Questions to Ask When Hiring a Financial Advisor
Choosing the right financial advisor to manage your wealth is one of the most important decisions you will make. Much like a conductor leading a symphony, a skilled advisor can help coordinate multiple aspects of your financial life so they work together in harmony. To find the right person, it’s essential to ask thoughtful questions upfront. Here are 10 questions that can help you determine whether an advisor aligns with your goals and interests:
1. Do you operate as a fiduciary?
A fiduciary must act in your best interest. They recommend only what benefits you and maintain ongoing loyalty and duty of care. You may also ask whether they have any conflicts of interest to better understand their role.
2. How are you compensated?
Advisors typically fall into one of three categories:
- Fee-Only: Charges fees for planning and/or asset management. This may be a percentage of assets managed, an hourly rate, or a flat fee.
- Fee-Based: Earns compensation through commissions for selling products or placing trades.
- Commissions: Receives compensation in the form of a commission for selling products or placing trades.
Additionally, ask about your total or “all-in” cost for investment management services. This includes underlying investment fees such as mutual fund or exchange-traded fund expenses.
3. What services do you provide?
Some advisors focus solely on investment management, while others offer comprehensive planning that may include retirement, tax strategies, education funding, insurance, charitable giving, business succession, and estate planning.
4. What certifications and education do you have?
An advisor’s credentials and education reveal their expertise and specialties. The CERTIFIED FINANCIAL PLANNER® (CFP®) designation is considered the gold standard. It requires coursework, an exam, relevant experience, adherence to ethical standards, and ongoing continuing education.
5. Do you have any disclosures or disciplinary actions on your record?
This question helps uncover any history of regulatory or criminal misconduct. You can verify their response using FINRA’s BrokerCheck and the SEC’s Investment Adviser Public Disclosure site.
6. What is your specialty and typical client size?
Ensure the advisor’s focus matches your needs. For example, a business owner may prefer someone experienced with entrepreneurs and liquidity events.
7. What is your firm’s investment philosophy?
This will help you determine whether their approach aligns with your goals and values. Ask about their guiding principles, how they select investments, what might prompt changes, and how success is measured. You may also want to discuss potential tax impacts of their strategy.
8. Do you require a specific minimum investment?
Some advisors have minimum asset requirements, while others may waive them under certain circumstances.
9. How often do you meet and communicate with clients?
Communication styles vary. Some advisors prefer phone or email, while others encourage in-person meetings. Clarify whether you can reach out as needed or if they prefer scheduled check-ins.
10. Who is on your team and what resources do you provide?
Some advisors work independently, while others have support teams. Ask if you will interact with other team members and how they collaborate with professionals such as accountants and attorneys. Additional resources like technology tools and educational materials can also add value.
Choosing a financial advisor goes beyond their qualifications; it’s about finding someone who understands your goals and values and can guide you with transparency and trust. Asking these questions can help provide a clear picture of how an advisor operates, what services they provide, and whether they are the right fit for your financial journey. Making an informed choice today may help you build confidence and work toward your financial goals.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.
Laura K. Rhoades
Financial Advisor
CFP®