Important Questions to Ask a Financial Adviser Before Hiring


Every year, it seems that there is a sad story about a famous athlete or entertainer mismanaging their finances. These stories are another example of why it is important that wealthy people have a financial adviser. However, keep in mind that not every financial adviser has their client’s best interests in mind. That’s why it’s important that you do some research before choosing someone to handle your finances. To assist in the process, here are several questions that you should ask a financial adviser before hiring them.

What kind of adviser is he/she?

Financial advisers often use different terms to help themselves stand out from their peers. Advisers can also use terms such as wealth manager or portfolio manager in an attempt to impress potential clients. The important issues to focus on are experience and licensing. Look for an adviser that aligns closely with your goals and vision for the future. Make sure that you understand the differences between financial advisers.

Type of services

Financial advisers may offer different types of services. Some advisers may only give advice according to the types of investments that you have. Many financial planners will create a long term financial plan for you based on your risk tolerance. Ask the financial adviser about the types of services that they offer before you agree to hire them.


Many financial advisers often receive bonuses and incentives based on the type of investments sold. Be aware that some financial advisers are offered trips and financial bonuses for selling certain annuities, mutual funds, and life insurance policies. When financial advisers change firms they may receive a bonus for bringing new clients with them to the firm.

Does the company sell proprietary investments

Financial advisers often sell proprietary investments. The firm will receive extra compensation for selling you mutual funds. When you are doing research on your financial adviser’s investment firm, look up the term revenue sharing. The firm should be transparent about how they make their money.

How did the adviser deal with complaints

Every financial adviser should have a section on their profile that explains how they dealt with complaints. Research all of the different complaints concerning the adviser. Speak with the adviser so that you can get an idea of how they may handle the situation with you if an issue shall arise.

How is the adviser paid?

An adviser is normally paid in three different ways. They may charge you a flat fee or a percentage of the assets that they are managing. They may receive a commission from your investments. They may also receive a commission on any insurance products.

Fiduciary or suitability

Once you have a clear understanding of a financial adviser’s compensation model, you’ll be able to tell if the adviser uses a suitability standard or a fiduciary. If the adviser operates under a suitability standard, they are paid a commission as a percentage of the amount invested. If the adviser operates under a fiduciary, they may be paid a percentage of your assets or an hourly fee.