Questions to Ask a Financial Advisor

By Rebecca Lake. January 27, 2025 · 9 minute read

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Questions to Ask a Financial Advisor

When it comes to managing your finances, hiring a financial advisor can be a wise decision. But with all the different types of financial pros out there, how do you find one that will work for your specific needs?

Asking questions is a good way to learn more about what an advisor does, understand their approach, and determine if they are the best fit for your situation and goals. In fact, it’s a good idea to interview at least two or three different advisors before choosing one you want to work with. These essential questions to ask an advisor can help you find the right fit.

Key Points

•   Check a financial advisor’s qualifications by asking about certifications, years in the field, and areas of expertise.

•   Ensure that the services offered align with your financial needs, including investment philosophy and client focus.

•   Gain clarity on how an advisor will be paid, such as whether they are fee-only, fee-based, or commission-based, plus any extra costs.

•   To understand any potential conflicts of interest and ensure unbiased advice, ask about fiduciary status.

•   Make sure you’re comfortable with an advisor’s communication style and methods for tracking performance.

Qualifications and Experience


If you plan to trust your finances to an advisor, selecting someone with the right qualifications and relevant experience is important. Here’s what to ask a financial advisor about their professional background.

What Certifications Do You Hold?


Two meaningful credentials are Certified Financial Planner (CFP®) and chartered financial consultant (ChFC). To earn either designation, an advisor must pass a certification exam, complete coursework, and have a certain level of experience in the field. They must also submit to a background check and adhere to a set of ethical standards. An advisor with tax expertise will typically be a certified public accountant (CPA) or personal financial specialists (PFS), which are CPAs who also offer more comprehensive planning.

Do You Have Any Disclosures on Your Record?


It’s important to know if an advisor has faced any regulatory, criminal, or disciplinary actions in the past. You can also verify this information by typing the advisor’s or firm’s name into the Securities and Exchange Commission’s (SEC’s) Investment Adviser Public Disclosure search tool. There, you can find out about the professional’s licenses and any disciplinary history they may have.

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Services and Approach


Financial advisors vary in terms of the services they offer, the type of clients they work with, and their approach to financial planning. These questions can help you choose a financial advisor who will be a good match for your needs.

What Are Your Areas of Expertise?


Some advisors specialize in retirement planning, tax strategies, or estate planning. Others will help you create a comprehensive financial plan that could cover general money management, the types of accounts you need, the kinds of insurance you should have, and estate and tax planning. You’ll want to make sure that their expertise aligns with your needs and goals.

What Types of Clients Do You Typically Serve?


Certain financial advisors work exclusively with high-net-worth individuals, while others focus on small business owners, pre-retirees, or people in certain professions like physicians or artists. Choosing someone who has experience serving clients similar to you can help ensure they’ll be able to offer the guidance and financial advice you need.

What Is Your Investment Philosophy?


You’ll want to make sure how your money is invested aligns with your preferences, risk tolerance, needs, and financial goals. So when speaking with a potential advisor, you’ll want to get a sense of how they typically balance risk and return, if they concentrate on specific industries or types of investments, whether they prefer active or passive investment strategies, and how they tailor portfolios to client goals.

Fees and Compensation Structure


Financial advisors are compensated in different ways, and it’s important to understand their fee structure to avoid surprises.

How Do You Make Money?


Fee-only advisors charge a flat rate, hourly rate, and/or a percentage of assets managed for their services. Fee-based advisors, on the other hand, charge fees to clients directly for financial planning or portfolio management, while also earning commissions by selling financial products. Commission-based advisors primarily earn income by selling financial products. Fee-only advisors tend to have fewer conflicts of interest (more on that below). Ensure you understand how you will be charged.

Are There Any Extra Costs I Should Be Aware of?


A financial advisor’s fees may not cover all of your expenses. They might, for example, charge one fee for creating a financial plan, but charge more for putting that plan into action. Once your financial plan is in place, you may also have to pay trading, fund, and brokerage fees. Make sure you understand what your all-in costs are going to look like.

Do You Have a Minimum Account Size?


Some advisors work only with clients who have a certain level of assets. This might be a relatively low threshold, like $25,000, but it could be significantly more, such as $500,000 or $1 million, and possibly more. You’ll want to confirm whether this aligns with your financial situation.

Recommended: Who Are Wealth Management Advisors?

