For many retirees – and for those planning for retirement – investment assets represent the bulk of their wealth and life savings. Finding knowledgeable and professional help to invest and preserve these assets is paramount to financial success.  

While the finance industry has not made the process of selecting the right advisor relationship particularly easy, this list of six important questions can help you when trying to choose a financial advisor.

1. Are you a fiduciary?

One of the most important questions to ask a financial advisor is whether they are a fiduciary.

A fiduciary is someone who holds a legal or ethical responsibility to act in the clients’ best interests, not their own. But not all fiduciaries are created equal. Ask your financial advisor if they are required to act in your best interest at a point in time or continuously. You may be surprised by the answer.

2. What credentials do you hold?

In today’s industry, everywhere you look it seems like someone’s name is followed by alphabet soup. It’s important to ask your financial advisor about their credentials.

Do they hold any designations like the CERTIFIED FINANCIAL PLANNER™ certification? What do the credentials they have mean? How do you, the client, benefit from their credentials? And what are the requirements for your credentials? This is an often overlooked but very important question.  Remember, not all credentials are created equally. The CFP® is the “gold standard” for personal financial advisors.

3. How do you custody client assets?

The custody of client assets is often an unasked and underappreciated question. The answer to this question can be the difference in keeping your retirement assets and becoming a victim of fraud.

Be sure to ask your financial advisor where they custody their client assets (i.e., Charles Schwab, TD Ameritrade, etc.). Do they use a third-party custodian? Who is their custodian? How does that relationship work? Does the custodian report directly to clients? Do they receive compensation from the custodian? Are clients bound to work with a specific custodian?

While some financial advisors also custody client assets, someone looking for a financial advisor should consider whether independence is important to them.

4. What is your investment philosophy?

When trusting someone with your life savings, you should know what type of securities will comprise your portfolio. This can make a huge impact not only on your return but also your ability to tolerate risk and adjust your strategy.

Ask your financial advisor about their investment philosophy. Do they believe in timing the market? Do they prefer growth or value? Do they invest in individual securities or ETFs and Mutual Funds? Do they offer proprietary investments? Do any of their investments present a conflict of interest? Is the investment management process discretionary or non-discretionary?

5. How are you paid for your services?

Certainly, one of the most important questions you can ask a financial advisor is “how do you get paid?” You should make certain that your advisors’ interests align with your own and that compensation is reasonable.

Do they have a fee structure? Do they receive commissions on any of the products or investments they offer? If so, how much? How often do they bill for their services – quarterly, annually, etc.?

6. What does your disciplinary record look like?

You wouldn’t want to buy a car without looking under the hood a few times and maybe even pulling the Carfax report. So why would you trust a financial advisor with your life savings before you know their track record?

Be sure to ask your financial advisor whether they have a disciplinary record with a regulator. If yes, what was the problem and how was it resolved?

In addition to talking with your financial advisor, there are multiple tools to aid investors in researching advisor disciplinary records such as: FINRAs Broker Check tool, the SECs Investment Advisor Public Disclosure website, and the investment advisors Form ADV which they are required to provide prospective clients.

These are just a few of the questions that someone should ask when looking for a financial advisor. The Securities and Exchange Commission (SEC) is tasked with protecting investors and they serve as a great resource for investor education and advocacy. They have several resources to point you in the right direction including this publication on Top Tips for Selecting a Financial Professional.

When it comes to your financial security, it’s all about partnering with someone who is committed to putting your interests first. We invite you to learn more about HHM Wealth Advisors, LLC., the services they provide, meet their dedicated team, and learn how they protect clients’ assets. For more information or to schedule an appointment, call (423) 826-1670.


This article is contributed by John Dunham with HHM Wealth Advisors, LLC. The materials are general in nature and intended for informational purposes only.