Questions to Ask When Choosing a Financial Advisor

When it comes to managing your finances, technology has made things incredibly convenient. Robo-advisors, or automated platforms that manage your investments using algorithms, have grown in popularity thanks to their low fees and easy setup. But when life gets complicated, you may find that convenience doesn’t always equal confidence.

If you’re considering hiring a financial advisor, consider the following questions.

What do human advisors offer that robo-advisors can’t?

Human financial advisors offer nuanced guidance, emotional support, and a personal connection. Your financial situation isn’t a one-size-fits-all equation, and your plan shouldn’t be either. Whether you’re navigating a career change, selling a business, planning for retirement, dealing with divorce, the death of a loved one, or managing wealth across generations, a human advisor helps you contextualize and make near-term decisions that align with your long-term goals rather than just reacting to market movements.

In fact, a recent study showed that investors working with human advisors were more than three times as likely to feel confident about reaching their financial goals compared to those using robo-advisors.¹ That sense of security is more than just a feeling. It’s the result of having a partner who understands your full financial picture and helps you adjust it as life evolves.

Are they a fiduciary?

One of the most important distinctions to understand is whether or not your advisor is a fiduciary. Having an advisor who is a fiduciary, or one who isn’t, can have real implications for the type of advice you receive, the fees you pay, and the trust you place in your advisor.

At its core, a fiduciary financial advisor is legally and ethically bound to act in your best interest. This means their advice prioritizes your financial well-being above their compensation or the interests of any company they represent.

Alternatively, a non-fiduciary financial advisor may follow “suitability standards”, meaning they’re only required to offer recommendations that are suitable for you. However, their recommendations don’t necessarily have to be the best or most cost-effective options. This can lead to conflicts of interest, especially when the advisor earns commissions on certain products. For more information on how a fiduciary operates, read our article.

What’s the difference between Registered Investment Advisors, wirehouses, and independent broker-dealers?

Financial advisors can operate under different models — Registered Investment Advisors (RIAs), wirehouses, and independent broker-dealers.

• RIAs are typically fee-based fiduciaries, legally obligated to act in your best interest, offering personalized, comprehensive financial planning.
• Wirehouses are large firms where advisors can earn commissions by recommending products that may be appropriate, but not necessarily the best, for the client.
• Independent broker-dealers sit somewhere in between, with advisors who operate their own practices but use a broker-dealer’s platform, often blending commission-based and fee-based services.

Learn more about how each model works and which might be right for you.

What do their credentials mean?

Financial credentials aren’t everything, but they do show a commitment to professional standards and ongoing education. A CERTIFIED FINANCIAL PLANNER®  professional (CFP^®) is trained in all aspects of personal finance, while a Chartered Financial Analyst^® (CFA^®) specializes in investments. Other designations like CPA or ChFC^® indicate advanced knowledge in taxes or comprehensive planning. For more information on financial advisor designations, visit this link.

What is the scope of work they will provide?

When it comes to wealth management, there are many moving parts. It’s crucial to understand the scope of work that your financial advisor can or will provide—and where else you may need to turn for additional advice. In addition to financial planning and asset management, can your advisor also offer tax advice and guidance? What about support with estate planning strategies or insurance coverage? Furthermore, if your financial advisor’s scope of work is limited to a few areas, how do they collaborate with other professionals, like outside CPAs or estate planning attorneys, to ensure their advice is cohesive and that everyone is working in tandem? It may be your responsibility to ensure all those dots are connected.

How do they get paid?

Equally important is understanding how an advisor gets paid. Fee-only advisors charge a flat rate or a percentage of assets under management, and they don’t earn commissions on the products they recommend. That means their advice is typically aligned with your best interests rather than influenced by sales incentives. For example, if you have a $500,000 portfolio, a traditional advisor might charge around $5,000 a year. A robo-advisor may charge a quarter of that, but it’s important to consider that they may not offer tax strategies, estate planning, or wealth transfer advice.

What sets Mercer Advisors apart?

Mercer Advisors, the 2024 #1 ranked RIA firm in the nation, offers an integrated approach to wealth management.² With more than 350 advisors nationwide, we bring together financial planning, investment management, estate strategies, tax professionals, and insurance specialists. All of these services work together to help amplify and simplify your financial life.

We begin with a conversation to learn about your goals, then create a personalized plan designed to help you reach them. And we don’t stop there. As your life changes, so does your financial picture. That’s why we regularly revisit your plan to make sure it still fits.

Working with the right advisor is more than just good investing. It’s about building a relationship with someone who listens, understands, and puts your needs first. At Mercer Advisors, we’re here to be that partner. Ready to get started? Let’s talk.

¹ Costa, Paulo, and Jane Henshaw. “Quantifying the investor’s view on the value of human and robo-advice.” Vanguard, 2022.
² Mercer Advisors was ranked #1 for RIA firms with up to $70 billion in assets. The Barron’s top RIA ranking is based on a combination of metrics – including size, growth, service quality, technology, succession planning and others. No fee was paid for participation in the ranking, however, Mercer Advisors has paid a fee to Barron’s to use the ranking in marketing. Please see important information about the ranking criteria methodology here.

Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. The services and third-party links are presented for information and educational purposes only. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.