How to Evaluate a Financial Advisor’s Performance

Financial advisors can play a central role in driving your success, often wielding significant responsibility in helping you reach your goals and build wealth. However, it’s crucial to periodically consider if you’re getting the most value out of your relationship and if your expert is the right fit for your needs. But how do you evaluate a financial advisor’s performance—whether it’s meeting, exceeding, or missing the mark on your expectations?

In this article, we’ll offer ways to assess your relationship with a financial advisor and whether it’s right for you—ranging from metrics and benchmarks, fees, alignment with values, and warning signs of underperformance. Additionally, we’ll outline actionable steps to take if you believe you’re not getting what you should out of your arrangement.

Performance Metrics to Review

Expectations from a relationship with a financial advisor will likely vary depending on your needs and goals. You may have more short-term targets, such as buying a home or paying off loans you want to hit. However, you may have more ongoing, long-term objectives such as building a retirement plan or managing a portfolio. In the end, only you will be able to know if you’re getting what you initially envisioned, but there are some viable aspects—both quantitative and qualitative—to keep in mind as you evaluate your advisor’s performance.

Quantitative Metrics

You can use more concrete, quantitative metrics to help decide if you’re happy with your advisor’s performance, no matter the type of relationship you have. For instance, if your expert helped you craft a budget as part of a comprehensive plan, you can consider if it’s working and you’re reaching the goals they said you could by following it.

Similarly, for investment management arrangements, you can compare your portfolio returns to those of benchmarks such as the S&P 500. While there can be variance due to risk tolerance and market conditions, contemplate whether you’re happy with what you see.

Qualitative Factors

Conversely, qualitative details can be another way to evaluate your financial professional’s performance. According to Antwyne DeLonde, founder of VisionX Finance and former financial advisor and discretionary portfolio manager, it can be good “to look at more than just portfolio returns.” For instance, he points out that you could ask broad questions like “Are your financial goals being met?” and “Is your risk being managed effectively?” to understand if your advisor meets your expectations.

As you evaluate your general feeling about your advisory relationship, it can also be good to consider intangible details. For example, reflect upon the trust you have in your professional and whether their communication style has been satisfactory. Are you confident that they have the right expertise to get you where you want to go, and are they adaptable to market shifts or changes in your goals? These can help you understand, in a large sense, whether the individual or their company is right for you.

Does the Advisor Align With Your Goals and Values?

Your goals are the centerpiece of your collaboration with a financial advisor. For this reason, it’s important to assess if you believe you and your expert are aligned on your goals and important details like your risk tolerance and time horizon. Otherwise, in short, you may end up seeing results you didn’t intend.

“Your advisor should regularly check in with you about your goals and risk comfort level,” explains DeLonde. “For instance, if you’re uneasy with market fluctuations but your portfolio is heavy on risky investments, something’s off. I always made it a point to have open conversations with my clients to ensure their investments felt right for them, and adjustments were made when necessary.”

If you’re unsure of your alignment with an advisor on your goals or have gone through life changes, you can ask them and see if you’re on the same page. You could also review plans or paperwork to see if things match up. For example, if you’re comfortable, look at how your assets are invested to see if they align with your comfort level.

As DeLonde highlights, it’s not uncommon for professionals to initiate regular check-ins with clients to discuss important information such as your goals and risk tolerance. But if this hasn’t happened, it can be helpful to set up an appointment to talk through these points.

Are You Getting Value for Money?

Financial advisors can often come at a hefty cost, especially if you require multiple services or have a complex portfolio to maintain. Therefore, it’s vital to consider whether you believe you’re getting the right value for your money out of it.

First and foremost, your financial advisor should be transparent in the fees they charge for each service provided. While they should tell you beforehand, it’s not uncommon for advisory firms registered as investment advisors to include this information in their Form ADV documentations, available both through the SEC’s IAPD search tool and often on their websites. As a client, you must have a clear grasp of what you’re paying and what you’re getting out of it.

Advisors may use various fee structures, often depending on the type of service you’re receiving. For example, in a portfolio management arrangement, many charge a fee based on a percentage of the dollar amount of your assets under management (AUM). Though this is often around 1%, many factors can influence this structure. On the other hand, an advisor may use a flat-fee structure if they only offer planning services or are working on one or two projects with you.

To understand the value you’re getting, you can use some of the performance metrics we described above. That is, you can consider whether you believe you’re getting personalized and trustworthy advice and if you’re hitting tangible benchmarks, such as a certain amount of gains, or if you’ve reached the monetary goals you had.

