What Questions to Ask Whoever Manages Your Money
You've got a meeting on the calendar with your financial advisor, or you're interviewing someone new, and you don't want to sit there nodding along while they talk about "diversification" and "risk tolerance." You want to walk out knowing something concrete about what happens to your money and what it costs you. Good instinct. Most people never ask.
Here are the questions that actually matter, in order:
- How do you get paid, exactly?
- What is my all-in cost, in dollars, not percentages?
- Are you a fiduciary on this account, all the time?
- What would you do with my money if it were yours?
- Show me what happens to my plan in a bad year.
- Who else touches my account, and what do they get paid?
Ask these six and you'll learn more in twenty minutes than most clients learn in twenty years. Below is why each one matters and what a bad answer sounds like.
How Do You Get Paid, Exactly?
There are three basic models: fee-only (a flat fee or a percentage of assets, no commissions), fee-based (a mix of fees and commissions), and commission-only (they get paid when you buy a product). None of these is automatically bad. But you need to know which one you're in, because it tells you what they're incentivized to do.
A commission-based advisor makes more money the day you buy an annuity than the day you don't. That's not an accusation, it's just math. If someone can't answer this question in one plain sentence, that's the answer.
What a good answer sounds like: "I charge 0.9% of assets under management annually, billed quarterly. I don't earn commissions on anything I recommend."
What a bad answer sounds like: anything with the phrase "it varies" and no follow-up number.
What Is My All-In Cost, in Dollars?
This is the one people skip, and it's the one that costs the most.
Say you have $400,000 under management. A 1% advisory fee is $4,000 a year. Fine. But that's often not the whole bill. Add the expense ratios on the funds they put you in, say 0.6% average on actively managed mutual funds, that's another $2,400. Add a wrap fee some custodians charge, maybe 0.2%, another $800. Now you're at $7,200 a year, or 1.8%, not the 1% you thought you signed up for.
Over 20 years, on a portfolio growing at 7% before fees, the difference between paying 1% and paying 1.8% total is not small. Run it out and the higher-fee version leaves you with roughly 15% less money at the end, not because the advisor did anything wrong, but because compounding punishes every basis point without telling you it's doing it.
Ask for the total, in a dollar figure, based on your actual account size. If they can only give you a percentage, ask them to do the multiplication in front of you.
Are You a Fiduciary, All the Time?
A fiduciary is legally required to act in your best interest. That sounds like a baseline, not a bonus, but it isn't universal. Some advisors are fiduciaries only when giving certain kinds of advice and switch to a lower "suitability" standard when selling other products, like insurance or annuities.
Ask directly: "Are you a fiduciary on 100% of the advice you give me, or just some of it?" Get it in writing if you can, it's often in the advisory agreement or Form ADV. If they hesitate or explain that it "depends on the product," you now know where the gaps are.
What Would You Do With My Money If It Were Yours?
This question cuts through the sales pitch because it forces a real answer instead of a menu of options. A good advisor will tell you, and tell you why, and will often admit their own portfolio isn't identical to yours because your timeline, tax situation, or risk tolerance is different.
A bad answer is a shrug followed by "everyone's situation is different," used as a way to avoid committing to anything. That phrase is true, but it shouldn't be an escape hatch from giving you an actual opinion.
Show Me What Happens in a Bad Year
Anyone can build you a plan that looks great when markets go up 10% a year forever. Ask what the plan does in a year like 2008, when the S&P 500 dropped 37%, or 2022, when a 60/40 portfolio of stocks and bonds lost around 16%, an unusually bad year for that mix because both stocks and bonds fell together.
If you're 58 years old with $900,000 and planning to retire at 62, ask what a 30% drawdown two years before retirement does to your withdrawal plan. A real advisor has already run this number and can show you a sequence-of-returns scenario. If they can't produce anything concrete, they haven't stress-tested your plan, they've just built a spreadsheet that assumes good weather.
Who Else Touches My Account?
Many advisory relationships involve a custodian (where the assets actually sit, like Schwab or Fidelity), sometimes a separate money manager the advisor outsources to, and sometimes a broker-dealer that takes a cut. Each layer can add cost. Ask who else is in this chain and what each one charges.
A Worked Example
Here's what this looks like end to end. Say you're handed a proposal for a $500,000 account. The advisor says "our fee is 1%." You ask the six questions above and learn:
- The 1% fee is billed on total assets, so that's $5,000 a year.
- They put clients into a proprietary fund lineup averaging 0.75% in expense ratios, another $3,750.
- They're a fiduciary for the advisory account but sell insurance products on the side under a different, non-fiduciary standard.
- In 2022, their model portfolio for someone your age lost about 14%, and they can show you the account statements to prove it.
Total real cost: $8,750 a year, or 1.75%, not the 1% headline. That's not a reason to walk away by itself. It's a reason to know what you're paying for and decide if the service matches the price.
The Limitation Here
None of these questions tell you whether an advisor's investment picks will outperform. Nobody can promise that, and anyone who does is telling you something about themselves, not about the market. What these questions get you is clarity on cost, incentive, and legal obligation, the three things you can actually verify before you hand someone your money. Performance you find out later, and by then the fee structure is already locked in, which is exactly why it's worth checking first.
If you've asked these questions and the answers left you uneasy, or if you're managing money yourself and want a second set of eyes on the whole picture, that's what Wealth Shift is for. Find it at readmoneydecoded.com/wealth-shift.