Choosing a financial advisor is about more than finding someone to manage your investments. Depending on the relationship, your advisor may help you make decisions about retirement, taxes, estate planning, insurance, business planning, and other areas of your financial life.
Before hiring a financial advisor, you should understand how they work, how they're compensated, what services you'll receive, and whether their experience aligns with what you need. These 15 questions can help you compare financial advisors and determine whether someone is the right fit.
1. Are You a Fiduciary, and When Does That Fiduciary Responsibility Apply?
A fiduciary is required to act in their client's best interest when providing fiduciary advice. Ask whether the advisor serves as a fiduciary and, importantly, whether that obligation applies to all of the services you're considering.
Don't be afraid to ask the advisor to explain what their fiduciary responsibility means in practice. You should understand the standard that applies to the advice you're receiving and any potential conflicts of interest that may exist.
2. How Do You Get Paid?
Financial advisors can be compensated in different ways, including advisory fees, financial planning fees, commissions, or a combination of compensation methods. Understanding how an advisor gets paid can help you identify potential conflicts and better understand the relationship you're considering.
Rather than focusing only on labels such as "fee-only" or "fee-based," ask the advisor to explain exactly how they and their firm could be compensated through your relationship.
3. What Will I Actually Pay to Work With You?
How an advisor gets paid and how much you will pay are related, but they aren't the same question. Ask for a clear explanation of the costs you should expect based on the services you'll receive.
Depending on the relationship, costs could include financial planning or advisory fees, investment expenses, transaction costs, or other applicable charges. A prospective advisor should be able to explain the costs associated with their services in a way you can understand.
4. What Services Are Included Beyond Investment Management?
Investment management may be only one part of financial planning. Depending on the advisor, services could include retirement planning, tax-aware planning, estate planning coordination, insurance reviews, Social Security planning, business-owner planning, education planning, or other areas.
Ask what's actually included in your relationship and which services require an additional fee or a separate professional. This can help you compare advisors based on the value and scope of the relationship rather than investment management alone.
5. What Types of Clients Do You Work With Most Often?
An advisor doesn't necessarily need to specialize exclusively in people exactly like you, but experience with similar financial situations can be valuable. Someone approaching retirement may have very different planning needs from a young professional, while a business owner may face decisions that don't arise for a traditional employee.
Ask the advisor to describe the clients they typically serve and the financial situations they encounter most often. The goal is to determine whether your needs fall within the areas where the advisor has meaningful experience.
6. What Credentials and Experience Do You Have?
Titles such as "financial advisor" can encompass professionals with different backgrounds, education, licenses, and credentials. Ask about the advisor's experience and any professional designations they hold, including what those credentials actually require.
Credentials aren't the only measure of a good financial advisor, but they can provide useful information about an advisor's training and areas of expertise. You can also independently verify professional backgrounds and registrations rather than relying solely on what's presented in a meeting or on a website.
7. What Does Your Financial Planning Process Look Like?
Financial planning should involve more than gathering your account statements and recommending investments. Ask what happens after you become a client, what information the advisor will need from you, how recommendations are developed, and how the plan is updated as your circumstances change.
This question can also reveal whether financial planning is truly central to the advisor's service model or primarily an add-on to investment management. If you're looking for comprehensive planning, make sure the process reflects that.
8. What Is Your Investment Philosophy?
You don't need to be an investment expert to ask how an advisor approaches investing. Ask how portfolios are constructed, how investment decisions are made, how risk is evaluated, and what the advisor does when markets become volatile.
Pay attention to whether the explanation connects your investments to your goals, time horizon, and risk tolerance. Be cautious of anyone who focuses primarily on predicting markets, promises specific returns, or makes an investment strategy sound more certain than investing actually is.
9. How Do Taxes Factor Into Your Financial Planning and Investment Decisions?
Taxes can affect decisions involving retirement withdrawals, Roth conversions, charitable giving, investment gains and losses, business retirement plans, and many other areas of financial planning.
Your financial advisor may not prepare your tax return or provide tax advice, but they should be able to explain how tax considerations factor into their planning process and when they would involve your tax professional. This becomes particularly important when financial decisions overlap with multiple areas of your financial life.
10. How Do You Coordinate With My CPA, Estate Attorney, or Other Professionals?
Many financial decisions don't fit neatly into one professional category. An estate planning decision may affect investments, a business decision may create tax implications, and a retirement strategy may require coordination between your financial advisor and CPA.
Ask whether the advisor regularly works with clients' outside professionals and how that coordination typically happens. A strong financial plan should account for the fact that your financial life doesn't exist in separate silos.
11. How Often Will We Meet, and What Communication Can I Expect?
Some financial advisors schedule regular planning meetings, while others primarily communicate when the client initiates contact. Neither model is necessarily wrong, but you should know what you're signing up for.
Ask how often you'll meet, what those meetings typically cover, and how you can contact the team between reviews. If accessibility is important to you, understand whether you'll be able to reach someone when a question or financial decision comes up.
