Apr 10

Tip On Questions To Ask A Financial Advisor

finacial advisorIf you are looking for a financial advisor to help you with your finances, be warned that practically anyone can call themselves one. Roger Sorensen lays out 10 Questions To Ask A Financial Planner (along with an interview worksheet):

  1. What experience do you have?
  2. What are your qualifications?
  3. What services do you offer?
  4. Are you Independent of financial product sponsors?
  5. Will you be the only person working with me?
  6. How will I pay for your services?
  7. How much do you charge for your services?
  8. How are you licensed?
  9. Have you been publicly disciplined for any unlawful or unethical actions in your professional career?
  10. Can I have it in writing?

You should take your time and feel totally comfortable with the advisor you choose. It's well worthwhile asking friends for recommendations and to interview a number until you find the one that is correct for you. If you have any reservations, you're better off passing and looking for someone else.

You should also have done some basic research yourself. This allows you to ask a number of financial questions to see how the financial advisor responds. It places you in a much better position to evaluate their knowledge and to get a feel if they are looking out for you or themselves. After all, this person will be helping you decide where to place your hard earned money so you want to have complete confidence that they are working for you.

An important footnote: Financial advisors cost money. Before you hire one, consider carefully whether you can manage your investments yourself at far lower cost.


  • Also make sure the advisor has experience helping others with your same financial goals. There are advisors who specialize in many different areas. You can search for independent financial advisors at websites like www.claroconnect.com which has many niche financial advisors.

    Feb 02
  • I'd be happy to recommend my financial advisor to you. He's been in the business over 10 years & will put together a free portfolio analysis for you. If you are serious about investing in your retirement or funding your child's future, please send me an e-mail and I can give you his information. He's helped my family a lot!



    Oct 23
  • Its hard to suggest a financial advisor without giving a location. An advisor 3 states away isn't going to be as much help to you as someone local. If you interested in real estate i would check out REITS

    Jul 12
  • I was wondering if anyone can suggest a Financial Advisor to me. I am a conserative investor .I am doing research for my portfolio. I would like advise from someone that owns realestate and who is a conservative.Thanks in advance.

    Apr 26
  • While a financial advisor may give you a sense of security in your investments, the first thing you have to think about before you hire one is whether you are an active or a passive investor. If you have the time to research the market and potential investments and can make informed decisions, you may not need an advisor, and you may not even need to be diversified. In my blog I touch on this question "To Diversify or Not To Diversify" and the financial advisor, if you choose one, is really a big part of that decision. dineromaker.blogspot.com/

    Apr 22
  • If he ever pitched any type of a hot variable annuity to you, Run:-)

    Apr 11
  • I am just starting out with a financial advisor, and I met him at a wedding faire (a great place for them to meet potential prospects) -- he is in his 20s and just starting out, but was able to tell me what his own portolio was -- stocks, mutual funds, investment properties, etc. I am in a similar situation, with a couple investment properties, and a 401k and a mutual fund... I felt very comfortable with him, although I didn't ask him any of those questions (except how much he charges, etc).

    I also made sure that I can "fire" him any time. As I am just starting out on my investmenting for the future, I asked my father for advice before I got a financial advisor. His spiel was that no one will watch my money better than me, so that I should do it all myself, not trust anyone to watch out for my money. That may be good advice if you are retired, have time on your hands or know a lot about the financial world, none of which would describe me. So I had to go with my gut instinct. We will see if I will be able to retire at age 50 in 21 years!! So far so good!

    Apr 11
  • Elliot nails it. This fee-only/fee-based hysteria is absurd, as demonstrated by the settlement Raymond James had to pay for 'reverse churning' fee based accounts. If the question is, "how will I pay for your services?" The answer should be, "it depends." I recently had a new client transfer in a ~$1MM equity portfolio, most of which will not be touched anytime soon. This client is far better off in a traditional, commission based brokerage account than a fee based advisory account.

    I don't understand why people that point out the incentive to churn commission based accounts never mention the incentive to ignore fee based accounts (see the Raymond James settlement above). Incentive doesn't equal action and an ethical advisor can and will use both types of compensation models depending on the circumstances.

    Apr 10
  • I have to disagree with George. Though the CFP designation is an *indicator* of competence, it should not be a reason to exclude an advisor. Many highly capable advisors with years of experience don't take the time away from their clients to get that designation, because their experience and satisfied client base does more for their business than the letters CFP.

    Also, the argument over form of compensation is marketing spin by advisors and masks the real question - is the advice I'm getting in my best interest? Commissions are far cheaper in the hands of an ethical advisor for smaller accounts (who pays $3k for advice on a $20k rollover??), fee-based is appropriate in certain situations, and fee-only is appropriate in highly complex/high net worth situations. If a fee-only advisor tells you that you need insurance, you still have to pay the build-in fees of the insurance product.

    Bottom line - as for recommendations from your friends, your CPA, your attorney, etc. The ability, integrity, and service of the advisor is your criteria - not the classes they took nor their compensation model(s)...who can explain exactly how their doctor gets paid?

    Apr 10
  • I would also ask:"what is your financial exit strategy." If the advisor can't tell you in one sentence beware! It's also a red flag if your advisor is recommending stocks for you but she owns rental properties.

    Apr 10
  • Very good advice...I get asked this question a lot and I always say that the financial planner you pick must, AT A MINIMUM, have a CFP license AND be compensated by Fees ONLY (which is NOT the same as fee-based!). Interview at least three planners who meet the above criteria and pick the one you are most comfortable in working with.

    There is another great article by Newsweek along with a checklist and diagnostic list on how to pick planners at napfa.com



    Apr 10