Questions To Ask Before Hiring A Financial Advisor

Personal Capital In San Francisco SkylineImagine learning how to cook from someone who only knows how to operate a microwave oven. Yum! Those frozen TV chicken dinners sure taste good!

Imagine learning about stock investing from someone who doesn’t know how to calculate a dividend discount model or a WACC. Psssst, I hear Zynga is a good buy! Why? Because I heard it on the news!

Imagine learning about real estate investing from someone who has never owned nor understands the concept of cap rates. Here are the keys Mr. Bank! I cannot pay my mortgage no more.

We call these scenarios, “Talking out of your a$$.” It’s a way of life for so many in the advisory business because we have to start somewhere and it’s a competitive world out there. Furthermore, I do believe most of us inherently want to help people. But, sometimes we end up hurting those we care about during the fake it, until you make it process.

I’ll be providing some questions in this post that you should consider asking when it’s your turn to get an overview with your free financial consultation with Personal Capital. They have the best free financial tools online to help track your net worth, analyze your investments, and check for excess fees.

Only after you are satisfied with your advisor’s answers should you consider paying for financial advice. In fact, I recommend spending at least a couple months managing your finances on your own before making a decision. Who knows. You might discover your own financial guru inside after utilizing their tools!

Let’s start with an interesting situation between advisor and client in order to give them advice on how they can help us better.


Imagine a financial advisor who has a respectable net worth of $250,000. He’s 32 years old, hungry, went to Penn State and generally an all around nice guy. He owns a home, has $100,000 in his 401K, majored in English and likes football.

Meanwhile, you are a Big Kahuna with a net worth of $2.5 million at the age of 38. You own multiple properties, trade derivatives, have $700,000 in your 401K, another $600K in your E*Trade account, went to UPenn, created and sold a business, and have little debt!

How on earth is the financial advisor who has 1/10th his prospective client’s net worth convince he’s worthy? Clearly, Big Kahuna should consider an advisor with more experience, who invests in similar circles, and who has a higher net worth. So how does the financial advisor ever get started? Through hustle, loyalty, and trust.

* Demonstrate your hustle. The main promise you can give your clients is that you will work harder than any other advisor on the planet. When you don’t know much, you’ve got to provide service. Promise respond to all e-mails, return all phone calls, take your client out for meals, watch investments he’s interested in, and look out for new opportunities. Work ethic is the number one thing you can control.

* Demonstrate your loyalty. Loyalty is vital in the service business, yet it is one of the most underrated topics of discussion. If you are job hopping left and right or schmoozing other clients while your client is standing right in front of you at a party you are being disloyal and disrespectful, frankly. It’s important to make your client feel like you will stick with him/her during the good times and the bad times.

* Build trust. Trust is gained through a consistent demonstration of hustle. Trust is similar to loyalty, but is based more on the simple things that go down to the very core of a good relationship. When your client rings in to place an order, can he hang up the phone to watch his kid play soccer and trust you to press BUY instead of SELL for the exact number of shares he mentioned? Once you gain someone’s trust, make sure you never lose it.


Due to my experience of interviewing literally hundreds of candidates over my career, I’ve developed somewhat of a ball-busting, bullshit detector for folks looking to pitch themselves. If there’s one thing you can accuse me of, it’s being thorough with important decisions. The last thing you want to do is hire someone who is a total disappointment. Once they are in, due to stringent labor laws, it’s a very arduous process to get them out!

Here are a list of questions you should consider asking your prospective financial advisor. The goal is to get a better understanding of their character, trustworthiness, and financial acumen. You need to know that your advisor is as smart, or hopefully much smarter than you financial wise. You also need to be able to rest easy knowing they are always looking out for you.

Basic Background Questions

* How long have you been a financial advisor?

* What are your credentials? (undergrad, graduate school, certifications, online presence)

* Do you believe credentials matter if one has proven they can properly manage their finances over time?

* How long have you been in your current job?

* What were you doing before your current job and how long were you there?

* How are you incentivized?

* Give me an example of where you helped turn around a client’s financial situation for the better.

Investment Philosophy And Financial Acumen Questions

* What is your fundamental belief on asset allocation? How often? Why should we do it? What signals do you use?

* How would you go about building the right investment portfolio for someone 5 years, 10 years, 15 years, 20 years, and 30 years from retirement?

* If history has shown time and time again that the majority of active fund managers underperform their benchmarks, why do actively managed mutual funds still exist?

* What is your current outlook for the housing market and why?

* Where do you see the 10-year risk free rate going over the next several years and why?

* What do you think is the proper withdrawal rate during retirement?

* Do you think annuities a good idea for someone my age with my income stream and assets?

* Why do so many people bash whole life insurance policies?

* What is the S&P 500 currently trading at in terms of forward P/E and why do you believe the earnings estimates are achievable?

