12 Questions to Ask a Financial Advisor

Choosing a financial advisor means deciding who may help shape some of your biggest financial decisions, so the first meeting should go beyond discussing investment returns. Ask how the advisor gets paid, when they act as a fiduciary, which clients they typically serve and what conflicts of interest they may have. You can also verify their answers by reviewing regulatory documents such as Form ADV and Form CRS and checking their professional background. Asking the right questions upfront can make it easier to compare advisors based on costs, services, qualifications and how they would work with you.

Consider reaching out to a financial advisor about your retirement plans, budget and investment strategy.

1. Do You Abide by a Fiduciary Duty?

Investment advisors owe their clients a fiduciary duty under applicable law. For SEC-registered investment advisors, that federal fiduciary duty includes a duty of care and a duty of loyalty and applies across the scope of the advisory relationship. Broker-dealers operate under a different standard: Regulation Best Interest generally requires them to act in a retail customer’s best interest when making a covered recommendation. If a financial professional is dually registered, ask which capacity they will be acting in when providing a particular service or recommendation.

Despite these regulations, questioning a potential advisor about the bounds of their fiduciary duty can still be worthwhile. Advisors may have potential conflicts of interest arising from their compensation model, business affiliations or other arrangements. Investment advisors generally must eliminate conflicts or make full and fair disclosure so clients can provide informed consent, and certain conflicts may also need to be mitigated or eliminated. Ask the advisor to explain their conflicts, how they address them and whether they will act as a fiduciary whenever they provide advice to you.

2. Do You Have Any Disclosures on Your Record?

It’s important to know whether an advisor or their firm has previously violated rules or misled consumers; several similar complaints filed against an advisor or on a firm’s track record may be a red flag. Advisors should be able to tell you whether they or their firm have faced any past regulatory, criminal or disciplinary actions.

You can also find information about a firm’s disclosures in its Form ADV. Investment adviser filings are available through the SEC’s Investment Adviser Public Disclosure (IAPD) database. Item 11 of Form ADV Part 1A includes disciplinary-history questions, while the firm’s Part 2A brochure includes material disciplinary information as well as details about fees, conflicts and business practices. Form CRS can also indicate whether a firm or its financial professionals have reportable legal or disciplinary history. For brokers and brokerage firms, FINRA BrokerCheck provides information such as employment history, regulatory actions, arbitrations and certain customer complaints.

3. What Services Do You Provide?

Before choosing a financial advisor, it’s important to consider whether you simply want investment management or if you want more comprehensive financial planning and wealth management services. Financial advisors often offer a wide range of services in addition to portfolio management, such as:

• Retirement planning
• Trust and estate planning
• Tax planning
• Educational expense planning
• Insurance planning
• Cash flow planning
• Charitable giving
• Business succession planning

Some advisors may specialize in helping clients navigate the financial challenges of a divorce, while others focus on getting their clients retirement ready. Advisors who cater to the wealthy may offer a suite of family office services, which can include comprehensive wealth management services in addition to various administrative services, such as bill paying.

4. What Types of Clients Do You Specialize in Serving?

It’s also helpful to ask whether an advisor specializes in working with any one type of client. Some financial advisors work exclusively with high-net-worth individuals and their families. Others may work specifically with business owners or people in certain professional fields, such as doctors or university employees. Choosing an advisor who works with clients similar to you means they likely offer the type of guidance and advice you need.

5. Do You Require a Specific Minimum Investment?

Financial advisors typically require their clients to invest a certain level of assets in order to open or maintain an account. Asking a potential advisor what their minimum is could immediately tell you whether they’ll be a good fit or not.

This minimum figure not only could dictate if you can even work with the advisor, but it could also shed light on whether the advisor typically works with people of your asset level. Note that some advisors have no minimum at all, some use minimum fees and others have waivable minimums for those who may not meet it.

If you don’t have much to invest, you might consider working with a robo-advisor rather than a traditional advisor. While you won’t get the face-to-face time a human advisor offers, robo-advisors typically have lower account minimums and fees.

