Hard Questions to Ask Your Financial Advisor

Key Takeaways Your financial advisor should be able to explain why they use the investments they recommend, not simply tell you what to buy.Mutual funds and ETFs have important differences in trading flexibility, costs, taxes, investment focus, and management style.Owning several mutual funds does not necessarily mean you are diversified; different funds may hold many of the same investments.Ask your advisor about fees—including what you actually pay and whether those fees change as your assets grow.Ask about mistakes. How an advisor recognizes, learns from, and adapts after a mistake can reveal a great deal about their investment process.A financial advisor should be able to explain their portfolio-management process in understandable terms.Trust should come from transparency, alignment of interests, planning, process, and experience—not simply because someone says, “Trust me.”Your financial plan ultimately belongs to you. Your daily spending, saving, and financial decisions should remain connected to your own goals and dreams. Aired August 16, 2025 Episode Overview Would your financial advisor willingly discuss their biggest investment mistake? Can they clearly explain their fees? Can they tell you why they selected one investment approach instead of another—and why you should trust them with your life savings? In this episode of Purpose Driven Finances, Allan Malina and Rich Roth turn the questions toward the advisor. The discussion begins with Allan announcing that Servus Capital Management is adding a mutual fund option for investors who prefer mutual funds. Allan explains several differences between mutual funds and ETFs, including when they trade, potential expenses and tax consequences, active versus passive management, and the possibility of overlapping holdings among multiple funds. Then the questions become more personal. Allan discusses memorable client experiences, his biggest investment-management miss, how Servus charges fees, how its portfolio process works, and one of the most difficult questions any advisor can face: Why should people trust you? The larger lesson is simple: investors should understand not only what they own, but also the philosophy, process, costs, risks, and person responsible for helping manage their financial future. Frequently Asked Questions What questions should I ask a financial advisor? Ask how they invest, why they choose particular investments, what you will pay, how they manage risk, how they have responded to mistakes, and how their process connects to your goals. What is the difference between an ETF and a mutual fund? ETFs generally trade throughout the market day, while mutual funds are typically priced once daily. They can also differ in costs, tax characteristics, management style, investment specificity, and portfolio construction. Does owning several mutual funds mean I am diversified? Not necessarily. Multiple funds can own many of the same securities, creating more concentration than an investor realizes. Reviewing the underlying holdings can help identify portfolio overlap. Should I ask my financial advisor about their mistakes? Yes. Understanding what went wrong, what the advisor learned, and whether the investment process changed afterward can provide valuable insight into how they manage money. How important are a financial advisor's fees? Fees matter because they reduce investment returns. Investors should understand what they pay, what services are included, and whether the fee schedule changes at different asset levels. How can I evaluate whether to trust a financial advisor? Look beyond promises. Consider transparency, experience, incentives, investment philosophy, risk-management process, communication, and whether the advisor's recommendations are centered on your goals.