10 Questions To Ask When Choosing A Financial Advisor (2022)

When people think of their money and how it is managed, they often zoom in on one metric — how well their investments performed compared to the broader market.

But a new survey reveals that another big factor determines whether someone is satisfied with his or her investment firm: the financial advisor.

“The study finds that there are two elements beyond investment performance separating firms with high satisfaction from those with low satisfaction: the person that investors credit for their investment performance and the relationship investors have with their advisor,” said Craig Martin, director of investment services at J.D. Power & Associates, which conducted the study.

When it comes to our money, how well our investments do is out of our control — as they say, past performance is not an indicator of future results. But, who we choose to manage our money is.

For that reason, you’ll want to search and vet all candidates carefully. Here’s how to find an advisor who is a good fit for your money needs.

Gallery: 10 Questions To Ask A Financial Advisor

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(Video) Questions You Should Ask Before Choosing a Financial Advisor - Question 10

How to Find the Right Candidates

Start by asking friends and family for referrals, says Minneapolis-based certified financial planner Sophia Bera and, in particular, get recommendations from people whose financial needs, outlook or stage of life is similar to yours. Before contacting planners, look them up online and on LinkedIn to get a sense of what each firm is like. Something as simple as the photos on their homepages can indicate which ones are targeting your demographic.

Also, search for a planner directly on the sites of the Financial Planning Association and the National Association of Personal Financial Advisors. The advisors on the latter organization’s site are fee-only, meaning they will not earn commissions for selling you specific investments but simply charge you a rate, usually based on the assets you put under management. Many experts say that a fee-only advisor is preferable, to eliminate conflicts of interest and ensure he or she always acts with your best interest at heart.

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(Video) Top 10 questions to ask your financial advisor

But there is one case when you may not want a fee-only advisor, says Bera — and that’s if you want him or her to also help you with annuities, life insurance or disability insurance — basically, other investment vehicles besides stocks, bonds, mutual funds, etc. If so, look for a firm that has a broker-dealer. “They’ll get a commission [for selling you those products],” says Bera, “but some people want a firm that has a broker-dealer so they don’t have to go to someone else for disability or life.”

Once you’ve gotten a list of potential advisors, take one more step before setting up appointments to meet: Find out whether each has ever been disciplined for any unlawful or unethical behavior. You can do this using the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck. You can also look the advisors up on the CFP Board’s site, to verify that they each have CFP certification status.

When you have your initial interview, here are the questions you want to ask:

1. How do you charge for your services, and how much?

If you didn’t see this information on the planner’s web site, ask whether there’s an initial planning fee, whether they charge a percentage for assets under management, or whether they make money from selling you a specific product. Not only should you know how much the service will cost you, but it can help you determine whether they have an incentive to sell you things.

2. What licenses, credentials or other certifications do you have?

Of the four main types of financial advisors, the certified financial planner (CFP) designation is harder to achieve than Chartered Financial Consultant (ChFC), because the former requires a comprehensive board exam; the latter, however uses the same core curriculum. If you want someone to manage your money, then look for a registered investment advisor (RIA). If you have a high income or a small business owner, you’ll probably want a certified public account (CPA), who can offer you advance tax planning. The personal financial specialist (PSF) certification is usually obtained by CPAs who want to demonstrate they can help clients with comprehensive financial planning.

3. What services do you/does your firm provide?

(Video) Questions to Ask Your Financial Advisor

Implicit in this question is also what assistance the advisor will not give you. “Some people are just investment advisors and only provide you advice on your investments,” says Bera. “Other people do comprehensive financial planning around retirement, insurance, estate planning and tax planning.” Go with someone whose offerings suit your needs.

4. What types of clients do you specialize in?

Some financial advisors have a niche, says Bera, and if you have a specific interest — such as charitable giving or socially responsible investments or if you’re a newlywed or recently divorced — you’ll want to find one that concentrates in that area too.

Edward A. Wacks, a CPA and CFP affiliated with Ameriprise Financial , says, “Most advisors tend to focus on people within 10 years of their age.” He for instance, focuses on soon-to-be retirees because he’s 61, and business owners because he has his own business. “I feel we have some commonality, and I understand their issues,” he says.

5. Could I see a sample financial plan?

There is no one set structure for a financial plan, which means there is wide variation. “Some people might give you 50 pages of stuff you don’t understand like charts and graphs, and another planner might provide a five-page snapshot of your financial situation,” says Bera. “With a sample, you can say, ‘I really want that in-depth analysis,’ or ‘I don’t understand that.’”

