Are You Asking Your Financial Advisor the Right Questions?

A family member asked me to take a look at a portfolio that his mom became the sole owner of after her husband passed away about six years ago.  The portfolio has been managed by an advisor at one of the major brokerages for years.

These are the items that caught my attention upon reviewing the account statement…

1) Both of the stock positions have declined in value since they were purchased.  

2) The exchange traded fund has lost more than half of its value since it was purchased.

3) The mutual fund has declined in value since it was purchased.

4) Thankfully, at least the three annuities have gone up in value (albeit by far less than what likely would have been the case if a different investment vehicle had been used but that’s a conversation for another day). 

I sent the family member a text (we also had a follow-up conversation), asking him how the advisor responded when he asked the following questions:

1) How is the cash in the account going to be invested?

2) Why were those specific stocks and that particular exchange traded fund purchased?

3) Is the plan to hold onto the mutual fund indefinitely?

4) Why are these annuities in the account?

5) How do I obtain a performance report that reflects how the total account has performed under your management?

I also asked what the advisor at the other brokerage firm where his mom has additional money said when he showed the account to him.

None of the five questions have ever been raised to the advisor.  Moreover, no one has asked the advisor at the other firm to take a look.  

The takeaways?  Are YOU asking your financial advisor the right questions about YOUR account?  How do YOU know that s/he is the best person to work with for YOUR situation?  How do YOU know that s/he is working in YOUR best interest?