top of page

How to choose a financial advisor



When someone is looking for an advisor, especially for the first time, it can be a frustrating search.  The difference in a planner, stockbroker, and an insurance salesperson isn't clear because all of them tend to use the title “advisor.”  The industry has become so convoluted that even folks who work in the industry can have a hard time articulating the nuances of the different types of “advisors.”  In fact, the regulators of the industry would say that this is all acceptable.  I tend to disagree about that, so I want to shed some light here.

WHAT type of advisor DO YOU NEED?


Financial Planner

A financial planning "advisor" gives you a comprehensive review with goals and action steps, and can either be one-time or ongoing. Perhaps you are saving or ready to save and aren’t sure what’s next.  You’re starting to think about how to fund college, estate planning, retirement planning, and things that really have a big impact on your financial life.  Many advisors would just tell you at this point to invest with them (if you meet their minimums!), but we believe that doing a comprehensive plan is key to selecting the right investment.  


The industry as a whole makes the mistake of going after the investment asset first because that’s where the money for the advisor tends to be.  We regularly talk to people who are just starting to save, $1000/month, let’s say.  If they have spoken to other advisors, they are typically told to come back when they have $250k or offered insurance products so that the advisor is getting some form of compensation through the insurance premiums.  Well that’s not really helping the client in the here and now, and frankly, the advice is a little misleading at best.  That is why we at Convergent Financial Group are a plan first and invest second firm, and we have no investment account minimums.  Learn more about financial planning here.     


People used to employ this type of “advisor” to purchase stocks on their behalf.  Now, with the public access to online trading tools like E-Trade, people can buy their own stocks.  So someone who is looking for a stockbroker “advisor” is generally looking for stock tips.  If you already have a robust financial plan and you’re looking for help only with stock picking, a stockbroker might be the right type of advisor for you.

Insurance Salesperson

If all you need is life insurance, get some quotes for life insurance at  But if you need specialized strategies within the realm of life insurance, such as buy-sell agreements for small business owners, AND you already have a robust financial plan, then an insurance salesperson could be a good fit for you.  If you go through an insurance salesperson or “advisor,” you should be aware that in most cases the insurance salesperson will be commissioned about 50-70% of what you pay in premiums the first year, and even if you are speaking to someone who can offer you insurance from various providers, they typically have minimum product sales they have to meet with their sponsoring insurance company.

What Do You Need?
Do Your Research


do your research

Google Search

Read online reviews and get a feel for the reputation of the advisor.  Some people like to get references, but I think the Google search is more valuable.  Any advisor in their right mind is only going to give you their happiest clients as references.  In my opinion, learning about their complete reputation through a Google search is much more telling because the advisor has no ability to screen that… what you see is what you get.

Anyone listed as an active broker with FINRA (Financial Industry Regulatory Authority) has or has had an association with a “broker-dealer,” which means that they can sell commissionable products. Being associated with a broker-dealer means that the broker-dealer has sales quotas that the advisor must meet to keep the association.  Therefore, you will want to make a mental note of their status as broker, as it could affect the advice they give you, especially if they are trying to meet those quotas. 

You are also checking for disclosures, which can be customer complaints or arbitrations, regulatory actions, employment terminations, bankruptcy filings and certain civil or criminal proceedings that they were a part of.  You want it to say NO discosures (see photo).  Check out a broker's listing with FINRA here.

An Investment Advisor Search through the SEC (Securities & Exchange Commission)

 will help you confirm that the adviser is registered as an investment advisor representative.  An investment advisor is paid for providing advice about securities to clients. In addition, some investment advisors manage investment portfolios and offer financial planning services. 

Also, here again, you are checking for their good standing and for disclosures, which can be customer complaints or arbitrations, regulatory actions, employment terminations, bankruptcy filings and certain civil or criminal proceedings that they were a part of.  Ideally, you want there to be NO disclosures.  You can check out Jeremy Ellisor's or another investment advisor's registration with the SEC here.

Screen Shot 2019-04-15 at 11.16.05

It’s very easy to GET into this business, but it’s very difficult to STAY in this business, so looking at longevity can be telling.  Ideally, if you are over 50, you want someone who is a little younger than you, but still experienced.  If you are in your 20’s or 30’s, you would typically want someone a little older than you because of their experience.

What experience do you have?


ask the hard questions

Ask the Hard Questions

Who do you work with?