Potential Conflicts of Interest


Conflicts of interest can be problematic as it can cloud the advice you receive. These questions for financial advisors can help you suss out whether their goals could potentially clash with your goals.

Do You Receive Any Compensation From Third Parties?


As mentioned above, fee-based and commission-based advisors receive payments from sales of specific investment and financial products, such as mutual funds or insurance policies, which could potentially cause a conflict of interest. It’s important to know if their recommendations could potentially be influenced by outside compensation.

Are You a Fiduciary?


Certain professional designations, such as a CFP®, are legally held to the fiduciary standard. As a fiduciary, an advisor is legally and ethically bound to put their clients’ interests ahead of their own (or their firm’s) interests and have a duty to preserve good faith and trust. If an advisor is not a fiduciary, ask how they address potential conflicts.

faith and trust. If an advisor is not a fiduciary, ask how they address potential conflicts.

Performance and Benchmarks


If you’re working with an advisor to grow wealth, you’ll want to have some way to measure your progress. Consider asking these questions about performance tracking and benchmarking.

What Investment Benchmarks Do You Use?


A financial advisor should be able to speak to the benchmarks that they will be reporting to you, as well as how they will measure your progress and determine whether adjustments need to be made in your portfolio. It’s also a good idea to find out if you will be able to track your portfolio’s performance and view financial reports online. Tools like client portals and mobile apps can improve your experience and provide transparency.

How Will You Consider Assets You Aren’t Directly Managing?


Your net worth may include assets that are not managed by a particular finance firm or advisor, such as an employee-sponsored 401(k) or any rental properties you may own. It’s important that a financial advisor look at your full financial picture when advising you on how to diversify, manage risk, and reach your goals.

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Communication and Availability


Advisors can approach communication differently and it helps to have realistic expectations going in. Poor communication or misaligned expectations can put a damper on your experience in working with an advisor.

How Often Will We Meet or Communicate?


At the minimum, you’ll want to speak with your financial advisor once a year to review your financial strategies as your life and circumstances change. Some advisors offer quarterly or semiannual meetings, however, which you might prefer. Find out how often you’ll meet, whether it will be virtually or in-person, and if the advisor will be available for phone calls or emails outside of scheduled appointments. Consider if their communication frequency and style meets your expectations.

Will I Work Directly With You or Someone on Your Team?


Some firms assign a primary advisor, while others use a team-based approach. When deciding which financial advisor you want to work with, you’ll want to clarify who your main point of contact will be.

The Takeaway


Choosing a financial advisor is a significant decision that can impact your financial future. By asking the right questions, you can get a good sense of their qualifications, approach, and ability to meet your needs.

Don’t hesitate to interview multiple advisors and compare their answers to ensure you find the best match for your financial goals. A well-chosen advisor can provide valuable guidance, helping you navigate the complexities of financial planning and achieve long-term success.

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FAQ


What should I look for in a financial advisor’s credentials and experience?


When choosing a financial advisor, you might look for credentials such as Certified Financial Planner (CFP®) or chartered financial consultant (ChFC). These designations mean that the advisor has passed a certification exam, has a certain level of experience in the field, and is legally required to adhere to a set of ethical standards. If you’re looking for an advisor with tax expertise, consider a certified public accountant (CPA) or personal financial specialists (PFS), which are CPAs who also offer more comprehensive planning.

What are the different types of financial advisors?


The term “financial advisor” is broad and can refer to any professional who offers financial advice. Common certifications include Certified Financial Planner (CFP®), chartered financial consultant (ChFC), certified public accountant (CPA), and personal financial specialist (PFSs). There are also specialized advisors, such as investment advisors (who focus on portfolio management), retirement planners (who help with retirement strategies), and wealth management advisors (who offer comprehensive services for high-net-worth clients). Robo-advisors provide automated investment solutions at a lower cost.

How can I evaluate the fees and services provided by a financial advisor?


Start by understanding the advisor’s fee structure — whether it’s fee-only, fee-based, or commission-based. Fee-only advisors charge flat fees or percentages and don’t earn commissions. Fee-based advisors charge fees but may also earn commissions on products they recommend. Commission-based advisors primarily earn income by selling financial products. Also ask about the scope of services they provide, such as retirement planning, tax strategies, or investment management, to ensure they align with your needs.


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