Challenge yourself and your broker to determine if you’re on the right path. And with the right person.
10 questions every investor should ask
−+1. What are my broker’s recommendations based on?
Do you ask for the rationale behind the investment decisions involving your portfolio? Does your broker offer any explanation? Do you ever wonder if your broker’s recommendations are really the right ones for you?
- Our recommendations are based on your individual needs after discussing a variety of factors, such as your goals, risk tolerance, time horizon, etc., and researching options you may want to consider based on your needs.
- Our investment professionals are happy to explain the rationale behind the recommendations they make and why they feel a particular option may be right for you.
- You can view our experts’ research and insights online at Schwab.com under the “Insights” tab, including:
- Commentary—updates on the market and investing trends that matter
- Investing Ideas—insights on market trends and investing opportunities you can act on now
VP, Sr. Financial Consultant, AAMS®
−+2. What are all the fees and commissions I’m paying, and how do they impact my returns?
Have you educated yourself in the fees and commissions associated with your investments? Do you understand all the fees and commissions you’re paying, as well as how they might be impacting your returns?
- Review the Charles Schwab Pricing Guide on Schwab.com, which contains information concerning certain fees applicable to brokerage accounts.
VP, Sr. Financial Consultant
Seal Beach, CA
−+3. Does my broker encourage me to be actively involved in my investment strategy?
Whether you prefer to provide less input or a lot, ultimately do you feel like you are encouraged by your broker to determine how much of a role you play in the development of your investment strategy?
- We want Schwab to be a place where your questions are welcomed and encouraged and where you can be engaged and involved with your investments.
- It is important to discuss with your investment professional your preferences around the level of involvement in your investments.
- At Schwab, we offer a wide range of options for you to connect with us via the communication channel of your choice, including face-to-face discussions, phone conversations, and online chat.
−+4. Do I understand how my broker is compensated?
Does my broker discuss his or her compensation with me? You probably wouldn’t blindly write a check to a contractor without understanding exactly what you’re paying for. So why would you allow yourself to accept such a relationship with your broker?
- It is important to understand how your investment professional is paid because of the impact it can have on your returns and the recommendations you receive. For example, recurring trading in a commission-based account could impact your returns.
- At Schwab, we strive to be straightforward about how our investment professionals are compensated.
- You should always feel comfortable talking to your investment professional about his or her compensation, and you can also see this information online at Schwab.com “Compensation and Advice Disclosure.”
- You can also speak to other people at Schwab, such as your local Branch Manager, about this topic.
−+5. Do I feel completely comfortable discussing my personal situation with my broker?
Does your broker routinely take the time to understand your specific life situation and any changes you may have experienced of late? How comfortable do you feel updating your broker and revisiting your investments when your personal situation or goals change?
- You should feel comfortable talking to your investment professional if your personal situation changes because it may have an impact on your progress toward achieving your goals.
- At Schwab, we want you to have a choice of which investment professional you work with, and if your current relationship is not the right fit, we can work with you to find one that may be a better fit for your needs.
- Confirm with your investment professional that all of your personal information is current and updated regularly.
- You can also ask your investment professional about developing a plan, if you don’t already have one that takes into account your personal situation.
- Schwab can help by reviewing your current holdings, goals, and risk tolerance and, when appropriate, by making specific investment recommendations when your situation or goals change.
−+6. Am I offered a wide range of investment products?
When discussing investment opportunities with your broker, do you talk about options from various companies, or does it seem as if you’re often discussing only proprietary products from your broker’s firm? Does your broker welcome questions about certain products you’ve read or heard about?
- At Schwab, we offer a broad range of investment options to meet your needs from leading asset managers across the industry as well as our own array of proprietary products.
- You can speak to your investment professional for more information and/or view information online at Schwab.com under the “Accounts & Products” tab.
- Even when you have a broker who may be making recommendations, it’s important that you remain engaged and fully understand the decisions that influence your investing outcomes, such as by asking questions about products and what is available to you.
−+7. Is my broker part of a larger team of investment professionals at the firm where other people can help me?
Do you have a team of professionals behind you or just one person? Can you speak to a specialist in fixed income, global investing, or financial planning when you need to?
- At Schwab, our investment professionals are supported by the research and insights of our own experts and industry professionals, and they have the opportunity to regularly engage with our experts.
- In addition, a wide range of specialists are available to speak directly with clients, and your investment professional can help direct you to the appropriate specialist.
- In addition to our investment professionals and specialists, you can always reach a licensed representative 24/7 via phone or online chat.
- You can also access our research and insights online at Schwab.com under the “Insights” tab.
Michelle J. Bartel
VP, Sr. Financial Consultant
Walnut Creek, CA
−+8. Do I understand the progress I’m making toward my goals?
Do you have tools at your disposal to clearly track your progress toward your goals? What benchmarks and measures are you and your broker using? This should be simple and transparent, not confusing and complicated.
- For many investors, it is important to have a long-term plan and track it over time to make sure you understand how you are making progress toward your goals (such as retirement).
- Confirm with your Financial Consultant that you have an up-to-date plan in place and discuss your preferences for how you want to review your progress over time.
- Schwab uses industry-standard benchmarks that are appropriate for the type of investments in your account(s).
- Clients can access performance-reporting tools, such as the Quarterly Portfolio Profile and Gain/Loss Report, online at Schwab.com at the “Portfolio Performance” tab under “Accounts.”
−+9. Do I get the level of attention I want from my broker?
Do you feel like you’re getting the attention you require or just what your broker has allotted to you? When going over your portfolio with your broker, do you feel like you’re having a meaningful discussion about your portfolio or do you feel like just another appointment on the calendar?
- You should feel comfortable discussing with your investment professional your needs and preferences so that you can help shape the relationship that is right for you.
- At Schwab, the philosophy that we live by every day is “through clients’ eyes,” which means that we strive to treat you the way we want to be treated, and we want every client to feel valued.
- We also offer many options for those who prefer not to work with an investment professional, such as the resources and tools available on Schwab.com.
−+10. Does my broker discuss the risks in my investment portfolio?
All investors need to understand the various risks in their investment portfolio and their tolerance level for those risks. How much, and how often, do you discuss these risks with your broker? Is your broker proactive about communicating possible risks as things change in the markets, in the economy, or in your personal situation?
- It is important to discuss the risks in your investment portfolio with your investment professional to ensure you understand them and that they are appropriate for your financial goals.
- It is also important to have an up-to-date plan in place that takes into account things such as changes in your personal situation, changes in your goals or risk tolerance, etc.
- Ask your Financial Consultant about developing a plan if you don’t already have one and discuss your communication preferences with him or her.