10 Questions to Ask a Financial Advisor

Meeting with a financial advisor for the first time can feel awkward. Many people default to broad questions like, “What returns can you achieve?” or “Where is the market headed?” Those questions rarely tell you what you need to know, and may not even be ones an advisor is equipped to answer.

Useful questions to ask your potential financial advisor can help clarify how they would serve you, how they are compensated, what potential conflicts may exist and what services or products they’re allowed to offer.

Clarifying these details upfront helps you compare financial advisors on what matters most: what services they provide, how they get paid and when different standards of care apply. It also helps you choose the right financial advisor for your goals, financial situation and long-term financial plan.

Choosing the Right Financial Advisor

“Financial advisor” can often be used to describe many different financial professionals, from those who focus on budgeting and financial planning to those who provide regulated investment advice. The title alone does not necessarily tell you what services someone can provide, what disclosures you should receive, or what regulatory framework applies.

Many financial advisors present similar qualifications and services on paper, which can make it difficult to understand how they truly differ. To help you make the right decision, here is a breakdown of some of the different types of financial professionals:

• Insurance Agent: A professional who may help with insurance coverage decisions and sell insurance products, typically regulated under state insurance rules. Insurance can be part of a broader plan, but selling a policy is not the same as ongoing investment management or regulated investment advice. Often, they are paid by commissions that may influence the product suggestions they provide.


• Certified Public Accountant (CPA): A professional who may support tax planning, business accounting or guidance tied to income and estate planning situations. A CPA can be an important part of a broader plan, but tax support is different from providing regulated investment advice.


• Certified Financial Planner® (CFP): A professional designation, not a regulated title. CFP professionals may focus on financial planning and follow professional standards set by the CFP Board, which includes a mandate to act as a fiduciary. But what legal fiduciary duty applies would depend on what services they provide and in what capacity they act.


• Investment Adviser: A professional who provides investment advice for compensation and must be properly licensed and regulated as established in the Investment Advisers Act of 1940. When acting in this capacity, they are subject to the fiduciary duty and other regulatory standards related to investment advice and must provide disclosures about services, fees and potential conflicts.


• Broker-Dealer Representative: A broker-dealer (as defined under the Securities Exchange Act of 1934) focuses on buying and selling securities and may make recommendations about financial products. Representatives’ compensation is often tied to transactions or commissions, which can create different incentives that investors should understand.


• Dual-Registered Professionals: Some professionals may hold several of these titles, such as being both an investment adviser and a broker-dealer. In these cases, they may switch roles depending on the account or service they’re working on at a given time. This means the standards that apply, how the professional is compensated, and what disclosures you receive may vary. When working with a dual-registered individual, it can be helpful to clarify what capacity they’re acting in at any given time.

Once you know in what capacity an investment professional is acting, you can better interpret what regulations apply to their services, what disclosures you should receive and what to expect from the relationship.

Top 10 Questions to Ask a Financial Advisor

Below are 10 questions to ask a potential financial advisor, plus what their answers might help you clarify about whether or not they may be the right fit for you and your long-term goals:

1. Are You a Fiduciary?

This is the foundational question regarding the standard of care an advisor maintains to put your interest first. For anything involving your investments, if you are looking for a financial professional that’s legally obligated to put you first, you are looking for a clear "yes" and an explanation that they are obligated to act as a fiduciary for you at all times. If they are an investment adviser, they are legally obligated to put you first throughout the entirety of your relationship.

It is important to contrast the fiduciary duty with other standards, such as "Regulation Best Interest" (Reg BI), which applies to broker-dealers. While Reg BI raised the bar for brokers, it is not the same as the ongoing fiduciary standard that applies to Investment Advisers under the Investment Advisers Act of 1940. If you encounter reluctance to answer this directly, or if the answer is buried in "hedging" language about different standards for different accounts, it is worth asking follow-up questions.

2. How Are You Registered?

Professional titles can be misleading because the term "financial advisor" is often used to describe a variety of investment professionals. Anyone from a bank representative selling credit cards to a sophisticated wealth manager may use it. A good reference is FINRA’s professional designation database, which provides information about what various designations mean and the organizations that grant them. However, once someone provides investment advice, they must be properly licensed and subject to regulatory oversight.

Understanding if they are an investment adviser, a broker-dealer or dually registered helps you understand which rules apply and when fiduciary duty is in force. You cannot "hide" a regulation under a title. The SEC is clear: If someone is acting as a registered investment adviser, they are obligated to comply with the Investment Advisers Act of 1940.

To confirm an advisor's status, you should use public databases. Additionally, FINRA’s reference on professional credentials provides access to the BrokerCheck and Investment Adviser Public Disclosure (IAPD) systems.

3. If Dually Registered: When Are You Acting as an Adviser or Broker?

Some professionals wear "two hats." They may act as an Investment Adviser (fiduciary) when managing your portfolio, but switch to acting in a broker-dealer capacity when selling you a specific financial product, like a mutual fund.

This question gets the professional to spell out exactly when they are acting in which capacity. You are looking for a simple, consistent explanation that you can easily understand. If the distinction feels confusing or if the adviser downplays the shift in standards, it is worth pausing before moving forward. Consistency in the standard of care is often a hallmark of a transparent relationship.

4. How Are You Compensated?

The way a financial professional is paid can shape their incentives and the recommendations they provide. Common models include a percentage of assets under management, flat fees, hourly rates, commissions or a combination of these.

