Finding a financial advisor can feel overwhelming. After all, your advisor will know all about your finances and help you make big investment decisions. You want someone you can trust to communicate consistently with you, understand your goals for the future, and help you make wise choices.
When it comes to wealth building, you can’t overestimate the importance of having a great financial advisor. More than half of investors who work with a financial advisor (55%) said they saved more for retirement as a result.1 And The National Study of Millionaires found that almost 7 out of 10 millionaires (68%) worked with an investment professional or financial advisor to achieve their net worth. They didn’t do it by themselves!
These numbers show that using a financial advisor is worth it, but you shouldn’t pick just anyone. You want to be confident you’re working with a pro who knows your goals and can help you achieve them.
Whether you’re interviewing investing pros for the first time, reevaluating your current pro, or just wondering what to ask at your regular check-ins, this guide will help you know what to look for and expect from a quality pro.
Questions to Ask a Financial Advisor
Whether you’re just starting to invest or you’ve been investing on your own for years, it’s a smart move to turn to a professional. But what should you ask in that first meeting? With these questions, it’s easy to spot a great financial advisor.
Interview Question #1: What do you love about your job?
Do you want to work with someone who dreads going to work every day? Of course not! You want a financial advisor who loves what they do, someone with a sincere desire to help people.
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Not only will this question help you get to know an investing pro, but it should also clearly reveal their why. Do they care about the whole financial picture: paying off debt, having emergency savings, making sure tax bases are covered, and building wealth for the long term? What’s their story of how they got into the business?
You’ll see what a financial advisor is all about by their response to this question. You’ll also know very quickly if they’re just punching a clock.
Interview Question #2: What services do you provide clients?
A financial advisor can help you create a long-term investing strategy, weigh the pros and cons of different account types, pick mutual funds, rebalance your investing portfolio, and set savings benchmarks to help you reach your long-term goals. They’ll be able to answer your tough questions about investing so you can feel confident making decisions.
Remember, it’s important that your advisor understands your whole financial picture. Look for someone who not only understands your investing goals, but also your tax situation, your insurance coverage and your real estate plans. A financial advisor can help you with more than just explaining complicated investing terms and helping you choose funds. They’re often able to provide debt management or estate planning services as well.
Financial advisors also have access to great online resources that can help you stay engaged outside of your regular meetings with them. Those resources can help you track your investment account performance, visualize savings milestones, or estimate the nest egg you need for retirement. When you meet with a pro for the first time, make sure you find out exactly what services and resources they offer to help you reach your financial goals.
Interview Question #3: What is your investment philosophy?
You’ve got to make sure you and your financial advisor are on the same page! That means they should have a long-term investing strategy. You want a pro who will encourage you to invest consistently, no matter how the market is performing.
A great financial advisor will want to learn about you, your overall financial situation and your goals before they start recommending strategies or products. But once they do start suggesting different approaches, you can expect a great advisor to recommend a variety of mutual funds with a history of above-average performances. Steer clear of a financial advisor who wants you to risk your nest egg by trying to invest in single stocks.
The key to wealth building is to invest year after year in good growth stock mutual funds. I recommend diversifying your investments equally between these four types of mutual funds: growth, growth and income, aggressive growth, and international.
Interview Question #4: How will we communicate about my investments?
You don’t want to work with a financial advisor who only engages with you when you reach out. Look for someone who proactively communicates with you—keeping you updated on how your investments are performing and when it’s time to rebalance your portfolio.
How much should you communicate with your financial advisor? This will vary person to person and depend on your own preferences, but you want to strike a balance that feels comfortable to you. For most people, that means connecting with their advisor once a quarter with a more formal check-in at least once a year. When you decide to hire a financial advisor, that’s the time to speak up about how often you want to touch base.
Interview Question #5: How do you get paid?
When you meet with a pro for the first time, this may be one of your top questions. I get it. Paying an advisor for their services affects your bottom line, so it’s important to have a thorough understanding of exactly how your advisor gets paid. Some pros may offer a free consultation, but it’s only fair to pay them for their services after that.
When you work with a financial advisor, you’re not just paying someone to manage your funds. You’re paying for a full-service professional—someone who can guide you to set realistic goals, help you save consistently month after month, calm your nerves when the market is down, and answer any question you have about your investments. In my experience, the value of that relationship is worth every penny.
A great financial advisor can clearly tell you not only how they’re paid, but also why it’s worth it. That’s what you’re looking for. If an advisor dodges a question about fees, take that as a sign to go elsewhere. Don’t work with someone who won’t give you a straightforward answer about how they’re paid.
Interview Question #6: How will you measure and evaluate my investment performance?
You want a pro who sees the big picture, not just individual fund performance. A great financial advisor will evaluate your portfolio performance in light of your risk tolerance and long-term goals, as well as current trends in the stock market. Rate of return is important, but it isn’t the only factor to consider.
Make sure the financial advisor you choose sees the value of a diverse portfolio and regularly rebalances your funds. That way, when some funds are down, others can pick up the slack with above-average returns. A diversified portfolio will help you grow your investments steadily over time.
If any advisor wants to put all of your eggs in one basket by investing heavily in individual stocks or market ventures, that’s a warning signal that they’re not the right pro for you.
Interview Question #7: Can you tell me why the last two clients you lost stopped working with you?
Things don’t always work out, and it’s not necessarily a red flag if an advisor you’re considering has lost a couple clients recently. Notice how an advisor answers this question and whether or not there seems to be a pattern. If a pro lost two clients in the past month because they were frustrated by a lack of communication, that’s probably a bad sign.
