What Questions Should You Ask Your Investment Manager?

The most important questions to ask an investment manager fall into seven areas: fiduciary status, compensation, process, performance, risk, custody, and service. Begin with the one question that sorts the field fastest: "Will you act as a fiduciary for me, on all my accounts, at all times, and confirm it in writing?" From there, ask how they are paid and by whom, how they make investment decisions, how they want their performance judged, how they manage risk and downside, who holds your money, and who will actually serve you. Good answers are specific, written where it counts, and verifiable in public filings. Vague, defensive, or pressured answers are themselves an answer. Use these questions whether you are hiring a new manager or evaluating the one you already have.

Why do these questions matter so much?

Choosing or keeping an investment manager is one of the higher-stakes financial decisions you make, and the sales meeting is designed to be reassuring. Structured questions cut through presentation to the things that actually drive your outcome and protect your money: the standard of care, the incentives, the discipline of the process, and the safety of your assets. The questions below are organized by theme. You will not need every one in every meeting, but the themes are the ones that matter. For the framework behind them, see how to choose an investment manager.

Fiduciary and standard of care

Start here, because the answer governs everything else.

• Will you act as a fiduciary for me, on all of my accounts, at all times, in writing?
• Are you a registered investment adviser, a broker-dealer, or both?
• Are there any situations in which you are not acting as my fiduciary?

A fiduciary owes you duties of care and loyalty on an ongoing basis; a broker may be held only to the narrower Regulation Best Interest at the point of a recommendation. A firm that cannot confirm fiduciary status without qualification is telling you something. We explain the distinction in what is a fiduciary.

Compensation and conflicts

How someone is paid shapes the advice they give.

• How exactly are you paid, and what is my all-in annual cost as a percentage?
• Does anyone other than me ever compensate you in connection with my account?
• Do you earn anything from the specific investments you recommend, including proprietary funds, commissions, or revenue sharing?
• How do you handle the conflicts that remain?

You want the total cost, not just the headline fee, and you want to know whether the manager is paid to sell rather than to advise. The cleanest answer is that the manager is paid only by you and earns nothing from product selection; see fee-only vs. commission-based advisors.

Investment process

This is where you learn whether there is real discipline behind the returns.

• How do you make investment decisions, step by step?
• What is your philosophy, and what evidence supports it?
• When and why do you sell a position?
• How is my portfolio expected to behave in a sharp downturn?
• How is my portfolio tailored to my goals and tax situation, rather than a standard model?

A manager who can articulate a clear, repeatable, evidence-based process is more likely to deliver results you can understand and stay invested in. Improvisation dressed up as judgment is a warning sign.

Performance and benchmarks

Ask how to judge them, on their own terms, fairly.

• What benchmark should I use to evaluate you, and why is it the right one?
• May I see performance over a full market cycle, including a downturn, net of all fees?
• How should I think about your results on a risk-adjusted basis?
• When your strategy underperforms, what is usually the reason?

Beating a rising market is not skill if it came from taking more risk. A confident manager will welcome being measured against an appropriate benchmark over a meaningful period and will explain when and why their approach lags.

Risk management

Returns get the attention; risk determines whether you stay the course.

• How do you measure and control risk in my portfolio?
• What is the largest decline I should be prepared to see, and over what period?
• How concentrated can the portfolio become, and how do you manage liquidity?

You are looking for a manager who thinks seriously about downside, position sizing, and liquidity, not only about upside.

Custody and safety

This protects you from the worst outcomes.

• Who is the qualified custodian, and will I receive statements directly from them?
• Will my assets be held in my name, separate from your firm?
• Has the firm or any of its people faced disciplinary or regulatory action?

Your assets should sit at an independent qualified custodian such as Schwab, Fidelity, or Pershing, in your name, with independent statements. A manager who also takes custody of your money is a serious red flag. Verify disciplinary history at adviserinfo.sec.gov and brokercheck.finra.org. See how your assets are protected.

Service and the relationship

Finally, understand what the relationship will actually feel like.

• Who will manage my portfolio and be my point of contact, and how many clients do they serve?
• How often will we meet, and how will you communicate during volatile markets?
• What reporting will I receive, and how transparent is it?
• What happens to my account if my lead contact leaves the firm?

A professional serving too many relationships cannot give yours much attention. Clear reporting and a defined communication plan, especially for difficult markets, separate a real relationship from a sales transaction.

A worked example: how answers reveal the firm

The following is a hypothetical illustration. A prospective client asks two firms the same three questions: are you a fiduciary at all times in writing; what is my all-in cost; and who holds my money.

Firm A answers yes in writing, states an all-in cost of about 0.70% including low-cost underlying funds, and confirms assets are held in the client's name at an independent custodian with statements sent directly. Firm B says it acts in the client's best interest but will not put "at all times" in writing, quotes a 1% fee while declining to total the underlying product costs, and is vague about custody. The questions took five minutes and produced a clear ranking before any discussion of performance. The example is hypothetical, but it shows how a short, structured set of questions does most of the work of due diligence.

The questions at a glance

Frequently asked questions

What is the single most important question to ask an investment manager?Whether they will act as a fiduciary for you, on all accounts, at all times, and confirm it in writing. The answer quickly separates advisers held to a continuous fiduciary duty from salespeople held to a narrower standard.

What questions reveal hidden costs?Ask for your all-in annual cost as a percentage, including underlying fund expenses and any commissions or revenue sharing, and ask whether anyone other than you compensates the manager. Totaling these exposes costs the headline fee hides.

How can I tell if a manager has a real process?Ask them to walk through, step by step, how they decide what to buy, how they size it, and when they sell, and how the portfolio should behave in a downturn. A clear, repeatable, evidence-based answer signals discipline; vagueness signals improvisation.

What should I ask about the safety of my money?Ask who the qualified custodian is, whether assets are held in your name, whether statements come directly from the custodian, and whether the firm has any disciplinary history. Independent custody is the basic protection against fraud.

Should I ask these questions of my current manager too?Yes. The same questions work as a periodic review. If your current manager cannot answer them clearly, or the answers have changed, that is useful information about whether to stay.