Choosing the right financial advisor is a critical decision that can significantly impact your financial future. But no pressure…right?

Whether you’re just starting your financial journey or seeking a new advisor for more specialized advice, asking the right questions will help you make an informed decision. 

In this blog, we’ll discuss the key questions you need to ask when considering a financial advisor with the help of our COO, Thiel Ruperto. With over 22 years of experience as a fiduciary financial advisor, Thiel helps individuals, families, and businesses reach their financial goals holistically.

Let’s dive in!

First things first, why are you seeking financial help?

Before you start any conversations with potential financial advisors, you need to understand why you’re interested in financial advice and counsel in the first place. 

Are you just getting started with investing? Do you need personalized advice to meet your financial goals? Are you interested in unconventional investments outside the stock market? Do you need help figuring out where to start?

A financial advisor can help you with all of the above (and more!), but not every advisor focuses on the same specialties. By clearly understanding your financial needs, you can choose an advisor that can set you up for success. Here are 10 questions you should ask potential financial advisors before you hire them:

1. What Are Your Qualifications and Credentials?

Financial planning requires a deep understanding of finance, tax laws, investments, and retirement planning. Look for recognized credentials like Certified Financial Planner (CFP) and Chartered Financial Consultant (ChFC). These certifications indicate that the financial advisor has undergone rigorous training and adheres to ethical standards.

Thiel’s advice:

“Credentials are important, of course. However, I always recommend prioritizing experience over credentials as you research financial advisors. Credentials are good to have, but shouldn’t be the main reason to hire an advisor. Every financial advisor will bring something different to the table.”

2. What Is Your Experience in Financial Advising?

It’s important to know how long the advisor has been in practice and whether they have experience dealing with situations similar to yours. If your focus and concerns are on retirement planning, for example, find out how much experience they have in this area.

3. What Services Do You Offer?

Financial advisors offer various services, including investment management, tax planning, estate planning, and retirement strategies. Ensure they provide the specific services you need, and clarify if they’re equipped to handle more complex financial needs as your life evolves. You want to look for a financial advisor that can grow with you. Jumping from advisor to advisor is not only frustrating, but it limits your potential for financial success.

Thiel’s advice: 

“No two individuals are the same. Even if two people have similar backgrounds and income, they have different goals, values, and aspirations. That’s why I practice holistic advising. This allows me to look at the whole picture and find an avenue that works best for you and your goals.”

4. How Do You Charge for Your Services?

Financial advisors may charge in several ways: 

• Fee-only (an hourly rate or flat fee)
• Commission-based (earning money from selling products)
• A combination of fee-only and commission 
• Assets under management (AUM) fees

Understanding a financial advisor’s fee structure will help you assess whether their incentives align with your best interests.

5. Are You a Fiduciary?

A fiduciary is legally obligated to act in your best interest. Advisors who are fiduciaries must provide objective advice free from conflicts of interest. If a financial advisor isn’t a fiduciary, they may prioritize commissions over your needs.

Thiel’s advice: 

“Always make sure your advisor tells you why they are making recommendations; everything needs to align with your personal goals at all times. If they can’t explain their strategies clearly or get defensive, that’s a red flag.”

6. What Is Your Investment Philosophy?

Different advisors have different approaches to investing. Some may take an active, hands-on approach, while others might advocate for long-term, low-cost strategies like index investing. Make sure their philosophy aligns with your risk tolerance, goals, and values.

Thiel’s advice: 

“My financial planning structure is built on three pillars: principal protection, income, and growth. If you can’t accomplish your financial goals with all 3, then it’s not worth pursuing. For example, if you discover a new investment opportunity that promises income and growth but puts your principal at too much risk, I wouldn’t recommend that particular route. There are plenty of strategies to explore that don’t put those three pillars in jeopardy.”

7. Can You Provide References or Testimonials?

Hearing from other clients who have worked with them can provide valuable insight into their strengths and weaknesses. A reputable financial advisor should have no issue providing references or client testimonials.

Thiel’s advice: 

“Ask for at least two or three references and actually call them and ask questions. No professional will give out bad references, but it’s still important to follow up with the individuals they give you to contact. You will get a better sense of the potential advisor and if they’re the right match for your financial aspirations.”

8. How Will We Communicate and How Often?

Good communication is key to a successful client-advisor relationship. Ask how often they’ll meet with you, how they prefer to communicate (email, phone, in-person meetings), and how accessible they are in between scheduled meetings.

Thiel’s advice: 

“Some clients meet every year, every six months, or every quarter. Everyone’s financial needs differ; if you have questions or concerns, you should always feel comfortable going to your advisor whenever needed. I prefer Zoom calls or lunch if the client is local because when you’re face to face, things come up naturally during the conversation. Maybe your child is getting married or you are thinking about finally buying that condo in Hawaii; you may not think to call your advisor immediately, but these conversations often bring major financial decisions to light.”

9. What Happens if Something Changes in My Life or Financial Goals?

Life events—like marriage, children, or career changes—can alter your financial strategy. Understanding how a financial advisor will help you adjust your plan when these events occur is essential. Will they proactively reach out, or do you need to initiate these updates? It will likely be a mixture of both.

Thiel’s advice: 

“The best thing about financial planning is that nothing is set in stone! If your goals or financial circumstances change, you can pivot your plan as needed.”

10. How Do You Measure Success in Financial Advising?

It’s important to align on what success looks like. Some advisors might focus solely on investment performance, while others may take a more holistic approach, considering factors like achieving lifestyle goals, reducing debt, or creating a sustainable retirement plan.

Thiel’s advice

“Measuring success in financial planning is simple: success is the success of a client. If we reach suitable financial goals within a realistic timeframe, then that’s a successful partnership. It doesn’t matter how much money I make as an advisor; it’s about how many of my clients reach their goals. 

Financial advice is a lot of responsibility. Every dollar impacts the future of an individual, family, or business. Make sure that your advisor understands this.”

Find The Best Fit For Your Financial Journey

Navigating the financial world is overwhelming. There’s a lot of competing information that contradicts each other, so it can feel impossible to know what’s right and wrong. That’s why you need to prioritize hiring a financial advisor that you can trust.

By asking the questions we reviewed in this blog, you can gauge whether a financial advisor is the right fit for your needs and goals. Remember, this is a partnership. You need someone you trust, who listens to your concerns, and who has the expertise to guide you toward your financial objectives.

Disclaimer:

This material is intended for informational purposes only and should not be construed as legal or tax advice. Information here is not intended to replace the advice of your investment advisor or financial advisor. This information is not an offer or a solicitation to buy or sell securities. This information may have been compiled from third-party sources and is believed to be reliable. All investing involves risk, including the loss of principal.