6. What is your investment approach?

If you have a strong preference for a particular philosophy, ask the advisor what his or hers is. For instance, if you prefer to use low-cost funds, you can ask whether they plan to used actively managed funds or passive investments. Wacks gives an example of the kinds of differences in investment philosophy that can arise: “I say to the client, ‘I’m not here to make you a lot of money. If you want someone to do that, and trade stocks back and forth, then I’m not the person. If you’re looking for someone who makes investments consistent with your risk tolerance and goals, then I can help you.’”

(Video) Top 10 Questions to Ask Your Financial Advisor

7. How much contact do you have with your clients?

“Some of planners hold an initial planning meeting and then you see them once a year, and that’s all you get,” says Bera. Others might have quarterly check-ins. “Some clients just want to go over everything once a year and then they’re good. Others are looking for more support, so it depends on the amount you want to pay, and how involved you want your planner to be. Are you a delegator? Or do you expect your advisor to explain things to you?” If you're not sure of what you'll be comfortable with, the J.D. Power & Associates survey found that investors contacted 12 or more times a year had the highest rates of satisfaction with their advisors.

8. Will I be working only with you or with a team?

This question will also help you see how often you’ll be in touch with your advisor. “Some will say, ‘I’ll meet with you once a year, but Gina will reach out to you regularly and is my right hand person and does a lot of data gathering for me.’ Some companies have a team approach rather than an individual approach,” says Bera, adding that one isn’t better than the other. “It’s really whatever your preference is. But I wouldn’t want someone to get into a relationship and say, ‘I only see my advisor once a year, and I thought I’d be seeing him more often.’ Then others really like the team approach because they know if their planner is on vacation, they can still get an answer right away.”

9. What makes your client experience unique?

“Basically, ‘Why do I want to work with you?’” says Bera. “And people should be able to answer that.” This will also give you insight into whether their strengths are the ones you seek in a planner. For instance, she would tell clients, “I’m your financially savvy best friend,” and explain that her focus is on using their money to match their values. This pitch would appeal to some clients, but not ones who, for instance, are out to maximize returns in the market.

Finally, there’s one last question you want to ask of yourself after meeting with a potential planner:

10. Did he or she ask me questions and seem to be interested in me?

(Video) 10 Questions for Your Financial Advisor

“Does he or she talk 90% of the time?” says Wacks. “If it’s more like 60/40 and he has asked you how he or she can help you, that’s really important. Financial planning about looking at the person’s individual circumstance instead of punching in some numbers — it’s based on the client’s goals, financial background, what they believe about money, etc.”

Photo: Ano Lobb/Flickr

FAQs

How do I prepare for a financial advisor meeting? ›

  1. List your assets and liabilities. ...
  2. Outline your income and expenses. ...
  3. Write down your goals. ...
  4. Consider the needs of your family. ...
  5. Understand your financial strengths and weaknesses. ...
  6. Get your financial documents in order. ...
  7. Prepare a list of questions to ask your advisor. ...
  8. To sum it up.

What should I talk to my financial advisor about? ›

8 Things You Must Discuss With Your Financial Advisor
  • Your spending and saving habits. Telling your financial advisor how much you earn isn't enough. ...
  • Your emergency savings. ...
  • College. ...
  • Retirement. ...
  • Life insurance. ...
  • Short-term and long-term goals. ...
  • Your tolerance for risk. ...
  • Your advisor's fees.
24 Oct 2015

What do people look for in a financial advisor? ›

That includes integrity, reliability, expertise, and technical know-how. It's a mix of trust, competence, and authority. It's not all about just building a relationship with clients. Being a financial advisor means building a relationship of trust.

How do I know if my financial advisor is a fiduciary? ›

The easiest way to verify that a potential advisor is a fiduciary financial advisor is to simply ask and then verify their status. To check that they're registered with the SEC, use FINRA's BrokerCheck database.

What are the top 5 financial advisors? ›

The following five financial advisory firms operate with more than $1 trillion in total assets under management (AUM): BlackRock, Vanguard, Fidelity, State Street Global Advisors, and J.P Morgan Asset Management.

What makes a financial advisor unique? ›

The best financial advisors are those who make it not about the papers and the balances but about the client's personal growth. They don't just change the client's money, they change the client by making them grow – growing in knowledge, in mindset, exercising better behaviors.

