Financial Advisor Interview Questions
A financial advisor helps clients plan their short- and long-term financial goals. These goals can vary from saving up for retirement to planning to expand a business in a foreign country. Financial advisors can advise a variety of clients from individuals to large commercial enterprises.
A financial advisor will meet with their clients to understand their needs, develop plans to meet those needs, and advise their clients on the best ways to implement the plans. In addition, they will update their clients periodically on the performance of their investments and provide tax and insurance advice as well.
Financial advisor responsibilities may include:
- Securing new clients for their company
- Providing financial advice that is industry approved
- Recommending investment packages based on the needs of the client
- Helping clients develop financial plans dependent on their short- and long-term goals
- Preparing financial documents, investment reports, and income projections and communicating them clearly to the client
The role of a financial advisor is to act as a consultant, so they must be experts in their field. In order to effectively analyze client needs, stay on top of industry trends, and make the best recommendations possible, a skilled financial advisor will:
- Break down complex financial strategies in order to best explain them to clients
- Communicate clearly with clients about their short- and long-term goals
- Possess some level of salesmanship in order to convince clients
- Constantly maintain a professional demeanor since they are usually the face of the company
- Be proficient with data entry and organization in order to keep records of client portfolios
Because financial advisors largely act as consultants, it’s imperative that they are experts within their field. As a result, most financial advisors will possess at least a bachelor’s degree in a relevant field, and many go on to get an MBA. In addition, they must also pass the FINRA Series 7 and possess the 63 Securities Registration.
As the face of the company, financial advisors are one of the main points of communication between clients and the company. As such, 1-2 years of sales experience is also preferred.
If you’re getting ready to interview for a position as a financial advisor, you can prepare by researching the company as much as possible. Learn about the 9 things you should research before an interview.
The typical salary range for a financial advisor is $48K to $95K with the median being $68K.
Factors impacting the salary you receive as a financial advisor include:
- Degrees and certifications (bachelor's, master's)
- Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), or Chartered Financial Consultant (ChFC), etc.
- Years of experience
- Reports to (managerial responsibilities and direct reports such as senior executive, manager, team lead)
- Type of organization (commercial, private, independent)
FINANCIAL ADVISOR SAMPLE INTERVIEW QUESTIONS
Question: How does your experience with financial management qualify you for a financial advisor position with our firm?
Explanation: This is a general question that the interviewer is likely to ask early in the interview to gain an understanding of your experience and expertise in the financial planning industry. This is similar to the “tell me a little bit about yourself” question. You can use your standard elevator pitch to respond to this, or you can choose to cite some specific aspects of your experience to illustrate why you’re qualified and what skills you possess.
Example: “I have always enjoyed analyzing financial investment strategy and specific investment opportunities. I began investing while still in college and decided that I wanted to gain a much better understanding of the markets and strategies to take advantage of them. After finishing my formal education, I went on to become a Certified Financial Planner. During my career, I have worked with a wide variety of clients and created hundreds of individual financial plans. While not all of my clients have reached their financial goals, those who have followed my advice, remained flexible, and had a little bit of luck have been successful.”
Question: What other professionals or firms do you use to assist you in providing a comprehensive financial planning service to your clients?
Explanation: Financial advisors need additional resources to provide complete financial advice and planning services to their clients. An interviewer will ask you this question to understand what other affiliations you have and how you use outside resources. You can answer this in a general manner, but be prepared to provide specific names and contact information if the interviewer asks for it.
Example: “Providing financial advice to a client is a serious matter. To create a comprehensive financial plan, I utilize a team of professionals that I can reach out to for advice and services. These include attorneys, accountants, brokers, and other financial professionals. I maintain both formal and informal relationships that I can use when appropriate.”
Question: What investment firms do you use to help manage your client’s money?
Explanation: While financial advisors are qualified to create financial and investment plans, they are usually not licensed to execute trades or make investments. Therefore, they need to use external investment firms to accomplish this for their clients. Again, you should have existing relationships with some of the leading investment firms in the industry and be able to describe them.
Example: “I work with a number of leading investment firms in the industry. These include Vanguard, Fidelity, T. Rowe Price, and Schwab. These companies offer a wide array of investment options and low fees. However, if my client has a preference for another firm, I honor their wishes."
Question: What asset allocation guidelines do you recommend for your clients? What percent of equities (stocks, bonds, annuities, and real estate) would you allocate in a portfolio?
Explanation: This is a bit of a trick question because asset allocation is unique for each client and their situation. The interviewer is expecting you to state this, but they also want you to provide some examples of allocation percentages for each class of client. This will demonstrate your current knowledge of the options available and how they should be distributed in a client’s portfolio.
Example: “There is no ideal asset allocation percentage for all clients. Since each client’s situation is unique, I recommend allocations that will best suit their needs. Portfolios can contain several investment instruments, including stocks, bonds, real estate, cash, and other types of investments. For example, if the client was young, married, and owned his own home, I’d recommend an aggressive portfolio of stocks and high-yield bonds. However, if the client was nearing retirement, I would create a more conservative portfolio of bonds, REITs, cash, and perhaps an annuity.”
Question: What are the current economic risks you think will impact your clients' financial plans, and can you suggest some investment strategies that might alleviate these?