It can be helpful to ask for a plain-English description of how your financial advisor gets paid for their various services. Are they a broker receiving a commission on an investment product? A personal finance specialist charging a one-time fee to build a budget? Or an investment adviser, charging an annual percentage to actively manage your assets?

Transparent answers help align expectations and reduce the likelihood of "sticker shock" later in the relationship. Compensation structures can shape incentives, which is why it helps to understand how the financial advisor is paid and how that relates to the services they provide.

5. Do You or Your Firm Receive Commissions, Referral Fees or Other Incentives?

This question is designed to uncover potential conflicts of interest. It is important to know that even being a fiduciary does not mean there won’t be any conflicts; it means those conflicts must be proactively and clearly disclosed. Investment advisers are required to raise these issues and disclose them proactively.

You want to learn if any third parties (such as mutual fund companies or insurance providers) pay your financial advisor or the firm they work for when you purchase or invest in certain products. Investors should expect straightforward disclosure and concrete examples of how these potential conflicts are managed to ensure they do not compromise the quality of the investment advice provided.

6. Are There Any Additional Costs I Should Expect?

Financial services can be complex and they often involve paying several different parties. There may be fund expenses (internal to mutual funds or ETFs), platform fees, trading costs or any number of others. These "layered fees" can sometimes make it difficult to understand the full costs you might pay.

It is worth noting that not all additional costs, like trading fees, can be predicted with 100% accuracy. For example, if your investment strategy requires a shift due to economic forces, higher trading activity could increase costs for that period. However, you should ask for a breakdown of known expenses and ensure there was an appropriate reason. Vague answers regarding where different costs may apply should prompt follow-up questions.

7. What Services Do You Provide?

Different financial advisors offer vastly different service sets. Some may offer insurance products while others help with personal finances. This can even vary for the same type of professional. For example, some investment advisers focus strictly on portfolio management, while others can provide comprehensive financial planning support. If your long-term goals necessitate ongoing support and advice, it can be beneficial to look for an adviser that offers the support in areas you need, which may include retirement planning, cash flow management, tax-efficient investing strategies or estate planning coordination.

Clarify whether the financial advisor is able to offer everything you need for your financial situation or only for specific parts. It can also be helpful to confirm how they interact with other professionals. For some professions like investment advisers, finding one who will coordinate effectively with your accountant or estate attorney can ensure you have holistic coverage.

8. Who Will I Be Working With?

The initial person you meet with may not be the person who handles your day-to-day needs. This division of labor can be beneficial to you because representatives specialize in their respective fields. You should ask about the expertise of the team who will support you.

Understanding the team structure helps set expectations around responsiveness and continuity. Will you be working with a single chartered financial analyst, a team of personal financial advisors or a dedicated client service group? Knowing the "who" behind the "how" can be essential for long-term comfort.

9. What Is Your Philosophy or Approach?

Most financial advisors have different approaches to managing your money, and you should ensure anyone you’re turning to for financial advice is someone whose approach you can understand and accept. For example, some financial advisors suggest paying small debts first, while others recommend paying off debts with higher interest first. A financial advisor will only help you if you can heed their advice, so developing trust is key.

Anyone offering to deal in or recommend securities must be a broker-dealer or an investment adviser. These professionals generally have an investment philosophy that guides how they make investment recommendations or decisions. Understanding this investing philosophy is important so you can maintain discipline to the plan you build with them.

Ask your investment adviser how they choose investments for you, such as by a defined framework assessing economic trends and proprietary research. You should also ask if they use a team-based process involving an investment committee or if decisions rely on a single person's intuition. If they use packaged products like mutual funds, ask how those underlying managers fit together into a coordinated investment strategy. A disciplined, long-term approach is generally preferable to strategies based on market timing or speculation.

10. What Happens If Something Changes with You or Your Firm?

This final question addresses the resilience of your financial future. What happens if your specific advisor retires, changes roles or leaves the firm? How are clients transitioned to ensure there is no gap in service?

A thoughtful answer should mention succession planning, a team-based structure and documented processes that exist independently of any one individual. If there is no clear plan for continuity, you may want to think carefully before relying on that potential advisor for your multi-decade retirement planning needs.

Find a Fiduciary Advisor Who Welcomes Your Questions

The right advisor will welcome your questions and answer them clearly, helping you understand:

• In what capacity would they serve you and what care standards apply when investment advice is involved
• How their compensation works and where potential conflicts may exist
• What services they offer and how their approach supports your financial goals
• Whether their investment philosophy, communication style and service structure fit what you want long-term

Fisher Investments is a fiduciary investment adviser that provides ongoing portfolio management and planning support. To learn more, request an appointment to explore whether Fisher Investments is a good fit for you.

This article is for informational and educational purposes only and should not be construed as investment advice or a recommendation regarding any particular investment strategy or course of action. The information presented is general in nature and does not take into account the individual circumstances, objectives, or financial situation of any specific investor. We provide our general comments to you based on information we believe to be reliable. There can be no assurances that we will continue to hold this view; and we may change our views at any time based on new information, analysis or reconsideration. Some of the information we have produced for you may have been obtained from a third-party source that is not affiliated with Fisher Investments.

Nothing herein constitutes legal, tax or investment advice. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized advice. Please seek the guidance of a CPA when making tax planning decisions. You should consult with a lawyer qualified in your state before implementing any changes to your estate plan. Fisher Investments cannot sell you an insurance policy. If you want to purchase an insurance policy, you should contact a licensed insurance provider in your state.

Fisher Investments has no duty or obligation to update the information contained herein.