Ryan Walker, CFP®
Choosing a financial advisor means finding someone you trust to help you make important financial decisions. But how do you know if an advisor is the right fit?
You might be preparing for retirement, looking for more guidance with your finances, or wondering if your current advisor is meeting your needs. Asking the right questions can help you understand what an advisor offers and what working together would look like.
Here are 12 questions to help guide those conversations.
Before getting into financial strategies, start with a few basics about the advisor's background and how they do business.
One of the first things to clarify with a potential financial advisor is whether they're required to act in your best interest.
A fiduciary has a legal obligation to do so when providing advice within the scope of their fiduciary responsibilities. However, not all financial professionals operate under the same standards, and some may have different obligations depending on the services they're providing.
What to listen for: A clear explanation of the advisor's fiduciary responsibilities and how they handle potential conflicts of interest. If an advisor says they're a fiduciary, ask what that means for the advice you'll receive.
Financial advisors can be compensated in several ways. Some are fee-only, meaning they're paid through client fees rather than commissions on financial products. Others may earn commissions or use a combination of fees and commissions.
Beyond how an advisor is paid, consider what you're receiving for that fee. Two advisors might charge similar amounts, but one may focus primarily on managing investments while the other includes ongoing financial planning.
What to listen for: Ask for a breakdown of fees and what they cover. Are financial planning services included? Are there additional investment expenses? You should leave the conversation knowing what you'll pay and what you'll receive in return.
The financial services industry has a wide range of professional credentials, but they don't all require the same level of education or experience.
One credential to look for is the CERTIFIED FINANCIAL PLANNER® certification. CFP® professionals must meet education, examination, experience, and ethical requirements, including a fiduciary obligation when providing financial advice.
Credentials are a useful starting point, but an advisor's experience working with clients in situations similar to yours matters, too.
What to listen for: Ask what the advisor's credentials mean and how their experience relates to your needs. You can verify professional qualifications through resources such as CFP Board and the SEC's Investment Adviser Public Disclosure website.
An advisor who regularly works with people approaching retirement may be familiar with decisions surrounding Social Security and retirement income. Someone who primarily serves younger professionals may have more experience helping clients navigate different financial priorities.
Neither approach is inherently better, but understanding who an advisor typically works with can help you decide whether their experience aligns with your needs.
What to listen for: Ask about the types of clients the advisor typically serves and whether they've worked with people facing situations similar to yours. Their answer should give you a better sense of how their experience relates to the guidance you're seeking.
Investment management is just one part of financial planning. The decisions you make about retirement income can affect your taxes, and healthcare costs can influence when you're financially ready to retire.
These next questions are particularly helpful for anyone approaching retirement.
As retirement approaches, the focus often shifts from building savings to figuring out how those savings will support your lifestyle.
You'll need to consider which accounts to draw from, how much to withdraw, and how to manage the risk of outliving your money. Other income sources, such as Social Security or pensions, also factor into those decisions.
A retirement income strategy should account for changing expenses and market conditions, with room to adjust as retirement progresses.
What to listen for: Ask how the advisor would approach retirement income if the market experienced a significant downturn during your first few years of retirement. Their response can help you understand how they think about investment risk and withdrawal strategies.
The accounts you withdraw from in retirement can have different tax consequences. For example, distributions from traditional retirement accounts are generally taxed differently than distributions from a Roth IRA, or after-tax brokerage account distributions. The timing and amount of withdrawals from these accounts can also affect your overall tax situation. Different strategies like Roth conversions should be evaluated based on current investments and tax laws and revisited as those change.
Tax considerations extend beyond meeting your income needs in retirement. Withdrawing inefficiently can lead to higher tax on Social Security, higher Medicare premiums, or leave you with less flexibility income down the road. Depending on your withdrawal needs, it may influence how investments are managed or how you approach charitable giving, making it helpful to understand how an advisor incorporates taxes into their recommendations.
What to listen for: Does the advisor consider taxes when discussing investment and retirement decisions, or is tax planning treated as a separate conversation? Ask how they coordinate with your CPA or other tax professionals to make sure everyone is on the same page.
Deciding when to claim Social Security isn't always as simple as choosing the age that provides the largest monthly benefit. Your retirement timeline, market fluctuations, other sources of income, family, and health circumstances may all influence the decision.
Medicare brings a different set of considerations, particularly around enrollment timing, coverage choices, and potential out-of-pocket costs.
Ask how the advisor helps clients evaluate these decisions within their broader retirement plan.
What to listen for: Does the advisor help clients evaluate different Social Security claiming strategies and understand how Medicare decisions fit into their retirement plans? If they don't provide guidance in a particular area, ask whether they can coordinate with someone who does.
Let's say your estate planning attorney recommends updating how certain assets are titled or changing your beneficiaries. Your financial advisor may need to help coordinate those changes so they're reflected in your accounts.