What is the first key component of a successful financial plan? ›

When developing a personal financial plan, one of the first things you should do is assess your current financial situation. This includes your income, assets, and liabilities. Which of the following is not a benefit of understanding your own money personality?

How do I quit a financial advisor? ›

The only thing that should be put in a resignation letter is the date, your name, signature and one sentence: “I resign my position effective immediately.” After resigning at 3 p.m. on a Friday, an advisor should immediately go to the hiring firm to complete paperwork, then immediately start contacting clients.

What should I bring to my first meeting with a financial advisor? ›

WHAT TO BRING TO YOUR MEETING WITH A CFP® PROFESSIONAL
  • Financial Statements. Provide copies of your financial statements—including those from your banks, brokerage firms and retirement account custodians—and your tax documents.
  • Income and Expenses. ...
  • Debt. ...
  • Insurance. ...
  • Goals. ...
  • Your Questions.

What is the difference between a financial planner and financial advisor? ›

A financial planner is a professional who helps individuals and organizations create a strategy to meet long-term financial goals. "Financial advisor" is a broader category that can also include brokers, money managers, insurance agents, or bankers. There is no single body in charge of regulating financial planners.

How often should I meet with my financial advisor? ›

Experts recommend that you meet at least once a year with a financial advisor to discuss your investment plan and review your risk tolerance and cash flow objectives.

How much money do you need to talk to a financial advisor? ›

Most financial advisors charge based on how much money they manage for you. That fee can range from 0.25% to 1% per year. Some financial advisors charge a flat hourly or annual fee instead.
...
Financial advisor fees.
Fee typeTypical cost
Hourly fee$200 to $400
Per-plan fee$1,000 to $3,000
2 more rows
4 Aug 2022

Is it worth it to talk to a financial advisor? ›

A financial advisor is worth the money if you are uncertain about how to manage your money, invest for your future, and take care of your family. Expert financial advice may be needed at various turning points in your life: when you have a child, get a promotion, or come into an inheritance.

Can you trust a financial advisor? ›

An advisor who believes in having a long-term relationship with you—and not merely a series of commission-generating transactions—can be considered trustworthy. Ask for referrals and then run a background check on the advisors that you narrow down such as from FINRA's free BrokerCheck service.

What do people want from an advisor? ›

Regardless of background or net worth, most clients and investors want much the same things from their advisors—trust, competence, integrity, respect and understanding. The conventional wisdom, it seems, is good advice.

Why do people choose a financial advisor? ›

Financial advisors can help you build funds for the ultimate long-term goal, retirement. And then, once you're retired or nearing retirement, they can help ensure you're able to keep your money safe.

Why clients leave their financial advisor? ›

High fees or even poor market performance are not always the reasons why clients dump their advisors. Communication is a big issue: miscommunication, not listening to clients, or not communicating with them. Setting unrealistic expectations at the outset of the relationship is another big mistake.

How much should a fiduciary charge? ›

They typically charge about one percent of the money they manage, which doesn't sound like a large sum of money.

What are the 4 fiduciary duties? ›

4. Specifically, fiduciary duties may include the duties of care, confidentiality, loyalty, obedience, and accounting. 5.

Who is the best fiduciary? ›

Find a Fiduciary Financial Advisor
RankFinancial Advisor
1Fisher Investments Find an Advisor Read Review
2CAPTRUST Find an Advisor Read Review
3Mercer Global Advisors, Inc. Find an Advisor Read Review
4Madison Investment Advisors, LLC Find an Advisor Read Review
6 more rows
13 Sept 2022

What questions should I ask my financial advisor during annual review? ›

  • 5 key questions to ask at annual review time. Is your investment strategy on track? ...
  • Is my investment strategy on track? You probably have several savings goals and accounts. ...
  • Am I saving tax-efficiently? ...
  • Am I protecting my income? ...
  • Am I preserving my assets? ...
  • How does my financial plan affect my family?
10 Jan 2022

What questions should I ask about money? ›

  • 10 Answers to the Most Common Questions About Money. ...
  • How Bad Is It If I Don't Pay Off My Credit Card Every Month? ...
  • What Does a Realistic Budget Look Like? ...
  • How Much Debt Is Too Much Debt? ...
  • How Much Should I Actually Be Spending on Fun Stuff? ...
  • How Do I Get Good Health Insurance if I Don't Work Somewhere That Provides It?

