Three Questions You Need to Ask When Looking for a Financial Advisor

November 12, 2016

It’s the season of choices in America. While the leaders we have chosen will impact the future of our country, there’s an even more important decision to be made—a decision that will impact the future of your hard-earned savings: your financial advisor. While Americans spend more than a year engrossed in political choices, they don’t spend nearly enough time looking for a financial advisor. In fact, Americans on average spend more time looking for a car than they do when they look for a financial advisor. Often, they don’t even ask the questions that matter most.

When you are searching for a financial advisor, there are three questions that you absolutely must ask to ensure that you are working with the right advisor for you.

  • Are you held to a fiduciary standard?
    It’s important to realize that all financial advisors are not created equal. If you go to a butcher’s shop and ask what you should eat for lunch, the butcher won’t recommend that you eat a salad. He’ll likely recommend that you eat some sort of meat because he has a personal stock in that choice. If you go to a dietitian, however, she’ll likely take a lot more factors into consideration because she is considering what will benefit your health the most. In the world of financial advisors, there is something called the fiduciary standard, which is a different series of exams and legal obligations for the financial advisor. If financial advisors are held to a fiduciary standard, they are legally held to act in ways that benefit the client instead of benefitting themselves. In other words, you’ll want to make sure you have a financial advisor that is held to a fiduciary standard because your financial needs will always take priority.
  • How do you get paid?
    There are many different ways that your financial advisor could bill you for services. The two primary methods of payment are fee-based and commission-based. A fee-based plan generally involves a recurring charge that you pay periodically. A commission-based plan requires that you pay a commission on your funds, and is either frontloaded (you pay the fee up front) or backloaded (you pay the fee when you sell the fund). There’s not one best method of payment, but it’s important that there is mutual understanding about the fees you will pay and that your financial advisor is transparent with you about the fees you’ll be paying. Make sure there are no hidden charges, because even small percentages could cost you hundreds of thousands of dollars over your lifetime. You should be able to trust your financial advisor, and that means clear communication and transparent payment methods.
  • What is your specialty?
    Different financial advisors have different specialties. Some financial advisors may focus on young families who are just starting out, while others may focus on people in their 30s and 40s who are trying to increase their capital as much as possible. At Ashton Strobelt, we want to help people retire and stay retired. We focus on people who are older than fifty years old—the people who are transitioning from their working years into retirement.

Although choosing a financial advisor may not be as fun as choosing a car or as heated as choosing the leader of our country, it’s an incredibly significant decision. Don’t skip the important questions when you’re looking for the right financial advisor for you. If you have any questions about your finances or about retirement, email them to