* Where do you see the S&P 500 or Dow Jones over the next 12 months, 24 months, and 36 months and why?

* If there’s a mile-long track and you completed the first lap at 30 mph, how fast do you have to go on the second lap to average 60 mph?

Character Discovery Questions

* Please explain why you are different from other financial advisors?

* What is an area of weakness you need to work on, and how do you plan to get there?

* What was your biggest financial mistake and how did you recover?

* Why do you think people spend more than they earn?

* If you were not a financial advisor, what would you be?

* What is the best means of communication? (to end on a soft note)

With the above questions, you should be able to get a good idea of your financial advisor’s character and financial IQ. You don’t have to ask them all these questions obviously. But, you need to ask enough questions so that you know you are getting your money’s worth. The financial advisory business is a service business, not a stock guru business. You want to be able to get along with your advisor and hopefully build a friendship over time.

Because I’ve spent my entire career in the finance industry, financial acumen comes second to trust when it comes to taking on a financial advisor. I want to know that when the market is crashing while I’m fishing on a boat somewhere off the Gulf of Mexico that my financial advisor is looking for opportunities based on our pre-discussed guidelines. I don’t want to have to worry about picking up the phone to keep tabs on him or her.

Trust is tantamount when it comes to having someone look out for your finances. Trust has to be earned through hustle and consistent demonstration of purpose over time. The last thing you want is to pay for financial advice and have an advisor lose you more money than you otherwise should. At the end of the day, you should use your advisor as a sounding board for ideas and plans. The ultimate financial decision is up to you.


I don’t mind if my financial advisor is not as wealthy so long as s/he provides amazing customer service, is trustworthy and follows my investment risk parameters. However, the more I pay for my advice, the more seasoned an advisor I require. There’s no reason a wealthier advisor with 20 years of experience can’t be as hungry as someone with only two years of experience.

I’m really pleased with how easy it is to sign up with Personal Capital. It literally took less than a minute to sign up, and then I simply clicked on the various pre-populated financial institution options to have them securely retrieve my information and aggregate everything into one place. Personal Capital tracks my net worth growth, analyzes my 401K for excessive fees, tracks my spending, and also gives me a bird’s eye view of my entire financial situation so I can optimize accordingly. With 28 financial accounts to manage, Personal Capital has really helped me simplify my finances.

They recently launched the best Retirement Planning Calculator around, using your real data to run thousands of algorithms to see what your probability is for retirement success. Once you register, simply click the Investing tab on the top right and then click Retirement Planner. There’s no better free tool online to help you track your net worth, minimize investment expenses, and manage your wealth. Why gamble with your future?

About the Author: Sam began investing his own money ever since he first opened a Charles Schwab brokerage account online in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college on Wall Street. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. He also became Series 7 and Series 63 registered. In 2012, Sam was able to retire at the age of 35 largely due to his investments that now generate over six figures a year in passive income. Sam now spends his time playing tennis, spending time with family, and writing online to help others achieve financial freedom.

Photo: TransAmerica Building and SF Bay, 2015, SD

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship. Sam focuses on helping readers build more income in real estate, investing, entrepreneurship, and alternative investments in order to achieve financial independence sooner, rather than later.

You can sign up to receive his articles via email or by RSS. Sam also sends out a private quarterly newsletter with information on where he's investing his money and more sensitive information.

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  1. says

    I currently do not use a financial adviser because I follow a very boring investment strategy but as life become more complex (marriage, kids, side income etc) a second set of eyes to review how my system is set up would be really helpful. Thanks for the questions to ask when I get to the point of investigating advisers 3-6 months from now.

  2. says

    Sam, I am going to save a print these at, because I have not even spoken to my financial adviser in years! Ok, ok, I also haven’t put any money into my Roth IRA in a few years either, but still, I would like a little interaction and some info on my investments and maybe chatting about what my risk level should be.

    If I have hundreds of thousands to invest, I would definitely be more invested in my…ummm…investment strategy….for now, I would just like a yearly face-to-face.

  3. Nunzio Bruno says

    Those questions are awesome! My first job (and pretty much only because after I started Financially Digital) out of grad school was a planner for a small firm with high networth clients (min 5 million). I was a fresh MSFP so I didn’t really get to much face to face interaction but I know that my employer probably never answered half of those questions with anyone. It wasn’t a bad firm they were just very set in their ways – old school ways. I can’t imagine being the client on the other end of the table and not asking those questions! Loved your first 3 points before the questioning about proving and demonstrating your hustle. I feel like advisors should see this list so they can really measure themselves and reflect as well – might help make better and more informed service providers :)

    • says

      Hey Nunzio, thanks for the feedback!

