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Everything You Need to Know About Choosing a Wealth Advisor

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For an individual or family of significant means, selecting a wealth advisor is a major undertaking that can have far-reaching consequences. Even among high-net-worth families, the needs of a client with a net worth of $30 million will drastically differ from those of a family with a net worth of, say, $5 million.

How, then, should a high-net-worth individual (HNWI) approach the important task of selecting a wealth advisor?

Personal Referrals Can Help Identify Suitable Candidates

The starting point for any search is to identify a pool of suitable candidates. Personal introductions and referrals are a rich source of intelligence at every level but even more so in the HNW segment.

For a client with significant wealth, “it’s imperative to seek out an advisor with a long history of working with similarly wealthy clients,” says Linda Erickson of Erickson Advisors in Greensboro, North Carolina.

Friends whose personal circumstances resemble your own can be an excellent source of referrals, as can other professionals you work with, such as an attorney or CPA. Industry organizations such as The Certified Financial Planner (CFP) Board of Standards and the Financial Planning Association (FPA) also offer directories of qualified professionals, but a personal recommendation from a trusted source is always preferred.

Related: Reach Your Financial Goals With Personal Capital’s Private Client Wealth Advisory Service

Narrowing the Search

Once the search has narrowed to a short list of candidates, it’s time to consider credentials. Viable candidates should hold respected qualifications such as CFP (Certified Financial Planner) or the CFA (Chartered Financial Analyst) designation. Both qualifications have educational requirements, including passing rigorous industry exams.

“The CFP designation is table-stakes, but UHNW (ultra-high-net-worth) families need advisors with advanced post-CFP planning credentials, such as the Certified Private Wealth Advisor (CPWA) or Certified Investment Management Analyst (CIMA), which are attained by fewer than 3 percent of advisors,” says Tom Geoghegan of Beacon Hill Private Wealth in Summit, New Jersey.

The next step in the vetting process requires some research. You may wish to conduct a background check to verify education and credentials. Visit financial governing body FINRA’s BrokerCheck website to ensure that there are no regulatory violations or disciplinary actions outstanding against your candidates.

Finally, every financial advisory firm with more than $25 million in assets under management must file a Form ADV with the Securities and Exchange Commission. This publicly available document contains extensive information about a firm, including fee structure, assets under management and more. You’ll want to check this form to make sure what you’ve been told matches up with a firm’s financial situation.

What Questions Should I Ask Potential Advisors?

Once the pool of candidates has been narrowed to just a few, it’s time to start meeting the candidates and diving into the details of how these advisors might work with you. Here are some of the most critical questions to ask.

What Is Your Fee Structure?

This is one of the most important questions you can ask because how an advisor is compensated has great bearing on your relationship. There are many compensation models, but some can create a conflict of interest. An advisor with a firm that offers its own financial products could be incentivized to recommend those products if he or she receives a commission, regardless of whether these products are the best options for you.

Outside of commissions, advisors may be compensated through flat fees, as a percentage of assets under management or both. Knowing how your wealth advisor is compensated can aid you in determining when their recommendations are meant to help their bottom line or yours.

Wealth Advisors

Talking about money is one of the most intimate conversations in our culture, but a great advisor makes it easy.  Adeolu Elete/Unsplash

Are You a Fiduciary?

A fiduciary is legally bound to act in the best interests of the client. Financial advisors who are fiduciaries are required to choose only those investments that are the best option for their clients. A registered investment advisor (RIA) is legally required to act as a fiduciary. In addition, holders of the CFP and CFA designations are bound by their associations’ code of ethics to act in the best interests of the client.

Do You (or Your Firm) Have Liability Insurance?

Should a mistake be made, is there a mechanism in place to ensure that the client is reimbursed?

What Resources Can Your Firm Provide to Manage Significant Assets?

UHNW clients in particular have extremely complex needs and typically require vastly more than just investment advice. Are there in-house legal and tax experts? Does the firm offer every service that the client might require? If not, will they work together with an outside team?

How Will We Work Together?

HNW and UHNW clients have unique needs and require a high level of service. What is the firm’s process in working with clients of this caliber?

What Is Your Investment Philosophy?

This is one of the most basic and essential questions. The advisor must have a view on investment and managing a considerable fortune that is congruent with your own.

These are just a few of the questions that are critical in the advisor search. During the interview process you’ll dive deep into the details of your financial picture. When the assets being discussed are considerable, it makes sense to ask candidates for a written proposal that details a bespoke plan for addressing your individual needs.

In the End, Chemistry Counts, Too

Choosing a wealth advisor is a deeply personal decision. A wealth advisor knows intimate details of not only your finances but also your family and personal life. Talking about money is one of the most intimate conversations in our culture. Consequently, mutual respect and personal rapport are key considerations. With careful consideration and a successful choice, you can build a trusted relationship that will benefit your family for years to come.


Rebecca Baldridge, CFA, is an investment professional and financial writer with over 20 years of experience in the financial services industry. She is a founding partner in Quartet Communications, a financial communications and content creation firm.

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