Similar coordination may be needed when retirement withdrawal decisions affect your tax situation.
Understanding how an advisor works with the other professionals in your life can give you a better picture of how financial planning recommendations are carried out.
What to listen for: Ask how the advisor communicates with other professionals involved in your financial life. Do they take an active role in coordinating recommendations, or is that responsibility primarily left to you? Understanding how that collaboration works can help you know what to expect.
It's easy to focus on the first few meetings when choosing an advisor. But understanding what happens after those initial conversations is just as important.
Consider what happens if you decide to retire two years earlier than originally planned. That decision could affect your healthcare coverage, retirement income strategy, and how much you'll need to withdraw from your investments.
Situations like this are why ongoing financial planning matters. A plan developed when you first begin working with an advisor may need to change as your circumstances evolve.
Ask how the advisor reviews your plan over time and helps you make adjustments when needed.
What to listen for: Is there a clear process beyond the initial planning meetings? Ask how often your plan is reviewed, what might prompt an update, and how the advisor helps you follow through on recommendations.
Some advisory relationships include regularly scheduled planning meetings, while others involve less frequent reviews. Neither is necessarily the right approach for everyone.
Think about how involved you'd like to be in your financial planning and how often you expect to hear from your advisor. It's also helpful to know what happens between meetings, especially when an unexpected question or financial decision comes up.
What to listen for: If you have a question between meetings, who do you contact? How quickly can you typically expect a response? There isn't necessarily one right communication schedule, but it should work for you.
At some firms, you'll work primarily with one financial advisor. Others use a team-based approach, with different professionals involved in various aspects of your financial plan.
Ask who will lead your planning conversations and who you'll contact when you have questions. If the firm uses a team approach, understanding everyone's responsibilities can help you know what to expect.
What to listen for: You should have a clear picture of who your primary contacts will be and what each person is responsible for. It's also worth asking what happens if your primary advisor is unavailable.
Investment performance is one way to evaluate progress, but your financial goals likely extend beyond your portfolio's returns.
If you're hoping to retire at a certain age, for example, you'll want to know whether you're still on track to support your desired lifestyle. Other goals, such as helping family members financially or leaving a legacy, may require different considerations.
Ask how the advisor measures progress toward your goals and how those conversations are incorporated into ongoing planning.
What to listen for: Does the advisor focus primarily on investment performance, or do they also revisit your broader financial goals? You should understand how progress will be reviewed and how the plan may change as your needs evolve.
When considering the best questions to ask a financial advisor, think about what you want to learn from their answers. Beyond understanding their qualifications and services, pay attention to how they communicate and approach your conversations.
Do they take time to understand your situation before offering recommendations? Are they willing to explain unfamiliar terms or walk through something again if you have questions?
You should also feel comfortable asking about fees and potential conflicts of interest. These are reasonable questions, and an advisor should be prepared to discuss them openly.
Don't overlook the personal side of the relationship, either. Financial planning often involves conversations about family circumstances and important life decisions. You want to work with someone you trust and feel comfortable talking to.
There's no single advisor or approach that's right for everyone. Taking the time to compare your options can help you find a relationship that makes sense for you.
Key Takeaways
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Choosing a financial advisor is a personal decision, and it's worth taking the time to find someone who's the right fit. Whether you're interviewing someone new or taking a closer look at your current relationship, asking thoughtful questions can help you better understand your options and what matters most to you.
At Prosperity Planning, we know how important it is to feel heard, have your questions answered, and feel confident in the people helping you make financial decisions. That's why our process is built around getting to know our clients, understanding their priorities, and helping them feel informed and supported along the way.
As a fee-only fiduciary firm with multiple CFP® professionals and an in-house CPA, we take a comprehensive approach to financial planning, considering how different aspects of your financial life work together.
If you're looking for a financial advisor or exploring whether a fee-only fiduciary approach is right for you, we'd welcome the opportunity to get to know you and answer any questions you may have.
Schedule a call with one of our Certified Financial Planner™ (CFP®) professionals today!
Prosperity Planning is neither an attorney nor an accountant, and no portion of the content should be interpreted as legal, accounting or tax advice. Be sure to consult with a tax professional before implementing any investment strategy. Investment advice, financial planning, and retirement plan services are provided by Prosperity Planning, Inc., an SEC registered investment advisor. The information contained herein, including but not limited to research, market valuations, calculations, estimates and other material obtained from these sources are believed to be reliable. However, Prosperity Planning, Inc. does not warrant its accuracy or completeness. The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or to participate in any trading strategy. If an offer of securities is made, it will be under a definitive investment management agreement prepared on behalf of Prosperity which contains material information not contained herein and which supersedes this information in its entirety. Any investment involves significant risk, including a complete loss of capital and conflicts of interest. The applicable definitive investment management agreement and Form ADV Part 2A will contain a more thorough discussion of risk and conflict, which should be carefully reviewed before making any investment decision.