      I, too, am hoping financial advisors or anybody in the services business read the first three points, whether they are starting off, or are veterans. It’s about service first. That is what we are paying for, not so much an advisors stock picking skills at all.

      It’s important to ask tough questions because this is our finances, our livelihoods we are talking about!

  4. Hiro says

    I want to be a Big Kahuna. Is anyone hiring? what kind of job do I need to apply for? :) Heck, Many of us want to be 30 yrs w/ 250k+ net worth.

    Great article like always! TY!

      • Hiro says

        thanks for the link! Fortunately I’m working in one of the industries that you listed and progressing at an expected rate. I’m always interested in other people situations so I can use it as a motivation to be better. If not I could put things in perspective to appreciate my current status.

        Again, many thanks.

  5. Chris says

    Sam, why are you signing up for a financial advisor? Didn’t you used to be an advisor and currently a financial guru? What am I missing? Why do we as educated, deliberate, intelligent people need others managing our money?

    • says

      We don’t. But, unless we are Warren Buffet, and have more money than God, we need to stay on top of our finances.

      No matter what your financial education is, it’s ALWAYS good to hear someone else’s viewpoints. My consult is free, so why not hear what he has to say? If after the consult, I find him to be worthy, I may give him some of my business to manage.

      My finances are currently set on autopilot so I can focus on my business. But if I think an advisor can make me an extra $1, I’m happy to pay him 1 penny for advice (1% fee). This article is intended to help those who are considering getting a financial advisor.

      Even doctors have doctors.

  6. says

    These are awesome questions to ask. I would add that some of the questions – broad market predictions – are probably best evaluated on how someone arrives at an answer rather than their projection (unless it’s something crazy like S&P 200 in 12 months.)

    If a financial advisor can give good responses to most or all of these questions, you’ve found a good one.

    • says

      That is correct. When I’m interviewing a candidate, I care less about the final answer but more about HOW the candidate comes about with his answer. When it comes to financial predictions, who the hell knows? If we always knew, we’d all be billionaires. I want to hear the reasons for predictions and why in a coherent manner.

      This is good advice for anybody looking for any job. Take heed!

  7. Lloyd says

    Good article.
    I already signed up and hope to communicate with advisor soon.
    Meanwhile, can you share your thought on those of people who spend tens of thousands on a birkin or Valentino jacket? You did talk about cars and real estate a lot, but these are more of necessities for life. i really want to know your attitude on luxury

    • says

      Luxury is in the eye of the beholder.

      When you find out the margins of such clothing items and jackets (90% gross profit margins), and realize where they are made, you probably will never find them luxurious anymore, but a waste.

  8. Catie says

    I had to read those questions a couple of times. It has been awhile since I had to select a FA, but as I read the questions I realized I did ask a lot of those same questions when I selected my current FA seven years ago. I work for a major bank and support the IT in the brokerage division, but when I was required to but my investments within the organization I really didnt know where to go. They had an employees group that the company pushed. It took all of 6 months before I got out of there. Since I worked in the brokerage division I frequently set up new offices of new recruits. One group stood out to me so I approached them. I called the senior FA directly and asked a good number of questions. I really had the hardest time going with a FA who was so much younger than me, but he has proved himself over and over again and I still have two to three conference calls with him and/or his team every year.

    He has even advised me with my 401k investments. I couldnt be happier and at 55 I am just putting in time (cuz I can) until I finally retire.

    Thanks for the great articles.

    • says

      Catie, that’s great you’ve been using a financial advisor since the age of 48! Sounds like he has added more value than his cost for sure.

      The age thing is a funny hurdle isn’t it? The simple fact is, the older we get, the younger everybody else gets. It’s all about SERVICE imo.

      Feels great having someone look out for you doesn’t it?


  9. says

    That’s a great article as always Sam!

    Funny that you posted this. I was just asking friends what their investments grew by since last year. They were basically at or below the S&P 500. I mentioned I grew mine by 24.82% (not counting any contributions) and had posted it not more than an hour ago.

    And glad that I’m still keeping contributions up to the 10% for now, but may have to adjust this next year depending upon the “fiscal doom cliff”.

    A quick check on the S&P 500 for YTD shows 13.58%.

  10. says

    I once read that it’s best to go with someone who has been in the industry for at least 10 years. That way they’ve seen good times and bad. Also, I’ve heard to steer away from “salesmen” financial advisers who charge a percentage and go with a flat fee per hour . Do you agree with this advice?

  11. says

    I have a wonderful mentor, Earl, that I met through a charity we both support. He is in his late 80’s now and is a retired financial planner. He’s very well off financially, and still studies the markets and has amazing insights. Super sharp and seems years younger. I don’t have the liquid capital to do much more than invest in my retirement fund right now, but I will and I’ll certainly listen to what Earl has to say. Otherrwise, I’ve talked to a few financial planners for the free consult but I’ve never really been impressed. Thanks for the list. I’ll take advantage when I get to that point.

