be happy to give you some names of people you can call. Of course, you shouldn't expect a broker to provide you with the specifics of other clients' financial transactions. But you should be free to ask about an investor's style, responsiveness etc.

You may need to interview several candidates before you find a suitable investment representative. But it's worth the effort. Making the right choice today can pay off in the future.

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See the Columnists section for some past articles.

Guy Steele is a financial planner and head of the Pali Palms office of Edward Jones. Send planning and investing questions to him at 970 N. Kalaheo Ave., Suite C-210, Kailua, Hawaii, 96734, or call 254-0688