TL;DR: How to choose a financial advisor comes down to evaluating trust, transparency, and the scope of support they provide. This guide walks readers through key questions and criteria to confidently select an advisor who aligns with their long-term financial goals.
Main points:
- Look for a fiduciary advisor who is legally obligated to act in your best interest
- Choose an independent advisor for broader, unbiased product and strategy options
- Prioritize a holistic planner who covers income, taxes, estate planning, and risk management
- Ensure they offer ongoing, concierge-style support with regular reviews and adjustments
- Understand how they’re paid (fee-only vs. commission) to avoid conflicts of interest
A recent study found that only 4 in 10 people work with a financial advisor. Making the decision to work with a professional can be a taxing and prolonged task. However, it's imperative to your financial future to find someone to help you plan and manage your retirement. How do you choose the right financial advisor? Here are four questions to consider.
Are they a fiduciary?
A fiduciary is a kind of advisor that is legally and ethically required to act on behalf of their clients. This is one of the most important qualifications to look for in a financial advisor. They must put their clients’ interests ahead of their own and preserve good faith and trust as an advisor. When you partner with a financial advisor to manage your money, you are essentially putting the earnings of your life’s work into their hands. Don’t you want to trust that person?
As a fiduciary, I only succeed when my clients succeed. That is the benefit of hiring a fiduciary to manage your assets. You are the captain! The advisor is just here to help you steer the ship in the right direction. As you evaluate your options, this is also where strong questions to ask a financial advisor come into play.
Are they an independent advisor?
An independent advisor wants to do more than sell you a product. Unlike advisors who work for larger institutions, independent advisors are not tied to the products or services of a larger firm. This opens the door for them to offer more products and services to their clients.
At Asset Preservation Tax & Retirement Services, our recommendations are focused on providing solutions to the unique challenges each clients’ plan presents. We use only the most trusted and reputable brokerage services on the market to provide thoughtful strategies for each client. Being an independent advisor means that our only goal is to earn the trust of our clients by using the best services.
Are they a holistic planner?
A holistic planner will look at every aspect of your financial future. If an advisor only discusses your income plan but never your tax plan, they are only looking at one part of your financial picture
At Asset Preservation Tax & Retirement Services, we take care of all our clients’ financial needs. From income planning to tax planning to estate planning, our holistic approach looks at the whole picture. We look for ways to minimize your risk and tax liability and maximize your income strategies while putting a plan in place to efficiently transfer wealth to your loved ones.
Do they offer concierge service?
Planning your financial future is a lot more than a one-and-done meeting. Your journey is constantly evolving, and your financial advisor should work alongside you every step of the way in order to meet your goals and personal needs.
At Asset Preservation, we have a quarterly meeting with our clients in order to stay up to date on their plans and make adjustments accordingly. We also offer events for our clients to attend to really get to know them better!
Working with a financial advisor can greatly impact your financial future. Make sure you are working with someone who puts you and your retirement goals first. After all, it's your wealth we are talking about!
How Do They Get Paid?
You should be empowered by understanding the difference between fee only vs commission financial advisor structures.
Fee-only advisors are paid directly by clients, which often makes their pricing easier to understand. Commission-based advisors earn money through product sales, which can introduce conflicts of interest if not clearly explained.
When you compare financial advisors, pay close attention to how transparent they are about fees. If the explanation feels unclear or overly complex, that alone can signal potential issues.
Quick Checklist: Choosing the Right Advisor
When deciding how to choose a financial advisor, use this simple checklist to stay focused:
- Confirms fiduciary responsibility
- Explains fees clearly and transparently
- Offers a full, holistic planning approach
- Provides ongoing support and regular reviews
- Meets the core qualifications to look for in a financial advisor
Frequently Asked Questions
What is the average fee for a financial advisor?
Fees vary depending on the service model. Many advisors charge a percentage of assets under management, often around 0.5% to 1% per year. Others may charge hourly or flat fees. Fee-only structures are typically more transparent than commission-based models.
What is a red flag for a financial advisor?
Common financial advisor red flags warning signs include unclear fees, pressure to purchase specific products, lack of fiduciary commitment, and avoiding direct answers to simple questions.
How to determine a good financial advisor?
To figure out how to determine a good financial advisor, focus on their credentials, transparency, and planning approach. Ask detailed questions to ask a financial advisor, and take time to compare financial advisors before making a decision.
What are the 3 C's of selecting a financial advisor?
The 3 C’s are competence, character, and compatibility. Competence refers to skills and experience. Character reflects trust and integrity. Compatibility ensures the advisor’s approach aligns with your goals and communication style.
Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
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