Broker Check

Finding the Right Financial Advisor for You

| March 17, 2017
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Find the Right Financial Advisor

Choosing the right person to help you manage and grow your assets is crucial to your financial success. Certainly, depending on your level of personal expertise and financial objectives, you could do the job yourself. However, there are many decisions to make when choosing which financial tools match your level of risk. Should you diversify? How do investments impact your tax liabilities? At what point do you add riskier investments to your portfolio? How do you go about building a portfolio?

A financial advisor is a paid professional who provides financial services to customers who seek to reach particular monetary goals. Indeed, they can assist you with designing the right path to save for college, plan a home purchase, or devise a retirement strategy. This is achieved through various pathways, including investments (stocks and bonds), creating a budget, and/or tax planning. 

Of course, trusting that someone else is going to accurately steer you towards the best return on your investment (including time and money) can be worrisome. How do you know if they’ve the expertise to help you navigate the what, where, when, and how of wise planning or investing? Below, you’ll find four primary factors that will assist you in determining whether a financial advisor is the right fit for your financial planning or investment goals.

Certifications and Education

A financial advisor who has an academic background in finance -- such as an undergraduate or master’s degree in finance, economics, accounting, statistics, or business -- is solid signification of their expertise. An additional factor to consider is if they’ve been certified as a financial planner (CFP®), a retirement management analyst (RMA), or a certified investment management analyst (CIMA). While these aren’t the only certifications that signal financial advisory proficiency, they are the most widely known, and the qualification process is rigorous (including a set of challenging exams).


There are several different ways that financial advisors earn their salary. You’ll want to scrutinize the fee structure required for compensation carefully. Why? The source of a financial advisor’s compensation tends to influence their decision making. This is true of humanity in general, regardless of their profession. Furthermore, as a part of financial planning on your part, you need to know what it’s going to cost for expert advice and/or asset management.

  • Flat fee: This is project based compensation. For example, if you’re retirement planning, and all you need is for the financial advisor to calculate some numbers along with creating a plan of action, then you’d pay a single fee. Make sure the fees are agreed upon up front.
  • A percentage of asset value: You’ll find this is the primary way many financial advisors are paid. The percentage itself will depend on other factors -- such as whether or not you’re provided with investment management, financial planning or both! It’s best to be mindful that even though the percentage may stay the same (e.g. 2% yearly), as your assets increase, so does the portion paid to the financial advisor. However, the advisor may also lower their percentage based on a number, and amount, of assets they’re managing for you. Think of this as a “bulk discount” situation.
  • Commission: Another common compensation structure is based on commission. In this capacity, financial advisors are more akin to salespeople. This doesn’t mean they are unqualified to advise you. However, commission based fees have an incentivizing quality that focuses on selling you something for the purpose of increasing their commission, which comes from another source (e.g. the investment firm who is also earning money by selling certain financial products).
  • Hourly rate: If you’re a do-it-yourself kind of person, then paying an advisor per hour may be the way to go. As with any profession, rates will vary. Additionally, you may only be paying for time in an advisory capacity. If the financial advisor is managing your assets, other compensation agreements are more likely to be enacted (such as commission based, fee-based or fee-only arrangements).
  • Retainer: This can be ideal if you’re looking for advice on a continuous basis. Retainers aren’t normally linked to the value of your assets. Also, there’s less concern regarding questionable incentivizing that comes with compensation being tied to your purchase of certain financial products (e.g. insurance, stocks, and so forth). You and your financial advisor will set up an agreement detailing the specifics of the retainer amount, the time it covers -- quarterly or yearly -- and what services they will provide.

Google is your friend

Now more than ever you can immediately access reviews, both good and bad, by performing a simple Google search. This includes verifying a financial advisers credentials and determining whether or not they’ve had complaints lodged against them in the past.

Interview them

You’re hiring them to achieve a tangible result based on their expertise. While they aren’t your employee, financial advisors agree to provide a specific service to you. As such, you have every right -- if not a distinct responsibility -- to interview them by asking a few direct questions.

  • What are your credentials?
  • Are you a fiduciary?
  • What is your compensation structure?
  • What services do you offer?
  • Do you specialize in providing financial advice and/or asset management for specific types of clients (e.g. retirement seekers, Boomers, Gen X’ers, Millennials)?
  • Do you have a sample of a financial plan available?
  • On average, how frequently are you in contact with your clientele?

There are many more questions you can pose during the interview process. The aforementioned questions are just a few to kick-start the conversation so you can achieve greater clarity about the individual whom you will be trusting to guide you to a better financial future. An additional question to pose would consist of you asking them to explain a concept to you. Doing so will help you determine their communication style. After all, you want to hire a financial advisor who will gladly explain concepts to help you understand -- at least in general -- their proposed financial plan.

Finding the right financial advisor takes some sweat equity. However, given that you’re entrusting another individual with your assets, even if all they provide is a financial plan, knowing who they are is paramount to ensuring you choose the right advisor.  If you’d like additional information about Financial Advisors in your particular locale, visiting Broker Check is an excellent source to include during your research.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC.  Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS.  Chesapeake Investment Planning, LLC is not affiliated with Kestra IS or Kestra AS.

Todd Wilhoit contributes articles for See this one and more here.


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