Things To Consider When Choosing A Financial Advisor

Things To Consider When Choosing A Financial Advisor

| October 28, 2022

There are many different points of consideration when deciding which financial advisor to go with. These can include where you found them, what is their investment philosophy, what is their business model, and maybe most importantly, what type of financial planning work do they actually do? All of these play a role in who you should trust with your life savings.

Who Are They?

Whether you found your financial advisor through a referral, a personal relationship, Google, an advertisement, or any other method, the relationship matters. Making sure you have a good sense of camaraderie and knowing you and your advisor see the financial world in a similar way is imperative for long-term success in the relationship.

An equally important thing to consider is how well they communicate with you. A financial advisor who consistently communicates and makes sure their clients are in the loop regarding ideas the advisor has is a great relationship to have. Additionally, having a financial advisor who can “speak the same language” as you when they are going through the financial plan is imperative. After all, if you are not understanding what they are saying and their recommendations, then how can you be expected to follow through on these recommendations? All of these aspects of communication helps to build trust and allows for a long-term, healthy, relationship to be harbored.

Business Model

The business model utilized by your financial advisor is equally as important as who they are. A standard business model for this profession will be where the advisor charges a 1.0-1.25% fee based on the nominal amount of assets under management. However, an advisor could also be basing their business model on commissions collected from the client. For example, they could be charging a percentage of the assets under management, and also counting on collecting income from insurance sales, annuity sales, or any other type of sale. Obviously, if the advisor is counting on collecting some sort of commission from the client then there is a conflict of interest where it may not be in the advisor’s best interest to make recommendations based on the client’s best interest. If your advisor is “fee based” then this means he is not relying on income from commissions, and as a result this advisor would be more likely to have your best interests in mind. At Peak, we believe in using the fee based approach to ensure we can act in your best interest as your fiduciary.

Another thing to consider is how they actually work. Do they rely on single stocks when investing, or do they use broad based indices? Studies show 85% of the time a broad based index will outperform an active manager. Additionally, is the advisor using mutual funds or ETF’s? Generally speaking, the performance should be similar if they are both tracking the same index, but the expense ratio of a mutual fund could be close to 1.0%, while an ETF may be closer to 0.2%. Of course, if performance is the same, it is in the clients best interest to use the ETF because it is lower cost. This is why at Peak we like to use index tracking ETF’s in order to keep costs low for our clients while still receiving the same market returns.

Finally, you should look at what sort of planning work they do. A lot of advisors make broad suggestions based on what they know about you, and their primary focus is solely on investment management. In fact, many “financial planners” actually don’t do any planning at all. Having a CFP who does a deep dive into your financial plan, can be crucial to your long term financial success. At Peak, we build out financial models projecting how your finances will play out until age 90 or 95 (longer than average life expectancy) in order to make sure both us and our clients have a grasp of how things will look if the client continues doing exactly what they are currently doing. Then we can make recommendations to improve the financial plan, or help the clients reach extra goals they have (travel, early retirement, etc.). Additionally, we can help optimize the plan to make it look even better if there are no additional goals the client would like to achieve. Through this planning work we can answer the question “will I outlive my money?” as well as any other important financial questions the client may have.


Choosing someone to guide you to and through retirement is one of the most important decisions you will make in your life. Making sure it is someone you can trust, and someone who only has your best interests in mind is imperative to make sure you have the highest probability of success. If you would like to further discuss your financial situation, please give our office a call at (734) 681-7575 or email me at