Questions to Ask Financial Advisors

Hiring the right financial advisor can make all the difference. During your first meeting with a professional, treat it like an interview. It’s important to ask them about their qualifications, how they make money, and their investing approach to ensure they’re the right person for the job.

What to Ask a Financial Advisor

1. Are You a Fiduciary?

Advisors who follow a fiduciary duty must put your best interest above all else and practice with a high level of care. They must also avoid or disclose conflicts of interest. Therefore, it’s vital to ask about and fully understand a professional’s ethical standards.

Stephen Kates, CFP^®, Principal Financial Analyst for Annuity.org, recommends you “interview any prospective advisor about how they work with clients, their background, qualifications, and how they are paid.” In this way, you can find out whether they’re a fiduciary and see if any of their business practices stand out.

2. What Are Your Qualifications?

The highest quality financial advisors hold professional certifications and designations from accredited organizations and universities. These titles often require extensive education, on-the-job experience, and adherence to high ethical standards to attain and uphold them.

Key examples include:

• Certified Financial Planner (CFP)
• Chartered Financial Analyst (CFA)
• Chartered Financial Consultant (ChFC)
• Chartered Retirement Planning Counselor (CRPC)

3. How Do You Make Money?

Your financial advisor should be upfront about how they earn compensation. Look for professionals who use a fee-only structure and don’t earn commissions from the products and investments they recommend, as this could present a conflict of interest. In your first meeting, ask how the advisor earns money from their services.

4. How Much Will I Pay?

Financial advisors could use various fee structures depending on their services. Some may offer a flat fee or retainer schedule, while others base payments on assets under management (AUM). Make it a point to ask for details on the fees you can expect as a client, whether it’s a one-time consultation or an ongoing relationship.

Tyler Meyer, CFP^®, founder of Retire to Abundance, says that clients should “be sure to discuss their fees upfront.” To do this, he explains that clients can “ask ‘How do you get paid?’ and ‘Are there any additional costs?’.”

5. How Often Will We Meet?

During your first appointment with an advisor, ask them how frequently you’ll meet and through which means. Ultimately, this should depend on your financial situation and proximity to the professional. Some advisors may want to see you in person consistently, while others prefer to meet virtually over the phone or on a remote video call.

6. What Is Your Investment Philosophy?

In many cases, your financial advisor will provide investment advice, whether it’s just lending their planning expertise or trading on your behalf. Before you hire them, ask about their investment philosophy, including what types of assets they recommend, how they structure portfolios, and their approach to risk.