What to ask a financial advisor before you hire them

Before you pay a financial advisor to manage your money or give you guidance, ask them directly about how they make money, what they are legally required to do, and whether they have a history of complaints. A good advisor will answer these questions without hesitation. The answers tell you whether the advisor's incentives align with yours — that is, whether they profit when you do well or when they sell you specific products.

Start with the basics: ask how they charge (flat fee, hourly rate, percentage of assets, or commission on products sold), whether they are a fiduciary (legally required to put your interests first), and whether they have ever been disciplined by regulators. Then move to specifics about what they will actually do for you, how often you will hear from them, and what happens if you want to leave. These conversations take 20 to 30 minutes but save you from costly mistakes later.

Key Takeaways

  • Ask how the advisor is paid — flat fee, hourly, percentage of assets, or commission — because this determines whether they benefit when you make money or when they sell you products.
  • Ask whether they are a fiduciary, which means they are legally required to put your interests ahead of their own profit.
  • Ask to see their Form ADV Part 2, which discloses their background, conflicts of interest, and any regulatory actions against them.
  • Ask what services they actually provide, how often you will hear from them, and what it costs to leave if you are unhappy.
  • Search the SEC's Investment Adviser Public Disclosure database and FINRA's BrokerCheck to verify their credentials and history before you meet.

How does the advisor make money?

This is the single most important question. Ask the advisor directly: "How do you get paid, and how much will it cost me?" Listen for one of these four models.

Fee-only advisors charge you directly — either a flat annual fee (say, $2,000 per year), an hourly rate (say, $150 to $400 per hour), or a percentage of the assets they manage for you (often 0.5% to 1.5% per year). They do not earn commissions on products they recommend. This model tends to align their interests with yours: they make more money when your account grows.

Commission-based advisors earn money when you buy or sell investments or insurance products they recommend. They may not charge you an upfront fee, but they profit from the sale itself. Ask what percentage they earn on each type of product — stocks, bonds, mutual funds, insurance. This model creates a conflict: they may recommend products that pay them higher commissions rather than products that are best for you.

Fee-based advisors use both models: they charge you a fee and also earn commissions on some products. Ask them to break down both sources of income so you understand the full picture.

Robo-advisors are automated platforms that charge a flat annual fee (usually 0.25% to 0.50% of assets) and manage your portfolio using algorithms. They have no human advisor, so there is no commission-based conflict, but you also get no personalized information.

Are they a fiduciary, and what does that mean?

Ask: "Are you a fiduciary 100% of the time, or only when you are managing my money?" This matters because a fiduciary is legally required to put your interests ahead of their own profit. A non-fiduciary advisor only has to recommend products that are "suitable" for you — a much weaker standard that allows them to recommend higher-commission products even if better options exist.

Most registered investment advisors (RIAs) are fiduciaries. Most stockbrokers are not — they are held to the "suitability" standard instead. Some advisors are fiduciaries only when they are managing your money but not when they are giving you information, so the timing matters. Get the answer in writing, because advisors sometimes claim fiduciary status they do not actually have.

What is their background, and have they ever been disciplined?

Ask the advisor for their Form ADV Part 2, which is a disclosure document that lists their background, education, experience, fees, and any conflicts of interest. It also lists any regulatory actions, customer complaints, or criminal history. You can also search for this information yourself in two free databases.

Search the SEC's Investment Adviser Public Disclosure database at investor.gov. Type in the advisor's name or firm. You will see their registration status, Form ADV, and any disciplinary history with the SEC.

Search FINRA's BrokerCheck at brokercheck.finra.org. This database covers stockbrokers and brokerage firms. You will see their employment history, licenses, and any complaints or disciplinary actions filed against them.

If an advisor refuses to provide Form ADV or if you find disciplinary history, ask them to explain it directly. Some complaints are frivolous, but a pattern of complaints or a serious violation is a red flag.

What services will you actually provide?