    • says

      You’re lucky to have Earl!

      That’s the thing, if folks are NOT impressed with their financial advisor after asking five of the above questions for example, then definitely move on. It’s your money, and it’s your peace of mind.

  12. says

    Very timely information! Thanks. I’m so risk adverse that I find it so hard to put trust into people that deal with money, so I’ve not yet found someone I can trust 100% not to be trying to swindle me. Will keep these on file until I start the search in the new year.

  13. Brendan says


    I really enjoyed your list of questions with which to quiz a potential financial planner. Overall though, with the amount of free information on the web, can’t individuals be essentially as effective? As long as an individual will dedicate time to learning the principles of asset allocation, effective savings strategies, etc., by reading blogs such as yours, I have to wonder if a financial advisor is unnecessary for most individual investors. For high-net worth individuals though, it may be a different story.

    • says

      I definitely think the majority of us can manage our finances ourselves if we put in the legwork. However, look at the state of people’s finances in America at least. Savings rate is under 5%, the average retiree has less than $300,000….. clearly, something is wrong, and many folks are going to be in a world of hurt once they realize too late they don’t have enough money.

      I think a lot of folks also OVERESTIMATE their discipline and financial abilities. For example, a new graduate right out of college who thinks s/he knows everything just b/c s/he graduated in a bull market where everything is going up. Danger Will Robinson for a false sense of security.

      So at the very least, folks should consider getting a handle on their finances with tools such as Mint, Personal Capital, etc to run the numbers themselves. If a financial advisor or wealth manager can help you get on the right track and end your career with $1 million rather than $100,000, then s/he is worth it. Just got to ask the hard questions first!

      • Brendan says

        I definitely agree with your sentiment. The United States of personal finance is definitely in dire straits, although there are signs that my generation (millennials) may be more responsible than our parents were at a young age – i.e. increased 401(k) participation rate, delayed home-buying, etc.

        Regarding the general overconfidence bias, that is definitely a very real phenomenon which a lot of people fall victim to, especially the young (although I had to google Danger Will Robinson)!

        I think one problem is that people get the idea that the math is too complicated or finances are something for other people to figure out, not themselves – but like you have said, the only person you can count on is yourself! Once we all understand how personal finance can be boiled down to fairly simple concepts, and the solution is not more debt, the U.S. will really start getting back on a fiscally sound track, both individual citizens and the country as a whole.

    • says

      What I’ve seen from most of the people I know/work with (maybe 85% of them) actually just put their investments on complete auto-pilot and don’t look at it. I literally mentioned my YTD increase to several family members and their response was “great, not sure how mine are doing” … not even comparing year over year gains. Sad but true.

  14. Jon says

    Had the initial chat with a person from Personal Capital today, so I will definitely have to use a few of these questions when we chat again next week and he provides recommendations.

    I also think that recommendations go a long way. Obviously the person giving the recommendation means a great deal, but someone’s reputation and success (or lack thereof) with other clients is an important data point.

    • says

      Good to hear Jon! I’ve been uploading all my accounts and making sure I’ve got all the offline accounts set up so I can have a thorough pictures. I’ve liking it though, and it’s fun to play around with the assumptions!

      I’ve also got a couple good posts on how PC can help us save on fees. I was shocked at what I found out. Stay tune!

  15. says

    I was never good while managing my finances and always use to struggle for money as never saved a penny. But one of my friend suggested me a financial adviser and showed me a lot of ways that how I can work on my finances and more towards my savings. Today I’m managing my finances smartly and added money on my savings account.

  16. says

    Good list. What are the correct answers to the questions though? If a person tells a client what they want to hear, does that mean the questions are correct or is it that they are selling them?

    For example, if the individual really wants to buy a house and ask the question regarding real estate to the prospective planner, the individual who says “oh yes, real estate is a great investment” could get hired before the one who says “you need to be careful putting all your money into an asset that you might not be able to get it out of for years.”

    Good article though and the entire planning process will help a person understand more about their money, what they really want and what they can do to get there.


  1. […] 9) Someone is paying you to promote a Roth IRA. Money makes people do anything. If some organization is going to pay you to promote the Roth IRA then I guess you’re better off than others who don’t have the same money making opportunities. If you can earn more promoting the Roth IRA than what you can earn from the returns of your Roth IRA, then you would be a fool to ignore all the wrong reasons for contributing to a Roth IRA in order to pad your bank account. Be especially aware of financial advisors or CFPs who aggressively push the Roth IRA without providing other benefits besides tax free growth and gains. Make sure pitchmen practice what they preach. (See Questions To Ask Before Hiring A Financial Advisor) […]

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