Essential Questions to Ask Financial Advisors

Magazines are filled with questions to ask financial advisors. After running an advisory firm for decades, I can say that many of those lists miss the mark. Here’s an insider’s perspective on the essential questions to ask, what to listen for, and the warning signs to watch out for.

Understanding Financial Plans

1) Ask to See Their Written Financial Plan

What to ask:

“Can you show me a sample of a written financial plan you’ve delivered to a client?”

What to listen for:

Look for a comprehensive, customized, and easy-to-understand plan that covers retirement, income, goals, cash flow, investments, taxes, estate planning, and insurance. It should reflect how they tailor financial plans to each person’s unique goals and circumstances.

Warning signs:

• They don’t provide a written plan.

• The sample is overly generic or filled with boilerplate.

• It’s mostly investment-focused with little planning detail.

• It’s too long and complicated without a clear summary of action steps.

  
  

Clarity on Deliverables

2) Ask to See Their List of Deliverables

What to ask:

“What specific services and deliverables can I expect throughout the year?”

What to listen for:

A clearly defined service calendar or list that includes regular reviews, tax strategy sessions, rebalancing, and updates to your financial plan.

Warning signs:

• Vague or noncommittal answers.

• Everything sounds ad hoc or reactive.

• No real accountability or schedule.

  
  

Compensation Transparency

3) Ask – Specifically – How They Get Paid

What to ask:

“Can you walk me through exactly how you’re compensated—including fees, commissions, or any third-party arrangements?”

What to listen for:

Transparency, simplicity, and alignment—ideally a fee-based structure, with all potential conflicts disclosed upfront.

Warning signs:

• Evasive or confusing explanations.

• Unclear separation between advisory and product-based compensation.

• “Don’t worry, you don’t pay me—it comes from the investment company.”

  
  

Investment Philosophy

4) Ask What Their Investment Philosophy Is

What to ask:

“How do you select investments, and what principles guide your investment approach?”

What to listen for:

A consistent, disciplined approach (e.g., evidence-based, diversified, long-term focused) that avoids hot tips, emotional decisions, or reliance on their investment geniuses.

Warning signs:

• Buzzwords like “beat the market,” “exclusive access,” or “our analysts.”

• No clarity or philosophy beyond selling products.

• Excessive focus on performance over process.

• Talk or guarantees of outperformance.

  
  

Risk Management

5) Ask What Form of Risk Management They Use

What to ask:

“How do you assess and manage risk in my portfolio and overall financial life?”

What to listen for:

A holistic view of risk—not just market volatility, but longevity risk, tax risk, inflation, etc.

Warning signs:

• Only talks about diversification.

• Ignores other risks like insurance gaps or overconcentration.

• No framework for updating, stress-testing, or making adjustments to your portfolio or your plan.

  
  

Experience Matters

6) Ask About Their Experience

What to ask:

“Tell me about your background and the kind of clients you typically work with.”

What to listen for:

Depth and relevance—they’ve worked with people like you, handled complex situations, and grown through different markets.

Warning signs:

• Very recent to the industry.

• Generic or overly broad client types.

• Inflated credentials, no credentials, or exaggerated experience.

• Their experience is solely in insurance, investments, or another single area.

  
  

Process Overview

7) Ask About Their Process

What to ask:

“What’s your process for onboarding and ongoing service? What happens in the first 90 days and after that?”

What to listen for:

A clear, structured process with stages, checkpoints, and deliverables—not just a one-time setup. Collaboration with other professionals such as CPAs and attorneys is also a good sign.

Warning signs:

• “We just get started and go from there.”

• Overly casual or improvised approach.

• No formal progress tracking.

• Pitching specifics before understanding you—because one size doesn’t fit all.

  
  

Client Management

8) Ask How Many Clients They Serve

What to ask:

“How many households do you work with, and how do you ensure each one gets attention?”

What to listen for:

A manageable client-to-advisor ratio and systems that ensure ongoing, proactive service.

Warning signs:

• They serve hundreds of clients solo.

• No mention of technology, team, or service tiers.

• You feel like just another number.

  
  

Succession Planning

9) Ask About Their Succession Plan

What to ask:

“If something happens to you, what happens to me as a client?”

What to listen for:

A thoughtful, documented succession plan—either through a team-based firm or a named successor advisor.

Warning signs:

• No plan in place.

• “I’m not going anywhere anytime soon.”

• Solo operation with no continuity or backup.

  
  

Conclusion

Choosing the right financial advisor is crucial. By asking the right questions, you can ensure that you find someone who aligns with your needs and values. Remember to listen carefully to their responses and watch for any warning signs. Your financial future depends on it.

For more insights, consider checking out this resource.