Broker Check
9 Key Questions to Ask a Financial Advisor

9 Key Questions to Ask a Financial Advisor

| March 13, 2023

Do you want to find a financial advisor but don’t know how to pick the best one? Don’t worry. Many of us have struggled with the same problem before. The key to choosing the best financial advisor for your specific situation is to ask the right questions before you hire them.

In this article, we’ll provide insight into the key questions individuals should consider asking a potential adviser prior to working with them to gain a better understanding of their qualifications, services, and fees. Read on for more information about how to find a financial advisor who best meets your needs.

  1. What services do you offer?

Financial advisors offer many different kinds of services to various groups of people. It’s crucial that you make sure these align with what you need. For example, if your financial picture is complex, you might require comprehensive care by a team of professionals who do more than just worry about taxes and retirement planning. You might need advisors who, for example, handle trust and estate considerations, business succession strategies, and charitable giving too.

  1. How do you get paid?

A financial advisor typically gets paid in one of three ways: on an hourly or project-based basis, from commissions, or from advisory fees. While no fee structure is necessarily better than another, it’s wise to have a thorough understanding of this because it can impact how the advisor chooses to guide you. 

  1. What fees do you charge?

Fees will eat into your savings and investment profits. It’s best to know what additional fees you’ll be expected to pay – both upfront and recurring ones – beyond the cost of the financial advisor themselves.

  1. What are your qualifications?

Like any other instance when you’re hiring someone, you want to know what experience, skills, and education they bring to the table. Find out what the initials after their name means using FINRA’s online database and use Form ADV to check the advisor’s record. Another valuable resource is FINRA’s BrokerCheck tool, which can be used to check the backgrounds of brokers and investment advisors.

  1. How can I reach you if I have a question?

This inquiry will show you how accessible the advisor will make themselves to you. How often will they communicate with you? Will you be able to contact them via email or phone outside of scheduled appointments if you need to ask a question?

  1. What is your investment philosophy?

The key here is to choose an advisor whose investment philosophy is similar to yours. If you prefer to buy and hold blue chip companies, for example, you probably won’t want to work with an advisor who trades small caps. Or if you’re an impact investor, you’ll want to select an advisor who will pick investments that reflect your values.

  1. What benchmarks do you use?

In this instance, you want the advisor to mention benchmarks that relate directly to what they invest in rather than something generic that’s easy to beat.

  1. What does success look like to you?

This is another way of asking how the advisor will track your investment performance. They should respond that they will view your performance in light of your long-term goals. In addition, make sure that they value diversification and will help you rebalance your allocations when needed. 

  1. Do you work with other professionals like attorneys and CPAs?

Finally, if your finances are complex or you own a business, it’s probably in your best interest to see if the advisor works independently or on a team and if they’re open to collaborating with other professionals from your circle. And if you need a referral for a specific service, will they provide that?

It’s not always easy to find a qualified advisor who you can trust. As you go through the process of picking one, however, consider using the above 10 questions to determine which one will be best for your personal circumstances. Take your time as you check out your options since this decision is an important one. Best of luck!