How to Choose a Financial Advisor: Questions to Ask

Choosing a financial advisor is a big decision. You're trusting someone with your financial future, so it's important to find the right fit. Here are the key questions you should ask before hiring an advisor.

1. Are You a Fiduciary?

This is the most important question. A fiduciary is legally required to act in your best interest at all times. Not all financial advisors are fiduciaries—some operate under a lower "suitability" standard, which only requires them to recommend products that are suitable for you, even if better options exist.

Look for an advisor who will put it in writing that they're a fiduciary 100% of the time.

2. How Are You Compensated?

Understanding how an advisor gets paid is crucial because it reveals potential conflicts of interest. There are three main compensation models:

Fee-Only

The advisor charges a transparent fee (usually a percentage of assets under management or a flat fee). They don't receive commissions from selling products. This model tends to have the fewest conflicts of interest.

Commission-Based

The advisor earns commissions by selling financial products (insurance, mutual funds, annuities). This creates an incentive to recommend products that pay higher commissions, which may not always be in your best interest.

Fee-Based

A hybrid model where the advisor charges fees but can also earn commissions. This can create mixed incentives.

Ask the advisor to clearly explain how they're paid and whether they receive any compensation from third parties.

3. What Services Do You Provide?

Some advisors only manage investments. Others offer comprehensive financial planning including retirement planning, tax strategies, estate planning coordination, and insurance analysis.

Make sure the advisor's services align with your needs. If you need help with a 401(k) rollover, tax planning, or estate planning, confirm they can help with those areas.

4. What Are Your Credentials?

Anyone can call themselves a "financial advisor," but credentials matter. Look for:

• CFP (Certified Financial Planner) - The gold standard for comprehensive financial planning

• CFA (Chartered Financial Analyst) - Strong investment expertise

• Series 65 or 66 - Required for investment advisors

• CPA/PFS (Personal Financial Specialist) - Tax and planning expertise

While credentials aren't everything, they demonstrate a commitment to professional education and ethical standards.

5. Who is Your Typical Client?

You want an advisor who regularly works with people in your situation. If you're a young professional just starting to save, an advisor who specializes in retirees with $2 million portfolios might not be the best fit.

Ask about their typical client profile: age range, income level, net worth, and common goals. The closer you are to their ideal client, the better they'll be able to serve you.

6. Do You Have a Minimum Account Size?

Many advisors require minimum account sizes—often $250,000, $500,000, or even $1 million. If you're just starting out, this can be a barrier to getting professional advice.

Ask upfront about minimums so you don't waste time if you don't meet their threshold. Some advisors (like myself) don't have minimums because we believe everyone deserves access to quality financial advice.

7. What is Your Investment Philosophy?

Every advisor has a different approach to investing. Some are active traders trying to beat the market. Others prefer passive index investing. Some focus on individual stocks; others use mutual funds or ETFs.

Ask the advisor to explain their investment philosophy in plain English. Do they believe in market timing or long-term buy-and-hold? Do they focus on domestic or international investments? Make sure their approach aligns with your beliefs and comfort level.

8. How Often Will We Meet?

Some advisors meet with clients annually. Others meet quarterly or even monthly. Think about how much communication you want and make sure the advisor's style matches your preferences.

Also ask: How accessible are you between meetings? Can I call or email with questions? Do you respond within 24-48 hours?

9. Can I See a Sample Financial Plan?

A good advisor should be able to show you (with identifying information removed) what a financial plan looks like. This helps you understand what you're paying for and whether their planning process is thorough.

10. Can You Provide References?

While not all advisors can provide client references due to privacy concerns, it doesn't hurt to ask. At a minimum, you should check their regulatory record on FINRA's BrokerCheck or the SEC's Investment Adviser Public Disclosure website to see if they have any disciplinary actions or complaints.

Red Flags to Watch For

• Guaranteed returns or claims of beating the market consistently

• Pressure to make quick decisions

• Vague or evasive answers about fees and compensation

• Pushing specific products without understanding your situation

• Not asking detailed questions about your goals and circumstances

Trust Your Gut

Beyond the technical questions, pay attention to how you feel. Do you trust this person? Do they listen to you? Do they explain things in a way you understand? A good advisor-client relationship is built on trust, communication, and mutual respect.

Looking for a financial advisor who works as a fiduciary, charges transparent fees, and doesn't have account minimums? That's exactly how I built my practice. Let's schedule a free consultation to see if we're a good fit.

Disclaimer: This article is for educational purposes only and should not be considered investment advice. Please do your own due diligence when selecting a financial advisor.