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How To Interview A Financial Advisor: A Proven Script

Finding a financial advisor is like finding a trusted mechanic. Learn how to interview a financial advisor and tell if he or she is a good fit.

Stock photo of a young couple meeting with their financial adviser. Via MoneyUnder30.com
Hooking up with a good financial advisor can be a lot like finding an ace mechanic: Wherever possible, you’ll want to use word of mouth from trusted friends or family members to find someone who’s ethical, honest and has the experience, if you will, to keep your fiscal engine humming.

Yet it’s not likely that most of us are going to poke around Herb’s Garage looking for a seal of approval from the National Institute for Automotive Service Excellence. (Yes, there is such a thing.) Maybe that’s understandable, because we all tend to judge a mechanic mostly on their track over the years with family cars.

Steven G Blum is a Wharton professor and shares tips on interviewing your financial advisor.The same logic, in theory, can apply to taking on your parents’ financial advisor, but there are some issues to contend with. In my case, for starters, my parents didn’t have a financial advisor, nor investments, nor retirement accounts. I had no idea whom to go to, or what questions to ask.

“The people on the other end of your investments have command of a great many tricks of the trade that are far beyond the knowledge of even very smart regular people,” says Steven G. Blum (pictured). He’s the author of a recently published book, “Negotiating Your Investments: Use Proven Negotiation Methods to Enrich Your Financial Life” (Wiley).

“We tend to place too much trust in our financial advisors,” he adds. “But because they know a great deal that you don’t, you are badly disadvantaged and very vulnerable to being manipulated.”

Because Blum knows the turf much better than any of us, he provided Money Under 30 with a list of questions help you interview a financial advisor before you engage. That might sound intimidating, but the key to remember is that the advisor works for you — and will control a significant portion of your money.

“People are intimidated, do not know the right questions to ask, or fear appearing pushy or rude,” Blum says. “But regretfully, it’s very common that people do not question a financial advisor carefully or fully before engaging her or his services.”

He adds that for people 35 and under, this can be an especially difficult task: “Younger adults have an added burden in that they have been brought up to be polite, respect older people and honor authority. While these are good traits, they may create a reluctance to ask the hard questions and be skeptical about what’s being said.”

Blum, aside form running his own firm, is also a celebrated teacher. He’s taught in the Department of Legal Studies and Business Ethics at the University’s of Pennsylvania’s Wharton School of Business since 1994, and has won the William G. Whitney Award for outstanding teaching at Wharton six times.

The question Blum recommends you ask include the following:

1. What credentials have you earned? What did you study in college? What college degrees did you earn? From which colleges?

This set of questions might sound smiler to something you’ve encountered in a job interview. “You want an advisor who has deep understanding of the subject matter in question,” he says. “This includes finance, economics, markets and taxation. Regretfully, a great number of practitioners lack this knowledge. Look for a very solid educational background as a first step in determining whether an advisor really has the knowledge base to fulfill a ‘duty of care.’”

2. How do you incorporate tax strategy into how you make investment decisions for your clients? Name three books you have read that address investing and finance.

With this query, you might feel really uncomfortable, as though you’re giving the advisor a grilling. “But tax planning is very important if you are to get guidance that is worth the maximum amount to you,” Blum points out. “It can make the difference between successful investing and losing out.”

3. How are you regulated? What role do you personally play in complying with all regulatory requirements?

“There are several different regulatory regimes that govern financial advisor conduct,” Blum says. “Some are more effective than others. A good advisor should know how she is regulated and should play a role in making clients safe and well served.”

4. Can you pick stocks that consistently beat the market?

This is something of a trick question. “If they say yes, run! Economists know that this cannot be done on a consistent basis. A great many financial advisors, however, make their living by ‘doing’ this thing that economists teach cannot be done. How much do you want to spend on someone doing for you that which science knows cannot be done?”

5. How do you make money? How does your firm make money? What conflicts of interest exist and how do you navigate them?

“Ideally, you want a firm whose only income is what the clients pay directly to them,” Blum says. “Many of us will be embarrassed to ask how much an advisor makes. It is, however, the essence of what you want to know: What do they do and for whom do they do it? This is an extremely highly compensated sector of our economy. You do not want to be financing their yachts.”

We began this column talking about cars, and in some corners of the financial advising world, it’s a lot like selling used cars — so be on you guard. “The financial services industry has been studying how best to sell their products and advice for over a century,” Blum cautions. “They train their people for advantage in selling and taking control of the conversation. Much like car dealerships, they arrange a structure and script for the conversation that makes independent inquiry by the customer quite difficult.”

In other words, don’t be passive. Ask your potential advisor questions, lots of them, before you get you financial motor running.

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Published or updated on July 31, 2014

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About Lou Carlozo

Based in Chicago, Lou Carlozo is a personal finance contributor for Reuters Money, a columnist with DealNews.com, and a former managing editor at AOL's WalletPop.com. Contact him with story ideas for Money Under 30 at feedbacker@aol.com, or follow him via LinkedIn and Twitter (@LouCarlozo63).


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  1. Perry says:

    My name is Perry. Italian guy, 27 years old and I live in Australia. I have 20.000 dollars saved, and I would like to invest. Could you recommend me where to invest, how much, what about Bettermint)? should I speak with a financial planner? If yes, do you know any good advisor in Sydney can help me?
    I always read your newsletter, they great!!


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