Shopping for a Financial Advisor?

Here’s how to find the Right One for You.

shopping for a financial advisor in maple grove

At some point, maybe now, you will consider whether or not you need the help of a financial advisor. It’s probably because you either don’t have the time, knowledge, or desire to manage and monitor your investments by yourself, let alone create and follow through on a comprehensive financial plan. No matter your reason finding the right financial advisor is a big decision that needs to be considered carefully.

First step, don’t rush into it and hire the first advisor you meet with. Use this post as a guide for things you should be looking out for and questions you should ask. I’ve tried to lay out the most important topics related to choosing the right financial advisor for you. If you are already working with an advisor you might find this article useful in evaluating your current advisor to make sure he or she is the right fit.

Background and Experience

When hiring any professional you need to at least make sure they have relevant experience, education, and whatever credentials are valuable in their industry. In the case of financial planning you should see where they went to college and what they studied. One very well-known financial planning company is notorious for hiring career changers with no real finance background, they especially like it if you have a background in sales. At the very least make sure they studied a relevant field like economics, finance, or even accounting. 

Financial Advisor Credentials - CFA, CPA, CFP, CLU

A relevant college education should be a minimum. Has the financial planner shown the desire to continue learning and increasing his knowledge base. Credentials such as a CFA (Chartered Financial Analyst), CFP (Certified Financial Planner), and CPA (Certified Public Accountant) not only show an ability to study and learn advanced topics but because these designation require continuing education to maintain active status you can be assured they are staying up to date on changes in the industry.

Keep in mind just because an advisor has a lot of letters after his name does not make him or her qualified. There are a lot of designations and certifications now-a-days, and not all of them have the same importance. Make sure you understand what a designation means. Did it require classes, many hours of self-study, comprehensive testing?

Investments, Financial Planning, or Both

Financial Planning Image

In my opinion, both the right investments, and a comprehensive financial plan are critical to long-term financial success. Does the prospective financial advisor perform any planning and projections before they start investing your money? My company’s motto is Investing with Purpose because we believe that your financial goals and plan guide how to allocate and invest your portfolio. The two are intertwined and are much less valuable when done in isolation. Like an architect designing a beautiful blueprint of a new building is useless if the materials are poor quality. Likewise, the best building materials in the world don’t do much without the right blueprint to put them together.

If after the first meeting with a potential financial advisor, he or she starts recommend complicated financial products like, whole and universal life insurance and variable indexed annuities you should be careful. The financial planning needs to be done ahead of time (before and recommendations are made) so that you investments are aligned with your financial plan.

After meeting with the right financial advisor you should have a clear understanding of what it takes to achieve a successful retirement and achieve all of your goals.

Investment Philosophy

Does your financial advisor have an actual investment philosophy or are they just trying to pick the best stocks, sectors, and mutual funds. Having an evidence-based, consistent investment philosophy is going to give you the best chance of achieving your goals. Make sure you ask your investment advisor about his or her investment philosophy. If they can’t explain it, dodge the question, or their answer isn’t to your liking you should probably pass. Remember, not all financial advisors are experts when it comes to investments. In fact, many advisor just farm out the investment part of their practice to a TAMP or Turnkey Asset Management Program. This means your advisor isn’t the one actually managing your investments but instead hires a third party to manage your portfolio on your behalf. This can create problems because a real comprehensive financial plan and investment portfolio should be closely aligned which is difficult to achieve if the same company isn’t handling both.

Tax Preparation and Tax Planning

Tax Planning Tax Prep Advisor Services

Everything you do financially involves taxes in one way or another. Therefore it is important to find a financial planner that also has tax experience, and not many do. For example, in my practice, I am a financial advisor but I can also prepare your annual tax return. My partner, another financial advisor, is a CPA and manages the tax practice side of our business. The value isn’t necessarily in the preparation of your tax return (although it’s definitely a convenience) the real value is having all of your tax situation aligned with your financial plan and investment portfolio. With everything in one place you are going to get more valuable tax planning which can save you a lot of money. This could include tax loss harvesting, managing tax brackets, knowing which account to best invest your money, finding additional deductions and opportunities for tax savings. This is much more difficult to do when dealing with a separate tax preparer and financial advisor. For the best experience make sure your financial advisor provides tax planning and doesn’t just refer you to a third party tax accountant. On top of it all this will save you money. In our practice, we charge below market rates for our tax preparation services because it’s a benefit to both you and us, with the efficiencies that are created.

How does your financial advisor get paid?

financial advisors paid broker fiduciary

No one works for free. Most financial advisors are either commission based, meaning they are compensated by selling you financial products or they are fee-only meaning you pay them for their advice. This fee is usually in the form of an hourly rate or a percentage of the assets they are helping you manage. The problem is that selling financial products can create a conflict of interest because they get a large fee for making the sale, rather than just recommending the best investments for your personal financial situation. Keep in mind fee-based is not the same as fee-only. A fee-based advisor can sell both commissioned products and charge an annual fee. This does not remove the conflict of interest and you usually end up paying more than you otherwise would.

In addition to what your advisor charges, what are the other costs involved in working with them?

If you financial advisor invests your money in mutual funds or exchange traded funds (ETFs) those funds will also have an expense ratio associated with them (this is in addition to what you advisor charges). Is the expense ratio on these finds less than 1%? If not, you are invested in some expensive funds. For example the average fund that we use for our clients’ portfolio is o.20%. Costs are well within your control so make sure you check this additional cost.

In addition many times advisor’s recommend funds that have large loads attached to them. This is really just another sales charge that you have to pay when buying or selling these funds. These expenses can be as high as 5.75%. They are completely unnecessary in today’s investment world. There are just as many good investments without these additional charges. If you see A, B, or C share classes in your portfolio you are paying these loads – check your account statements.

Are you Comfortable?

This is more subjective. It’s the feeling you get when meeting with an advisor. Are you uncomfortable because they are trying to sell you products that you don’t really understand? Or are they asking for the names of your close friends and family so they can prospect for more client? Make sure you feel comfortable with the person because you could be working with them for years. If you don’t understand something, ask. If the answer isn’t satisfactory move on.

Fiduciary. What’s that?

Only 15% of all financial advisors are held to a fiduciary standard. A fiduciary is someone that, by law, has to do what is in your best interests as the client. This means your interests are more important than the advisors, as they should be. If a financial advisor is not a fiduciary they don’t have to do what’s best for you, they can, instead, do what’s best for themselves and the company they work this. This leads to advice and products that may not be right for you and your family. Ask if your potential advisor is a fiduciary, if not you need to seriously consider moving on.

Clean Record

At the very least check to make sure your future financial advisor has a clean record. This is public information and can easily be found online by going to This is a government entity that regulates financial advisors. You will be able to see if your potential advisor has been subject to any regulatory actions in the past.


Deciding on the right financial planner will require you to do a little research and shopping around. It’s ok to take your time and meet with multiple advisors. If you ever feel pressured or feel like it’s not the right fit then move on. This is a big decision and could be affect you for years to come. A bad advisor will not only cost you time and money but a lot of unnecessary stress and headaches. If you are in market I would love to meet or chat over the phone and discuss how I might be able to help you. If I’m not the right fit I might be able to point you in the right direction.

If you haven’t already, check out some of my earlier posts which should help in your decision of choosing a financial advisor.

Financial Advisor Checklist

Fiduciary Standard - Why it's important

How your Financial Advisor gets Paid is Important

If you actively searching for a financial advisor right now I urge you to read more About Me and see if I might be able to help.