Selecting Your Investment and Financial Advisor

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Selecting an investment and financial advisor is one of the most important financial decisions...

Selecting an investment and financial advisor is one of the most important financial decisions you can make!

You have to follow the four following P’s in selecting an advisor for your personal financial and investment goals.


As with most important decisions in life, preparation is key to your success in choosing an investment advisor.

Research investor publications for information on choosing the right investment goals for your lifestyle.

Before interviewing advisors, develop specific questions related to those goals and get to know your own personal style.

Are you looking for a partner in managing your investments, or are you willing to provide the advisor with control?

Do you have any social or political beliefs that will need to be considered in establishing your goals and selecting an advisor?

Ask for referrals from friends who have been successful in achieving their investment goals.

But remember, you are selecting an advisor not only on how well he/she selects stocks, but also on how well he/she administers accounts.

Research the background of your advisor before you make your final selection.

Ask for complaint history as well as success stories.

Other questions to consider include employment history, educational background and professional affiliations.

Determine the significance of professional designations an advisor may hold!


Your investment advisor will have access to the most personal details of your finances, so trust is important.

Most advisors will have an introductory meeting with you at no cost. Such meetings provide you with the opportunity to decide how comfortable you will be with an advisor, both personally and professionally.

Many investment firms have ethical standards that are more stringent than some regulatory requirements. Ask whether such standards exist in an investment advisor’s organization. Determine how such standards are administered.

Determine whether your account will be a priority to an advisor. Is the amount of money you intend to place under his/her management comparable to other clients? What is the income base of other clients? Is it comparable to yours?

Will your advisor be accessible for questions or meetings, or will such functions be assigned to another staffperson?

If so, ask to interview anyone that can influence the decisions made on your account.

Will you be comfortable with an advisor’s personal style? Is he/she a sales-person or an advisor? Which type is best for your personal investment goals?

The use of buzzwords may be a sign of good marketer, but not necessarily of a good investment manager!

Don’t be intimidated…

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Ask for an explanation of terms you don’t understand!

Will you be informed if the advisor has any financial interest in the investment products he/she recommends?

Will you be informed if the advisor becomes the subject of an ethical or regulatory investigation after he/she is hired?


Asking questions about an advisor’s investment philosophy is one of the most important steps in choosing an advisor that can help you achieve your personal investment goals.

Is the advisor conservative or aggressive with regard to his/her investment philosophy?

Ask to review records to verify his/her answers. If an advisor works for an investment firm, request information on the firm’s philosophy as well.

Investors often consider social or political issues in the selection of investment products.

Will the advisor, and if applicable, his/her firm, be able to respond to your views?

The size of an investment organization is not necessarily an indication of an advisor’s ability to help you achieve your personal investment goals.

Determine the advisor’s seniority in the firm.

Understand how corporate or management changes can influence his/her investment philosophy.

What is the advisor’s (or the firm’s) views with regard to communicating to clients?

Ask to see copies of account reporting formats and procedures.

How often will you receive reports on your account?

Will you be able to understand reports?

Does the advisor – or the advisor’s firm – support the recent initiatives concerning plain language?


Analyzing performance results is another important aspect of selecting an investment advisor.

As a first step, discuss whether the advisor complies various performance standards.

Certain standards, which are based on ethics codes, were created to level the playing field for investors and the investment profession.

Analyze an advisor’s performance record over time.

Be aware that there are many considerations in determining overall performance, including the investment instruments utilized and account and market activity.

Compare advisor performance with leading benchmarks, such as the various indices.

How is the advisor paid for his/her performance?

Determine whether an advisor’s performance data includes the impact of fees charged to clients, and whether he/she receives compensation from anyone other than clients.