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Don’t Make These 3 Mistakes When Hiring a Financial Advisor
The wrong advisor can cost you time, money, and peace of mind. Here’s how to avoid common mistakes and find the right one.
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Hiring a financial advisor is a big step. You’re trusting someone to guide your future and help you reach your goals. The right advisor can be a game-changer—but the wrong one could steer you off track with poor advice, hidden fees, or decisions that shrink your savings instead of building wealth.
Unfortunately, not all advisors are created equal. Some earn commissions on the products they recommend. Others aren’t even legally required to act in your best interest. So, how do you avoid making the wrong choice and find someone who puts you first?
Here are three common mistakes to watch out for while hiring a financial advisor:
Mistake #1: Hiring Someone Who Isn’t a Fiduciary
Trust is the most critical part of a successful advisor-client relationship. You want to know this person is making the right decisions—not just for your finances, but for you and your family’s best interests.
However, not all financial advisors are legally obligated to act in your best interest. The only ones who do must uphold a fiduciary duty.
Fiduciary advisors follow the highest standard of care and transparency. The law binds them to prioritize your needs above their own, recommend only what’s best for you, and fully disclose any conflicts of interest. As we’ll mention in the next section, most fiduciaries operate on a fee-only basis and don’t accept commissions for pushing product sales.
High-quality professionals usually hold respected titles or certifications such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), or Chartered Financial Consultant (ChFC). They may also maintain registrations with the U.S. Securities and Exchange Commission (SEC) or their state securities regulator as an investment adviser.
Before hiring a financial advisor, ask: “Are you a fiduciary and will you act in my best interest?” If the answer is unclear, trust your instincts and consider someone else who will put you first.
Mistake #2: Choosing an Advisor Paid by Commission
Some advisors make money when you spend more by earning commissions on financial products and insurance. But as a client, the advice you receive should be based only on your needs—not tied to their compensation.
If an advisor pressures you into a specific strategy or investment, that’s an immediate red flag. It signals they may not put your interests first and aren’t a fiduciary, creating a serious conflict of interest. How can you be sure they’re recommending what’s best for you and not just what benefits them most?
As you search for a financial advisor, verify that they work on a fee-only structure. Asking them upfront during your initial phone call or meeting is a straightforward option. You can also look up the advisor’s or their firm’s Form ADV documents on the U.S. Securities and Exchange Commission (SEC) Investment Adviser Public Disclosure (IAPD) database, which outlines their fees, compensation, and business practices.
Working with a fee-only expert can help ensure the advice you receive is best for your needs and future, not your advisor’s bottom line.
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Mistake #3: Hiring Someone Misaligned with Your Goals
Even if your financial advisor exudes all the best qualities, they might not be the best fit. Why is this? Not every advisor can help with your specific goals. Many specialize in different areas, such as:
- Wealth management
- Investment management
- Retirement planning
- Tax planning
- Estate planning
- Business succession planning
That’s why working with someone who aligns with your financial and life goals is vital. Ensure they have the proper background, experience, and focus to support your needs. Otherwise, you risk getting generic, off-target advice.
Before hiring an advisor, ask what types of clients they typically serve. The first person you meet isn’t always the best fit. It might take a few meetings and comparisons before finding the professional who suits your needs. A strong match makes all the difference in getting advice that moves you forward.
How to Find a Good Financial Advisor
Finding the right advisor can feel challenging, especially when the wrong one could set you back years. Misaligned advice, generic strategies, and conflicts of interest can all keep you from reaching the milestones that matter most.
So, how do you spot the difference? This quick checklist breaks it down:
Don’t Hire This Person If They…
- Avoid explaining their compensation.
- Push specific products or strategies too quickly.
- Won’t confirm they’re a fiduciary.
- Promise high returns or guaranteed outcomes.
Look for an Advisor Who…
- Is transparent about fees (e.g., fee-only) and business practices.
- Tailors advice around your goals and life stage.
- Holds trusted credentials (e.g., CFP, CFA).
- Takes time to educate and build a long-term plan.
Finding someone who checks all these boxes doesn’t have to be a guessing game. A free matching tool can help connect you with fiduciary financial advisors who meet your needs and put you first. It only takes a few minutes to get started.
Match With a Fiduciary Advisor
Avoid hiring the wrong advisor. To make it easier to find the right one, we offer a free matching tool that connects you with a vetted fiduciary financial advisor based on your location and needs. It only takes a few minutes to get matched with a qualified professional who can help you build a smart financial plan.
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