The Questions a Trustworthy Advisor Welcomes
By Daniel Baumgartner & Petra Peters
Choosing an investment advisor is one of the few decisions where the buyer often feels rude asking the price, and ruder still asking who else is being paid. In our experience, many careful people keep their questions to themselves, worried about seeming uninformed or about offending someone they may soon rely on to manage their investments.
From our perspective, those questions are welcome, because the answers are written down before you walk in: in the firm’s Form ADV, its client relationship summary (known as Form CRS), and the advisory agreement. The SEC’s Investor.gov/CRS page explains what these documents cover and offers a free tool for looking up any firm.
Here are the questions, each paired with the answer an advisory firm should be ready to give, including our own.
What Do You Do, and What Do You Not Do?
The first question establishes the firm’s specific scope of services. Scope varies from firm to firm, which is why the question is worth asking. Listen for named activities in the answer; a firm that names its limits is easier to evaluate.
Our answer comes from our Form CRS. Terra Nova offers “only investment advisory services to individuals and families,” with a particular focus on “high net worth families, their entities, and trusts,” and “we do restrict our advice to limited types of investments.” Our work is portfolio construction and asset management across U.S. and European markets. We don't prepare tax returns or draft estate documents. When those issues have portfolio implications, we work alongside a client's attorney and tax professionals.
How Are You Paid, and by Whom?
The answer is in the firm’s disclosure documents and client agreement, so asking to see it in writing is ordinary diligence. Listen for whether the fee is based on account value or on commissions, how the firm’s professionals are paid, and what the custodian charges separately.
Here is ours, in the words of our Form CRS. Our advisory fee is “an annual percentage of the value of your account,” paid “quarterly, in arrears” (after the quarter ends) on the account’s quarter-end value, and “fees apply in any case and are unrelated to market movements in either direction.”
Terra Nova is an investment advisor earning fees and is not a broker-dealer earning commission, and our financial professionals are compensated from the advisory fees the firm receives. Additional account expenses depend on the financial institution where the account is held, and we don’t have or sell proprietary products.
Because we act as your investment advisor, our Form CRS states that we must act solely in your interest and not put our interest ahead of yours. The same document describes the conflicts of interest we disclose, including soft-dollar arrangements, in which brokerage firms credit a portion of trading commissions toward research, and the incentive any asset-based fee creates to encourage a larger account.
Where Are My Assets Held, and How Are Decisions Made?
This question clarifies whether the advisor holds your actual funds or uses an independent third-party custodian.
We don’t hold client assets. As a client of Terra Nova, an account can be opened at Fidelity since the vetting process has been completed through Terra Nova, and the financial institution you decide to work with is your choice. The custodian provides the account, login credentials, and cash access, while we direct investments strictly under written authority. Families living on one side of the Atlantic can ask which custodians can hold an account for a resident of the other country.
Investment decisions are discretionary and made in-house within written investment objectives covering goals, risk tolerance, and time horizon. Both the client and the firm sign those objectives.
The client can change them at any time, they are reviewed on a regular basis, and we monitor client investments daily. Expect to hear what you own and why in plain language, at whatever level of detail you want, and that applies to both spouses.
It’s also reasonable to ask whether the firm or an outside manager manages the underlying investments, and how rebalancing is decided. For families spending in more than one currency, we consider the currencies in which clients expect to spend as one factor in portfolio construction and liquidity planning.
What Happens if I Need Time?
Patience is a credential you can gauge in a first meeting. Notice how an advisor responds when you’d like to think it over, bring your spouse to the next conversation, or wait a season. Also, note an advisor who mentions, unasked, that many investment decisions can wait.
For readers arriving here after losing a spouse, investment changes aren’t made simply because a spouse has died. The drivers are investment objectives, cash flow needs, risk tolerance, and time horizon.
Why We Welcome These Questions
Terra Nova Asset Management is an independent, partner-owned investment advisory firm serving U.S. and European clients since 1998.
Where an answer is written down, we give it in writing. We explain the portfolio so either spouse can follow it, and when legal or tax issues have portfolio implications, we work alongside our clients’ attorneys and tax professionals.
In our experience, an advisor whose answers are already written down has no reason to object to the question. Clear answers and patience are two credentials a first conversation can verify, and we’d be glad to have that conversation with you.
Daniel Baumgartner can be reached at our Sparta, New Jersey office at (855) 248-6630 or baumgartner@terranovausa.com. Petra Peters is in New York at (212) 355-1234 or ppeters@terranovausa.com.
You may also contact us here to schedule a meeting and we’ll get in touch with you soon.
Frequently Asked Questions
What questions should I ask an investment advisor before hiring one?
Start with five:
- Scope: what the firm does and does not do
- Pay: how it is paid, and by whom
- Duty: what it owes you within the advisory relationship
- Custody and decisions: where assets are held and who decides
- Time: how it responds when you want to wait
A first meeting should cover all five.
How do I know if an investment advisor is a fiduciary?
Ask where the duty is written. An SEC-registered investment advisor describes its standard of conduct in its Form CRS, and the advisory agreement sets out the relationship itself. You can look up a firm’s registration, relationship summary, and disciplinary history free at Investor.gov. The advisor should also be able to explain how the relationship works in practice.
Is it rude to ask a financial advisor how much they charge?
No. An advisory firm should expect the question, because the answer already appears in its disclosure documents and client agreement. An answer covers:
- How the fee is calculated, such as a percentage of account value
- When it is charged, such as quarterly
- What the custodian charges separately
Asking to see it in writing is ordinary diligence.
Do you work with German-speaking and European investors?
Yes. Terra Nova Asset Management manages portfolios for U.S. and European clients, including German-speaking investors. Our experience in both U.S. and European markets is particularly relevant for clients whose assets, spending needs, or family circumstances span jurisdictions.
About Daniel
Daniel Baumgartner is a founding partner of Terra Nova Asset Management LLC. Drawing on his background in finance and international business from NYU, he manages personalized investment portfolios and builds long-term client relationships focused on disciplined investment management and individual objectives.
About Petra
Petra Peters, founding partner and CEO of Terra Nova Asset Management LLC, has decades of international banking and asset management experience. With deep experience in U.S. and European markets, she designs and manages specialized portfolios for private and institutional clients.