How to Evaluate Your Current Financial Advisor
Maybe you already have a financial advisor but you’re having some second thoughts about working with them. Do you want help with your investments but they don’t seem very engaged? Do you wish they communicated more or offered a more practical long-term plan for your wealth building?
If you’re wondering if your advisor is the best fit, here are some questions to ask yourself.
Evaluation Question #1: Am I happy with my financial advisor’s communication with me?
A great financial advisor should take the initiative to communicate with you, based on your preferences. And if you have to leave a barrage of voicemails and unreturned texts before they finally get back to you, that’s not a good sign!
Every time you meet with your financial advisor, you should feel more knowledgeable and more empowered to make decisions about your investments. That’s one way to spot the truly great financial advisors: They’re great teachers! If your current investing pro responds to your questions and concerns with eyerolls and half-hearted answers, it’s probably time to part ways.
Evaluation Question #2: Does my financial advisor take the time to understand my long-term goals?
Maybe you’re investing because you want the freedom to retire early, start your own business, give generously, or leave a legacy for your kids and grandkids. Do those details come up when you meet with your financial advisor? Whatever your high-definition dream for retirement is, make sure your pro understands your vision for the future.
Working with a financial advisor who shares your values and understands the financial journey you’re on is important. If your advisor recommends going into debt for a vacation or getting a home equity loan, I have one piece of advice for you: Run!
Evaluation Question #3: Does talking with my financial advisor make me feel more knowledgeable or more overwhelmed?
Listen, you should never invest in something you don’t understand. That’s why it’s important to have an advisor who can break down complicated investing jargon into plain English. One of a pro’s main responsibilities is to teach you about investing. If they’re just telling you what to do with your money, they’re not doing their job.
If you’ve found your current financial advisor lacking in some of these areas, it may be time to look for a new advisor. The great news is that finding top-rated pros doesn’t have to be complicated when you know what you’re looking for. I’ll dive into this more later.
Questions to Regularly Ask Your Financial Advisor
Maybe you have a financial advisor you enjoy working with—that’s great! But even so, it’s important to meet regularly to talk about how your investments are performing and make any changes that are needed.
When you meet for your regular check-in with your financial advisor, consider asking these questions. They can help you know if your wealth-building strategy is on track.
Check-In Question #1: How is my current portfolio working toward my goals?
Investing is a marathon, not a sprint—but you still need to check in and reevaluate your strategy regularly. As a whole, is your portfolio performance on track? Do your fund selections still make sense with your long-term goals?
Check-In Question #2: What’s missing from my financial plan?
Life changes all the time, and those changes can impact your financial plan. Maybe it’s time to start saving for your kids’ college. Maybe your aging parents had recent health issues and you want to be prepared to help. Maybe you’re well beyond investing 15% of your income in retirement accounts and you want to get into real estate investing.
As your finances shift with time, you need to discuss these changes with your advisor.
Check-In Question #3: When should I rebalance my portfolio?
Every year, you should look at your investing portfolio and make sure your four fund types—growth, growth and income, aggressive growth, and international—are equally balanced. Over time, certain funds will overperform, taking up more room in your portfolio.
If you never rebalance, one day you might realize that one type of fund is taking up 60% of your portfolio! That puts you in a dangerous position if the market takes a downturn. Maintaining balance in your portfolio helps you take advantage of market growth without putting your nest egg at risk if the market changes.
Check-In Question #4: When should I readjust my investment strategy?
Just like it’s important to regularly rebalance your fund allocations, it’s also important to periodically evaluate your investment strategy as a whole. Are your funds overperforming? Underperforming? Should you make changes to your investing portfolio?
Based on your goals, your advisor may recommend increasing your savings rate. Or maybe your retirement funds are so on track that it’s time to start saving outside of those as well. If your financial advisor truly understands your goals and hopes for the future, they can offer great advice about your next steps.
Check-In Question #5: How will my investments affect my taxes?
Did you know your financial advisor can also help you understand your tax situation? That’s right. A financial advisor can help you make informed decisions about everything from which tax breaks to take to how taxes impact your estate planning. Just remember to keep the whole picture in mind: Don’t make choices about investing based on the tax impact alone.
Check-In Question #6: Am I protecting my assets?
Talk with your advisor about your current insurance plans and any changes you’ve made recently. Why is having the right insurance coverage so important to your wealth-building plan? Let’s say your house catches on fire and is completely destroyed. If you don’t have the right insurance coverage, you could lose hundreds of thousands of dollars. With the right coverage, you should be able to rebuild your home without having to dip into your nest egg.
All it takes is one unexpected disaster, like a health crisis or a car wreck, to cut into your future earnings or even deplete your nest egg. That’s the last thing you want after working so hard to build wealth and leave a legacy for your family. Having the right insurance is crucial, so don’t forget to review this when you meet with your pro.
Check-In Question #7: Do you have all my current personal information?
Make sure your advisor is up to date on the changes in your life. Maybe you moved this year, had a child, or switched jobs. Not only do you want your advisor to have your most recent contact information, but you also want them to know about the life changes that may impact your financial situation.
How to Find a Financial Advisor
Are you happy with your current financial advisor or investment professional? Great! Keep investing for the long term and meeting regularly with your pro.
Maybe you already have an advisor, but these questions have made you realize your current pro isn’t a great fit for you and your needs. It’s important to find a pro you can trust, and that may mean it’s time to move on.
If you’re looking to make a change or just getting started with investing, try SmartVestor. It’s a free way to find top-rated investment professionals in your area. Looking for a pro shouldn’t be complicated. With SmartVestor, you can interview as many pros as you want to find the best fit for you.
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