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5 Questions You Should Ask Your Financial Advisor


By Garrett Sorensen, Relationship Manager

Finding a financial advisor nowadays isn’t difficult. Finding the right financial advisor you can get to know and trust is a little bit of a harder task though. In a world where advisors like Ivan Boesky, Charles Ponzi, and Bernie Madoff make the headlines, it can seem like a business riddled with advisors that don’t have your best interest in mind. So, to help navigate the task of finding an advisor that you can trust, I have found the 5 best questions you should ask your current or prospective advisor to make sure they have your best interest in mind.

      1. What are your qualifications?

    What makes someone qualified to handle our money? Many people would be surprised to know that some well-known firms don’t require anything higher than a High School Diploma or GED to become an advisor. Some advisors build their practice based on their life experience and nothing more. While there is no designation that is required to be an advisor, top advisors will seek out higher designations to help show they are qualified. Some of the top ones to look for are Certified Financial Planner, CFP(R), Chartered Financial Consultant (ChFC), and Chartered Financial Analyst (CFA) just to name a few. It's okay to ask an advisor where they went to school and what formal education they have on what you're looking to get help with. Warning: Not all financial designations are equal. Also, there are hundreds more that might be a better fit for what you’re looking for. The FINRA website has a list of designations they view as legitimate (Click Here) and offer the option to learn more about them and compare them to others.

      2. How do you get paid?

    If you cringed just reading that question, I don’t blame you. However, this is one of the most important questions to ask your advisor. If you want to know where your advisor’s loyalty is, asking how he gets paid will tell you everything you need to know. The one and only way an advisor that ONLY has your best interest in mind can answer is, “I get paid by you.” A true fiduciary advisor will have little to no conflicts of interest when it comes to your money. These conflicts can come from a broker-dealer or company they work for that is paying them an incentive to sell you a financial product. If an advisor receives commissions of any sort, any fees on top of what they are charging you, or you just don’t understand how they are actually getting paid, it may be time to start looking for a new advisor. Do not hesitate to ask an advisor every way he gets paid and make sure you understand it completely. Advisors can try to hide fees in things such as TAMP (Turnkey Asset Management Program) fees, trail commissions, 12b-1 fees, higher than average trade cost charges, and many others. 

      3. How many other clients like me do you service? Do you have a niche?

    Making sure the advisor you hire knows how to help you with your specific goals seems like a no-brainer. But, more often than not, we see people with unique problems or planning opportunities make costly mistakes because they hired a generalist instead of a specialist. Much like physicians, advisors can have special skills or training on certain planning techniques. Some advisors work specifically with certain professions, some with specific companies, and some work with people that have common hobbies and interests. Finding an advisor that has a niche, or a specific target of the population that they only work with, can ensure that the advisor has dealt with situations similar to yours. If your advisor is willing to work with anybody that can fog a mirror, you might be missing out on crucial steps you could be taking in your finances. Identify what is important to you when it comes to your money and look for an advisor that works in that space all the time. 

      4. What would happen to my account if you were no longer around?

    This one can seem like a morbid question to ask, but it is very important when it comes to the relationship you can build with an advisor. This question isn't just about what happens if your advisor gets in an accident tomorrow, but also how long they will serve as your advisor.

    If your advisor is close to the same age as you and you’re getting ready for retirement, have you asked your advisor if they are too? The last thing you would want to happen is to enter the time of your life that you have been building towards for decades and then the guy or gal that helped you get there decides they are going to do the same. Or, is this a career that your advisor is just dabbling in and in two years you find out he or she has left the industry completely and your finances are being handled by someone you’ve never even met before. Asking your advisor these questions can help you have peace of mind when it comes to finding the long-term relationship you should be looking for with an advisor. 

      5. How many clients do you service? 

    This question always reminds me of a story I heard from a friend of mine. She used to work for an advisor that told her to inform every client who called that he is busy and would return their call shortly. Then, she would provide the caller's name to the advisor, and he would pull up their file and read who they are and what he has done for them. With over 400 clients, there was no way he could remember even half of them or know what he was doing for them. Most people want to be able to call their advisor when they have an issue and get through to their advisor or at least hear back from them soon. Ask if you will have their cell phone number or if you are always going to be dealing with a secretary or associate advisor. Another bonus question you can ask here is would they classify you as one of their top 10 or 20 clients. If you get a response something like, “I don’t rank my clients,” or “No matter what I will give you the same treatment,” just know they might not value you as much as another advisor who would see you as their ideal client. 

    At the end of the day, there is no hard and fast rule on who you should hire as your financial advisor. What you should look for is someone you can trust, that knows your needs and can help you on a personal level with them, and will value the long-term relationship that you will want to build with this person. It is always okay to ask for a second opinion from time to time to make sure that the quality of service you are receiving is aligned with your goals as well.