The hard questions for a new advisor?

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Tycer's picture
Tycer
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Joined: Apr 26 2009
Posts: 594
The hard questions for a new advisor?

So the unwilling partner in Peak Prosperity Preps (I guess that’s the three Ps) is hunting a new financial advisor. Well I should subtext this in that after all these years she’s less unwilling, but still can’t take the red pill. She’s heavy in the market. As a team we’re what the McAlvany’s would call balanced.

 I have been asked to attend the interview with a recommended prospective advisor. What are the hard questions? I’m looking for 8 or 13 PP driven Questions that will allow my partner and me to see how agile and eyes wide open this advisor  may or may not be.

Tycer's picture
Tycer
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Joined: Apr 26 2009
Posts: 594
These were what I came up with.

The answers were telling.

 

What is your investment style?

 

When did you adopt that style and why? 

 

What might drive you to make a change to that style? 

 

Who do you like reading on the internet regarding investment?

 

 

What is an example of a portfolio you currently manage? How is it divided/weighted?

 

What metrics do you use to determine downside movement. 

 

Where are we in the life cycle of this bull market? 

 

What indicators would you be able to see that would alert you to or predict a potential Lehman style event?

 

What changes would you make to a portfolio in the event of another Lehman type systemic failure? 

 

How fast could you make those changes?

 

How big is your book?

 

What’s the average size of your portfolios?

 

Are all sizes portfolios managed the same?  

 

What is your fee? 

 

What were your return % 2011-2016? 

 

What are your thoughts on ETFs? Do they have any effects on corporate valuations?

 

Reverse mortgages?

 

Annuities?

 

Are there any insurance products you like to sell? 

 

Do your projections account for CPI? What is the current CPI? Do you think that’s accurate? Headline vs Core 

newsbuoy's picture
newsbuoy
Status: Silver Member (Offline)
Joined: Dec 10 2013
Posts: 213
How would you hedge this market?

check out this for ideas:https://www.peakprosperity.com/podcast/87334/new-harbor-hedging-101

Are familiar with the ideas of Mr. Nasim Taleb and which of his ideas do you consider most often?

Is there a tooth fairy?

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 2797
I'd Also Add These Questions To Your List

Great questions, Tycer.

To your list I'd also add:

What's your fee structure? (% AUM, commission, etc)

How independent are you? (a hard question to ask, but essentially you want to know "Are you going to be pushing your parent firm's proprietary instruments on me because you get a better cut on them?")

How did you perform in late 2008/early 2009? (did they have sufficient risk management in place, or did their portfolio drop as much as the market did?)

What's your position on precious metals? (if they try to talk you out of owning any, I'd consider that a red flag)

What's your position on holding cash? (A good fiduciary should not shy from holding cash at times when they believe the market is overvalued. And when they do, they should charge you no fee or a nominal fee on that cash allocation. Remember: you are relying on their wisdom to know when to be in the market and when not to be. Most financial advisors are allergic to holding any cash and will fight to keep your capital fully deployed, i.e., fully billable, at all times. That's not in your best interest.)

What's your position on the cryptocurrencies? (Not saying they have to be experienced in allocating client funds into the cryptos, but you should at least want to work with someone who has an educated opinion on this emerging space.)

What's your experience in helping clients invest in tangible assets? (e.g., purchasing investment property through a retirement fund)

Explain your firm's risk management strategy. Do you hedge at all? If so, which vehicles do you use, and in which situations are they appropriate?

A good financial advisor should also be well-versed in estate planning (and if they don't provide the services themselves, they should have a trusted partner to refer you to). Ask them how they would go about advising you given your personal situation.

Lastly, as many reading this know, we endorse a financial advisor here at PeakProsperity.com. We entered into this relationship given the high volume of requests we receive to connect people with an advisor who's approach takes into account the macro trends and risk factors we focus on here at this site.

After asking the questions proposed on this Forum thread to any potential advisor you're considering, we'd recommend you then schedule a free phone consultation with our endorsed advisor (which can be quickly done here) to hear their answers. That way you'll have a basis for comparison.

Good luck, Tycer!

Tycer's picture
Tycer
Status: Platinum Member (Offline)
Joined: Apr 26 2009
Posts: 594
Adam Taggart wrote: Great
Adam Taggart wrote:

Great questions, Tycer.

To your list I'd also add:

What's your fee structure? (% AUM, commission, etc)1%

How independent are you? (a hard question to ask, but essentially you want to know "Are you going to be pushing your parent firm's proprietary instruments on me because you get a better cut on them?")Owner -3 employees 

How did you perform in late 2008/early 2009? (did they have sufficient risk management in place, or did their portfolio drop as much as the market did?) profit. Went 60% cash real early and went back in in large and emerging markets 

What's your position on precious metals? (if they try to talk you out of owning any, I'd consider that a red flag) she thinks 25% max/ looks at annuities as similar Insurance 

What's your position on holding cash? (A good fiduciary should not shy from holding cash at times when they believe the market is overvalued. And when they do, they should charge you no fee or a nominal fee on that cash allocation. Remember: you are relying on their wisdom to know when to be in the market and when not to be. Most financial advisors are allergic to holding any cash and will fight to keep your capital fully deployed, i.e., fully billable, at all times. That's not in your best interest.) moves to heavy cash often 

What's your position on the cryptocurrencies? (Not saying they have to be experienced in allocating client funds into the cryptos, but you should at least want to work with someone who has an educated opinion on this emerging space.) wants me to teach her  Cannot endorse due to wild west and lack of knowledge 

What's your experience in helping clients invest in tangible assets? (e.g., purchasing investment property through a retirement fund) didn’t ask

Explain your firm's risk management strategy. Do you hedge at all? If so, which vehicles do you use, and in which situations are they appropriate? Hard for me to explain this one. Wife has note

A good financial advisor should also be well-versed in estate planning (and if they don't provide the services themselves, they should have a trusted partner to refer you to). Ask them how they would go about advising you given your personal situation. The employee present with her was Estate and social security specialist 

Lastly, as many reading this know, we endorse a financial advisor here at PeakProsperity.com. We entered into this relationship given the high volume of requests we receive to connect people with an advisor who's approach takes into account the macro trends and risk factors we focus on here at this site. Talked with them right after you announced them

After asking the questions proposed on this Forum thread to any potential advisor you're considering, we'd recommend you then schedule a free phone consultation with our endorsed advisor (which can be quickly done here) to hear their answers. That way you'll have a basis for comparison.

Good luck, Tycer! Thanks ! We’ll see how my bride processes the info and acts. Her Current advisor lives and dies by candles:^(

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Offline)
Joined: Jun 25 2014
Posts: 752
What is your position on marijuana?

Quite simply, my experience in the business world has been that the short-term thinkers who can really destroy an investment by running solely after short-term gains and bonuses, by and large like marijuana.

That said, they'll be unlikely to tell you that.

They'll be firmly against drugs... until you smell it on them.

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