Financial Advisor Interview Tips

When speaking with financial professionals that you are considering to engage, treat the initial conversation as an interview. you should be prepared to ask the financial advisor questions that will allow you to judge the advisor's ability to manage your finances appropriately.

The professional should also ask you about your goals, your current financial situation, your plans for the future, and your personality as it relates to saving and investing. By learning about you, the advisor can begin to formulate an appropriate investing strategy.

Steps to prepare for interviewing an advisor

1. Create your personal financial goals

You work hard each day to support your family and your lifestyle, so it is important that you know what you want your life to look like down the road. Your goals can be broad, such as wanting to be able to travel when you retire, or they can be specific, such as wanting to buy a new car within the next few years

Write down your goals and keep them ready for the interview.

A. What specific things do I wish to save for?
Examples: buying a new car, a down payment on a home, vacation, sending your kids to college, paying off credit card debt, planning for retirement.

B. How much progress have I made toward obtaining each of these goals to date?
Include how much you have saved, where your money is located, and how much money you owe.

C. How soon do I wish to accomplish these goals?
Break each goal into short-term (1 year or less), medium-term (1-3 years), or long-term (5+ years). Knowing your priorities is essential, and should be communicated during your interview with an advisor.

2. Prepare your interview questions for the advisor

When interviewing the advisor, ask relevant questions and have the advisor answer as much information as possible, write down the responses so that you are able to compare several advisors objectively later on.

Ask the financial advisor the following:

  1. What financial services do you provide?
  2. What licenses or qualifications do you hold?
  3. How would you prepare my financial plan?
  4. What continued services will I receive after the initial plan?
  5. What are your typical clients like, and how have their portfolios performed?
  6. How many clients do you have? What is the average portfolio size?
  7. How have portfolios of clients similar to me (risk, portfolio size) performed?
  8. How have their portfolios performed over the span of one year? Five years? Ten years?
      (make sure that assessment takes the advisor's fees into account)

The next important area of questioning has to do with how the advisor is paid.

At this point, your examination of what services the advisor provides should have given you a basic idea of how much value you would derive from them. Now, by finding out about the advisor's fees, you can see whether you expect to get your money's worth by hiring him/her.

You should ask these fee related questions:

  1. How is your compensation calculated?
  2. Do you provide a free initial consultation?
  3. Ask for a written estimate of what the fees will be.

By having these questions answered, you will have a good idea of whether an advisor provides the services you desire. Look for a very strong fit here.

Click here for more questions to ask a financial advisor.

3. Verify the credentials of the advisor

The advisors that you interview will talk to you about their numerous qualifications. To learn more about what each license and designation means, visit our designation page.

Always obtain a copy of the advisor's registration form, Form ADV.

Part 1 discloses information about the advisor's education, business, and whether the advisor has had problems with regulators or clients.

Part 2 outlines the advisor's services, fees, and strategies. You can get Form ADV from the advisor, the SEC, or the state securities regulator, depending on the size of the advisor's business.

Use BrokerCheck to research the advisor. BrokerCheck is a tool any investor can use to research a financial professional or firm. This tool enables individuals to complete a thorough background check on financial professionals like brokers, brokerage firms, financial advisors, investment advisors, advising firms, etc. You can use the Brokercheck tool on the FINRA website.
Click here to read how to use the BrokerCheck Tool

4. Evaluate your advisor post interview

Review the qualifications and fees that each advisor listed. Did anything stand out for each advisor that made you uneasy? Reassured? Make notes of such sentiments while you draw comparisons. Did the advisor listen to what your goals, risk tolerances and questions were? If the advisor provided you with the names of client references you will want to look for satisfied long-term customers.

5. Make a decision on which advisor you wish to hire

If you have gotten this far, then you have just about all the information you will need to make a decision regarding which advisor seems the best for you. Don't settle for someone you are unsure of because there are many advisors to choose from. You should be able to find one with a strong track record of providing the services you need at a reasonable cost. Most importantly, you should feel comfortable with the professional that you choose. You want someone that you have confidence in after all, this is your money that we're talking about. No matter what his or her title is, your professional should seem like the right choice to you.