Questions to Ask a Financial Advisor

Derek Notman |

Questions to ask a financial advisor and tips to know if they have your best interests at heart.

With the New Year right around the corner it is a great time to reflect on our achievements and the goals we set ourselves.   Setting goals takes a bit of self-reflection and determining what it is that we want.  In an ever-changing global economy with technology affording us the advantage of being on the cutting edge and accessing everything we want to know at the click of a button, our goals become bigger and we work harder to realize these milestones.  After all, as a species, do we not thrive on maximizing our potential and our own self-worth?

With that being said, as we head into 2019 at a rather rapid pace you may be considering engaging the services of a financial advisor.  I wanted to give you a list of questions to ask any potential financial advisors you may end up working with to make sure you get started on the right foot.

You see, as a Certified Financial Planner®, my purpose is to help clients realize their hopes, dreams and goals through the powerful leverage of our financial planning process.  I am truly vested in ensuring my clients and my prospective clients receive sound and most importantly, honest financial advice and solutions.

Let’s chat about a few pointers to look out for regarding the information you may be receiving from your financial advisor.


Acting In The Best Interest Of The Client?

Everyone has become rather obsessed with customer service these days and most service providers pander to the ‘The Customer Is Always Right’ cliché.  This is not necessarily a detriment, especially when it comes to being advised how and where to invest, save and use your money. 


For an investment advisor to act in the best interest of their clients, “Fiduciary Duty” is the term required.  This means the investor will put the client’s needs above their own and provide advice and recommendations that are viewed as being the best option for the client and if anything is a conflict of interest, by law, they need to disclose it upfront before any contracts are signed.

In the instance of a broker who is in the business of selling securities to people for others, they often refer to themselves as financial advisors, financial consultants, wealth managers, advisors or registered representatives.  Nonetheless, stockbrokers do not work with a ‘must have’ fiduciary duty to the client.  Stockbrokers are exempt from having to comply with a higher standard of ethical behavior towards their clients, since legally they are seen to be in the business of being a broker or seller of investments and they do not receive compensation for the advice they give clients.  It is in the service of selling a product and as long as the product is suitable, that satisfies the letter of the law.

Interestingly, upon the banking collapse and ensuing mistrust of Wall Street, consumers are seriously wary about investing their money.  In a 2012 survey by the Consumer Federation of America, it was revealed that slightly more than half of respondents, 55% said it was difficult for them to know who to trust for financial advice. 52% of the respondents claimed that investing seemed complicated and they feared losing their money.

As you can well imagine, there’s a great sense of distrust and this is perpetuated by brokers presenting themselves as financial advisors.

Ask Your Financial Advisor These 5 Questions

  1. Is the Advisor Held to a Fiduciary Standard?

Asking a planner if they are held to a fiduciary standard will quickly tell a consumer if the advisor is acting in their best interest. A Certified Financial Planner professional must abide by the fiduciary standard. Representatives of broker-dealers are not required to provide services to their clients under the fiduciary standard of care.

  1. Is the Advisor with a Registered Investment Advisory Firm?

Registered Investment Advisory Firms are different from other firms because they are not required to sell only one company’s products. They offer a wide range of investments that other firms simply can’t. This gives you a wider variety of options for products that are more suitable to your current and future needs.

  1. How Long Have You Been in the Business of Giving Financial Advice?

According to a Cerulli Associates study, the average age of a financial advisor is 51, with 38% of advisors expecting to retire in the next 10 years. Ideally, you want an advisor who will not be retiring before or when you will. But you would want an advisor with a good amount of experience. Many advisors were hired after 2009 and have zero experience with a severe economic downturn. Ask about an advisor’s career too, like what sort of jobs they had in the past. Find out how these jobs were related to the industry and if they helped develop their experience. Ideally, an advisor with ten years of related experience would be a good starting point.  For information, my experience is nearing 14 years.  This is a fair amount of time to have experienced the economic roller-coaster.


  1. Do You Provide Investment Management, In-Depth Financial Planning, or Both?

Investment management is the design of the client portfolio consistent with the client’s risk management profile, time horizon, and goals. This is the basic service that clients need and entails the purchase of a variety of assets such as bonds, stocks and alternative investments. However, more investors also need planning services to go along with investment management, as most of them are self-directing their retirement. Today, it’s best to work with a financial advisor who offers both services to assist clients in making sensible and financially sound decisions.

  1. What Financial Planning Is Offered Beyond Investment Strategy or Portfolio Management?

This is critical because in my opinion the financial planning should come before the portfolio management. Engaging in proper financial planning can give you more confidence and clarity than just plain investment management. Make sure you confirm that your advisor actually has a year-after-year process designed to keep you ahead of your decisions and on top of your projects.

Just like a doctor, attorney, or even a plumber, it is ok to ask questions to make sure you are getting the service and advice you expect.  Remember, it's your money, so love it and do what is best for you!

Thank you for reading!


Derek Notman