The 19 Questions the Wall Street Journal Recommends Asking Financial Advisors (Plus our Answers)
In one of its personal finance columns, the Wall Street Journal recommends that families and individuals ask lots of questions before hiring a financial advisor. We agree. We’ve answered similar questions that the Certified Financial Planner Board recommends. Here are The Coleridge Group’s answers to the WSJ’s questions.
Are you always a fiduciary, and will you state that in writing?
Does anybody else ever pay you to advise me and, if so, do you earn more to recommend certain products or services?
No.
Do you participate in any sales contests or award programs creating incentives to favor particular vendors?
Bah ha ha, sales contests. Like in junior high. You gotta love the broker-dealer and insurance worlds. No, we don’t participate in childish games.
Will you itemize all your fees and expenses in writing?
Yes, our fees are clearly listed in our pricing page and our Form ADV.
Are your fees negotiable?
Yes.
Will you consider charging by the hour or retainer instead of an annual fee based on my assets?
The families we serve love the subscription (i.e. retainer) model and we’re happy to provide it. We feel it provides a great alignment of interests.
Can you tell me about your conflicts of interest, orally and in writing?
Although any type of compensation structure will have some sort of conflict of interest, we try our darndest to not have any. If you’re ever unsure, please ask.
Do you earn fees as advisor to a private fund or other investments that you may recommend to clients?
No.
Do you pay referral fees to generate new clients?
Although we love when our clients refer us to their friends and families, we don’t compensate them for doing so.
Do you focus solely on investment management, or do you also advise on taxes, estates and retirement, budgeting and debt management, and insurance?
We provide comprehensive financial planning. We do this because we understand that investing properly is important, but not sufficient, to achieve financial independence. Seriously, how can someone call themselves a financial advisor and never ask for a person’s tax returns or review their insurance policies?
Do you earn fees for referring clients to specialists like estate attorneys or insurance agents?
No. For those families who don’t have other professionals in their corner, we’re happy to refer them to select trusted professionals, but we’re never compensated for doing so.
What is your investment philosophy?
We employ a well-diversified, tax-efficient, low-cost approach to investing. This approach is based on evidence and not gut feelings.
Do you believe in technical analysis or market timing?
No, I believe in science.
Do you believe you can beat the market?
If I did, I’d be living on the beach right about now instead of in my office answering this question.
How often do you trade?
We mostly trade only to rebalance client portfolios.
How do you report investment performance?
We report performance net-of-fees. For those clients who pay for our services through their checking account, net-of-fees will equal gross-of-fees.
Which professional credentials do you have, and what are their requirements?
I hold the CFA Charter and the CFP® Certification. Both of these designations require rigorous study, continuing education, and adherence to high ethical standards. Learn more about my experience.
After inflation, taxes and fees, what is a reasonable estimated return on my portfolio over the long term?
We expect portfolios to provide long-term returns that closely resemble historical returns. Here is a list of the returns for different asset allocations from 1926 – 2021.
| Asset Allocation | Average Annual Return | |
|---|---|---|
| 0% Stocks/100% Bonds | 6.3% | |
| 20% Stocks/80% Bonds | 7.5% | |
| 30% Stocks/70% Bonds | 8.1% | |
| 40% Stocks/60% Bonds | 8.7% | |
| 50% Stocks/50% Bonds | 9.3% | |
| 60% Stocks/40% Bonds | 9.9% | |
| 70% Stocks/30% Bonds | 10.5% | |
| 80% Stocks/20% Bonds | 11.1% | |
| 100% Stocks/0% Bonds | 12.3% |
Source: Vanguard
19. Who manages your money?
We do, and we invest in the same assets and securities that we recommend to clients.
Sound good? Let us know if you’re ready to get started planning your financial right now and the future of your dreams. Click below to schedule a free intro call today.
