What to Know Before Hiring a Financial Consultant
Today’s theme: What to Know Before Hiring a Financial Consultant. Before you sign an engagement letter, let’s demystify credentials, fees, ethics, and fit—so you feel confident, protected, and energized about your next money chapter. Subscribe for practical checklists and real-world stories.
Fiduciary Duty vs. Suitability Standard
A fiduciary must put your interests first; suitability only requires appropriate recommendations. Ask directly: Do you always act as a fiduciary, in writing, for all services? If not, when might conflicts arise, and how are they disclosed and managed?
Scope of Service and Deliverables
Clarify whether you are getting holistic planning, investment management, tax coordination, estate collaboration, or just product selection. Request timelines, sample deliverables, and meeting cadence. Specificity today saves disappointment and drift tomorrow.
Who Orchestrates Your Financial Life
Great consultants quarterback, coordinating CPAs, attorneys, and benefits teams. Ask how collaboration happens and who leads. Share your experience below: have you worked with a planner, broker, or coach, and how did the roles differ in practice?
Certifications That Truly Matter
Look for designations with rigorous standards and continuing education like CFP, CFA, or CPA-PFS. Ask what the letters mean, what they uniquely qualify the consultant to do, and how often their knowledge is formally refreshed.
Do a Transparent Background Check
Search public databases like BrokerCheck and the SEC’s IAPD for disclosures, exams, and firm history. Request the firm’s Form ADV and a plain-English explanation of conflicts. An ethical pro welcomes scrutiny, questions, and careful reading.
Know the Fees and the Real Cost
Fee-Only, Fee-Based, and Commission—Not the Same
Fee-only consultants are compensated solely by clients; fee-based may also receive commissions; commission-only sell products. Clarify precisely how they are paid and when incentives might tilt recommendations away from your best interests.
Calculate the All-In Cost
Add advisory fees, fund expense ratios, trading costs, platform charges, planning retainers, and potential taxes from strategy changes. Request a written dollar estimate for year one and year three across realistic portfolio scenarios.
Negotiate Clarity, Not Just Price
Ask about tiered pricing, hourly options, or project-based plans. Seek fee caps on complex projects. If a consultant resists clear, written fee schedules, consider it a caution flag. Share a fee question you plan to ask in your first interview.
Experience and Fit: The Human Element
If you hold startup equity, rental properties, or international assets, ask for anonymized comparisons and outcomes. A consultant who has navigated situations like yours will discuss pitfalls and trade-offs with credible, practiced nuance.
What is your investment philosophy? How do you diversify, rebalance, and tax-loss harvest? Who holds my assets, and how do you conduct due diligence on managers and funds? Show me an example plan deliverable, start to finish.
Guaranteed returns, vague fee answers, product-first pitches, pressure to decide immediately, or reluctance to put fiduciary status in writing. If your gut tightens, listen. Your money deserves patience and transparency, never hurried promises.
Confirm fiduciary duty in writing, all-in fees, relevant expertise, clean disclosures, clear deliverables, and personal rapport. If you checked every box, proceed. Download our checklist by subscribing and tell us which item surprised you most.
