5 Important Questions to Ask Your Financial Adviser
The answers to these questions can help make sure you're getting smart guidance from the right person.

Most people don't have a lot of room for error when it comes to where and how they invest their money, especially as they grow older. Even people who do have a little cushion have no interest in needlessly losing money.
That's why when you go in search of investment advice you want to make certain you're getting the right guidance from the right person. And frankly, that's not always easy to determine.
You can better weigh a financial professional's recommendations if you find out a little bit about them before you start acting on their advice.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
With that in mind, here are five important questions you should ask a financial adviser:
1. Are you a fiduciary?
This question might not occur to everyone, but it can be helpful to understand that in the investment world, there are two standards—the suitability standard and the fiduciary standard.
Financial professionals who operate under the suitability standard offer you products for sale from a range that is available from the company or companies they represent. They are paid commissions calculated as a percentage of the amount you pay to purchase the product. By law, the guidance they give and the products they sell you must be suitable for your needs, objectives and unique circumstances. Financial professionals operating under this standard would include insurance agents (producers), as well as brokers (registered representatives).
A financial professional operating under the fiduciary standard must present, by law, the best advice he or she can give, taking into consideration the needs, wants and objectives of the individual consumer. The client's needs and personal objectives must come first. Typically, fiduciaries are paid a recurring fee calculated as a percentage of the market-based assets for which he or she is providing advisory services (not commissions). Financial professionals operating under this standard would include investment adviser representatives.
2. How do you get paid for the services you provide?
This question is important because it's not just about the adviser's bottom line. It also affects your bottom line. Typically, there are three ways advisers make money: They charge the client a flat fee, perhaps based on an hourly rate for their advice; they charge the client a fee that is a set percentage of the assets under their management; or they make a commission for selling insurance products, mutual funds or other investments. When a fee is based on the percentage of the assets, not only does that eliminate the conflict of interest you can have with commissions, but it also ties the adviser's success to the client's success. Think of it this way: A broker who sells a financial product for a commission is unaffected by the losses or gains. But a fiduciary whose fee is determined by the value of the assets has an incentive to make sure the plan is in line with the client's financial goals.
3. What licenses or credentials do you have?
Do they have only a securities license? Just an insurance license? Can they provide services in both? You can do a little online research on a financial professional yourself. For example, FINRA.org has a free search tool called Broker Check. Just type in a name to find background information about a financial professional. The Securities and Exchange Commission has a similar search tool called Investment Adviser Public Disclosure. You also can visit your state's department of insurance website and verify whether an insurance producer is licensed.
4. Can you show me a sample financial strategy or plan?
Advisers should have a well-defined process they use when making recommendations. That doesn't mean they should have a cookie-cutter plan that they give out to everyone—far from it. Every client's goals and resources are different, so there should be a process for determining what's best for your situation. They should be able to show you what that process is or provide you a sample plan that demonstrates how they develop a recommendation to fit your situation.
5. Have your ever been publicly disciplined for illegal or unethical activities, or filed for bankruptcy?
It's amazing how many people who claim to be financial advisers can't handle their own money. In fact, it's downright scary seeing them give advice when their track records show they can't follow that advice themselves. You should be able to practice what you preach and have a good handle on what you're talking about before handing out advice to others.
Joshua M. Blaker is founder and president of Accrue Wealth Designs, a full-service financial advisory firm. He has passed the Series 65 securities exam, qualifying him as an Investment Adviser Representative in Arizona, and holds the Registered Financial Consultant (RFC®) designation. He is also licensed as an Insurance Professional in multiple states for life and health insurance.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Joshua M. Blaker is founder and president of Accrue Wealth Designs, a full-service financial advisory firm. He began in the financial-services industry in 1997, working alongside his father. As an income and preservation specialist, Blaker works with retirees and individuals planning for retirement. He has passed the Series 65 securities exam, qualifying him as an Investment Adviser Representative in Arizona, and holds the Registered Financial Consultant (RFC®) designation. He is also licensed as an Insurance Professional in multiple states for life and health insurance. Investment advisory services offered only by duly registered individuals through AE Wealth Management LLC (AEWM). AEWM and Accrue Wealth Designs are not affiliated companies. Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, lifetime income generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. AW06183444
-
Aging: The Overlooked Risk Factor
Sponsored Elder care is a personal and financial vulnerability many people fail to plan for.
-
AI vs the Stock Market: How Did Alphabet, Nike and Industrial Stocks Perform in June?
AI is a new tool to help investors analyze data, but can it beat the stock market? Here's how a chatbot's stock picks fared in June.
-
Eight Tips From a Financial Caddie: How to Keep Your Retirement on the Fairway
Think of your financial adviser as a golf caddie — giving you the advice you need to nail the retirement course, avoiding financial bunkers and bogeys.
-
You Were Planning to Retire This Year: Should You Go Ahead?
If the economic climate is making you doubt whether you should retire this year, these three questions will help you make up your mind.
-
Are You Owed Money Thanks to the SSFA? You Might Need to Do Something to Get It
The Social Security Fairness Act removed restrictions on benefits for people with government pensions. If you're one of them, don't leave money on the table. Here's how you can be proactive in claiming what you're due.
-
From Wills to Wishes: An Expert Guide to Your Estate Planning Playbook
Consider supplementing your traditional legal documents with this essential road map to guide your loved ones through the emotional and logistical details that will follow your loss.
-
Your Home + Your IRA = Your Long-Term Care Solution
If you're worried that long-term care costs will drain your retirement savings, consider a personalized retirement plan that could solve your problem.
-
I'm a Financial Planner: Retirees Should Never Do These Four Things in a Recession
Recessions are scary business, especially for retirees. They can scare even the most prepared folks into making bad moves — like these.
-
A Retirement Planner's Advice for Taking the Guesswork Out of Income Planning
Once you've saved for retirement, you'll need your nest egg to support you for as many as 30 years. For that, you need a clear income strategy, not guesswork.
-
Why Smart Retirees Are Ditching Traditional Financial Plans
Financial plans based purely on growth, like the 60/40 portfolio, are built for a different era. Today’s retirees need plans based on real-life risks and goals and that feature these four elements.