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Be confident, informed and prepared to meet with a financial advisor

AARP Interview an AdvisorTM helps you understand the advisor’s credentials, compensation and how to get the conversation started. ? By continuing with this tool, you agree and understand that AARP is not providing financial advice or recommending any individual financial advisor. The selection of a financial advisor is a personal decision that should be made after careful consideration of your individual financial situation.

The Gold StandardGolden Cup

Our "gold standard" concept is for people who are looking for substantial advice and guidance from a personal financial professional. This guidance uses the term “advisor” to describe this type of professional relationship.

Investment professionals generally come in two varieties; registered investment adviser representatives and broker-dealer agents. As is explained in more detail below, registered investment advisers typically offer a greater depth of services and advice than broker-dealer agents, and are an appropriate choice for someone looking for substantial investment advice and account monitoring. On the other hand, if you are simply looking to buy or sell stocks, for example, you can readily find a broker-dealer to execute your transaction. Read on, and apply the “gold standard” if you are looking for advice and guidance from a personal financial professional.

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The Gold Standard

Our "gold standard" concept is for people who are looking for substantial advice and guidance from a personal financial professional. This guidance uses the term “advisor” to describe this type of professional relationship.

Investment professionals generally come in two varieties; registered investment adviser representatives and broker-dealer agents. As is explained in more detail below, registered investment advisers typically offer a greater depth of services and advice than broker-dealer agents, and are an appropriate choice for someone looking for substantial investment advice and account monitoring. On the other hand, if you are simply looking to buy or sell stocks, for example, you can readily find a broker-dealer to execute your transaction. Read on, and apply the “gold standard” if you are looking for advice and guidance from a personal financial professional.

Golden Cup
Comunication Image Client-advisor relationship
College Image Registration, certifications and designations
Retirement Image Experience
Service Image Services
Fees Image Fees
Cinflict Image Conflicts of Interest
Written Image Written Plan
Meeting Image Meeting Frequency
Diciplinary image Disciplinary Action

Client-Advisor
Relationship

Place your interests above the advisor’s interests and those of the firm the advisor represents.

Require that the advisor acts with care, skill and diligence with regard to your goals and personal circumstances.

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Registration, Certifications, & Designations

Make sure the advisor is registered as required by the Securities and Exchange Commission, their state regulator or the Financial Industry Regulatory Authority (FINRA).

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Experience

The advisor should be experienced weathering ups and downs in the market.

The advisor should have experience with clients in similar situations to yours.

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Services

Comprehensive financial planning, if that is what you seek, includes but is not limited to:

  • Estate planning
  • Insurance planning
  • Investment planning
  • Tax planning
  • Retirement planning

Fees

Fee-only advisors are compensated by their clients for the advice and services they provide. They do not accept commissions to sell particular products. Clients pay fee-only advisors a flat fee, an hourly rate, a retainer or a percentage of assets under management (AUM).

Conflicts of Interest

Advisors should avoid conflicts of interest at all costs. When a conflict is unavoidable, it would have to be disclosed and managed.

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Written Plan

There should be a written, personalized plan provided.

A full-service financial advisor, for example, will provide additional services beyond buying or selling securities on your behalf, such as providing advice and a written analysis of your personal financial situation. It should be a red flag to you if the advisor you currently work with, or someone you are considering, will not provide a written analysis.

Meeting Frequency

An annual review is a best practice for advisors. You may meet more frequently, including leading up to, during or following a major life event. Whether it is quarterly, annually or some other time frame, it’s important to know how often you’ll meet with the advisor so you both have the same expectations.

Disciplinary Action

The advisor should not have faced disciplinary action. The U.S. Securities and Exchange Commission, your state securities regulators and the Financial Industry Regulatory Authority (FINRA) provide free reports on the disciplinary history of financial advisors. You can follow up with these authorities to verify whether there's a history of disciplinary action or customer complaints.

Prep Material for Consultation

Financial Proffesional image

Understand the difference in financial professionals.

“Broker-dealer" and "registered investment adviser" are terms defined in federal and state securities laws, and they define the legal obligations of these professionals. Other optional titles may relate to certifications and designations the advisor has earned.

