FAQs

Questions to ask when hiring a financial advisor.

We understand that hiring a financial advisor requires careful consideration. To offer transparency about our firm and help our clients be as informed as possible, we’ve developed a comprehensive list of important questions—and our own answers—to ask any potential financial firm.

Firm Structure & Objectivity

Q: What type of advisor is HFM? Is your firm independently owned? Is there any affiliation with a brokerage firm or insurance company?

Q: Is your firm “fee-only,” “fee-based,” or “commission-based”?

A: HFM is “fee-only,” and charges those fees based on assets under management (AUM). Our fees come from our clients and not from commissions, or outside vendors or companies. In the financial context, in a “fee-only” model, the advisor’s only compensation comes from client advisory fees, not commissions or investment trailer fees. “Fee-based” often refers to a hybrid model where an advisor charges a fee for advice but can also earn commissions from selling products, which creates a potential conflict of interest when selecting investments for the client. “Commission-based” is when the advisor receives revenue on the purchases and sales transactions of the investment products themselves.

Q: Does your firm receive compensation from product sales? What are all your sources of revenue?

Q: How are conflicts of interest managed?

Q: Is HFM a fiduciary?

Q: Can your firm provide me with its set of disclosure documents collectively known as the Form ADV?

People & Professional Qualifications

Q: Who manages the portfolios and what are their qualifications?

Q: Which advisor(s) will be assigned to my portfolio and my planning?

Q: How much experience does your team have?

Investment Philosophy & Process

Q: What types of investments are used (equities, ETFs, mutual funds, SMAs)?

Q: What is your investment philosophy and selection process?

Q: Does your firm use active or passive management strategies?

Q: How do you benchmark and evaluate portfolio performance?

Q: How are portfolios rebalanced and how often?

Q: How is tax efficiency handled?

Costs, Transparency, & Custody

Q: What are the all-in fees and typical portfolio management cost structure?

A: Fees are based on a percentage of AUM (assets under management) and the percentage decreases as asset levels increase. Discussed more completely in HFM’s Form ADV document, clients may incur other fees charged by third parties, including custodian fees, mutual fund expenses or trailer fees, and bank fees. Third parties charge brokerage and other transaction costs, but none of these fees are paid to HFM or its employees.

Q: Are there any product or fund-level fees associated with investing my portfolio?

Q: Do you receive revenue sharing or commissions?

Q: Do you use front-end or back-end loaded mutual fund share classes?

Q: How do you provide transparency in your work with me?

Financial Planning Approach

Q: Is financial planning included or separate?

Q: What is your planning process?

Q: What are your advisors’ specializations?

Q: Are there continuing education requirements for financial planning and portfolio and financial analysis credentials?

Q: Are referrals influenced by compensation or partnerships?