By Angela Dorsey
Are you looking to hire a financial advisor but not sure what questions to ask a financial advisor in an interview, or what their answers really mean? Finding a financial advisor you can trust and relate to is critical. I recommend asking the following financial advisor interview questions and listening carefully to the answers.
1. How do you get paid?
Financial advisors can be paid in many ways, and it’s important that you understand how the advisor is compensated. Some advisors are paid by commission, some charge hourly, some as a percentage of the assets they manage, and others as a flat fee.
Which one is best? It really depends on what you need. If you just want someone to take a quick look at your finances and then send you on your way to implement yourself, then perhaps hourly is best for you. If you want someone to help you implement the recommendations they make, then perhaps AUM or flat fee would be better.
2. Do you receive a commission from the investments you recommend?
If an advisor receives a commission for the investments they recommend, they may not recommend the best investment for you. I recommend that you stick with fee-only financial advisors; they do not receive commissions on the investments they recommend.
3. Are you a fiduciary?
A financial advisor who is a fiduciary makes investment decisions with your best interest in mind. A financial advisor who isn’t a fiduciary may recommend products for which they receive a commission or other form of payment. The best way to feel confident that your advisor is prioritizing you above all else is to partner with a fiduciary.
4. What are your qualifications and certifications?
The CERTIFIED FINANCIAL PLANNER™ certification is the gold standard for financial advisors. In addition to meeting rigorous education, training, and ethical standards, CFP® professionals are committed to serving in their clients’ best interests in order to prepare them for a bright financial future.
5. Will your recommendations be primarily focused on one area, or will they be comprehensive in nature?
This question will uncover what services the advisor offers, and if they are just an investment advisor or a comprehensive financial advisor. Do they include all areas of your financial life in addition to the investments, such as retirement planning, tax planning, insurance, and cash flow? What if you need help in applying for a HELOC; will they help you with that? If you want an advisor to do more than just manage your assets, be sure to ask them what that will look like.
6. What is your investment philosophy/approach?
Do they believe in actively trading in your account? Or do they take more of a buy-and-hold long-term view? Do they use individual stocks or mutual funds and ETFs? How often do they rebalance or change your accounts? These are all important questions to answer to understand who is making the investment decisions with your retirement savings.
7. Why did you become a financial advisor?
This is a good question to find out the motivation and level of passion an advisor has for their work. Listen to their story about why they became a financial advisor. You will be able to tell if they have a passion for the work they do. (Check out my story here.)
8. How often will I hear from you?
Do you want a more personalized relationship with your advisor, or would an annual check-in be enough? If your advisor is truly offering comprehensive financial planning, you should be hearing from your advisor quarterly or at least every 6 months.
9. Do you offer a client portal?
We believe it’s important to see the big picture and all the moving parts of your financial life. When you decide to work with us, you will have access to our robust Client Portal, an incredible resource to help you see your entire financial picture in one place, store important documents, run reports, track spending, and more. We created a short video to show you how to access it, how it works, and how to take advantage of it. Check it out now!
10. How many clients do you work with?
This question gives you a sense of how much attention you will get from your advisor. An advisor who has 50 clients will be able to give you more attention than someone with 100 clients.
11. Do you specialize in clients like me?
Many advisors focus on a variety of clients. However, some specialize in the specific financial needs of people. For example, at Dorsey Wealth Management, we specialize in helping women and couples within a few years of retirement and those that are already retired. We’re passionate about helping our clients retire with confidence and peace of mind. It’s helpful to find an advisor who has experience working with people in your financial situation.
12. Bonus Question for Yourself: Do you trust them?
After you speak with an advisor, the most important thing to consider is if you felt heard and listened to. Did they ask you about your goals, and what was important to you? Or were they just interested in how many assets you would roll over to them? Did you feel a connection with the advisor?
A client-financial advisor relationship is very personal. Would you feel comfortable discussing sensitive topics you may not have even discussed with family members?
Did you get the sense that they are truly interested in developing a relationship with you, and helping you, or would you just be another account with their firm? The bottom line: do you trust them?
Don’t Rush Into Anything
Interviewing a financial advisor shouldn’t be overwhelming. An advisor should be more than happy to answer these questions—and any others—about how they operate. If you don’t know where to start, ask friends and family for referrals to set you down the right path.
At Dorsey Wealth Management, we believe in complete transparency and want our clients to feel comfortable working with us and asking us questions. If you’d like to learn more about our answers to these questions or others you may have, you can reach us at (310) 370-7776 or firstname.lastname@example.org.
If you’re interested in learning more about becoming a client, don’t hesitate to reach out to us for an introductory meeting by scheduling a free introductory 30-minute phone call.