What questions should you ask a financial advisor?
Editorial staff, J.P. Morgan Wealth Management
- If you’re exploring working with a financial advisor, it’s important to do your research first.
- Consider preparing a list of key questions to determine if an advisor aligns with your financial goals and investment style.
- Don’t hold back: Ask about fees and commission structures, experience, availability and anything else that comes to mind.
Sometimes having an experienced hand at the wheel may be helpful when it comes to your investing and financial journey. To make sure you choose – and stick to – a financial strategy that’s right for you, you may want to consider working with a financial advisor.
We get it: This can be a big decision. Your relationship with an advisor may be one of the most personal (and important) relationships of your life. After all, you may end up sharing more with them about your personal finances than you do with your parents, siblings or closest friends. Asking the right questions can help you assess their experience, investment philosophy and how they’ll help you navigate some of life’s biggest financial decisions.
With so many options available, it may be helpful to have a list of questions on hand to ask a financial advisor so you can make an informed choice.
Keep reading for some basic information about why you may want to work with a financial advisor along with some tips for questions to ask during exploratory conversations with advisors.
Why you may want to consider working with a financial advisor
A financial advisor may provide guidance tailored to your unique financial situation, helping you build a plan that aligns with your short-term needs and long-term goals. Whether you’re preparing for retirement, saving for a home or managing an inheritance, an advisor can offer personalized strategies to keep you on track.
Depending on your arrangement, advisors may help you with:
- Tax planning: Some advisors assist in optimizing your tax strategy to minimize liabilities and maximize savings.
- Budgeting and cash flow management: Financial advisors can create a plan to balance expenses, savings and debt repayment.
- Retirement planning: Working with a financial advisor may help you ensure you have the right savings strategy and investment mix for long-term financial security.
- Estate planning: Some advisors can help structure your assets for efficient wealth transfer and legacy planning.
- Risk management: Some financial advisors provide guidance on insurance, market risks and financial safeguards to protect your wealth.
An advisor may be able to act as a valuable sounding board, keeping you disciplined during market fluctuations and helping you avoid emotional financial decisions. Whether you need a one-time consultation or ongoing financial management, choosing the right financial advisor may help to make sure your financial strategy adapts to life's changes.
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How to prepare for a conversation with a financial advisor
Before meeting with an advisor to decide if they are the right fit for you needs, try to define your financial goals.
Here are a few things you may want to consider as you do this:
- Are you looking for help with retirement, saving for a home or managing investments (or something else)?
- Do you need one-time advice or an ongoing financial partnership?
- What is your risk tolerance and how hands-on do you want to be with your investments?
As you prepare for the meeting, you may also want to compile any and all relevant financial documents, like income details, debt obligations and any existing investments you may have, so you can provide the advisor with the clearest possible picture of your financial situation.
Some questions you may want to ask a financial advisor when you first meet with them
The best way to evaluate a financial advisor is to ask questions that may help to reveal their experience, investment philosophy, fees and approach to financial planning so you can get a feel for them – and they can get a feel for you.
Key topics you may want to cover when you meet with a financial advisor include:
- Their fiduciary status and whether they are required to act in your best interest (see FAQ section below).
- How do they earn their money? Is it through fees, commissions or both?
- Their approach to investment strategy, risk management and diversification.
- The services they provide beyond investments, like tax planning, estate planning or budgeting.
- Their communication style and availability for ongoing support.
Below, we’ve compiled some specific questions to potentially guide a conversation with a financial advisor you’re interviewing.
Why should I trust you with my finances?
A good financial advisor should be transparent about their credentials, experience and investment approach. Some advisors have certifications, including being a Certified Financial Planner (CFP), enabling them to handle most financial planning tasks. Some advisors have additional experience in specialized areas, too.
This is also a good time to ask about the advisor’s years of experience, the number of clients they serve and the volume of investments they manage. Your hard-earned money should be handled by someone who has experience in the areas where you’d like to see your finances grow.
Keep in mind: An experienced advisor should give you a sense of what sets them apart from the sea of others you may be interviewing. Do they praise themselves on flexibility, values-based investing or dealing with clients with your specific situation or background? Their answers may give you a better sense of what kind of relationships they want to build with their clients – and potentially with you.
What are your fees and how do you earn compensation?
Financial advisors charge clients in different ways – some take a percentage of assets under management, while others charge flat fees or earn commissions. Understanding their compensation model may help ensure their incentives align with your best interests.
So what is the normal fee for a financial advisor? Before you reach for your wallet, know what you are about to buy.
The most common fee models include:
- Fee-only advisors: Fee-only advisors charge a flat fee, hourly rate or percentage of “assets under management” (AUM). For example, if an advisor charges 1% AUM, you would pay $1,000 per year for a $100,000 portfolio. Some advisors also offer flat-rate financial planning packages, which is a slightly different model.