“It’s not just about managing investments—are they helping you save on taxes, plan for retirement, or handle market changes?” says DeLonde. “If you’re paying fees and only getting surface-level advice, you’re not getting your money’s worth. A good advisor proves their value in the outcomes they help you achieve.”

Another way to assess value from an advisory relationship is by comparing the rates you pay with industry averages. If you believe you’re paying too much for the returns you receive and see that it’s higher than most other options on the market, it may be time to consider alternatives. As noted, investment advisory is often around 1% but can be higher based on portfolio size.

Ultimately, myriad factors can impact how much value you may feel you’re receiving. However, it can be helpful to ponder a combination of awareness of fees, quantitative metrics, and comparisons of industry standards to get a clearer picture.

Look for Warning Signs

Sometimes, you’ll know if your advisor falls short of your expectations. In other cases, though, you might be unaware that your portfolio or plans are underachieving. Therefore, it’s important to stay on the lookout for warning signs your advisor or the plans they’re implementing are underperforming.

Here are some examples of red flags:

Poor Communication

“A big red flag is if your advisor is hard to reach or doesn’t explain their strategies clearly,” says DeLonde. An advisor or their firm should exhibit strong communication skills, whether delivering a plan, reviewing progress, or helping you schedule an appointment. If this isn’t the case, it could call their performance into question.

Dismissive and Rigid

Throughout your meetings and communication, a professional should also make you feel comfortable and heard. Be wary if they dismiss your ideas or don’t have an open mind. You should be able to have an arrangement where each person feels comfortable sharing ideas and, if they believe something fits better, they explain it in clear and detailed terms.

“I’ve seen people stay with advisors who only call during fee reviews or give cookie-cutter advice,” DeLonde notes. “If your advisor isn’t personalizing their approach or adapting to your life changes, it’s a sign they’re not fully invested in your success.”

Not Transparent

It’s crucial to know about the practices and fees an advisory expert uses, especially if they control your portfolio. It’s a negative trust signal if you’re unclear about these details or they don’t make it easy to find, as this could display a desire to hide information.

An advisor’s compensation structure and investment philosophy, if applicable, should both be readily available in the brochure section (2A) of their Form ADV. Sometimes, it’s also listed on their website, and they should be able to talk about it if asked upfront.

Doesn’t Uphold a Fiduciary Standard

The highest quality financial advisors uphold a fiduciary duty, avoiding conflicts of interest and practicing with integrity. While they should be able to tell you in a consultation or list it on their website, a professional is often a fiduciary if they have reputable credentials from accredited organizations such as the CFP Board, the CFA Institute, or The American College of Financial Services, to name a few.

If your advisor isn’t bound by the fiduciary standard, consider looking for a new professional. This is because you may never know if they have conflicts of interest or are truly prioritizing your needs ahead of their own.

“Trust is everything in an advisor-client relationship. Make sure your advisor is a fiduciary who is legally required to act in your best interest,” advises DeLonde. “I was always upfront about fees, how I was compensated, and any conflicts of interest. If your advisor can’t be that transparent, it’s a serious issue,” he says.

If Expectations Aren’t Met

Your relationship with a financial advisor should be both productive and comfortable. It’s imperative to have confidence that they’re giving you the proper expertise for your needs and goals, while also being pleasant to work with. So, if you believe they’re not meeting expectations, it can signal a time to act.

DeLonde advocates addressing your concerns directly with your advisor. “If you feel like your advisor isn’t meeting your needs, speak up,” he says. “I’ve had clients who came to me after feeling unheard by their previous advisor, and it often boiled down to a lack of communication.”

While it’s disconcerting if your portfolio lacks performance, your plans aren’t easily coming together, or you’re not happy with fees, it can be helpful to talk it out and see if you and your expert can make changes. Advisor-client arrangements are often long-term and take work to stay aligned over time.

“If things don’t improve after a conversation, it’s okay to move on,” DeLonde adds. “Your financial future is too important to settle for anything less than someone who truly has your back.”

If you believe there’s a large disconnect on important issues or your advisor displays serious negative qualities, like a lack of a fiduciary standard, it may be time to switch. This can be daunting, however, especially if you’ve had the same professional for years. As noted, though, emphasize experts who offer the services you need at competitive rates, follow a fiduciary duty, and have high-quality credentials such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), or Chartered Financial Consultant (ChFC).

To find a vetted expert, you can use this free matching tool. After answering a quick set of questions, it’ll connect you with a financial advisor who matches your goals and needs.