Objective information about retirement, financial planning and investments


Selecting the Right Financial Advisor


Several years ago finance blogger extraordinaire Barbara Friedberg wrote this guest post for Happy Simple Living entitled Financial Advisors Who Get Paid To Sell Products Bother Me.  What she said in that post still resonates as true today as it did then.

While there are many excellent financial advisors who are compensated all or in part via commissions, an advisor who is compensated from the sale of financial products has a built-in conflict of interest when providing clients with advice.Finance

Ask a lot of questions

With the introduction of the new Department of Labor Fiduciary rules, financial advisors will be required to put their client’s interests first when providing advice on their retirement accounts.

Conflicts of interests must be disclosed. A financial advisor who already acts in a fiduciary capacity towards their clients likely has a leg up under these new rules.  They already run their practice from the perspective of putting the interests of their clients above all else.

As Barbara indicated in the title of her post, how an advisor is compensated is critical.

In short, selecting the right financial advisor for you involves asking a lot of questions and understanding how they do business.  

  • How are they compensated?
  • Do they have experience working with clients whose situation is similar to yours?
  • Are there conflicts of interest that will impact the quality of the advice they provide?
  • What qualifications does the advisor have?
  • How and how often will they communicate with you?

If the prospective financial advisor can’t or won’t answer these and other questions to your satisfaction ask yourself if this is someone to whom you want entrust your financial future.

Please contact me with any thoughts or suggestions about anything you’ve read here at The Chicago Financial Planner. Don’t miss any future posts, please subscribe via email. Please check out our resources page as well.  

Photo credt: FlickrEnhanced by Zemanta

Don't miss another post, subscribe via email

If you enjoyed this article, please enter your email address to receive the latest updates about financial planning, investments, and retirement plans.


  1. Thanks for the mention-One can't post enough on this really important topic.

  2. Thanks for your comment Barb. I agree, the public needs to continue to be reminded about the differences in the types of advisors and advice out there. There are far two many "advisors" who peddle high fee products and worse.

  3. I'm a Jr. Financial Advisor and I want to pursue a career in fee-based financial planning. Where should I start?

  4. Jason thank you for your comment. First I want to clarify what you are looking to do. Fee-based is basically another form of working on commission in my opinion. Fee-only is what I do and this means that we take no form of compensation from any provider of investments or financial products. If this is your area of interest fee free to contact me and I will be happy to point you to a few places that might be able to help you.

  5. I have a web site where I research penny stocks and stocks under ten dollars. I would like to comment about financial planners or investment advisors. I think one is better of being their own investment advisor and if you can't or just are not interested in financial matters than you can just have someone at fidelity investments or some other fund company pick some conservative investments for you.theirs no need to pay a financial planner or investment advisor lots of money for something you could get for free.

  6. James thanks for visiting the site and for sharing your opinion.

  7. I am in the process of hiring a financial planning advisor. The financial planner provided me with several references. What are the best questions to ask these references to help me make the most educated decision about selecting a financial planner?

  8. I am in the process of hiring a financial planning advisor. The financial planner provided me with several references. What are the best questions to ask these references to help me make the most educated decision about selecting a financial planner?

  9. Thanks for your comment. In one respect I think the whole process of asking an advisor for references is a bit flawed in that no advisor is going to give the names of clients who are any less than totally satisfied with his/her services.

    That said, you might inquire about the advisor's communications style. How and how often do they communicate with clients? Are they accessible when you contact them? Do they communicate in a fashion that is understandable to non-financial folks?

  10. Finance Outlook, the complete financial solution.We provide one of a kind innovative financial remedies to all the financial riddles and puzzles that you tumble upon, every moment.

  11. I think one good financial advisor is enough to fulfill the need of a client, if your advisor is good and strategic I suppose one is enough.

  12. Thank you for your comment and for visiting the site.

  13. Hi
    After 25 years in the business, I believe fees and the way financial planners are paid are important along with a host of other factors when selecting a financial planner. I put together a one page financial planner checklist with 'seven questions to ask your financial planner, and one big question for you'. It has been very popular should anyone wish to use it. Cheers

  14. I came across your blog just to look, but I had to leave this comment to say how much I appreciate your work. Thanks for the help.

  15. R H Stacey says

    I like to believe most people who are in, or near retirement age either have saved / invested adequately in 401-K, ROTH or IRA devices, or they have NOT! Perhaps a minority still have a defined pension plan. Most will have to rely on social security, and income streams from their contributory retirement streams, 401-K, IRA, ROTHS.

    Available data suggest only a relatively small proportion of us Boomers appear ‘adequately funded’ for a long retirement. Going into retirement with debt is a major drag. The danger of course, is running out of money before you run out of time.

    Shop carefully with half a dozen or so potential ‘financial advisors’ before you choose, or maybe you will chose to do it on your own like I.

    I retired at 60, my wife 2 years later at 62. We both choose early social security benefits, while I managed our 401-Ks having rolled them both over to Vanguard, the fund house where our respective ROTH’s are housed. Selecting from a broad array of INDEX stock, bond, REIT’s, and a few dividend paying blue chips, we have set up a balanced portfolio 60% equities 40% bonds, preferreds, and REIT’s.

    Our balanced portfolio has grown while we enjoyed about a 3-4% spend rate each year.

    No advisor costs need be added if you so desire.

    • Roger Wohlner says

      Thanks for the comment and best wishes for a long, healthy and prosperous retirement.

      • R H Stacey says

        Doing our best Roger. We have now about $730K investable assets, a nice home, cars, and no debt.
        I guess that should set the stage for a ‘decent’ retirement.
        Naturally, this was part of the planning, and saving, investing over many years.
        Two high school graduates, here. Never BIG money earners, just learned to live on less than we earned, saved the rest.
        Simple, really. Wonder why it is so HARD for so many with far greater opportunities to DO?

  16. It really bugs me when there’s conflict of interest in the financial services industry.. Someone is trusting an advisor with their hard earned cash.. When I get a dollar from someone, I will make sure that I pay that dollar back before I even consider eating but that kind of loyalty doesn’t exist when it comes to money.. It’s getting better with the regulations in place and hopefully it never gets worse!

    • Roger Wohlner says

      Thanks for your comment. Trust is critical in a relationship with a financial advisor. This was true prior to these new rules and will be true into the future.

Speak Your Mind


This site uses Akismet to reduce spam. Learn how your comment data is processed.