19 Questions to Ask a Financial Adviser Answered
A client recently forwarded us an article by Jason Zweig published in the Wall Street Journal titled “The 19 Questions to Ask Your Financial Adviser” (link here), and asked if we would answer those questions. Rather than make it a private conversation, we have posted our answers below:
1. Are you always a fiduciary, and will you state that in writing?
Yes and yes. As a fee-based adviser, Atomi Financial Group is held to a fiduciary standard. This standard is outlined in our Form ADV, our client agreement, and throughout our website.
Not to split hairs, but we are also licensed to sell insurance, which is technically not a transaction that is held to a fiduciary standard. Nonetheless, we always consider what’s in our clients’ best interests when making recommendations.
2. Does anybody else ever pay you to advise me and, if so, do you earn more to recommend certain products or services?
No. Our compensation is the same no matter what investment we recommend.
3. Do you participate in any sales contests or award programs creating incentives to favor particular vendors?
No. We do not participate in any sales contests or award programs of any kind.
4. Will you itemize all your fees and expenses in writing?
Yes. We are completely transparent with respect to our fees.
5. Are your fees negotiable?
Yes, but only under certain conditions. We feel our fees are competitively priced and fairly compensate us for our work. We do not offer discounts simply because another adviser offers a cheaper price. However, there are always unique situations that may necessitate a reduction in our fees. For example, we discount our fees when clients fund a donor-advised fund or similar charitable contribution vehicle. We’re happy to discuss other situations.
6. Will you consider charging by the hour or retainer instead of an annual fee based on my assets?
Yes. While assets-under-management-based fees are our most common fee arrangement, we also offer hourly and retainer-based fee models.
7. Can you tell me about your conflicts of interest, orally and in writing?
Yes. We rarely have conflicts of interests, but, when arise, we disclose them in writing.
8. Do you earn fees as adviser to a private fund or other investments that you may recommend to clients?
No. We have no proprietary investments.
9. Do you pay referral fees to generate new clients?
We currently do not have any referral fee arrangements. If, we did have them, we would disclose such an arrangement in writing to the client.
10. Do you focus solely on investment management, or do you also advise on taxes, estates and retirement, budgeting and debt management, and insurance? (Here the best answer depends on your needs as a client.)
We are a holistic wealth manager. We offer an array of services, which can be found here: https://www.atomifinancial.com/our-capabilities.
11. Do you earn fees for referring clients to specialists like estate attorneys or insurance agents?
We do not earn any fees for referring clients to estate attorneys. We do utilize several outside insurance experts, such as property and casualty. In these circumstances, we share in a portion of the commission earned. Our partners (and whether we have a revenue sharing arrangement) is outlined here: https://www.atomifinancial.com/firm-overviews.
12. What is your investment philosophy?
Our investment philosophy is very similar to the asset allocation methodologies employed by major universities like Yale and Harvard. Why? Because we believe their approach offers the potential for superior risk-adjusted returns and lower volatility through all market cycles. A detailed overview our approach can be found here: https://www.atomifinancial.com/investment-philosophy.
13. Do you believe in technical analysis or market timing?
No. While we utilize broad economic and market trends as inputs in our investment models, we do not trade based on technical analysis.
14. Do you believe you can beat the market?
No. We believe in a goals-based approach when determining how much investment risk an investor should take. We measure our performance against a client’s financial goals, not market indexes.
15. How often do you trade?
Quarterly, we check portfolios for allocation imbalances and will rebalance to bring a portfolio back within tolerances.
16. How do you report investment performance?
We report quarterly performance net of our fees. However, it is important to note that some direct investments only provide an annual valuation while other investments provide no timely valuations until its sale. Therefore, any type of short-term performance is likely to not accurately represent true performance.
17. Which professional credentials do you have, and what are their requirements?
Within our core team, we have two Masters of Business Administration (MBA), a Certified Financial Planner® (CFP), and an Accredited Asset Management Specialist® (AAMS).
The CFP® certification program is administered by the CFP Board. CFP® professionals must pass the comprehensive CFP® Certification Examination, pass CFP Board's Fitness Standards for Candidates and Professionals Eligible for Reinstatement, agree to abide by CFP Board's Code of Ethics and Professional Responsibility and Rules of Conduct which put clients' interests first and comply with the Financial Planning Practice Standards which spell out what clients should be able to reasonably expect from the financial planning engagement.
The AAMS is a professional designation offered through the College for Financial Planning. It is a 10-module examination that focuses on the fundamentals of asset management. Its designation is the industry-benchmark for asset management credentials.
18. After inflation, taxes and fees, what is a reasonable estimated return on my portfolio over the long term?
We design a client’s investment portfolio to meet their specific financial goals. Consequently, we cannot provide any forward-looking statements regarding potential performance.
19. Who manages your money?
Our investment committee makes all financial asset allocation and investment selection decisions.
