What to Ask Before Taking Investment Advice

Before you act on investment advice from anyone, ask four things: who they are and whether they are registered, what it costs you, what could go wrong, and whether they earn more if you say yes. Most bad outcomes trace back to skipping one of those questions. This guide gives you the exact questions to ask, the red flags that should end the conversation, and how to verify an adviser in a few minutes. If you are new to booking experts, start with how to get expert advice online and come back here before you book anyone who talks about your money.

This article is general information, not investment advice. It will not tell you what to buy. It will help you judge the person who does.

Check who is giving the advice

In the US, people who give investment advice for a fee generally need to be registered, either with the Securities and Exchange Commission or with their state securities regulator. People who buy and sell securities for you need to be licensed through FINRA. A consultant who explains how index funds work in general terms is in a different category from one who tells you which fund to buy. Know which one you are talking to.

Ask directly:

• "Are you registered as an investment adviser, and with whom?"
• "What licenses or credentials do you hold?"
• "Is this a general educational session, or are you recommending specific investments?"

If the answer to the first question is no and the answer to the third is "specific investments," stop. A confident tone and a polished profile are not credentials. On ConsultChat, reviews come only from completed, paid sessions, which helps, but a review cannot verify a license. The last section shows how to do that yourself.

Questions about fees

Fees compound just like returns, and a one percent difference each year adds up to a large share of your balance over 20 years. Ask:

1. "How are you paid? Flat fee, hourly, a percentage of assets, commission, or some mix?"
2. "Will you earn anything from the specific products you recommend?"
3. "What are the total costs of this investment, including fund expenses, trading costs and any sales charges?"
4. "Are there fees to get out, and how long do they last?"
5. "Can you show me the fee disclosure in writing?"

A consultation on ConsultChat is a flat fee for a block of time, nothing else. Managing your money is a separate agreement with its own fee schedule; read it before signing.

Questions about risk

Everyone is comfortable with risk until they lose money. Make the adviser be specific:

• "In a bad year, how much could this drop? Give me a number, not an adjective."
• "What has to be true for this to work out, and what would make it fail?"
• "How does this fit with what I already own?" Buying more of what you already have is not diversification.
• "When would I need this money, and does that change the answer?"
• "What is the worst case, and could I live with it?"

A worked example: a reader was told a product was "low risk with strong returns." When he asked for the largest drop in the last fifteen years, the adviser could not answer. He asked for the written prospectus instead, found the figure himself, and decided it was not low risk by his definition. The question took thirty seconds, not a finance degree.

Questions about conflicts of interest

A conflict does not make someone dishonest, but you should know it exists:

• "Are you a fiduciary for this advice, meaning you are required to act in my best interest? Will you put that in writing?"
• "Does your firm or anyone connected to you make money if I buy this?"
• "Would you recommend the same thing to a family member with my situation?"
• "What would you recommend if I could not buy anything from you?"

The last question is often the most revealing. A good adviser will have an answer that sounds like a plan. A salesperson will steer back to the product.

Red flags in investment offers

End the conversation if you hear any of these:

• Guaranteed returns, or "no risk." Nothing with a meaningful return is risk-free.
• Pressure to decide now, limited spots, a closing window.
• Requests to send money outside a regulated platform: wire transfers to a personal account, cryptocurrency to a wallet address, gift cards.
• Secrecy: "don't tell your bank why you're moving the money," or advice to keep it from your spouse.
• Vague explanations of how the return is generated.
• Unsolicited contact by message, social media or a dating app that drifts to investing.
• Claims of special access to deals ordinary people cannot get.

If you have already sent money to someone who fits this pattern, report it to the SEC and your state regulator, and stop sending more even if they promise to release your funds after one more fee. Our guide to avoiding online consultation scams covers how these approaches look on any platform.

How to verify an adviser

This takes five to ten minutes and should happen before you pay for anything beyond a general session:

1. Search the SEC's Investment Adviser Public Disclosure database for the person and the firm. It shows registration status, fees, services and any disciplinary history.
2. Search FINRA BrokerCheck for anyone who buys or sells investments. It shows licenses, employment history and complaints.
3. Check your state securities regulator, which handles smaller advisers that register at state level.
4. Match the name exactly. Scammers sometimes borrow the name of a real registered adviser. Confirm the phone number and firm details match what the database shows, not what the person told you.
5. Read the firm's disclosure document if they are an adviser. It is dull and it is where the conflicts are written down.

Treat any investment advice you receive, online or in person, as a claim to be checked rather than an instruction to follow. If you want to talk through your questions with someone before you commit to an adviser, you can book a session on ConsultChat for a flat fee, with payment held by the platform until the session is delivered. Before booking, read our list of questions to ask before booking a consultant, then add the ones in this article. The person giving you investment advice should be happy to answer every one of them.