Many people who ask me about investments or about wanting to set up an appointment often preface it by saying, "I'm sorry, this is probably a stupid question, but…"
I started to wonder why people often say this and asked myself if I ever do. For me, it's usually when I'm talking to someone, such as a doctor or a lawyer, about a subject I don't know a lot about or that intimidates me. I think most people are afraid to ask questions about their investments for fear of sounding bad or admitting in some way that they don't have all of their "stuff together."
I can assure you, there truly are no stupid questions when it comes to investments. Every question leads to more knowledge, and that's a good thing.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
First, let's start with questions about the investment itself:
- Is this product registered with the SEC or my state agency?
- Does this investment match my investment goals? Why do you feel it is suitable for me?
- How does this investment make money? Dividends? Interest? Capital gains?
- What are the total fees to purchase it? Not just commissions but any underlying fees as well.
- Is this investment liquid? Are there any fees associated with accessing my money?
- Can you tell me about the management team? Many companies tout past performance, but that may have come from a team that isn't there anymore.
- What is a reasonable return to expect for this investment? How has it performed over the long run? Many managers who highlight performance do so after a great year. If you are a long-term investor, that might not be meaningful to you.
- What are the risks associated with this investment? What would cause it to lose money?
Next is a list of questions you should ask about the adviser:
- How long have you been in business?
- What education or credentialing do you have? The credentials should match the advice you're looking for. For example, if you need planning advice, the advisor should be a Certified Financial Planner TM professional. If you want investment advice, then they should hold designations such as Certified Investment Management Analyst® (CIMA®), or Chartered Financial Analyst (CFA®).
- What is your investment philosophy?
- How do you get paid? Do you get paid more if I buy this vs. that?
- How often should we meet to discuss my investments?
- If I leave your firm, what are the fees if any? Most custodians charge a fee for outgoing transfers and/or closed accounts.
These questions are not inclusive, and you may have more depending on your situation. It is also important to ask a question more than once if you don't understand the answer the first time or to ask your adviser to rephrase the answer in a different way.
Understanding your investments and doing your due diligence on the adviser you’re working with is similar to researching a physician and understanding your prescribed medications. You wouldn’t leave your health to chance, and the same type of care should be taken with your money.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney or tax adviser with regard to your individual situation.
-
Stocks Slip Ahead of July CPI Report: Stock Market TodayThe latest inflation updates roll in this week and Wall Street is watching to see how much of an impact tariffs are having on cost pressures.
-
How Your 2025 Summer Wedding Could Save You Money on TaxesTax Breaks There are some wedding expenses that are tax-deductible, and you don’t want to miss out on savings.
-
What the OBBB Means for Social Security Taxes and Your Retirement: A Wealth Adviser's GuideFor Americans in lower- and middle-income tax brackets, the enhanced deduction for older people reduces taxable income, shielding most of their Social Security benefits from being taxed.
-
Financial Planner vs Investment Manager: Who's the Better Value for You?When markets are shaky, who do you trust with your money? A recent study provides useful insights into the value that different financial professionals offer.
-
I'm a Financial Adviser: This Is How You Could Be Leaving Six Figures in Social Security on the TableClaiming Social Security is about more than filing paperwork and expecting a check. When you do it and how you do it have huge financial implications that last the rest of your life.
-
The Big Pause: Why Are So Many Americans Afraid to Retire?While new research sheds light on Americans' growing reluctance to quit work in later life, can anything be done to help those with the retirement jitters?
-
Five Under-the-Radar Shifts Investors and Job Seekers Can't Afford to Ignore Under the OBBBBeyond the headlines: The new tax law's true impact for job seekers and investors lies in how it will transform industries and create opportunities in areas such as regional accounting, AI and outsourced business services.
-
I'm a Financial Professional: It's Time to Stop Planning Your Retirement Like It's 1995Today's retirement isn't the same as in your parents' day. You need to be prepared for a much longer time frame and make a plan with purpose in mind.
-
An Attorney's Guide to Your Evolving Estate Plan: Set-It-and-Forget-It Won't WorkWhen did you last review your will? Before kids? Before a big move? An update is essential, but regular reviews are even better. Here's why.
-
For a Richer Retirement, Follow These Five Golden RulesThese Golden Rules of Retirement Planning, developed by a financial pro with many years of experience, can help you build a plan that delivers increased income and liquid savings while also reducing risk.
