Financial advisor discussing with a young couple

How to Choose a Financial Advisor

Finding the right investment advisor can be a confusing and challenging process. First, the number of professionals offering to manage your investments has continued to grow, with everyone from bankers to insurance agents promoting their financial acumen. Second, with so many choices – including automated options like Robo-advisors – it’s difficult to know where to start.

I suggest reaching out to friends and family first for referrals and recommendations. They will be your best source of information since you know them well and likely trust their judgement. Another good option is to ask another professional who you already work with, such as an attorney or accountant. They will typically only recommend people that they have vetted and feel comfortable referring their clients to. Gather three names from these sources and plan to interview all three if possible.

If your attempt to gain referrals from family and your professional network comes up short, you may have to search online for options. When reviewing websites of potential candidates, be sure to check the credentials of the management team. You want to work with professionals who have at least 20 years of experience, because that means they’ve been tested in good and bad markets and won’t panic when things head south. It is also wise to read the firm’s investment strategy section closely. If they are only offering the same approach to investing that you can get from simply buying index funds or numerous asset classes, it could be a sign to steer clear.

Finally, look for rankings or articles about the firm that can help verify their credibility. Checking for community involvement is also a good way to see if the firm’s values align with yours and shows that the advisors are motivated by more than simply making money.

Once you’ve winnowed the field, you should set up a time to talk in person. It’s important to meet your potential advisor face-to-face to get a sense of his or her personality and the people you might be potentially working with in their office. Come prepared with a list of questions that will help you learn about the most important aspects of the firm and guide your decision.


Suggestions include:

  • How are you compensated? Some advisors are paid through “fees only,” which means they are paid directly by the clients they serve, usually a percentage based on the amount of assets they manage. However, some may charge an hourly fee or a retainer fee for services instead. Other advisors, including brokers, are paid on commission, which means they receive a set amount when they sell a client a certain financial product or investment. Typically, advisors who are paid on commission have a financial incentive to steer clients into a limited number of investments.
  • Are you a fiduciary? Working with a fiduciary is important because advisors who serve as fiduciaries are obligated to act in the best interests of their clients.
  • What can I expect in terms of services and reports? You want to make sure the firm you work with is responsive and clearly offers more than you might receive from an online service.
  • What is your investment strategy? It’s key to understand the firm’s strategy and whether it’s a good fit for you. Look for an advisor that performs real research, as opposed to simply allocating your money into a group of assets. Those firms may not even know which companies are included in the funds they recommend.

Don’t forget to also ask for the firm’s ADV, which will provide you with a closer look at the company’s business practices, ownership and regulatory record. Last but not least, ask for a list of references so you can interview clients yourself and get a better sense of their experience with the firm.

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