What questions should I ask my financial advisor about retirement? ›

You can work through these questions yourself or ask a financial advisor to help you project how your retirement might unfold.
  • How Much Money Do I Need to Retire?
  • When Should I Claim Social Security?
  • How Much Will Healthcare Cost in Retirement?
  • How Do I Spend From My Retirement Savings?

What questions to ask about investing? ›

Five Questions to Ask Before You Invest
  • Question 1: Is the seller licensed? ...
  • Question 2: Is the investment registered? ...
  • Question 3: How do the risks compare with the potential rewards? ...
  • Question 4: Do you understand the investment? ...
  • Question 5: Where can you turn for help?
4 days ago

Who is most trusted financial advisor? ›

More from FA 100:
2021 RANKFIRM2019 RANK
1Dana Investment Advisors3
2Salem Investment Counselors1
3NewSouth Capital Management6
4Check Capital Management52
32 more rows
6 Oct 2021

What should I expect from my financial advisor annual review? ›

An annual review should go beyond financial discussions but also cover any personal changes. Areas to be discussed with a client should include their investment portfolio, tax planning, estate planning, retirement planning, and life insurance policies.

What is a fiduciary financial advisor? ›

A fiduciary is a common term for a financial advisor who serves under fiduciary duty. These professionals have pledged to make recommendations with your best interest in mind, rather than their own financial benefit.

How do you ask someone about their finances? ›

Here's their best advice.
  1. Talk about your financial expectations early on. ...
  2. When bringing up money, take baby steps. ...
  3. Frame questions as "What if … " ...
  4. Broach the subject by sharing a money goal. ...
  5. Create money goals together and hold each other accountable. ...
  6. Ask about their upbringing.
29 Apr 2019

Does money bring happiness questions? ›

Does spending money make us happier than finding a job?
...
Money and Happiness - The 20 Questions.
1)What did you think when you read the headline?
7)What things make you happiest?
8)How does shopping make you happy?
9)What things that you buy make you happy and unhappy?
10)Can poor people be happy?
5 more rows

What is a typical retirement income? ›

Average Retirement Income in 2021. According to U.S. Census Bureau data, the median average retirement income for retirees 65 and older is $47,357. The average mean retirement income is $73,228.

How do I choose a retirement financial advisor? ›

To find a financial advisor, get recommendations from people you trust, ask for references, and interview possible candidates. You may prefer to hire a fee-based advisor, such as a fee-only financial planner, instead of one who receives commissions in return for selling or recommending certain financial products.

What questions should I ask before I retire? ›

22 Frequently Asked Retirement Questions
  • When Can I Retire? ...
  • How Much Money Do I Need to Retire? ...
  • Where Will My Retirement Income Come From? ...
  • What Percentage of My Final Working Earnings Will I Need in Retirement Income? ...
  • When Should I File for My Social Security? ...
  • How Much Savings Should I Accumulate Before Retirement?

What are the 5 questions to ask before you invest? ›

5 questions to ask before you invest
  • Am I comfortable with the level of risk? Can I afford to lose my money? ...
  • Do I understand the investment and could I get my money out easily? ...
  • Are my investments regulated? ...
  • Am I protected if the investment provider or my adviser goes out of business? ...
  • Should I get financial advice?

How do you evaluate financial advisor performance? ›

  1. Learn exactly what you are paying. ...
  2. Discuss fee transparency. ...
  3. Understand your investment costs. ...
  4. Determine whether your advisor is a fiduciary. ...
  5. Get a list of the services you should be receiving. ...
  6. Check your advisor's background. ...
  7. Make sure you are getting leading-edge advice.
6 Jan 2019

When should you talk to a financial advisor? ›

While some experts say a good rule of thumb is to hire an advisor when you can save 20% of your annual income, others recommend obtaining one when your financial situation becomes more complicated, such as when you receive an inheritance from a parent or you want to increase your retirement funds.

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1. Six Questions to Ask when hiring a Financial Advisor | Fiduciary Standard of Care
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3. This Is How You Pick The Right Financial Advisor
(Ramsey Everyday Millionaires)
4. 10 Questions To Ask Your Financial Planner
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5. What are some questions someone should ask when selecting a financial advisor? Isaac Samsa
(ERL Media)
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(Lucas Casarez)

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