Questions to Ask a Financial Advisor
Most people who sit down with me have never interviewed a financial advisor before. They were referred by a friend or they found us online, and they arrive with a list of questions they picked up somewhere, without a clear sense of what a good answer sounds like. That is a hard spot to be in when the decisions on the table took you 30 years to fund.
So I have answered the questions myself.
Below are the ones I hear most often, along with a few I wish more people asked. I have answered them the way I would across the table at our Houston office: the direct answer first, then the detail behind it. Some are specific to how we work at Concenture; others apply to any advisor you talk to, and you should hold all of us to them.
If you are meeting with more than one firm, take this list along. Ask each advisor the same questions and compare what comes back. The differences will tell you more than any brochure.
Whether we are a fit
Who do you typically work with?
Do I have enough saved to work with you?
The dollar figure matters less than the number of decisions stacking up. A family with a business sale coming, company stock, an old pension, and an estate plan that hasn’t been reviewed in a decade needs more coordination than a family with twice the assets and one straightforward portfolio. Ask any firm what its minimum is and which of your assets count toward it, because that second part varies more than you might expect. We covered where that line usually falls in our article on how much money you need to hire a wealth manager.
Do you work with people outside Houston?
Trust, credentials, and how we are paid
Are you a fiduciary?
Yes. We serve as fiduciaries for our clients, which means we are obligated to put your interests ahead of our own when we advise you. Plenty of people assume every advisor is held to that standard; that assumption is where trouble starts, because compensation models vary widely and some create real conflicts. Ask any advisor you meet (including me) to confirm in writing when the fiduciary standard applies to your accounts. I wrote more about why the distinction matters in this article on the importance of a fiduciary in wealth management.
How are you paid?
What will this cost me each year?
What credentials do you hold, and what do they mean?
I hold the CRPC™, the Chartered Retirement Planning Counselor™ designation, which focuses on retirement income, distribution planning, and the tax questions attached to both. Credentials tell you what someone studied, though they cannot tell you whether that person is any good with a situation like yours, so treat them as a starting point rather than a verdict. Other advisors here hold different designations, and you can see who holds what on our team page.
How long have you been doing this?
I’ve been doing this work for more than three decades. I spent over 10 years as a Resident Director at Merrill Lynch before founding Concenture as an independent firm. Tenure matters because a long career means someone has advised clients through more than one bad market, and that shows in how calm the conversation stays when things get ugly. Ask anyone you interview what they were doing in 2008 and in 2020. You can find my background info on my bio page.
Retirement income and taxes
How do I turn what I have saved into income that lasts?
By building what I call a retirement paycheck, which means deciding in advance which account each dollar comes from, in what order, and what happens to that order when markets move. For 30 years the question you have been asking is how much you have saved. The day you retire, it becomes how you replace the deposit that used to arrive every two weeks, and the answer draws on your portfolio, Social Security, any pension, and the tax treatment of each. Our retirement planning page covers how we build it, and what retirement income planning involves goes deeper on the mechanics.
When should I claim Social Security?
There is no single right answer, and any advisor who gives you one in the first meeting has not asked enough questions yet. Claiming early locks in a smaller benefit for life. Waiting increases it, and it also means drawing more from your portfolio in the years beforehand, which affects your taxes and your withdrawal rate. Your health, your spouse’s benefit, and your other income all affect the answer. We model it rather than apply a rule, and this article on coordinating investments, savings, and Social Security covers the interaction.
How do you handle taxes once I stop working?
What are RMDs, and should I be worried about them?
An RMD (required minimum distribution) is money the IRS makes you withdraw from tax-deferred accounts like a traditional IRA or 401(k) once you reach your 70s, whether or not you need it. The withdrawal is not the real problem; it’s the size of the tax bill attached to it, and that bill is largely set by decisions made in the years beforehand, while you still control your taxable income. Every dollar in a pre-tax account has a silent partner attached to it, and the partner is the IRS. This article on reducing required minimum distributions before they start walks through the options.
What happens to my plan if the market drops right after I retire?
This is the question I wish more people asked, because a decline in the first few years of retirement does more lasting damage than the same decline 10 years later. When you are selling investments to fund living expenses, a falling market means selling more shares to raise the same dollars, and those shares are not there to recover when prices come back. We plan for it by deciding ahead of time which accounts get drawn down in a bad year, so the choice is already made when you are least inclined to make it well. This article on staying on track during market volatility covers the rest.
Your accounts and employer benefits
Can you help me with my 401(k)?
I have company stock and deferred compensation from an energy employer. Can you help with that?
Yes. This is the work we do most. Between BP, Chevron, ExxonMobil, Shell, ConocoPhillips, and Phillips 66, a large share of Houston household wealth sits inside employer plans that follow their own rules, and the timing of your elections often matters more than the investments themselves. Company stock held inside a 401(k) has a feature called net unrealized appreciation, the growth on those shares above what you originally paid. Handled one way, that growth may be taxed at long-term capital gains rates when the shares leave the plan. Handled another way, the entire balance is taxed as ordinary income. Deferred compensation carries its own distribution elections, many of which cannot be changed once made. We have built a page for each of these employers, starting with BP retirement planning and Chevron retirement planning
Should I take the lump sum or the pension?
How we would work together
What does your planning process look like?
There are three steps; the first one is listening, because a plan built around goals we assumed rather than the ones you have is no use to anyone. From there we build the strategy, covering income, investments, taxes, and estate coordination together rather than in isolation. The plan then goes into motion and gets adjusted as your life changes. You can see more details on our process page.
How often will we meet, and who will I be talking to day to day?
We meet as often as your situation calls for, and more often in the year around a retirement date than in a quiet year afterward. Between meetings you get regular progress updates.
The second half of that question is the more useful one. At a larger firm, the advisor who brings you in is not always the person handling your account afterward. Concenture is a small team by design, and our team page shows everyone who works on client plans. Ask us who your day-to-day contact will be, and ask every other firm the same.
Will you work with my CPA and my estate attorney?
Yes, and the plan suffers when we don’t. A CPA is focused on this year’s return while an attorney drafts the documents and an investment manager runs the portfolio. All three can be doing excellent work while nobody checks that the beneficiary designations match the will. Coordinating those pieces is a large part of our job, and our legacy and estate planning page describes how that side fits together.
Who holds my money?
Not us, and the answer should be the same at every firm you interview. Your accounts sit with a separate custodian, the institution that safeguards the assets and produces your statements. You should be able to log in and see them yourself, independent of anything your advisor sends you. If an advisor tells you the firm holds the assets directly, or that statements come only from the advisor, stop the conversation there.
If you would like to talk
If we meet and I don’t think we are the right firm for you, I will say so, and I’ll usually tell you who might be a better fit. That is a better outcome than a relationship that was wrong from the first meeting.
Would you like to work through any of these questions with your own numbers in front of us? Schedule a 15-minute introductory call. It’s a conversation that helps you know quickly whether it makes sense to keep talking. If you are still comparing firms, our article on how to choose the best financial advisor in Houston, TX, lays out the criteria we would use ourselves.