Question 1: Are you a fiduciary?
Fiduciaries are legally required to act in your best interest. Non-fiduciary advisors only need to recommend "suitable" products, which can still earn them higher commissions at your expense. Always ask in writing.
Question 2: How are you paid?
- Fee-only: pays the advisor directly (hourly, flat or AUM percentage) — least conflict of interest
- Commission-based: paid by product issuers — high conflict potential
- Fee-based (hybrid): combination — somewhere in between
Question 3: What credentials do you hold?
Look for CFP (Certified Financial Planner), CFA (Chartered Financial Analyst), or CPA/PFS. These require rigorous exams, ethics standards and continuing education.
Question 4: What is your investment philosophy?
Make sure their approach matches your risk tolerance and goals. Beware of anyone promising market-beating returns or pushing exotic products.
Question 5: Can I see your Form ADV and disciplinary history?
All registered advisors file Form ADV with the SEC, disclosing fees, conflicts and any past disciplinary action. Look it up free at adviserinfo.sec.gov.
Frequently asked questions
How much does a financial advisor cost?
Fee-only advisors typically charge 0.5%-1.25% of assets under management, $150-$400 per hour for hourly engagements, or $1,500-$5,000 for one-time financial plans.
Do I need a financial advisor?
Most people with simple finances do not need one — low-cost index funds and a 401(k) cover the basics. Consider hiring one for major life events: marriage, divorce, inheritance, retirement, business sale.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Tradingpedia does not provide personalized financial recommendations. Always consult a qualified advisor before making financial decisions.