How to Choose the Right Financial Advisor or Planner

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Choosing the Right Financial Advisor - Questions to AskIn light of the financial ups and downs over the last several years, it’s hard to know who to trust today for guidance about investing. Yet, even with all of the uncertainty, as each day passes, you still grow closer and closer to retirement. And with that, you need to know where to put your hard earned dollars to keep them safe, yet growing to stay ahead of inflation.


The truth is that most people today spend more time planning a two week vacation than they spend planning their retirement. And, oftentimes people will put their life savings in the hands of a total stranger they picked from an advertisement or online reference because they simply don’t know how to research financial planners. And, this could prove to be a big mistake.

Although there are no iron clad guarantees, there are some questions you need to ask any financial advisor you are considering placing your money with. After all, this is the money you plan to live on for 20, 30, or more years! So this is a job that you definitely want done right.

Some experts have even likened picking a financial planner to hiring somebody for a job. And this makes a lot of sense. This person will be dealing with the business of your finances – so you will definitely need to hire the right person for the job.

Some of the most important questions you will need answers to include:


  • What is your experience? Today, just about anybody can call themselves a financial professional. But where the rubber meets the road is whether or not the person is truly qualified to give good, knowledgeable financial advice. Therefore, inquire as to what licenses and other qualifications they possess such as professional or industry designations like a Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC). You should also ask how long they have been in the financial services industry. Because, while it’s nice to give everyone a chance, you will likely be much more secure with an experienced professional who has worked in both up and down markets successfully.
  • How do you get paid? This is a biggie because an advisor’s pay source may have more to do with his or her recommendations than you think. There are numerous types of compensation structures in the financial services industry. The advisor could be paid on commission, a flat fee, an hourly rate, or a combination of any or all of these. Be sure to inquire as to any conflicts of interest as well. For example, if a financial services representative is paid on commission and they only offer a limited number or types of  products, then this could be a red flag as to where their true interests lie.
  • What is your track record? There are actually a variety of ways to evaluate an advisor’s track record. One such method is to simply inquire as to how many clients’ portfolios are performing in line with or better than their goals. Include both short and long term goals in this conversation. In addition to investment performance, you will also want to know their track record in terms of any disciplinary actions for unlawful or unethical actions in their professional career. If the advisor is registered with the United States Securities and Exchange Commission, then you can actually look up this information online
  • Can I get it in writing? Once you feel comfortable with an advisor, ask them if you can have an agreement in writing that will detail the services that they will provide for you as well as the fees that you will be paying them for those services. Information in this document should include their investing strategies, specific benchmarks for performance, and suggested products to help get you there. And, always keep this document in your files for reference.

Regardless of how well your relationship is with your financial advisor, always keep in mind that it is you who is ultimately responsible for your money. You may not be at the helm making every trade, but you are responsible for ensuring that your advisor works in your best interests and that they handle your finances properly.

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