9 powerful questions to ask a financial adviser in your first meeting

“Depending on the type of client, most should first think of what they are looking for in an adviser before they even meet,” says Nicholas Bunio, a certified financial planner with Retirement Wealth Advisors. “Do you want an adviser to just do retirement planning, or someone who can do retirement planning, plus estate planning, and insurance planning? Or are you looking for someone who invests money? Maybe you are looking for someone to manage your investments, or someone who sells life insurance, annuities or long-term care?,” he explains. (Looking for a new financial adviser? This tool can match you to an adviser who meets your needs.)

Then schedule a face-to-face meeting. This is the best time to not only convey your own personal financial standing and what you want from an adviser, but also your lifestyle, employment history, hopes and dreams for the future — and what you expect to get out of the relationship.

Here are the 9 most impactful questions you can ask in that first meeting with your prospective financial adviser:

1. Are you a fiduciary?

When it comes to financial advice, the term fiduciary means quite a bit; determining whether or not the financial planner you’re considering working with is one can be one of the most important questions you can ask.

First, what is a fiduciary? In simple terms, a fiduciary is an adviser  who is required by law to work with your best interest in mind when it comes to managing your assets. While not all financial advisers follow these guidelines, those who do are most often known as registered investment advisers, or RIAs. By design, RIAs meet these requirements. Certified financial planners, also known as CFPs, may also carry this status, but it’s best to ask any adviser if they’re a fiduciary first to find out. (Looking for a financial adviser who is also a fiduciary? This tool can match you to an adviser who meets your needs.)

2. What are your qualifications/credentials?

Certifications carry a lot of weight in the world of financial planning. When you’re researching the advisers in your area, you’ll probably see the various credentials tacked to the ends of their profiles and email signatures. Here are just 10 of the most common credentials to look out for and a little about what they mean:

Common credentials and designations for financial advisers

• Certified financial planner (CFP)®: This certification is backed by the Certified Financial Planner Board of Standards, also known as the CFP Board. If you’re looking for an adviser with expertise in financial planning, taxes, insurance, estate planning and retirement saving, a CFP may be the way to go. CFPs are also required to be a fiduciary of your assets, which in short means they are required to work in your best interest when it comes to managing your money.
• Chartered financial analyst (CFA)®: This subsect is recognized by the CFA Institute and ensures your adviser has passed exams covering topics such as accounting economics, ethics, money management and security analysis. For some context on the exclusivity of the CFA credential; more than two million candidates have taken the Level I exam since its inception in 1963, with 291,500 candidates going on to pass the Level III exam, according to Investopedia.
• Certified fund specialist (CFS): Advisers with a CFS certification have been certified by the Institute of Business & Finance (IBF) for their proficiency in working with mutual funds. Those who hold this title are qualified to become accountants, bankers, brokers, money managers, personal financial advisers, and various other financial industry professionals. To maintain this credential, advisers with a CFS are required to recertify with 30 hours of education every two years.
• Chartered financial consultant (ChFC): Issued by the American College of Financial Services, this designation ensures additional expertise in tax and retirement planning for special needs, wealth management, insurance and more. Continuing education requirements here is also 30 hours every two years with at least one hour in ethics.
• Chartered investment counsellor (CIC): Started by the National Alliance for Insurance Education & Research in 1969, the CIC certification is designated for agency owners, producers, agents, brokers, as well as agency and company personnel who meet various requirements and who pass five of seven course exams on the following topics: personal lines, commercial casualty, commercial property, life and health, agency management, commercial multiline and insurance company operations.
• Certified investment management analyst (CIMA): Financial consultants and investment advisers who achieve this credential from the Investments & Wealth Institute typically build their business around investments, risk assessment and portfolio management. This certification requires three years of industry experience, no record of ethical misconduct, a passing score on the qualifying course offered at Yale, the University of Pennsylvania or the University of Chicago, a passing grade on the exams offered by the Investments and Wealth Institute, and 40 hours of continuing education every two years to maintain.
• Chartered market technician (CMT)®: Those with this credential from the CMT Association demonstrate an expertise in investment risk in portfolio management including quantitative risk and market research, and rules-based trading system design and testing. CMTs are additionally qualified to conduct research, author research reports, recommend trades and investment programs and trade their own accounts.
• Certified public accountant (CPA): This is probably one of the more widely recognized credentials in public finance. CPAs are proficient in taxation auditing financial analysis and regulation, and meet both high professional and accounting standards. With tax season around the corner, this is a financial professional that may soon come in handy for just about all of us.
• Personal financial specialist (PFS): This credential is issued by The American Institute of Certified Public Accountants (AICPA). Those with a PFS must hold an unrevoked CPA certificate, become a member of the AICPA and have at least two years of full-time teaching or business experience in personal financial planning.
• Chartered life underwriter (CLU): If you’re looking for an expert in life insurance, estate planning, and business planning, financial professionals with a CLU might be for you. Often CFPs will add this credential to demonstrate this additional expertise.

It should be noted that these are only a fraction of the wide universe of potential credentials a financial adviser may carry. That said, these titles can also help decide if the adviser you are interviewing is a match for your financial needs.

Aside from certifications, you can also ask about their personal background. You may want to ask where they went to college or what degrees and credentials they attained while they were there.

Do a deeper dive on the financial adviser’s background

Plus, do a full background check. For starters, a good resource for background information on the brokers, brokerage firms, investment adviser firms and advisers you’re considering is a free tool from the Financial Industry Regulatory Authority (FINRA) known as BrokerCheck.

