Financial Advisor Red Flags

When interviewing a financial advisor, it can be similar to a blind date. You have no idea what to expect and the whole time you are on the lookout for red flags. Remember that when you meet with a financial advisor, you hold all the cards. Be prepared with a list of questions, but be sure to listen – because many times you can pick up on cues you would otherwise miss if you are leading the conversation.

Here are a few warning signs to watch out for:

Products vs. Planning 

Are they only talking about products? If your meeting with a financial advisor reminds you of a street peddler walking up to you wearing a trench coat full of items for sale – run! This is your first sign. What you should be hearing is an emphasis on a plan. They should talk about a plan that they will customize for you comprised of strategies for income, taxes, long term care, investments and legacy planning. If they do not play show-and-tell with a real plan they have created, you’ve probably just met a broker, not a planner.


If every question you ask prompts them to squirm in their leather chair or they don’t bother to answer it, this a red flag. There are many great questions to ask either a new or current financial advisor. Are you looking for tough questions to ask an advisor? I have just the list. Click this link to obtain my favorite questions. When I meet new families, I love questions because that means you are engaged and learning more about ways to better your family’s financial situation.

Sales Awards

You can learn a lot about someone from their office. What did they choose to put on their walls? Did they put plaques to show you their education and experience? Did they share personal photos to give you a peek into their own world? Keep on the lookout for sales awards. I am personally not impressed by sales awards. I don’t take pleasure in being sold by a sales master. How many widgets my professional has sold doesn’t instill any confidence with me. Lastly, how clean is their office; are there papers everywhere? My motto has always been:  “How you do anything is how you do everything”.

Did they ask to see your tax return?

My suspicions would grow if they are not interested in seeing your tax return or your legal documents. Financial planning is not done in a vacuum. Coordinating a tax strategy with clients and their CPA is vital. Harmonizing your legal documents and beneficiaries is crucial for legacy planning.

This is terrible!

In a one hour meeting, they shouldn’t spend the whole time brow beating you for all your previous financial decisions. As advisors, our job is not to be fault finders, discovering everything you have ever done wrong financially. I couldn’t imagine ever meeting a family that needed to replace all of their investments, either. In a first visit, they should have ample time to get to know your circumstances, diagnose issues in your current situation and consider possible remedies that may suit you.

Is this the end or the beginning?

My gut may twist if they never mention their ongoing customer service plan for existing clients. Be sure to ask them how often they will meet with you, plus how do they stay in communication with their current clients? Look for weak or broad answers because, if dating is bad, the marriage will not be any better. Advisors should meet at least once and up to four times a year with each client. Clients should receive monthly market commentary on the economy,  plus there should be informational opportunities for existing clients to stay up to date.

Are they retirement age too?

If you are looking for an advisor to take you to and through retirement, I would be concerned if they are your age or older. Why? Because if they retire when you do or shortly after, what is their succession plan? Also, listen out for their affiliation with any large custodians like Vanguard, Fidelity, Schwab and TD Ameritrade, where there is safety in numbers. If something happens to your advisor, you want to know where your money is and have easy access to it.

When interviewing a financial advisor, always remember to trust your gut. Your intuition has gotten you this far, so don’t let a slick person in a suit make you second guess it. Take your time; you should never rush into any relationship. Remember, you are not looking for a one-time transaction, but rather a relationship – so be on the lookout for red flags.

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM) and/or Swan Capital. AEWM and Swan Capital are not affiliated companies. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. This content is provided for informational purposes only and is not intended to serve as the basis for financial decisions. Swan Capital has a strategic partnership with tax professionals and attorneys who can provide tax and/or legal advice. 00627558

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