7 Questions to Ask a Financial Advisor Before Hiring Them
Photo by Amy Hirschi
The most important questions to ask a financial advisor before hiring them cover how they get paid, whether they will act as a fiduciary, what services are included, their experience with families like yours, and what the relationship will actually look like once you become a client.
Hiring a financial advisor can feel strangely personal. You may be handing someone information about your income, debt, investments, marriage, children, retirement plans, and some of the financial decisions you feel least confident about.
You may also be trusting them with money your family spent years building.
Most of us would never hire the first contractor who knocked on the door and offered to renovate the kitchen. We would ask questions, compare quotes, look at previous work, and try to figure out whether we actually wanted this person inside our house for the next three months.
Hiring someone to help manage your financial life deserves at least as much thought.
The good news is that you do not need to become an expert in investing or memorize every financial credential before the first meeting. A handful of thoughtful questions can tell you quite a bit about how an advisor works, how much you will pay, and whether they are a good fit for your family.
What should you know before meeting with a financial advisor?
Start with the problem you want help solving.
Need help with budgeting, debt, or money habits?
You may want to start with a financial coach.
A coach can help with organization, accountability, cash flow, and creating financial habits that actually stick.
Need help with investments, retirement, or a more complex financial plan?
A financial advisor may be the better fit.
An appropriately qualified advisor can help with personalized investment guidance, retirement planning, and coordinating longer-term financial decisions.
Know you need an advisor but aren't sure which one?
Interview two or three before deciding.
Compare their fees, services, experience, planning approach, and how comfortable you feel asking questions.
KMoney takeaway: Figure out the job before hiring the person. You'll get much more out of the seven questions below when you already know what you want help accomplishing.
Before interviewing an advisor, spend a few minutes identifying the problem you actually want help solving.
Try completing this sentence:
We need help with __________.
Maybe you want someone to manage your investments. Perhaps retirement has started feeling close enough that it's finally catching your attention. You could be balancing college savings against retirement, trying to make smart decisions after receiving an inheritance, or simply realizing that your income and assets have become too complicated to keep managing with a spreadsheet you created six years ago.
Your answer matters because financial professionals offer very different levels of support.
If your biggest challenge is sticking to a budget, paying off debt, or creating better financial habits, you may want to start by comparing a financial coach vs. financial advisor.
If you are still trying to decide how much money should go toward savings versus debt, my article on whether to pay off debt or save first can also help you organize those priorities before paying someone else to help.
Once you know what you need, interview a few advisors rather than assuming the first one you meet is the right fit.
Two advisors can look remarkably similar on paper and offer very different experiences. One may focus primarily on investment management. Another may spend much more time helping families coordinate retirement, college, insurance, taxes, and estate planning.
The following seven questions will help you figure out which relationship fits your family.
What are the 7 most important questions to ask a financial advisor?
#1: Will you act as a fiduciary when advising our family?
A fiduciary is required to put the client's interests first when providing financial advice.
Ask the question directly:
Will you act as a fiduciary whenever you provide financial advice to our family?
Then follow up with:
Will you put that commitment in writing?
You are looking for a straightforward answer.
For example, CFP® professionals are required by CFP Board to act as fiduciaries whenever they provide financial advice to a client, including duties of loyalty and care.
Other financial professionals may work under different standards depending on their role and the services being provided, which is why asking the question matters more than assuming a title answers it for you.
You do not need a 15-minute explanation filled with regulatory terms. You should come away understanding when the person is obligated to put your interests first and whether that obligation applies to the work they will be doing for you.
If the answer feels vague, keep asking until you understand it.
#2: How do you get paid, and what will our family actually pay?
You should understand every way an advisor or their firm can make money from your relationship.
Financial advisors may be compensated through:
Hourly fees
Flat financial-planning fees
Monthly or annual retainers
A percentage of the assets they manage
Commissions on certain financial products
Referral arrangements
A combination of several methods
The payment structure matters, but the dollar amount matters even more.
If an advisor charges 1% of assets under management and you have $500,000 invested with them, that works out to $5,000 per year before considering other potential investment expenses.
Ask:
Based on our situation and the amount we expect you to manage, approximately how much would our family pay during the first year? What would we expect to pay each year after that?