Ask the advisor to describe exactly what they will do for you. Will they build a financial plan, or only manage your investments? Will they help with tax planning, insurance, estate planning, or retirement planning? Will they rebalance your portfolio automatically, or only when you ask? Will they meet with you in person, by phone, or by email?

Ask how often you will hear from them. Some advisors meet quarterly; others only when the market moves significantly. Ask whether they will proactively contact you with ideas or only respond when you reach out. Ask what happens if your life changes — if you get married, have a child, or receive an inheritance. Will they update your plan, or will you have to ask?

Get the scope of services in writing. This prevents misunderstandings later and gives you something to point to if the advisor is not delivering what they promised.

What are the fees and what happens if I want to leave?

Ask for a complete fee schedule in writing. If they charge a percentage of assets, ask whether the rate drops as your account grows (many advisors charge 1% on the first $500,000 and 0.75% on amounts above that). If they charge a flat fee, ask whether it covers everything or whether there are additional costs for specific services.

Ask about other costs you might pay: trading fees, custodian fees, mutual fund expense ratios, or fees for specific services like tax planning. Some of these are unavoidable, but you should know about them upfront.

Ask what happens if you want to leave. Is there a contract, and if so, how long is it? Can you leave early, and if so, do you owe a penalty? How long does it take to transfer your money to another advisor? Some advisors make it straightforward to leave; others make it difficult. An advisor who is confident in their work will not lock you in.

What is your investment philosophy, and how do you pick investments?

Ask the advisor to explain their investment approach in plain language. Do they believe in buying and holding, or do they trade frequently? Do they focus on individual stocks, or do they use mutual funds and exchange-traded funds (ETFs)? Do they use a specific strategy, like value investing or growth investing?

Ask how they decide what to buy. Do they use a formal process, or do they rely on their judgment? Do they use the same strategy for all clients, or do they customize it based on your situation? Ask what their track record is — but be skeptical of claims about past performance. Past performance does not may provide future results, and an advisor's track record before they worked with you is less relevant than how they perform going forward.

Ask whether they have a conflict of interest in the investments they recommend. For example, do they recommend mutual funds managed by their own firm? Do they earn higher commissions on certain products? These conflicts are not always disqualifying, but you should know about them.

How will you communicate with me, and what if I disagree with you?

Ask how often the advisor will send you statements and performance reports. Ask whether you can access your account online and see your holdings in real time. Ask how you will communicate — email, phone, video call, or in-person meetings.

Ask what happens if you disagree with a recommendation. Will the advisor explain their reasoning and answer your questions? Will they respect your decision if you choose not to follow their information? A good advisor educates you and respects your autonomy; a bad one pressures you or dismisses your concerns.

Frequently Asked Questions

Should I ask about the advisor's personal investments?

Yes. Ask whether the advisor invests their own money the same way they invest yours. If they recommend a strategy but do not use it themselves, that is a red flag. Many advisors will tell you how much of their own wealth is in stocks versus bonds, which gives you insight into whether they practice what they preach.

What should I do if an advisor gets defensive when I ask these questions?

Move on. A may have access to advisor expects these questions and answers them clearly. If an advisor becomes evasive, dismissive, or hostile, that tells you something important about how they will treat you as a client. Trust your instinct.

Do I need to ask about insurance products if I only want investment information?

Only if the advisor recommends insurance. If they do, ask whether they earn a commission on insurance sales and how much. Some advisors are licensed to sell insurance and earn significant commissions; others refer you to an insurance specialist. Either approach is fine, but you should know which one applies.

Can I ask for references from other clients?

You can ask, but most advisors will not provide them due to privacy rules. Instead, ask whether you can speak to a current client who has a similar situation to yours. Some advisors will arrange this; others will not. You can also read online reviews, though remember that unhappy clients are more likely to leave reviews than satisfied ones.

What if the advisor says they cannot answer a question because it is confidential?

They should be able to answer questions about how they are paid, whether they are a fiduciary, their background, and their investment philosophy without citing confidentiality. If they refuse to answer basic questions about their business model, that is a sign to look elsewhere.