12. Who Will I Actually Work With?
The advisor you meet during the initial conversation may not be the only person involved in your relationship. You may work with other advisors, planners, investment professionals, or client service team members.
Ask who your primary point of contact will be and which team members handle different aspects of your financial plan. A team-based model can provide valuable depth and continuity, but you should understand how that team operates before becoming a client.
13. Where Will My Investments Be Held?
Ask which custodian or financial institution will actually hold your investment assets and how you'll access your accounts. Understanding the difference between your financial advisor and the custodian holding your assets is an important part of evaluating the relationship.
You should also understand how money can be moved, what account protections may apply, and how you'll independently view your balances and transactions. An advisor should be able to clearly explain how your assets are held and safeguarded.
14. What Happens If You Retire, Leave the Firm, or Become Unavailable?
A financial advisory relationship can last for decades, so continuity matters. Ask what happens to your financial plan and accounts if your primary advisor retires, changes firms, becomes unavailable, or can no longer serve you.
This is particularly important if you're considering working with an individual advisor rather than a broader team. Understanding the firm's succession and continuity plan can tell you whether your relationship depends entirely on one person.
15. Have You or Your Firm Had Any Disciplinary History I Should Know About?
This may feel like an uncomfortable question, but it's a reasonable one to ask. Give the advisor an opportunity to explain any relevant disciplinary or regulatory history and independently verify their professional background.
Public resources such as FINRA BrokerCheck and the SEC's Investment Adviser Public Disclosure database can help you research financial professionals and firms before making a decision.
You're Looking for Clarity, Not 15 Perfect Answers
There isn't one fee structure, investment philosophy, firm size, communication schedule, or financial planning model that's right for everyone. The purpose of asking these questions isn't to find an advisor who gives you a predetermined set of "correct" answers. It's to understand what you're getting.
By the end of an initial conversation, you should have a clear picture of how the advisor works, what you'll pay, what services you'll receive, who you'll work with, how your investments will be handled, and where potential conflicts may exist. Just as importantly, you should have a sense of whether the advisor understands the financial decisions that matter most to you.
Choosing a financial advisor is ultimately about finding someone whose experience, services, philosophy, and relationship style fit what you're looking for. Asking better questions before you hire someone can help you make that decision with considerably more confidence.
Frequently Asked Questions
Q: What questions should I ask a financial advisor before hiring them?
A: Ask about their fiduciary responsibility, compensation, total costs, services, experience, financial planning process, investment philosophy, communication, custody of assets, and disciplinary history. You should also understand who you'll work with and whether their experience fits your financial needs.
Q: How do I know if a financial advisor is trustworthy?
A: Look for clear answers about how the advisor is compensated, potential conflicts of interest, where your assets will be held, and the standard of care that applies to their advice. You can also independently review an advisor's professional and disciplinary history through regulatory databases such as FINRA BrokerCheck or the SEC's Investment Adviser Public Disclosure database.
Q: Should I ask a financial advisor if they are a fiduciary?
A: Yes. Ask whether the advisor acts as a fiduciary and when that fiduciary responsibility applies to your relationship. You should understand what standard applies to the advice and services you'll receive rather than relying solely on a title or designation.
Q: How should I ask a financial advisor about fees?
A: Ask both how the advisor is compensated and what you will actually pay. Depending on the relationship, costs may include advisory or financial planning fees, commissions, investment expenses, transaction costs, or other charges. Ask for a clear explanation of the total costs you can reasonably expect.
Q: What should I look for when choosing a financial advisor?
A: Consider the advisor's experience, credentials, services, typical clients, planning process, investment philosophy, fees, communication style, and potential conflicts of interest. The right fit should also depend on whether the advisor regularly works with financial situations similar to yours.
Q: Should I ask a financial advisor about their investment performance?
A: You can ask how the advisor approaches investing and evaluates portfolio results, but past performance shouldn't be the only factor in your decision. Focus on whether the investment philosophy is understandable, disciplined, appropriate for your goals and risk tolerance, and integrated with your broader financial plan.
Q: How many financial advisors should I interview before choosing one?
A: There is no required number. Speaking with more than one advisor can help you compare services, costs, experience, communication styles, and planning approaches. The goal isn't to interview a specific number of advisors, but to have enough information to make an informed decision.
About Andstead Advisors
Andstead Advisorsis an independent financial planning and wealth management firm headquartered in Denver's Denver Tech Center, serving individuals, families, retirees, and business ownersthroughout Colorado and across the country. Our teamprovides comprehensive financial planning, investment management, retirement planning, business owner solutions, retirement plan consulting, business succession planning, cash balance plan strategies, profit sharing plans, and Solo 401(k) guidance. As fiduciary advisors, we help clients make informed financial decisions through personalized advice, long-term planning, and ongoing partnership designed to support their financial goals at every stage of life.