Professional Competence and Reputation

Does the Wealth Advisor hold industry-recognized professional designations and credentials? Does he or she have a solid reputation in the community and are they highly experienced in their practice areas? Is he or she a true fiduciary?

Disciplinary Record

Has the person or firm ever been named in an SEC or FINRA disciplinary action, or been involved in an arbitration case in any capacity? This is one of the most overlooked but obvious ways of determining the legitimacy of any advisor. You can check disciplinary records here.

Consultant versus Sales Professional

Consider whether the advice to be given by the Wealth Advisor is more in the nature of consulting or independent unbiased advice as opposed to the sale of a product or program.

Objective and Unbiased Advice

Since Wealth Advisors are not compensated for trades, they are free to provide totally objective advice that helps clients pursue long-range financial goals.

No Conflicts of Interest

Private Wealth Advisors work only for their clients and do not manage or advise any mutual fund group or receive money from those groups or from any outside third parties.

Stewards of Your Money

A true Wealth Advisor is not only a strict fiduciary but he or she also acts as a steward of your money. This means that he or she will practice only ethical and prudent decision-making on your behalf and in your best interests.

Transparency of Fees

Ask about fees. If you don’t understand, ask again. Ask how fees are calculated. Ask for an illustration or a sample calculation. Wealth Advisors are usually compensated through a fee schedule based on assets under management (AUM). This means that their incentive is aligned with the goals of their clients. Their compensation can increase only as a client’s portfolio grows in value. Unlike hedge fund managers, they do not add to their fee a percentage of the capital gains earned by the client.

Discretionary Management

Wealth Advisors often exercise discretion to execute investment purchases and sales based upon an analysis of fund performance, current market conditions, and expectations of future conditions. Ask if the firm operates this way, or if they are required to seek the client’s verbal or written consent on each transaction. Often, busy clients do not want to be consulted for every change made to their portfolio. In that case, discretionary management may be preferable.

Flexible Positioning

Discretionary Wealth Advisors can identify opportunities as well as risks, and can take immediate and effective action. They are generally granted a limited power of attorney to make changes to a portfolio when conditions warrant or when a portfolio needs to be rebalanced to correct for market-driven changes. As their client, you don’t need to be in sync with the markets (or in communications with their firm) in order for your portfolio to remain dynamic and flexible in any market environment.

Number of Existing Clients

Ask about the number of clients the Wealth Advisor personally serves. He or she may have too many clients to adequately serve all of them properly. Ask whether or not you will be working directly with the Wealth Advisor on a regular basis, or whether your primary relationship will be with someone else.

Longevity of Existing Clients

Ask about the longevity of clients—how long has the average client remained with the firm? How many clients have left the firm, and why did they leave? An honest Wealth Advisor will disclose this information to a prospective client without hesitation.

Referrals from other professionals

How do other professionals in the community feel about the Wealth Advisor? If the Wealth Advisor was referred by your own professional, or by a good friend or colleague, do you trust that person’s judgment in making the referral?

Commitment to the Profession and Due Diligence

Dedicated and passionate Wealth Advisors monitor investment markets daily and thrive on always learning and studying new ideas. And as strict fiduciaries, they are obligated by law to perform due diligence at all times during the client relationship.