Explanation: This is an example of an operational question in which the interviewer is trying to determine your ability to function as a financial advisor and the depth of your knowledge about the field. The answer to this question will depend on the current financial climate and events occurring around the globe. A good answer to this question would be to identify several current economic risks and a financial strategy that would help mitigate them.
Example: “Some current economic risks that I’m keeping my eye on include the tension between China and the U.S., the rising price of energy, and the shortage of available housing here in the U.S. I’m currently advising my clients to maintain a diversified portfolio which includes stocks, bonds, and if possible, real estate investments. I’m moving my younger clients into slightly more conservative investments until the outcomes of these economic threats are clearer.”
Question: Is your planning strategy based on constant returns and low inflation, or does it include the effects of variable returns and a higher rate of inflation?
Explanation: This is a technical question which seeks to gain more information about the specific strategies you use when offering financial advice. Again, there is no right or wrong answer to this question as long as you can justify and support your answer. Answering this question is as simple as stating the strategy you currently use and why you feel this is appropriate.
Example: “Currently, I’m not that concerned about high rates of inflation, but I do prefer utilizing variable rates of return. The reason for this is that inflation has been stable around 2.5 percent over the last five years. However, there is a great deal of volatility in the financial markets, and rates of return on various investment instruments change frequently. While I don’t recommend my clients chase returns, I do keep a close eye on the markets and update my clients' portfolio recommendations accordingly.”
Question: Since a financial advisor has to interact with clients regularly, how do you prefer to communicate with your clients?
Explanation: The interviewer is seeking to understand your interpersonal relationship skills which are separate from your financial planning and advising talents. The reason for this is that clients will choose to work with advisors they like who also provide sound financial planning advice. You should be able to describe your communication style and how effective you are at interacting with your clients.
Example: “Interacting with my clients is one of my favorite parts of this job. I enjoy communicating with them and having a dialogue about their needs and how I can assist them. I prefer to do it face to face, but I recognize that isn’t always convenient. I’ve become very adept at using e-mail and texts to contact my clients when necessary. However, I recognize that my elderly clients may be uncomfortable with newer technology, so with them, I defer to phone calls if I can’t meet with them in person.”
Question: If I were a prospective client, how would you convince me to hire you to be my financial advisor?
Explanation: An interviewer will ask you this question to understand how you present yourself to clients and your ability to sell both yourself and the firm to the client. This is an important skill for all financial advisors to have since clients first choose the person then the firm. Naturally, they are also interested in your approach to providing financial advice, investments you recommend, and your fee structure. Each of these elements should be part of your answer in response to this question.
Example: “Selling myself to my clients is an important aspect of my job since, without clients, I wouldn’t have a job. I found the easiest way to do this is the first seek to understand their financial needs, communication styles, and what aspects of our relationship are the most important to them. I take my time to explain my approach to financial planning, the investment strategies I prefer, and other key factors of our future relationship. I try to save discussing my fee structure until the end of the conversation so that they are almost completely sold by the time we address this topic. My closure rate with client prospects has been well above 90%.
Question: What experience do you have with financial planning software, and how does this align with the technical requirements we're looking for in a financial advisor?
Explanation: This is another technical question in which the interviewer is seeking to understand your skills with programs and other tools used in the financial planning industry. You should be able to answer those straightforwardly, stating which tools you can use and your proficiency in using them.
Example: “Financial advisors have always had a variety of tools available to them. However, since the growth in the use of computers, technology, and software has occurred, these tools have grown exponentially. Additionally, everything moves more quickly these days, so being proficient in these tools is extremely important. I spend a lot of time developing my skills in this area and staying abreast of new developments in the industry. Tools I currently use include MoneyGuidePro, eMoney Advisor, RightCapital, and NaviPlan. Of course, I also use things like Excel, Quicken, and Google Office Suite.”
Question: Can you describe an incident in your career in which you handled a difficult situation involving one of your clients?
Explanation: This is a behavioral question that addresses the soft-skills aspect of the financial advisor’s position. Finances are among the most sensitive subjects to manage, so it is a common occurrence fora financial advisor to have to deal with an unsatisfied client. Behavioral questions are best answered using the STAR framework. This stands for Situation, Task, Action, and Results. Using this framework, you can walk the interviewer through your response in a logical manner.
Example: “Unfortunately, dissatisfied clients are part of this job. While I try to accurately appraise clients of the financial results they can expect from the plans I create, many people have unrealistic expectations. In a previous job, I had a client who was achieving above-market returns from their portfolio. However, some of their friends bragged about the exceptional returns they were gaining from high-risk investments. My job was to educate my client about this and recommend they follow the course I had plotted for them. I collected information about the high-risk investment vehicles their friends had chosen and showed them the average returns for these instruments over 10 years. Once they were aware of the accurate picture for these investments, they agreed that their current plan was best suited for their needs, and they continued to utilize my services.”
ADDITIONAL FINANCIAL ADVISOR QUESTIONS:
How do you plan on making the necessary contacts every day to be successful?
If I gave you a million dollars, how would you invest it?
What are your preferred wealth-management strategies?
What is the biggest financial decision you ever had to make?
What would your client business model look like?
Do you specialize in a specific stock option?