Some advisors specialize in serving young doctors, retirees with pensions, or the worse answer you can get… “anyone.”  You want to know if their client base description also describes you.  The more experience they have providing what you are looking for to people like you is proof positive that they will have a greater understanding and knowledge of how to best serve you.

How are you getting paid?

COMMISSIONS FROM PRODUCT SALES - Many advisors get commissions for selling annuities,  insurance, and similar products.  Folks might be surprised to learn that the advisor’s commission on a $500,000 annuity could be about $50,000!  If you’re thinking that’s a very steep commission, you and I are in agreement.  With life insurance, the adviser typically receives 50-70% of the first year’s premiums as commission.  That’s no small commission either!   

KICKBACKS OR 12B-1 FEES FROM INVESTMENT COMPANIES - This is an annual revenue stream paid to your advisor by an investment company.  It is considered an operational expense and is included in the fund’s expense ratio.  It is generally 0.25%-0.75% of the investment. 


ADVICE ONLY - This where you want to get a yes.  If the advisor is only paid for offering you advice, they are not incented to make certain recommendations to enhance their own income.  I personally think this is best and it’s how we do business at Convergent.  Just to be clear: investment products and insurance are not all bad.  BUT, they should be one small part of your financial portfolio, not the primary vehicle.

For more information on how advisors get paid, check out this blog post.

Will I be working with you or your staff?

Especially in larger firms, it is not uncommon for the senior advisor to handle the initial meetings with a client and then turn them over to a junior advisor or even an admin person.

What's your service model?

You want to find out what you can expect from each step of the initial process and how your ongoing relationship with the advisor will work.

What will I get from you?  Can I see a sample?

In the case of a financial or investment plan, for example, you want to actually see what the delivered product looks like.  Not only will this set clear expectations, but it will also help you understand if what they’re providing is even what you want.  Their ability to do this is also a telltale sign of whether they are actually a financial/investment advisor or an insurance advisor. 

Decision Time


decision time

Ask yourself...

Did the advisor pass all 3 research tests?

Did the advisor answer all of my questions completely and to my satisfaction?

Did I get the sense that the advisor was forthcoming in all answers, but especially regarding how they get paid?

Will I be satisfied and well-served by the deliverables and the ongoing service level of the advisor?

Can the advisor provide what I actually need?

Tips & Watchouts



An advisor says, “You don’t pay me.  The company that issues this product or mutual fund pays me.”  This is a big red flag that they are getting paid commissions or kickbacks.  I’ve seen annuities that pay 10% of the deposits to the advisor!  That could be $50,000-$100,000 for meeting with someone maybe twice!  A good advisor should be very comfortable explaining exactly how they get paid and how much they get paid.  I’ve said it before and will say it again… trust me, nobody is working for free.  It’s costing you something to work with an advisor regardless of how they might try to skirt around it.

When you ask who they typically work with, the advisor responds “anyone.”  That is a good indication that they are probably just selling products or investment vehicles for commissions or kickbacks.  The translation of “anyone” is “I can sell [product or investment] to anyone who has the money to purchase or invest.”  That doesn’t necessarily mean that this person is evil and out to get you, but it would give me pause personally.  I’ve heard too many stories from folks who come to see me after they get burned for me not to be leery.  

When it comes to insurance, one way you can tell if an advisor has your best interest at heart is whether they are pushing you to buy insurance from them or encouraging you to shop the marketplace for the best value.  

When you ask for a sample financial or investment plan, the advisor's ability to provide one is a telltale sign of whether they are actually a financial/investment advisor or an insurance advisor. 

If you have less than the account minimums that many firms require (usually at least $250k), beware.  This can be a vulnerable position for you, because you’re at a point where you’re looking for help and ready to take some action steps, but most firms (especially the large ones!) do not compensate their advisors for investment accounts below their minimums.  That scenario can lead advisors to try to sell you commissionable investments or insurance products so that they can make money off of the work they do for you.  It is reasonable for advisors to want to get paid for their time, BUT we believe that advisors should be acting in a fiduciary capacity (which means they are required to do what’s BEST FOR YOU) vs holding to the suitability standard (which means that they just have to offer you investments or products that are SUITABLE).  We at Convergent are always operating under fiduciary responsibility.

That makes sense.  I would like to

bottom of page