5 Criteria to Select the Right Financial Advisor

With so many financial professionals competing for your business, deciding on the right one can be daunting. Here are 7 criteria to guide your decision-making process.

When it comes to your investments, your savings, and anything relating to your income, you don’t want to leave anything to chance. So when you’re choosing a financial advisor, it’s important to choose one who’s not only competent, but also one with whom you feel a good rapport.

To assist you on your search for the right match, here are five criteria to consider. Follow these and you’re far more likely to end up with someone who can help you achieve your goals.

1. Transparency

One thing everyone wants to avoid when hiring a financial advisor are hidden fees, complicated billing, and surprise charges. Always ask how much someone charges, and also be sure to ask how they charge.

That means asking whether they charge by the hour, fee-for-service, or if they bill you according to how much in assets they’re managing for you.

2. Authority

Financial advisors usually have a few letters after their names: CFP, CPA, ChFC and so on. Ask what type of certification your potential new advisor has, and be sure you know what the letters stand for! Some are harder to earn than others. A CFP (Certified Financial Planner), for example, requires significant study and candidates must pass a famously difficult exam in order to rightfully attach those CFP letters to their names.

3. Suitability

Each license, credential and certification designates a different specialty, so determine what you need and then choose someone with the right credentials.

For example, if you run a small business, you might consider a CPA (Certified Public Accountant). CPAs know about tax planning, which is an essential aspect of financial advising for small business owners. Registered Investment Advisors (RIA) are a good match for people who are simply looking for someone to manage their money.

There’s also the level of service each financial advisor provides. You may just want some advice on your investments, or maybe you need a totally comprehensive life plan to take you from the present to retirement and beyond. Or perhaps you’re looking for estate planning, in which case there are financial advisors who specialize those services, too. The long and the short of it: determine your goals before you go shopping around.

4. Experience

It’s perfectly acceptable to ask a prospective advisor for any financial plans he or she has done in the past. You’ll want to know that you’re not hiring a total greenhorn who’s winging it at every stage. Some will offer you all sorts of samples, and you’ll find a range of varying depths of detail and complexity.

There’s no golden rule as far as what to look for, but rather it all depends on what you require. Want 100 pages of charts and analysis? That’s out there. Want a simple snapshot of your financial life with simple goals laid out in a user-friendly format? That’s available too. Make your expectations known and of course don’t be afraid to tell someone you just don’t understand what they’re showing you.

5. Responsiveness

As in any relationship, communication is vital to success. Ask how and how much your prospective financial advisor communicates with clients. Believe it or not, some send a report once and year and you won’t hear from them otherwise. Others offer a more supportive experience with constant contact via email, texting, or phone.


Finally, it probably goes without saying, but make sure your financial advisor is someone who seems genuinely interested in you and your finances. This may perhaps be the most important characteristic, since without knowing about your goals, he or she won’t be able to help you achieve them.


Chuck Donalies

Charles Donalies is the founder of Donalies Financial Planning, a fee-only financial planning firm located in Washington, D.C.

Charles and I became friends through NAPFA and I asked him to write some thoughts on selecting a financial advisor as a guest topic for this site.