6. What Advisory Certifications Do You Have?

A financial advisor’s certifications can be a good indicator of their level of experience and expertise. Two of the most notable designations are the Certified Financial Planner™ (CFP®) and chartered financial consultant (ChFC). Both require an advisor to have a certain level of experience, complete coursework, submit to a background check and abide by a set of ethical standards.

Certifications can also indicate an area of specialization, which may make an advisor better equipped to serve your particular set of needs. Advisors with tax expertise have designations such as certified public accountants (CPA) or personal financial specialists (PFS), which are CPAs who also offer more comprehensive planning. Advisors with insurance expertise may hold a chartered life underwriter (CLU) designation. Of course, not all certifications carry equal weight as some are much easier to earn than others. 

In addition, you might ask how many years of experience an advisor has. Like in any field, experience matters greatly, especially when an advisor has invested through varying market conditions. It is also telling to learn what an advisor feels qualifies them to address your unique financial needs.

7. How Do You Make Money?

You need to know how much your financial advisor will charge for their services. Depending on the service, an advisor may charge a flat fee, an hourly fee or an asset-based fee. Typically, advisors charge a flat fee or hourly fee for financial planning services and an asset-based fee for portfolio management. Some advisors can also earn commissions for selling financial products or trading securities, though they must disclose this.

A big difference to note is between fee-only vs. fee-based financial advisors. All financial advisors charge their clients some type of management fee or otherwise, as is referenced above. Fee-only and fee-based advisors, however, differ in the further compensation they receive.

A fee-based advisor can earn client-paid advisory fees as well as commissions or other compensation through brokerage, insurance or other activities, depending on the professional’s registrations and business model. These arrangements can create conflicts of interest that should be disclosed. If the professional serves in both advisory and brokerage capacities, ask when they are acting as an investment adviser and when they are acting as a broker, since different regulatory standards can apply to those relationships and recommendations.

Fee-only advisors, on the other hand, earn their compensation entirely from the fees their clients pay them. This means that, if you buy securities or other financial products as a client, your advisor will not earn sales commissions from those transactions. However, fee-only compensation does not eliminate every potential conflict. For example, an advisor charging a percentage of assets under management may have an economic incentive to encourage clients to keep more assets under management. Ask any advisor, regardless of compensation model, to explain the conflicts created by the way they are paid and how those conflicts are addressed.

8. What Extra Costs Should I Be Aware Of?

The fee an advisor charges for their services may not include all costs. Advisors may charge additional fees for services that are more complex or that they consider to be extra. For example, an advisor may create a financial plan for you, but then charge extra for implementing that plan.

You’ll also be responsible for trading fees and brokerage costs, as well as fund expenses. These additional costs can add up, so be sure you’re aware of all of the fees you’ll be responsible for before deciding to work with an advisor.

Even after fees, financial advice can make a difference. See how your net worth might stack up with and without an advisor using this calculator. 

9. What Is Your Investment Philosophy?

You should also ask advisors to describe their investing approach. Some advisors customize portfolios according to client’s needs, while others offer a selection of model portfolios that they assign to clients based on their needs. Advisors often offer a range of risk levels and asset allocations.

Different advisors may prefer asset preservation over aggressive growth, or vice versa. If you’re not comfortable taking on a lot of risks, you’ll want a financial advisor who advocates a more conservative strategy. Knowing whether their investment style aligns with your personal investing philosophy beforehand can save you a lot of headaches in the long run.

Advisors’ investing approaches may be driven by different philosophies, such as value investing, which seeks relatively undervalued stocks with the hope they’ll eventually produce strong returns, or contrarian investing, which espouses investing in opposition to the market majority. If investing for the greater social good is important to you, then you may want to seek out an advisor who offers socially responsible investing.

Other key questions to ask about an advisor’s investment approach. How do they measure success? What are the tax implications of their investment strategy? Advisors should ideally be measuring progress against your defined financial goals. They should adhere to your timeline and risk tolerance rather than trying to beat the market. It’s important to ask an advisor whether they’re explicitly taking taxes into account when they’re investing. This could significantly impact your net returns.

10. How Often Do You Communicate With Your Clients?

Asking this question can give you a glimpse into a typical client experience with an advisor. By finding out how often an advisor is in touch with their clients, you can get a sense of whether you will have an open line of communication or simply receive quarterly updates.

