3 Things You Should Know Before Choosing a Financial Advisor

Check out Jeremy’s latest podcast on finding an advisor by listening on “Apple Podcasts” or “Google Podcasts” or read below for 3 Things You Should Know Before Choosing a Financial Advisor.

#90 – Are you looking for a new financial advisor? Or perhaps you’re dissatisfied with your existing advisor and planning to switch.

Either way, searching for an ideal advisor can be difficult if you don’t know what you should be looking for in the first place!

In this episode, Jeremy Keil walks through three things you should know before choosing a financial advisor. He highlights the key characteristics that separate great advisors from mediocre ones so you can confidently identify your ideal advisor.

Jeremy discusses:

  • Series of questions you should ask prospective advisors in the first meeting
  • How to ensure your advisor will serve as a true fiduciary to you
  • Notable designations that help you pick an advisor in a particular area of specialization
  • How most advisors get paid — and why their compensation structure matters to you
  • And more

* FYI – during the episode Jeremy referenced the 6 & 63 licenses related to selling investment products vs. providing investment advice. He forgot to mention the series 7 as a license that allows one to sell investment products as well.

3 Things You Should Know Before Choosing a Financial Advisor

1) What it Means to be a Fiduciary

Many people ask us, “Are you a fiduciary?”

When we say yes, they move right into the next question. However, there are important follow-up questions to ask!

Ask the prospective advisor: Are you acting as a fiduciary TO ME?

The answer to this really depends on whether the advisor is a broker or an investment advisor.

A broker is somebody who earns commission when they sell you an investment product. An investment advisor is someone who gives you ongoing investment advice and holds to that fiduciary standard.

Investment advisors are preferable to commission-based brokers if you’re searching for a true fiduciary.

One way to know if a particular professional is a broker or an investment advisor is through websites like BrokerCheck and Investment Adviser Public Disclosure. (Some advisors might be both. In that case, it depends on what service they are providing you with.)

Broker or investment advisor: Neither of them are wrong. Who you work with depends on your financial needs.

2) Finding a good advisor

“How do I find an advisor who’s any good?” is probably the biggest question you have while looking for a financial advisor.

The truth is, nobody claims to be a bad financial advisor. Separating good advisors from bad ones is up to you — the client.

Now, we know there’s no black and white answer to what makes a financial advisor a good one. But there are best practices you can adopt to find the advisor most suitable for your specific needs, such as:

  • Make sure they’re registered through the SEC or through their state, where they’re listed as an investment advisor.
  • Check their credentials to identify their area of specialization. The CFP® designation indicates expertise in overall financial planning (letsmakeaplan.org tells you if someone is a CFP® professional or not). CIMA® and CFA® designations indicate expertise in investment management. RICP® and RMA® designations indicate expertise in retirement planning.
  • Look at their licenses. If they have only the Series 6 or 7, or the Series 63 license, they’re only registered to sell the investment products. They can provide investment advice if they have the Series 65 or Series 66 license.

Above all, a good advisor is someone that helps you feel confident about your retirement decisions.

3) Understanding Your Advisor’s Compensation

When choosing a financial advisor, it’s important to know their compensation structure.

There are three ways in which most advisors get paid:

  • Commissions: The advisor receives a one-time commission directly from the company when they sell a product.
  • Regular fees for investment advice: In this case, the advisors don’t receive commissions for selling specific products to you. They earn fees for their ongoing investment advice.
  • Financial planning: This has little to do with investments. They primarily help with managing your overall finances. The advisor usually charges based on their time (like an hourly/monthly rate) or on a specific project.

You want to know how advisors get paid because you want to align your needs with how that advisor is compensated.

For example, suppose you pay a one-time commission to an advisor for selling you an annuity. In that case, you can’t expect ongoing investment advice from them without any additional compensation.


If you want to learn more about finding an advisor, check out the resources below!

If you have any questions, feel free to contact us and we’ll be happy to help you achieve your ideal retirement!


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