Interviewing a Financial Advisor

What to Ask and Why It Matters

The other day a perspective client mentioned that he wanted to get more serious about financial planning. 

Great! It’s never too early, or too late, to get serious about your financial plans. 

He then went on to explain that over the next few weeks he was planning on interviewing a few advisors to find the right fit.  Good Idea! 

While it’s always a good idea to make sure the person you have handling your finances is right for your needs; I couldn’t help but wonder if he even knew what questions to ask before he made his decision.

As I explained, sometimes you just don’t know what you don’t know or: 

It ain’t what you don’t know that gets you into trouble.  It’s what you know for sure that just ain’t so. 

Mark Twain

Rather than agree to be interviewed by this perspective client right away I gave him a few suggestions of what he should ask of my colleagues first and suggested that after he is done interviewing two or threes of them, he should call me and compare how I answer these questions before making a final decision. 

I didn’t give him specific questions to ask but here are the things I told him to be looking for and thinking about during the interview process.


This is the one thing that is always top of mind.  At the end of the day how much is all this going to cost?  It’s a legitimate question, but if you take the right approach, it’s kind of irrelevant.

The way I see it, it’s a question of ratios.  If you pay an advisor 1.5% per year to manage $100,000 in assets the “cost” to you is $1500.  But if your assets grew under his or her management by 10% then your net gain would be 8.5%.  Now, increase the advisor’s fee to 1.75% and increase the return to 10.25%.  Your net gain is still 8.5%.  Which advisor did a better job or was more worth the money?

Yes see, it’s not a question of the fees you pay as much as it’s a question of what you get in return. 

The best advisors will tell you that the fee is secondary, the only number you should concern yourself with is your net (after fees) return.  What if the advisor who charged 1.75% got you a 15% return?  No contest right?        

Now, of course the higher the return the greater the risk so before you get too concerned about fees there are a few other things to consider.

Know What You are Planning For

Financial Planning is not just retirement planning, although most financial plans include a retirement component.  Planners that think in terms of a broad spectrum of client goals have coined the term Goals Based Planning.  In this scenario, money that is earmarked for retirement is treated differently that money for your child’s education, a new home, a dream vacation, or something more philanthropic. 

Knowing what you are planning for helps to define the amount of risk you are willing to take on, the time you are willing to remain invested, how long you can take to ride out some volatility and several other factors.  

Know Who You are Planning For

This one might seem a bit strange but determining who the plan will ultimately benefit is a significant consideration not only when it comes to education plans but also when you consider generational issues.  Building up a huge retirement nest egg is one thing, but adequately planning for what happens should you pass away prematurely is equally as important. 

This is a significant part of planning during your peak earning years.  It’s important to answer questions surrounding what could potentially happen to your plans if an earner suddenly died or became disabled before enough money had been accumulated. 

What About a Will?

Remember Prince, the popstar, who died in 2016?   He died without a will and while it is most likely that his estate will eventually be divided amongst his sister and few half-siblings, it’s been over five years and his estate has yet to be certified and distributed.  The clear winner in all of this has been Comerica Bank who have been collecting royalties and charging millions in administrative fees while the whole thing inches it’s way through the courts. 

While I am sure your estate won’t be anywhere near as complicated as Prince, the time it takes to settle your affairs will be greatly determined by how you structure your assets and insurance now, as well as how clear your will is.  A well planned estate can usually be settled in a matter of weeks.  While a poor plan regardless of size can take several years to settle, leaving your heirs with nothing while lawyers and estate administrators collect fees to sort it all out. 


Lastly, every personal relationship carries a certain amount of intangible connection.  At the end of the day, you have to trust who you are doing business with.  I’m not saying you should be best friends, but it helps if you like each other. 

Does the advisor come across as knowledgeable, helpful, and compassionate or are they arrogant, abrupt, and disorganized?  You can usually get a sense of these things within the first few minutes of any conversation.  Much like a priest or therapist, your financial advisor is going to find out some of your most personal details.  If you don’t trust them, you will inevitably hold back, making it difficult for them to do their job, it’s just human nature. 

There you have it.  I hope this helps some of you as you determine who is the best person to help manage your finances.  If you want to interview me as your financial advisor why not book a strategy session here? I would love to take 15-20 minutes to chat and see if we can find a way to work together. 

Cheers – Lauren

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