How to Choose a Financial Advisor in 10 Questions


Choosing a financial advisor can be a difficult, scary, and sometimes troubling. Believe it or not, many financial advisors are out to simply swindle you out of your money. However, here at Top Financial Advisor we will always be upfront with you. We want you to grow, improve and share us with your friends. With this in mind, let me share with you a list of 10 questions to ask before choosing your financial advisor, to make sure they don’t swindle you out of your money.

How to Choose a Financial Advisor in 10 Questions

How to Choose a Financial Advisor in 10 Questions

2 February 2009 – During a debate on the economic crisis with former Barroso and Blair advisor and current vice chairman of think tank Policy Network.

  1. What licenses, certifications, credentials do you have?
    Without credentials I would not trust any financial advisor, that does not mean they technically need a certification or licenses, but they should have experience. For example, I don’t have a certification. I do however, have years of experience investing money (my own and otherwise). However, if they do have a certification they should be one of the following: Certified Financial Planner (CFP), The Chartered Financial Consultant (ChFC), Certified Public Accountant (CPA), Personal Financial Specialist (PFS). Being licensed or having a certification in one of the above, they are required to put your needs first, and as such are likely safer to use. Notice, I’m just giving you tips and you are not handing me your money.
  2. What is your hourly rate?
    Asking for an hourly rate is important, quite often accountants and financial advisors will attempt to charge you thousands of dollars for something that will take them an hour. If they claim they only do pay-per-service or a flat rate, try to negotiate. No one will decline you for asking, and it’s an important factor in how to choose a financial advisor in 10 questions. (See our post on financial advising rates.)
  3. What services do you (or your firm) provide?
    Ask this question prior to telling the financial advisor your needs. You can then be sure that they can provide you with the services you need, whilst avoiding any potential lies. Be sure your job is done right, and do not assume that financial advisors will be honest.
  4. What makes your service unique?
    Perhaps the financial advisor you are talking to is the best in their field, the worst, or maybe they are just providing a standard service. If it is a standard service you should also consider reviewing services elsewhere and compare pricing.
  5. What does you (or your firm) specialize in?
    Some financial advising firms have a specialty, and can provide exceptional service in one particular area. Even if you are not interested at that given time in using the service they specialize in, some day you may need it. However, you should probably look elsewhere if you want exceptional quality.
  6. Could you provide me with references?
    Remember, you are hiring them to do work for you. Feel free to ask your financial advisor any questions you have or were/do ask during interviews.
  7. How often will we interact?
    A simple enough question, but it will inform you on how often you will be contacted with updates and how much time they are putting into your specific task. Asking your advisor to be a permanent contact will ensure they do a better job because they would like to keep you as a customer.
  8. Have you had any regulatory or legal action taken against you (or your firm)?
    If the financial advisor in question has some of the credentials from the first question I suggested asking. Financial advisors are required by law to answer your question. If they do have any regulatory action against them, hear them out. Some legal action may be unrelated to their service or moral character. Even after asking this question I suggest doing a google search of the firm.
  9. How will I pay for this service?
    Please, please, please, be sure to get this in writing. Read the contract carefully and ensure that you and the financial advisor are happy with the terms. If not negotiate or walk away.
  10. What is your approach to the given service?
    Asking a financial advisor their approach forces them to articulate how they intend to go about using your money. In doing so, they are trying to justify their actions and are much more likely to be honest with you (by completing the task the way they explained it to you).

Remember, you are hiring a financial advisor. Ask them questions you would be asked during an interview, look into their character, try to gain insight into the morals and professionalism. The tile should really be, “how to choose a financial advisor in 10 questions or less,” because even one of these questions will help you dramatically improve your understanding of a financial advisor’s character. (And for 40 more questions, see co-author Robb’s post, “40 Curveball Questions to Ask A Financial Advisor“) If for any reason you are dissatisfied with an answer to one of these questions, perhaps it is time to look elsewhere. Choosing a financial advisor is important, and asking only 10 questions could be the difference between striking it rich or going broke.

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