How to Interview a Financial Advisor
Let’s say you find yourself with wealth—a fair amount of wealth. You could have earned it after years of hard work, inherited it, or had a lucky break! Maybe you have a job with the potential to grow and want to start building your wealth. But you don’t want to leave money in a bank; you want your money to work for you! A financial steward can guide you to take action today.
So, you start the process of finding a financial advisor and encounter multiple professional individuals who want to help you. How do you know what questions to ask? Having a bad wealth advisor means working with someone who doesn’t have your best interest in mind. This may cause you to lose focus on what’s important to you and even find it more challenging to fulfill your financial goals.
Discover the breakdown between the first and second advisor interviews and common red flags to look out for.
Questions For Your First Advisor Interview
What is your firm’s philosophy?
Although there is no definitive “right answer,” you need a wealth planner who, at their core, seeks to understand your goals, aspirations, risks, and concerns before offering any recommendations. We refer to these advisors as aligned-interest advisors. We strongly believe that the true value of a great advisor isn’t about “beating the market” but about serving as your household CFO.
How do you get compensated?
If you want to predict how people are likely to behave, understanding their incentives is key. Knowing how advisors are compensated can help you identify the payment structures that work best for you. This insight also allows you to align incentives between yourself and your advisor.
For example, if an advisor is employed by an insurance company and earns high commissions for selling whole life insurance, there’s a strong likelihood that this product will be suggested—even if it’s not necessarily the best option for your needs.
What financial planning services do you offer?
Your ideal advisor is one who has expertise in the areas where you need the most support. For example, an advisor might specialize in Social Security and Medicare, but if you’re 30 years old, those topics may not be your top priority right now. Instead, you might need help figuring out which home you can afford or how to achieve your long-term financial goals. In that case, that advisor may not be the best fit for you
Other examples of important questions to ask when considering financial planning services include:
- Do you provide investment advice for retirement accounts like 401(k)s and IRAs?
- Do you offer estate planning or college savings services?
- How will you assist me in managing an inheritance or my business?
What is your approach to investment planning?
There’s no one-size-fits-all answer here, but there are definitely some strong and weak responses. The most important thing you want from your advisor is a clear, evidence-based process. If they seem like they’re “winging it” or start talking about their past market performance when you ask this question, it’s time to walk away!
Advisors simply don’t have the bandwidth to be your household CFO while also being exceptional stock pickers. The best advisors understand that true success comes from knowing the returns you need to meet your goals. If those returns appear reasonable (taking into account historical performance of a diversified portfolio), only then can they focus on building the right asset mix to aim for your target return while minimizing risk.
Why am I a suitable client based on what you know about me?
Although this question should be asked only after the advisor has had ample time to learn about you, it really gets to the core of the conversation. Their response should not only demonstrate a clear understanding of your situation, but also focus on how they can help improve it—and, ultimately, how you will benefit from their guidance.
Can you give me an example of a time when you helped a similar client make progress?
A strong indicator of a financial advisor’s expertise is whether they have experience helping clients with similar needs. If they struggle to answer or can’t provide clear examples, it might suggest they aren’t accustomed to working with clients like you.
How often will we review our plan to make sure we’re making the right kind of progress?
Knowing where you stand financially is important, and you want an advisor who keeps you in the loop.
Ask questions like:
How often do you expect to be in contact with me: once a year, monthly, or more?
Do you offer web services and portals?
Do you offer insight newsletters and reports?
At this stage, it may also be worth asking for examples of financial plans and asset allocations. Doing so will allow you to understand how their philosophy might actually materialize as a financial plan.
Questions For Your Second Advisor Interview
Do you have a sample financial plan you can send over?
Understanding the quality and value of an advisor’s financial plans can make all the difference between a mediocre advisor and one who is dedicated to accelerating wealth creation and helping you achieve your financial goals. By reviewing a sample plan, you can get a clear idea of what to expect from the financial planner or advisor you work with.
Who is your custodian?
A custodian is a bank or reputable brokerage where your investments are held. If your advisor acts as their own custodian, that’s actually quite common and is not a red flag. Many independent financial advisors work directly with large, reputable custodians like Schwab, Fidelity, TD Ameritrade, Pershing, or Apex, but in some cases, the advisor may handle custody themselves. This is generally a sign of a streamlined process, and as long as you trust the advisor’s reputation and transparency, there’s no cause for concern.
