Asking the Right Questions

Choosing appropriate investments is one of the most important factors in helping you to achieve your financial goals.

The marketplace is filled with a wide range of investment choices. So many, in fact, that selecting the right one for your situation can sometimes be difficult. Your financial advisor is there to help you sort through the maze of investment choices - stocks, bonds, money market securities, mutual funds, precious metals, art, and many more.

Participate fully in the investment selection process – it's your portfolio and you need to own it. As much as possible, understand how each investment fits, the risk it poses and the fees involved. You should be asking questions throughout the investment planning process and each time you consider a new investment for your portfolio.

Ask before you invest
Regardless of the type of investment you are considering, asking questions can help you learn more about the specifics of any potential investment and also help you stay in turn with the composition of your portfolio. Here are just a few questions that you should consider asking your financial advisor before you make an investment decision:

  1. Why should this investment be part of my portfolio?

  2. What category of investment is this - stock, bond, money market security, etc.? From what kind of organization - corporation, government, domestic or foreign organization, etc.?

  3. If you are investing in a mutual fund or managed account, what type of fund is it (growth, income, balanced, guaranteed, etc.)? What investments are included in the fund?

  4. How does this investment or fund fit with my investment strategy and strengthen my ability to meet my financial goals?

  5. How much risk is involved with this investment? Does this investment safeguard any or part of my money with a guarantee? Can I easily divest this investment if I choose to do so? With or without penalty?

  6. How does this investment help to diversify my portfolio or is it more of the same kind of investment already in the portfolio?

  7. What has been the performance record of this investment? How has this investment weathered the ups and downs of the market over a stated amount of time, i.e., the past year, three years, five years, etc.?

  8. How does the performance of this investment or fund compare to others in the same class, industry? How does its performance compare to the market as a whole?

  9. What are the fees and expenses associated with this investment?

  10. How long should I keep this investment? Why?


While past performance cannot predict or guarantee future performance, these are just a few of many potential questions you can ask your financial advisor.

Before investing, ask questions and insist on thoughtful, informed responses from your financial advisor or other resources. Ultimately, the responses you receive help to form the foundation of information that you will use to support specific investment choices - informed choices that can best meet your financial needs.