10 Things to Ask a Financial Advisor to Make Sure They’re the Best

Are you in the market for a financial advisor? You’ve come to the right place!

It can be hard to find a committed advisor to help you plan wisely. When it comes to wealth management, investments, and retirement planning, it seems like there’s always another financial service company ready to tell you why they’re the best. Sadly, many of them will not have your best interest in mind, so it’s important to take your time and sort through your options to find a reliable financial advisor you can trust.

Knowing the right questions to ask can make your search easier. Here are the top ten questions we think you should ask when interviewing a financial advisor:

1) What are you specifically licensed to do?

Many financial advisors are licensed only for insurance and mutual funds (read about why we think mutual funds are a bad idea here). They can’t handle individual stocks or bonds. They’re limited to their areas of expertise, and that means they’re restricted, and they’re only going to recommend services they’re capable of providing.

Let’s put it this way: If you wanted to remodel your house, you wouldn’t hire a carpenter who only has a hammer and nails, right? You want someone who not only has a complete set of tools, but also can see the big picture and can develop a comprehensive plan for the remodel. That’s why it’s important to make sure your financial advisor has an entire toolbox at their disposal. Read our response to this question here.

2) How will you be compensated?

Financial advisors can be compensated differently. Some are only paid through commissions, some are fee-only, and some are a combination of both fees and commissions. It’s important to be clear up front about how your financial advisor will expect to be paid for their services. Also, these details often are not disclosed. It’s okay to ask about them. Read our response to this question here.

3) Can you help me with my other assets?

Do you have any other assets you want help managing — maybe a rental property or farmland? You may have inherited assets that you’re unsure as to whether you should keep or sell. You might have questions about the tax consequences of either choice. The right financial advisor can help you make these decisions. Read our response to this question here.

4) Can you minimize my taxes?

Different financial strategies can have different effects on your taxes. When you’re searching for a financial advisor, it’s essential to clarify and understand how their specific strategies will impact your tax returns. If the advisor seems unsure or unclear about this, then they’re probably not the right person for the job. Read our response to this question here.

5) Do you have any professional designations?

There are many professional designations that financial service professionals can have, but be careful. Unbelievably, some of those designations only allow the companies to charge you extra fees! However, some professional designations are rigorous and truly indicate top-quality financial skills — like the CFP designation. Make sure to ask your potential advisor about their professional designations and how difficult they are to earn. Read our response to this question here.

6) How often will you contact me?

When it comes to communication, expectations should be set early. If you only want to hear from them once a year — that’s fine! If you want more communication, make sure to convey that or ask how often contact will occur and through what channels. Read our response to this question here.

7) What if something happens to you?

Who is your advisor’s backup? What are their credentials? If your financial advisor loses their financial backing, you could end up losing a lot of money. Make sure your advisor is adequately protected. Read our response to this question here.

8) What is your level of experience?

This one is a no-brainer — financial advisors with more experience are going to give you better advice. Have they been through rough times? If they’ve only been an advisor for 10 years, probably not. Experience means a lot in this field, so make sure your financial advisor has plenty of it. Read our response to this question here.

9) Are you a fiduciary?

A fiduciary is obligated to you. They represent the client first — not a brokerage firm or an insurance company.

Most financial advisors are NOT fiduciaries. Advisors who work on commissions for banks, insurance companies, or brokerage firms, are only required to provide advice that complies with the regulations of the larger organization — which are considerably more lax than fiduciary requirements.

Here’s the quickest way to tell whether your financial advisor is obligated to you or a company: Are they a Registered Investment Advisor? RIAs are required to represent their clients first, so they’re going to give you sound advice! Read our response to this question here.

10) Do you have an investment philosophy?

If your potential financial advisor has an investment philosophy, you know that they are rooted in a system, and they care deeply about the strategies and advice they offer you.

Ask your potential financial advisor if they have an investment process. If they do, go ahead and ask them what it is. And if they don’t, be skeptical. You could easily be interviewing a salesperson who doesn’t have your best interests in mind. Read our response to this question here.


Ready to Learn More?

Once you’ve asked your potential financial advisor these ten questions, you’ll have a solid idea of whether you’ve found the right financial advisor for you. If they’re licensed and experienced in a wide variety of financial and wealth management skills, adequately backed, and dedicated to providing you with sound financial advice, you’ve found a winner!

At CSH Investment Management, we believe everyone deserves a reliable financial partner they can trust. And we are committed to helping you find the right financial advisor to meet your needs. Whether you’re seeking advice about investment strategies, wealth management, retirement planning, business succession, or passing your wealth to the next generation, we’ve got you covered.

Ready to learn more? Check out our answers to these ten questions here! And if you have any further questions, please feel free to reach out to us by calling 217-824-4211 or on our website. We look forward to hearing from you!