Some advisors may prefer frequent face-to-face meetings, while others will primarily work over the phone or via email. Some may be open to phone calls whenever a question arises, while others may prefer to stick to scheduled communications. It’s up to you which communication style better suits your needs.

11. What Investment Benchmarks Do You Use?

It’s important to know what you’ll be able to reference to know if your plan is on pace to meet your goals. This is especially true if you don’t have a strong financial knowledge or background. Anyone who is charging you to complete a service should be able to speak to the benchmarks that they will be reporting to you and that they will use to determine whether adjustments are necessary in your investment portfolio.

Some common answers involve “beating the S&P 500” or “beating Standard & Poor’s 500.” Make sure you get a clear explanation of what this means to them and how you’ll benefit from hitting those milestones every single year. This is a question that might not be useful until the advisor is able to understand what your goals are over the long haul.

12. How Would You Adjust My Plan If My Situation Changes?

Your financial situation is unlikely to stay static over time. Career changes, marriage or divorce, children, inheritances, health issues or shifts in income can all affect your financial priorities and risk tolerance. Asking how an advisor handles life changes can help you gauge whether their approach is flexible and ongoing, or mostly set-it-and-forget-it.

A strong answer should explain how the advisor revisits assumptions, updates projections and adjusts strategies as circumstances evolve. This may include revising retirement timelines, changing tax strategies, reallocating investments or updating estate planning considerations. Understanding this process upfront can clarify what kind of long-term relationship you can expect and how actively the advisor will stay involved as your needs change.

Financial Advisor Red Flags to Watch For

The answers an advisor gives during an interview can be just as important as the questions you ask. A warning sign does not necessarily mean an advisor has done something wrong, but it may be a reason to ask more questions or conduct additional research before hiring them.

Potential red flags include:

• Promises or guarantees about investment returns: Investments involve risk, so be cautious of an advisor who guarantees returns, promises unusually high gains or suggests an investment has little or no downside.
• Pressure to make an immediate decision: You should generally have time to review an advisor’s services, fees and recommendations before committing money. High-pressure tactics or claims that you must act immediately can be a warning sign.
• Unclear explanations of fees: An advisor should be able to explain how they and their firm are compensated, including advisory fees, commissions and other costs you may pay.
• Reluctance to discuss conflicts of interest: Compensation arrangements, outside business activities and product recommendations can create potential conflicts. An advisor should be able to identify relevant conflicts and explain how they address them.
• Registration or credentials that are difficult to verify: You can research investment professionals through Investor.gov, the Investment Adviser Public Disclosure database and FINRA BrokerCheck, depending on how the professional is registered.
• A disciplinary history that raises additional questions: A disclosure does not automatically disqualify an advisor, but repeated complaints, regulatory actions or other disciplinary events may warrant closer review.
• Recommendations that don’t connect to your goals: An advisor should understand factors such as your financial objectives, time horizon and tolerance for risk before recommending an investment strategy.
• An unwillingness to put important information in writing: Documents such as Form CRS and Form ADV can provide information about services, fees, conflicts and disciplinary history. Be cautious if an advisor avoids providing or discussing applicable disclosures.

You don’t need to reject an advisor simply because one concern appears during your research. Instead, ask for an explanation and verify the information independently when possible. Comparing several advisors can also help you determine whether a firm’s fees, services and approach are reasonable for your needs.

Bottom Line

Interviewing more than one financial advisor can help you compare services, fees, experience and communication styles before deciding whom to hire. Ask each advisor how they are compensated, whether and when they act as a fiduciary, what conflicts of interest they have and how they would approach your specific financial goals. Don’t rely solely on the interview. Review documents such as Form CRS and Form ADV when available, and use regulatory databases such as IAPD or FINRA BrokerCheck to verify registration and disciplinary information. Remember, the goal is not simply to find an advisor you like, but to understand the relationship, costs and responsibilities before you agree to work together.

Tips for Choosing a Financial Advisor

• Working with a financial advisor can help you in a number of ways, from building a plan that matches your goals to getting help managing your assets. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Try to boil down the financial areas you need help with the most when looking for a financial advisor. For example, if you’re struggling to manage your taxes, consider going with an advisor that focuses on tax planning.

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