Then ask what that number includes.
There may be underlying fund expenses, planning fees, insurance commissions, platform costs, or other charges depending on the relationship.
You want to leave the conversation knowing what the service will cost in dollars you can picture coming out of your household finances.
Fees also deserve to be considered alongside value. Paying several thousand dollars a year may make perfect sense for a family receiving comprehensive planning and investment management. The same fee becomes harder to justify if you primarily need an annual investment checkup.
#3: What services are included, and where does your role end?
“Financial planning” can mean a lot of things.
One advisor may build your investment portfolio and meet with you once a year. Another may help coordinate retirement, insurance, college savings, taxes, estate planning, employer benefits, and major financial decisions throughout the year.
Ask specifically whether your relationship includes:
Retirement planning
Investment management
College planning
Insurance reviews
Tax-planning coordination
Estate-planning coordination
Employer-benefit reviews
Cash-flow planning
Regular planning meetings
Help implementing recommendations
Email or phone access between meetings
Then ask:
What would require another professional or an additional fee?
A good advisor should be comfortable explaining where their expertise ends.
They may work alongside your CPA on tax strategy without preparing your tax return. They may identify a need for an estate-plan update while referring the legal work to an attorney.
For parents, college planning is another area worth discussing specifically. If you already have a 529 or are deciding which account to use, my comparison of 529 plans, Coverdell ESAs, and UGMA accounts can help you develop more specific questions before the meeting.
Understanding the scope up front makes it much easier to determine whether you are paying for a relationship your family will actually use.
#4: Have you worked with families like ours?
An advisor may have 20 years of experience and still have limited experience with the financial circumstances your family is navigating.
Tell them a little about your situation and ask:
How often do you work with families dealing with similar priorities?
Those priorities might include:
Two working parents with significant childcare expenses
A family transitioning to one income
Variable or commission-based income
Business ownership
Stock compensation
Student loans
College and retirement competing for the same dollars
Supporting aging parents
A blended family
A major career change
Then ask for an example of how they have approached a similar situation without sharing another client's private information.
Family finances rarely fit neatly into separate boxes. Maybe the spreadsheet says you can increase your 529 contribution, but daycare already costs more than your first mortgage did. Perhaps retirement needs more attention, but you also want enough flexibility to take a family vacation without feeling guilty every time someone orders an appetizer.
Those tradeoffs are part of the plan.
Look for an advisor who asks questions before reaching conclusions and seems genuinely interested in how your household operates.
You should be able to picture yourself discussing both the exciting decisions and the uncomfortable ones with this person.
#5: What qualifications do you have, and how can we verify them?
Credentials can provide useful information about someone's education, experience, and professional requirements, but the letters after an advisor's name should be understandable.
Ask:
Which credentials or registrations do you hold, and which are most relevant to the work you would do for us?
You may see credentials such as CFP®, CFA®, CPA, or ChFC®, along with securities or insurance licenses depending on the professional's role.
You should also independently verify what you are told.
FINRA's BrokerCheck allows investors to research the background and experience of brokers and firms, including registration and certain disclosure information. Investor.gov also provides an investment-professional search that draws on regulatory databases.
For a CFP® professional, you can verify their certification through CFP Board.
This research usually takes a few minutes and is worth doing before transferring a meaningful amount of money.
A large social-media following, impressive office, podcast, or referral from a friend can help introduce you to someone. Professional verification gives you another layer of information before making the decision.
#6: How do you build and manage a financial plan?
This question tells you what life as a client may actually look like.
Ask the advisor to explain what happens after you sign.
They may start by collecting information about your income, accounts, debt, insurance, taxes, goals, and tolerance for investment risk. From there, they may create recommendations, establish priorities, implement changes, and revisit the plan periodically.
A useful follow-up is:
What should we expect to accomplish during our first 90 days working together?
Listen for concrete steps.
Maybe the first few months include consolidating old retirement accounts, updating your investment allocation, reviewing life insurance, establishing a college-savings target, and creating a retirement projection.
You should also understand how the advisor approaches investments.
Ask how they think about diversification, investment costs, taxes, risk, rebalancing, and major market declines.
One question I especially like is:
What would you recommend we do during a significant market downturn?