Broker-dealers and registered investment advisers may have similar roles, but there are important differences. Some of the key differences are highlighted in the chart below.

Registered Investment Advisers

  • Provide a wider variety of services, including investment advice and account monitoring.
  • Often work under a flat fee or a fee based on a percentage of the assets they manage for you.
  • Are required by the Investment Advisers Act of 1940 to act in a fiduciary capacity — under which they must act in their clients’ best interests.
  • Investment advisors monitor and manage their clients' assets on an ongoing basis and, therefore, their fees are typically higher than those of broker-dealers.

Broker-Dealers

  • Usually provide services on a transaction-by-transaction basis, such as arranging purchases and sales of different types of investments.
  • Often work on commission, meaning they earn income when buying and/or selling certain products from a company.
  • Broker-dealer agents may be required to follow the standard of conduct defined by the SEC, which incorporates fiduciary principles but does not require them to act as a fiduciary in all circumstances.
  • While broker-dealers provide fewer services to investors, their fees can be more cost-effective, especially to the investor who may only need transactional or occasional services.

The process of finding a financial advisor to work with can seem overwhelming and intimidating.

Our guide takes the mystery out of what questions you should ask when you interview an advisor. In preparing for your consultation with your advisor, please use the following steps:

puzzle building image
Create a list of your needs
Know your goals
Research your advisor
Things to listen for
During the meeting with your advisor
Create a list of your needs

You may go to an advisor with an open mind to hear about services, but you’ll want to think about how an advisor will be most beneficial to you. Here are some subjects for you to consider when thinking about how to use your advisor.

Know your goals

Be sure to know what your financial success looks like to you. You want an advisor who will work in your best interest, make decisions in your best interest and make decisions with your goals in mind. Having an advisor who helps you craft your goals and ensure that they are realistic can be beneficial as well. But it’s important that the advisor is starting the consultation with what you want instead of selling you services and products that do not match your desired short-, mid- and long-term outcomes.

Take time to think about what you would like to accomplish financially over the next year, five years and/or a longer time frame. Your advisor may challenge you on some of your goals, which is fine. But be sure that they lead with understanding your goals.

Research your advisor

  • A.View the advisor’s website to gain an understanding of services and designations. Research designations to understand the advisor’s value and how they are regulated.
  • B.Be aware of which services the advisor offers directly and which are outsourced. For example, will the advisor manage your investments or use a third-party company for your investments? If so, you may be paying additional fees for this service.
  • C.Ascertain the number of years the advisor has been providing financial planning or investment advisory services.
  • D.Find out what licenses and designations the advisor holds, and do research to understand what they mean.




  • E.Determine which services the advisor provides that are high priority for you.




  • F.Search online for reviews of the advisor or the firm they represent.
  • G.The Securities and Exchange Commission, your state securities regulators and the Financial Industry Regulatory Authority (FINRA) provide free reports and information on the disciplinary history of financial advisors. You can — and should — follow up with these authorities to verify whether there's a history of disciplinary action or customer complaints, which are potential red flags.

Any details that you can’t find on the site, add to the questions you plan to ask in person.

Things to listen for

  • A.Did the advisor get a sense of your needs or mostly try to sell products/services? An advisor who simply tries to sell you products and services is not putting your interests or needs first.
  • B.Was the advisor interested in teaching you things that you didn’t know/understand?
  • C.Did the advisor ask you about your goals?
  • D. Did the advisor guarantee you a return on your
    investments?Grey Question Mark
  • E.Is the advisor transparent about fees, designations and services? An advisor should be trustworthy and forthcoming about credentials, fees and services. If they try to sell you products and services but is not open about credentials and associated fees, this can be a red flag.
During the meeting with your advisor

Ask the advisor the following questions during your in-person or phone meeting. Feel free to add or omit questions based on what you’ve learned from previous research on the advisor.

Services
Experience
Investments/Products
Compensation/Fees

Following the Meeting With an Advisor

Think back on your meeting and see how the advisor performed against these criteria. Take the quiz below:

Think back on your meeting and see how the advisor performed against these criteria.

Following Your Meeting

Take the Quiz

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