After searching for finance pro in your region (associations such as FPA or NAPFA have ‘find an adviser’ portal to help match someone with your needs), the BrokerCheck website can show more about their credentials and work history, as well as any previous legal disputes they may have encountered throughout their professional careers with their firms or clients.

3. What are your personal or firm values?

Knowing an adviser’s values or investment philosophy can either be a dealmaker or breaker for many of us. Does the firm engage in actively managing your funds or do they let automated tools do all the work? If they choose them on their own, how do they make their investment selections? Are their decisions based on choices that you feel comfortable with? Or do you get the sense that they are making random decisions?

Finding the right financial adviser for your personal ethics and background

Bunio says knowing whether the adviser you’re considering is on the same page as you ethically and demographically is highly important. Since you will be working closely with your financial adviser, likely over a long period of time, “it’s always good to find someone who works with your type of demographic, such as teachers, people 50+, spouses or LGBTQ+.”

4. Are you primarily a financial planner or an investment adviser?

By now, it probably comes as no surprise that there is more than one kind of financial adviser. Knowing the difference between the two most common —  financial planners and investment advisers —  is another way to help determine whether the adviser you are meeting with is right for you.

“Some advisers only do financial planning,” says Bunio. “Others do planning, but they must manage your investments. Others don’t do estate planning. Many want nothing to do with insurance and even recommend against buying it.  Whether right or wrong, not all advisers are the same.”

Here are some key differences between the two:

Investment adviser

For starters, investment advisers typically specialize in securities and provide clients with data analysis to pick and manage their investments.. They also typically charge a fee to work with you and have a fiduciary responsibility to put your financial needs first. Investment advisers are also registered with the Securities and Exchange Commission (SEC) if they manage more than $100 million in combined client assets.

They can specialize in a wide range of financial advice, such as estate planning, retirement planning, investment management or taxes. This class of financial adviser often works with higher income levels.

Financial planner

The term financial planner is used as a wide brush in the world of financial advice. While many who fall into this category can be highly credentialed, the term financial planner doesn’t necessarily mean these individuals actually have any financial credentials.

While often used synonymously with the term financial adviser, a financial planner, much like its title, is primarily concerned with assisting with developing a financial plan for their clients. These can revolve around just about any aspect of a potential client’s financial wellbeing, including savings, college planning, retirement, taxes, insurance and estate planning.

5. What is your fee structure?

Knowing how your prospective financial adviser charges you for their services is likely one of the most important factors to consider. Do they charge a fixed fee, are they hourly, does their rate depend on how much money you have or will they charge you based on how much money they can help you earn?

For some background on this topic, and to help power your decision when you’re asking your adviser about the first place to look is fee structure.

Here are the five most common ways financial advisers charge their clients: 

• Percentage of assets under management: With this model, advisers charge fees based on your total amount of invested money, or assets under management (AUM). A typical fee is about 1%, though charges are usually built on a tiered schedule with the lower percentage of fees attached to the higher asset levels.
• Hourly: Special project or consulting rates for advisers are often charged by the hour and can range anywhere from $100 to upwards of $300 an hour, according to a report from AdvisoryHQ.
• Fixed fees: After consulting with an adviser with a fixed fee, this predetermined amount must be paid for a service, such as the creation of a financial plan. Those who charge flat fees can range anywhere from $2,000 to $7,000 a year, the NerdWallet report found.
• Commission: Compensation for advisers with a commission-based fee structure charge when a purchase or a trade is made on your behalf.
• Performance-based fees: Fees for performance-based compensation packages are charged when a defined benchmark is outperformed.

Advisers should have no problem talking about this, so don’t be shy when asking how they are compensated. If they are professional and abiding by the law and regulatory standards, they will be upfront with you on this topic.

6. What types of clients do you typically have?

Knowing whether or not an adviser you’re interested in working with serves clients like you  may be a factor worth considering, says Bunio. “Asking what type of clients they have is important,” he says, adding that knowing whether or not an adviser “serves teachers, or those 50-plus” can help bring peace of mind that they have worked with folks in a similar financial position before.

7. Do you work with attorneys or a certified public accountant (CPA)?

If you’re a business owner and have more intricate financial planning needs, finding an adviser who works directly with an attorney or a CPA — or an adviser who can recommend one — may be an important factor. Sometimes advisers will have one on their staff who can work with you through these more complex matters, or they may refer you to someone who can. All in all, Bunio says “everyone should work together and be on the same page. If not, that’s a bad sign.”

8. How will we work together?

What resources will I have to work with? Do you have an app available to view account information and monitor your portfolio? Will statements be mailed? Do you have paperless options?  Will anyone else have access to my financial information? These questions and more can help determine how you and your financial adviser will ultimately do business and work together.

Asking your adviser how, and how often, you will meet is another one of the most important questions you can ask, Bunio adds. “This is huge! I would say that it’s a red flag if it’s only twice a year or less,” he says. “Your finances are complex, sometimes I meet with my clients twice in a month.”

You may also consider asking if there are ways to meet virtually if in-person meetings aren’t possible. Ensuring they are not only financially, but technologically savvy may be more important to some than others. And since the financial planning industry can have some complicated language and concepts, knowing if they offer financial education resources can be something to consider as well.

9. Who is your custodian?

Knowing where your money is held is another key question to have answered. That’s why asking an adviser who their custodian is can be such an important question.

For some background, a bank custodian is the financial institution that physically holds your stocks, bonds, or other assets, and prevents them from being lost or stolen. Some of the best ways to know if the bank, or custodian, that they use is legitimate is to research whether they are FDIC-insured (the FDIC insures bank account balances of up to $250,000).