Five questions for your investment adviser this new year



Barbara Stewart, Special to QMI Agency

, Last Updated: 5:02 PM ET

One of my clients is a bit extreme and sends me a detailed agenda weeks in advance of our quarterly meetings. Although this sometimes feels a bit obsessive to me, I have to admit that it forces me to do my homework.

Even if you have the most trusting of relationships with your adviser, it strikes me that there are five items that are always worthy of discussion. And it is your meeting after all.

Question 1: What is my average annual performance return from the time I started?

Not all investment statements provide detailed information about rates of return net of management fees. If this isn't clearly spelled out, ask for a customized report. This is what you pay for -- you deserve to know whether you are achieving your return objectives or not.

Question 2: What is in my current portfolio?

Even if the bottom line returns look great, it is important to understand the associated level of portfolio risk. Ask for a breakdown of the percentage weightings by security, by industry and by country. At a glance you will be able to determine whether there is too much invested in any one asset, sector or region.

Question 3: What is your view on the market and the economy?

Once you have an understanding of your adviser's current outlook, you can then ask how this view affects your portfolio in particular. If caution is warranted, do changes need to be made to your asset mix? Are there any macro themes that suggest changing the emphasis on certain sectors?

Question 4: What are my management fees and trading costs?

In all likelihood you discussed this at the outset of the relationship, but it never hurts to ask this question again. If your asset mix has changed, or you have put more money in, you may be entitled to move to a lower fee schedule. If there have been any fund products added to your portfolio there may be additional embedded fees.

Question 5: What is your own portfolio strategy and why?

Assuming similar portfolio objectives and constraints, it makes sense that security recommendations will be consistent for all clients. Your adviser's personal investment portfolio should be aligned accordingly.

As is the case with any interview, you want to get a feel for a person's level of knowledge and ability to communicate.

Even if you already know the answers to some or all of these questions, it is a good idea to ask them.

Ideally you will walk away with a renewed feeling of confidence in your original decision to select that manager.