You are trying to understand whether there is a thoughtful process behind the portfolio and whether the advisor can explain that process in language you understand.
Financial planning should eventually translate into decisions your family can act on.
#7: Who will we actually work with, and what will the relationship look like?
You could have a great introductory meeting with a senior advisor and discover after signing that most of your communication happens with someone you have never met.
Ask who will actually manage your relationship.
Find out:
Who your primary advisor will be
Who builds your financial plan
Who makes investment decisions
Whether other team members will attend meetings
How frequently you will meet
Whether you can ask questions between meetings
How quickly the team normally responds
What happens if your advisor leaves the firm
Then finish with one question that brings everything back to your family:
What should success look like for us after one year?
The answer should extend beyond investment performance.
Success might mean being on track for retirement, increasing your savings rate, reducing unnecessary risk, completing an estate plan, improving insurance coverage, funding college appropriately, consolidating old accounts, or simply completing the financial tasks that have been sitting on your list for years.
Markets will have good years and bad years. Your financial plan should still be moving your family toward the life you are trying to build.
How should you compare financial advisors after the meetings?
Once you have interviewed two or three advisors, give yourself a little space before choosing.
The conversations can blur together surprisingly quickly.
One advisor may have quoted a lower fee but offered fewer planning services. Another may have more experience with families like yours. A third may look excellent on paper but leave both you and your partner feeling as though you barely got a word in.
Compare each advisor across the same categories:
Fiduciary commitment
Cost
Services
Relevant experience
Credentials
Planning process
Communication
Overall fit
If you are making the decision with a spouse or partner, consider completing the scorecard separately and then comparing notes.
You may have noticed different things.
Perhaps one of you loved the investment philosophy while the other noticed that the advisor directed nearly every answer toward only one partner.
Those observations belong in the decision alongside fees and credentials.
Which financial advisor should your family hire?
The right financial advisor should be able to clearly explain what they will do, what your family will pay, where their expertise ends, and how their recommendations connect to the goals you care about.
You should also feel comfortable asking questions.
Money gets complicated enough without feeling intimidated by the person you hired to help simplify it.
A strong advisor relationship can give your family another set of experienced eyes when the decisions become more meaningful: changing careers, sending kids to college, selling a business, receiving an inheritance, approaching retirement, or deciding how much you can afford to enjoy today while still preparing for tomorrow.
You do not need to understand every investment strategy before you hire an advisor. You should understand the person you are hiring and feel comfortable with the process they use to make recommendations.
Pay attention to how you feel leaving the conversation.
Do you understand what happens next? Do you know what the relationship will cost? Did your questions receive thoughtful answers? If you attended with a partner, did both of you feel heard?
Those are good signs that you may have found someone worth continuing the conversation with.
And if you leave with more questions than answers, you can keep looking. There are plenty of qualified financial professionals, and taking a little more time to find the right one can pay off for years.
Frequently Asked Questions
What is the most important question to ask a financial advisor?
One of the most important questions is whether the advisor will act as a fiduciary whenever they provide financial advice to your family. You should also understand exactly how they are compensated and what your family will pay, since both can affect the relationship.
How many financial advisors should you interview?
Consider interviewing at least two or three financial advisors. Comparing several professionals can help you understand differences in services, fees, experience, communication style, and investment philosophy before choosing.
Should a financial advisor be a fiduciary?
Many families prefer an advisor who agrees to act as a fiduciary whenever providing financial advice. Ask the advisor directly when the fiduciary obligation applies and whether they will provide that commitment in writing.
How can you tell whether a financial advisor is trustworthy?
Look for clear explanations, transparent fees, verifiable credentials, open discussion of potential conflicts, and recommendations that reflect your family's circumstances. You can independently research investment professionals through resources such as FINRA BrokerCheck and Investor.gov.
How do you check a financial advisor's credentials?
Ask the advisor which credentials, licenses, and registrations they hold, then verify them independently. FINRA BrokerCheck, Investor.gov, CFP Board, state regulators, and the organizations responsible for individual professional designations can help.
Should both spouses meet with a financial advisor?
When financial decisions affect the household, having both partners participate can be helpful. Each person may have different goals, concerns, risk tolerance, or questions, and a strong advisor should make space for both perspectives.
