How to Find and Choose the Right Financial Advisor or Planner

In 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 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 financial mistake.

Although there are no iron clad guarantees, there are some questions you need to consider and 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 to take time with so you make the most informed decision you can.

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 factors and questions you will need answers to include:

Do I need a financial planner?

This is a question I grappled with for a long time once I had sufficient investable assets to warrant a financial advisor. You need to look at it from three angles

How much am I investing? Generally you probably want at least $200,000 of assets to warrant paying for ongoing financial help to manage your assets. This will ensure that the fees you pay make sense versus just standard broad based market index funds.

Do I have time to regularly monitor my investment? Markets are moving much faster nowadays then they have thanks to free online trading, automated/algorithmic trading and the fact everyone is online and trading on their smart phones. Investing is easy when markets are going up, but planners earn their money when they reduce your losses in falling markets and keep you from making bigger mistakes.

Peace of mind? Most of us are not professional investors or trained finance professionals. We can all diagnose a simple cold or allergies. But for anything more serious we tend to see a doctor. Same with financial planners. They won’t suddenly generate spectacular returns – in fact they won’t beat the market in most years – but they will be there for advice and guidance during times of turmoil and to maximize your long term financial health.

This peace of mind is what you are paying for. It’s to have someone in your corner when things are tough, prevent you from making big mistakes and ensure your retirement plan is realistic.

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).

Registered Investment Advisor (RIA) – You want your financial planned to be an RIA! A RIA is regulated by a federal or state agency (e.g. the SEC) when it comes to providing investment recommendations and financial advice. They also have to adhere to strict regulations (and hold certain licenses) and most importantly avoid conflicts of interest by conducting business as a fiduciary (see next section).

You should also ask how long the advisor and their firm 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?

Choosing the Right Financial Advisor - Questions to Ask

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 if they are not operating under a fiduciary model. E.g. if they work for a larger broker house, they may be paid more to promote in-house products.

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.

Also make sure you ask if your financial planner and their firm is a fiduciary. If they or their firm do business as a Fiduciary, it means they that are only paid via client investment fees and are compelled to act in their customer’s best interests. This is the model where most advisors and planners are moving towards.

They cannot be paid on commissions received from selling financial products from specific institutions.

The following is a range of fees you could pay for based on invested assets for a professional financial planner. The range varies due to the quality and extra services you may get. Make sure you get a full fee schedule before signing up with a financial planner.

Assets InvestedManagement Fees
$0 to $1M0.8% to 1%
$1M to $5M0.65% to 0.9%
$5M to $10M0.55% to 0.7%
$10M+0.4% to 0.6%
Advisor Fees By Assets Under Management

Finally don’t be scared to negotiate fees and ask for a better deal! These guys want your business just like any other service provider. So negotiate where it makes sense – but remember you generally get what you pay for!

What about their investment approach?

You should talk to at least two different advisors before moving forward and you’ll find that their fees will fall into comparable ranges based on the amount you investing.

But a bigger difference is their investment approach and allocation strategy. While this will vary based on the investor profile, age and risk tolerance you will definitely get a sense after meeting with them a few times what their investment style is.

Some will directly invest all your assets into equities and bonds, others will use funds (ask around extra fees here) and others will use a combination. They should all get you access to more advanced investments.

There is no right answer, but be clear on your financial advisors investment approach for you and ensure you are comfortable with it to meet your long term financial goals.

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.


Another great channel to find a good financial advisor is to ask some of your well to do family or friends. This is a good way to get someone with a track record and who you know is legitimate.

But just be a little careful here as you want to make sure that once you get the reference, you treat the advisor like any of the others you are looking at and go through the above questions and reviews.

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.

What about Robo-advisors?

Robo advisors are basically automated or algorithmic financial advisers that pick investments based on an investor profile and desired risk profiles. They automatically adjust as their “models” change.

Robo advisors are a good option for those with less than $500K in assets and don’t have the time and/or knowledge to manage their investments.

But as your assets grow, consider getting a dedicated advisor that builds a plan specifically for you.

Should I just go with Vanguard or Fidelity and their financial planning services?

Most people will have assets, either through their employers 401K or via direct investing, with large fund mangers such as Fidelity and Vanguard.

These large fund managers offer very low cost options (generally below 0.3%) for their advisory services and use a combination or Robo-advisors and preset plans for investors.

If you want an even cheaper option with these large fund managers, consider their target date funds.

Is tax planning included in your fees?

When it comes to investing larger sums of money, taxes start playing a bigger role in how much of the returns you keep or have to pay back to Uncle Sam (the tax man) via capital gains and dividend income.

A good financial planner will show you how they take taxes into account when investing and even better, their firm may have tax professionals or services in-house to provide you a holistic investment strategy.

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