- Commission-based advisors: Commission-based advisors earn money through commissions on financial products they sell.
- Fee-based advisors: Fee-based advisors use a combination of AUM fees and commissions, depending on the services provided.
Keep in mind: Look at the price tag. Like most things in life, financial advisors aren’t free. The trick is to make sure your future advisor’s compensation aligns with what you want them to help you achieve.
How will you manage my money?
No matter your level of financial expertise – or interest in gaining financial expertise – it’s a good idea to have an understanding of how your money will be managed.
Ask how investment decisions are made and what level of control you’ll have. Some advisors make recommendations that require your approval, while others manage investments on your behalf. Ensure their approach aligns with your comfort level and financial goals.
Keep in mind: Make sure that your potential financial advisor goes into as much detail about their approach as possible. You can take their response to this question as a preview of how they communicate – so make sure they can explain it without the financial jargon.
Do you work with other clients like me?
Ideally, your advisor should have experience working with people who are – or were – in the same boat as you. If your priority is repaying that huge law school loan while still saving and investing, you want to know that your financial advisor has helped someone achieve goals like that before. Similarly, if you are a small business owner or prefer a certain kind of values-based investing approach, make sure the advisor has experience in those specialized areas.
It also may be a good idea to ask the advisor about their average client wallet size and the average age of the advisor’s clients. These questions may offer clues as to the type of clients the advisor has.
Keep in mind: Look for an advisor who has experience with clients in similar financial situations. Whether you’re paying off debt, running a business or planning for retirement, working with someone who understands your needs may make a difference.
How available are you?
We hope you never feel the need to call your advisor in the middle of the night – but 9 a.m. to 5 p.m. might just not work for you. Find out how flexible the advisor is to connect with you. Also, do they text, call, teleconference, meet in person or all of the above?
Keep in mind: There are plenty of advisors out there, so make sure the one you work with is flexible and available on your terms.
What questions should I ask my financial advisor during an annual review?
Once you’ve chosen a financial advisor and are comfortable with their strategy, there are some additional questions you may want to ask as your relationship with them grows. An annual review is a great opportunity to assess your financial progress and make adjustments as needed. Here are a few key questions you may want to consider asking your advisor as you assess your relationship after a period of time:
- Are my investments aligned with my long-term financial goals?
- How has my portfolio performed compared to benchmarks and expectations?
- Do we need to adjust my investment strategy based on market conditions?
- Are there tax-saving opportunities I should take advantage of before year-end?
- Am I contributing enough to my retirement accounts and maximizing tax benefits?
- Do I need to update my estate plan, will or beneficiary designations?
- Should my risk tolerance change, and should my asset allocation be adjusted?
- Are there any new financial planning opportunities I should consider?
- How do my current debts, savings and expenses impact my financial outlook?
- What should I focus on over the next year to stay on track financially?
Asking these questions may help to ensure that your financial strategy – and your financial advisor – evolve with your needs, keeping you on course for long-term success.
The bottom line
Hiring a financial advisor is a big decision, but asking the right questions can help you find the best fit for your needs. Start by defining your financial goals – whether it’s investing, retirement planning or wealth management – and determine the level of guidance you need. Research advisors, compare their qualifications and fee structures, and consider if they have experience working with clients like you.
If you're looking for financial guidance, J.P. Morgan Wealth Management offers access to experienced financial advisors who can help you create a personalized strategy based on your unique goals. Whether you need ongoing wealth management support or a one-time financial consultation, our advisors provide tailored insights to help you stay on track.
FAQs
The short answer is no, you could absolutely DIY it if that’s the right fit for you, but there are a range of reasons to consider a financial advisor. For instance, market swings can make it easy to react emotionally and lose focus when you’re investing. An advisor may help you stay disciplined and aligned with your long-term financial strategy.
A financial advisor helps manage investments, budgeting, retirement planning and someone’s overall wealth strategy. Some advisors are registered representatives (RRs) who handle transactions, while others are registered investment advisors (RIAs) who provide investment guidance and portfolio management.
A fiduciary financial advisor is legally required to act in your best interest, ensuring recommendations align with your financial goals rather than their own compensation. This helps eliminate conflicts of interest and provides greater transparency in financial planning.
A financial planner is a type of financial advisor specifically focused on helping individuals or businesses create long-term financial goals and mapping out strategies to help achieve them.
Investment consultants are a type of financial advisor that specializes in investment decision making. Investment consultants can create a custom investment strategy based on a client’s goals, timeline and risk tolerance. They can also assist with (or potentially even take over) the monitoring and management of a portfolio, as well as provide general investment advice and education.
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Editorial staff, J.P. Morgan Wealth Management
