Important Questions to Ask a Financial Advisor

By Arturo Conde | AUG 30, 2023

When you meet with a financial advisor about signing up with them, there are a number of important questions to ask. Here's what you need to know.

1. What are your qualifications?

Financial advisor qualifications can include a variety of educational degrees, or certifications common to many financial planners and financial advisors, including certified financial planner (CFP), certified public accountant (CPA), chartered financial analyst (CFA), chartered financial consultant (ChFC) and more.

2. Do you provide the services I require? How do you communicate changes and updates in services?

Having a financial advisor who offers the right services is very important, because it directly aligns with your goals as a client. If you need support with investing, you wouldn’t want to work with someone right now who specializes in estate planning - though their expertise may be useful later on. 

Communication with clients is also key, and different clients require various levels of updates and reports. A relatively regular schedule of communication is ideal so that you understand what is happening with your financial plan and can have a way to connect in case something changes on either end.

3. How well do I fit into your current client base? Is there a minimum amount I should consider?

Some financial advisors only work with high-net-worth clients or ultra-high-net-worth clients, for example. Asking about this will give you a sense of who the advisor's regular clientele includes and whether their current client base and minimum investment is a clientele that you might potentially be part of. If you don't have enough to meet this kind of a minimum investment, it may be necessary to seek out the services of another advisor or firm.

4. Are you a fiduciary?

A fiduciary financial advisor takes on the responsibility of their client, acting in the best interests of their clients at all times. Fiduciary financial advisors will seek to minimize conflicts of interests, and be transparent with any potential breaches, issues, etc.

5. How do you approach investment strategies? Can you give me a few examples of how you’d suggest I work with my money at different stages in life?

Analyses will vary from advisor to advisor, but may include fundamental analysis, technical analysis and more. Strategies for your money will depend on your goals, so be sure to note whether what the advisor is saying aligns with what you need.

Again, not all exact figures will be available to even estimate until an advisor has all of your information in hand. Nonetheless, important considerations to keep in mind are healthcare, tax consequences, investments, social security, pensions and annuities, to name a few. How skilled is your potential advisor in handling these topics? Do they have a team they can work with or recommend if they are less experienced?

6. How can I boost retirement income and reduce retirement expenses? How should I prioritize my finances pre-retirement in order to make the most of them later? 

Do this advisor's answers align with your current financial growth goals and outlooks, as well as your long-term ones?

7. What fees am I responsible for if I work with you? How often will I have to pay them?

Fee schedules are often based on a percentage of assets under management (AUM). There are also wrap fee programs and fee-only vs. fee-based distinctions to understand about every financial advisor firm. Performance-based fees may also come into play. It's important to understand all of these up front so that you avoid any unnecessary fees as early as possible in your relationship with a financial advisor.

Bottom Line

Retirement planning doesn't have to be as labor-intensive as another job, especially if you can find the right people to support you. Hiring a financial advisor might be a good step to take. Make sure you understand how to begin your research by preparing a list of questions that value the needs and wants that are important for you and your loved ones to have as you navigate your finances.

Tips for Deciding Whether You Need a Financial Advisor

• You have a list of questions, but how do you actually get connected to an advisor? Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Don’t forget to ask yourself some questions, too. Financial advisors have different areas of expertise, so it’s important to consider why you want an advisor before diving into the search. If you’re looking for helping crafting a financial plan, a 

certified financial planner

 (CFP) may be useful. If you’re going through a divorce, you might want the assistance of a certified divorce financial analyst (CDFA).

Photo credit: iStock.com/Perawit-Boonchu, iStock.com/VioletaStoimeno