10 questions to ask before hiring a financial advisor
TL;DR. The ten questions that separate fiduciary advisors from everyone else are about registration, compensation, custody, conflicts, and service scope. A fee-only fiduciary answers each one directly, in writing if asked. Hedging, vague numbers, or reluctance to put answers in email are the signal to keep interviewing.
Why a structured interview matters
Most "advisor interviews" are unstructured first meetings where the advisor does 80% of the talking and the client leaves impressed but informed about nothing. The questions below flip that ratio. Each one has a correct answer shape — vague responses are themselves the answer.
The 10 questions
1. Are you a fiduciary on every recommendation you make to me, at all times, with no exceptions?
Why it matters: Many advisors are part-time fiduciaries. Dual-registered brokers wear the fiduciary hat when "advising" and the broker hat when "selling." You want one standard, all the time.
Good answer: "Yes. I am a fiduciary on every recommendation. I'll confirm that in writing."
Red flag: "Generally," "on most things," "when required by law."
2. Are you fee-only or fee-based — and what's the difference?
Why it matters: If they don't volunteer the distinction, they don't want you to see it. See Fiduciary vs. fee-based advisor.
Good answer: "Fee-only. I'm paid only by my clients — no commissions, no product kickbacks, no 12b-1 fees."
Red flag: Long pause. Confusion about the terms. Insistence that "they mean the same thing."
3. What will I pay you in year one, in total dollars — including all fees on the portfolio?
Why it matters: A 1% AUM fee on $750,000 is $7,500. Add in expense ratios, platform fees, and product-specific costs, and your true year-one cost may be $12,000–$18,000. Make the advisor itemize it.
Good answer: A specific number or narrow range: "Your advisory fee will be $7,500. Your fund expense ratios will add roughly 0.08% or $600. Total first-year cost is about $8,100."
Red flag: "It depends" with no follow-up math.
4. Who custodies my money?
Why it matters: A legitimate fiduciary does NOT hold your money. Assets sit at an independent third-party custodian — Schwab, Fidelity, Altruist are the common ones — in an account with your name on it. This is the structural safeguard that made the Bernie Madoff scheme impossible at any real fee-only firm.
Good answer: A named third-party custodian. Your statements come from the custodian, not from the advisor.
Red flag: "We hold your funds in our pooled account." Walk out.
5. What do you recommend against?
Why it matters: A fiduciary exercises judgment about products they avoid and why. An advisor who recommends everything and avoids nothing is not exercising the duty of care.
Good answer: Specific products or strategies they avoid, with reasons: "I rarely recommend variable annuities with long surrender schedules because the cost-to-client exceeds the benefit for most people. I avoid non-traded REITs for similar reasons."
Red flag: "I can do anything you want."
6. What's your typical client look like, and am I one?
Why it matters: Advisors who try to serve every client serve no client well. You want a firm that specializes in households like yours — retirees, business owners, physicians, tech executives, pre-retirement accumulators, etc.
Good answer: A specific profile: "Most of my clients are professionals between 45 and 65 with $500K–$3M in investable assets and equity compensation."
Red flag: "We serve everyone."
7. Will you sign a written fiduciary pledge?
Why it matters: Every member of the National Association of Personal Financial Advisors signs the NAPFA Fiduciary Oath annually. Other firms sign their own. An advisor who won't put the fiduciary commitment in writing is telling you something.
Good answer: "Yes. Here's ours." Or a NAPFA oath on file.
Red flag: "The law already requires it, so there's no need." Technically true for RIAs; still the wrong answer.
8. Can I see your Form ADV Part 2A and Form CRS?
Why it matters: Every SEC-registered or state-registered investment adviser is legally required to deliver both documents to every client, free, before engagement (17 CFR §275.204-3). A good advisor sends them unprompted. An excellent advisor says "I'll email them before our next meeting so you can review before we meet again."
Good answer: Immediate email delivery.
Red flag: "We don't really use those internally." The documents are required by SEC rule. They exist.
9. Have you ever had a customer complaint, regulatory action, or arbitration filed against you?
Why it matters: You can verify the answer yourself on IAPD and FINRA BrokerCheck after the conversation — but you want to see how the advisor volunteers the information. Everyone hits a bump in a long career; the story behind it is the signal.
Good answer: Direct and specific: "Yes, in 2014 a client arbitration was filed. Here's what happened. It was resolved in my favor." Or "No, none. You can verify on IAPD."
Red flag: Evasion, followed by a disclosure you find yourself online.
10. What happens if I leave?
Why it matters: A fiduciary relationship should be easy to exit. No trailing fees, no surrender charges, no "we'll hold your account for 60 days while we complete paperwork."
Good answer: "You can cancel anytime. We'll transfer your assets in-kind to whichever custodian you choose. It usually takes 5–10 business days."
Red flag: Mention of early-termination fees, surrender charges on existing products, or a long unwind window.
How to actually run this conversation
- Get these in email after the first meeting. Send the list. "Can you confirm each of these in writing before our next conversation?" A fiduciary will. A non-fiduciary will negotiate which ones they'll answer.
- Score the responses. You're listening for specifics, not polish.
- Compare two advisors. Always interview at least two. The difference between "mine is great" and "mine is specific, written, and boring" is the difference between a good fit and a real fiduciary.
Key takeaways
- The right questions are about registration, compensation, custody, conflicts, and service scope.
- A real fiduciary puts answers in writing without friction.
- Vague answers are themselves the answer.
- Interview at least two advisors. The contrast is the data.
Sources
- NAPFA Fiduciary Oath — napfa.org/about-us/fiduciary-oath.
- SEC Investment Adviser Public Disclosure — adviserinfo.sec.gov.
- FINRA BrokerCheck — brokercheck.finra.org.
- 17 CFR §275.204-3 — brochure delivery requirement.
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