If I hire you and another economic crash happens, what’s your plan?
Note that you shouldn’t need to ask this question. If, during your first conversation, the advisor hasn’t made it clear that they’re focusing on positioning you for long-term success in the market rather than trying to time it, they might not be the right fit. One of the key benefits of working with a wealth advisor is that you’re not overwhelmed with panic or short-term worries, but instead, you’re able to focus on the long-term, comprehensive financial plan you’ve developed together.
What would the process look like if I decide to hire you?
This is an important question to ask during a second interview, when you’re seriously considering hiring the advisor.
Look for a clear, well-defined process for bringing you on as a client. If they hesitate or speak in vague terms, it’s a strong sign that they’re more focused on closing the deal than on building a meaningful, long-term relationship with you.
If I hire you, will I be working with you or somebody else?
Carefully consider your expectations regarding the relationship. Sometimes, a financial advisor may work with a team or alongside another advisor. If that’s the case, you’ll want to know who else will be involved in managing your finances.
Keep in mind that if you’re expecting the advisor to work directly with you, there should be no ambiguity about how the relationship will be structured and who will be handling your financial matters.
If I hire you, will I have to sell my current investments? Will there be tax implications?
If you hold investments outside of tax-advantaged accounts, such as individual brokerage accounts or other non-qualified investment vehicles, it’s important to ask the advisor whether you will need to liquidate those investments and purchase specific assets they recommend. Understanding this is crucial because transitioning your assets to an advisor’s management could potentially trigger tax consequences, such as capital gains taxes or other fees depending on the jurisdiction.
You should seek clarity on how the advisor handles these transitions and whether they have strategies in place to minimize any adverse financial impacts. This will help you make an informed decision and avoid any unexpected costs when moving your investments under their management.
If I hire you, what are my all-in costs?
During a second meeting, many clients focus on the fees they’ll be paying the advisor without fully understanding the additional costs that come with the client-advisor relationship. While you may be aware of the “advisory fee”—the fee the advisor charges for their services—it’s equally important to consider the “investment expenses.” These are the costs associated with the financial products the advisor selects and recommends on your behalf, such as mutual fund management fees, fund expense ratios, or commissions related to specific investment vehicles.
Some advisors may appear more affordable at first glance based on their advisory fees, but if the investment expenses are significantly higher, the overall cost could end up being greater than expected. When deciding if an advisor is the right fit for you, it’s essential to evaluate the total, all-in costs—including both the advisory fees and the underlying investment expenses—to get a true sense of what you will be paying.
What happens to our relationship if you retire or leave the firm?
Once you’ve found the right financial advisor, your relationship with them is typically long-term. This means you’ll be working closely together for years to come, making it crucial that you feel comfortable with them. A strong, trusting relationship is key to navigating the ups and downs of your financial journey. It’s not just about expertise or strategy—it’s about having an advisor you feel confident communicating with, someone who understands your goals and puts your best interests first. Make sure you feel heard and respected, as this rapport is fundamental to achieving your financial success over time
What other professional services do you have as part of your network (such as accountants, estate attorneys, insurance representatives, mortgage specialists, etc)?
Holistic financial advice rarely exists in isolation, as many aspects of financial planning require expertise beyond what a single advisor can offer. By asking this question, you gain insight into your potential advisor’s network and their ability to connect you with trusted professionals in other areas. Whether it’s tax specialists, estate planners, or insurance experts, having access to a well-rounded team is crucial for comprehensive financial planning.
If the advisor cannot provide examples of other professionals they regularly work with or recommend, it may indicate that they lack a broader network of experts. This could leave you in a position where you have to search for and vet additional experts on your own should the need arise. It’s important that your advisor can offer you not just advice, but also the connections to other professionals to ensure all aspects of your financial plan are well-managed.
At FindInvestPartners, we dedicate hundreds of hours each year to interviewing and evaluating financial advisors. Our algorithm helps you find an advisor with the right experience, skills, processes, and technology to provide excellent service. However, just as important as finding the right match is empowering you with the right questions to ask. Your confidence and trust are crucial to the long-term success of the advisor-client relationship.
If you’re interested in learning more about how we vet the advisors in our network, you can explore our selection process here.