How To Choose an Investment Advisor

What is an investment advisor?

An investment advisor is a type of financial advisor or broker who helps you make and manage investment decisions. They may be an individual, a group or a company, as long as they hold the proper registration.

Investment advisors go by many names:

• Asset managers
• Investment counselors
• Investment managers
• Portfolio managers
• Financial planners
• Wealth managers
• Stockbrokers

Unlike your everyday financial advisor, investment advisors are regulated by either the Securities and Exchange Commission (SEC) or their individual state securities regulator.

With this added validation, investment advisors are able to provide expert advice and support for their clients’ evolving financial needs. They can help guide asset allocation and ensure portfolio diversification while constantly fine-tuning your investment strategy to remain in line with market movements.

However, these services do not come free. Fees can vary significantly, so it is essential to compare the best investment advisors to maximize your wealth effectively.

Of those investors working with a CFP investment manager:

• 78% have at least three months’ worth of expenses saved in an emergency fund.
• 57% have a will.
• 42% experiencing fewer financial conflicts within the family.
• 24% feel confident about navigating potential unemployment.

Source: Financial Planning Longitudinal Study, CFP Board of Standards (2025).

Steps to choose an investment advisor

There are a few steps you can take to help ensure that you choose the right investment advisor for your needs.

1. Clarify your investment goals and advisor expectations

With no shortage of investment advisors nationwide, it can be difficult to find the one that best matches your investment goals and style. These are a few considerations to help with your decision.

Define your needs

First, determine what you need in an advisor.

Not all investors may benefit from the services of an investment advisor, as their fees may not be worthwhile for lower-volume investors or those new to investing. It is not uncommon for advisors to require a minimum of $100,000 or more in assets.

That is why it is crucial to determine just how much support you need. Passive investors are not likely to require the same level of support as a day trader, for example. Meanwhile, high-net-worth individuals will likely benefit from the extra support and expertise that an investment advisor provides.

Confirm available services

In addition to investment management, some investment advisors may also assist with other aspects of your financial planning, such as estate planning and tax planning. Confirm that your advisor can handle the services you need. For example, if retirement planning is your goal, be sure to choose an investment advisor with the relevant experience and background.

Think ahead to your future and consider what major life changes may lie ahead that could affect your needs for an advisor. Events like marriage, having a baby and retirement can all significantly impact your investment strategy.

Working with an investment advisor can be highly beneficial.

• 86% of investors who work with an advisor report greater peace of mind in their financial life.
• 75% of those with advisors said this support was a timesaver, saving them a median of over 100 hours per year.

Source: Emotional & Time Value of Advice Survey, Vanguard (2025)

Check available investment types

Investment advisors typically support several types of investments, including stocks and bonds, as well as alternative investments like cryptocurrency, real estate and commodities, such as gold.

However, financial firms can vary significantly in their offerings. For example, while Robinhood is a popular choice for crypto and stocks, it does not offer money market accounts. Meanwhile, SoFi takes a more comprehensive approach, offering banking, loans and insurance. For the investor looking to consolidate all their accounts in one place, SoFi makes a more attractive offer.

Before choosing an investment advisor, be sure to confirm that it provides the services and investments you want for your portfolio — not just for now, but also in the future.

Rule out a robo-advisor

The rise in digital investing, including the use of investment apps like Webull and Robinhood, represents a shift in how today’s investors manage their investments.

Today, investors also have the option of robo-advisors that automate the investment advising process. Using algorithm-based platforms, automated investment apps like Betterment and Wealthfront offer many resources through automated investing support. You may still have access to human advisors. For example, Fidelity is one example of a hybrid brokerage that provides both automated and human advisory services.

Robo-advisor apps are also generally more affordable because they offer a DIY approach to investment management and financial advising. However, they lack the personalized and in-person support of an investment manager. With a robo-advisor, you can’t build a personalized relationship with one advisor who learns and supports your preferences.

“Robo-advisors offer what I call a one-size-fits-none approach,” said Asher Rogovy, chief investment officer at Magnifina. “They can’t handle the complexities that emerge in real financial lives like coordinating multiple accounts, managing concentrated risk or planning for major life changes.”

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2. Compare advisor credentials and compensation methods

Once you know what type of investment manager you need, it is time to begin the search.

There are a few ways to find an investment advisor:

• Ask family and trusted friends for their recommendations.
• Research top advisors and firms, checking client reviews to see the experience of others.
• Use a matching tool to find and compare investment advisors.
• Check professional organizations, such as The CFP Board and the National Association of Personal Financial Advisors (NAPFA), that offer search tools for advisors in your area.

Consider looking locally, as well. Although Rogovy acknowledges that many advisors can work remotely, he said, “A local advisor should understand the financial implications of living in your state.”

Types and credentials

When choosing an investment advisor, 90% of consumers say they value an advisor’s certifications in their search. An advisor’s certifications can help you better understand their experience and capability to see if they’re the right fit for you.

Investment advisors are usually required to register with the SEC when they manage $100 million or more in client assets under management (AUM). They then become registered investment advisors (RIAs).

In addition to experience and education, an RIA is held to a fiduciary standard, a requirement that standard financial advisors lack. This means that your RIA must act in your best interest at all times.

“‘Investment advisor’ usually means an SEC- or state-registered firm that manages money for a fee and owes a fiduciary duty,” explained Steven Rogé, chief investment officer and CEO of R.W. Rogé & Company. “‘Financial advisor’ is a broader label that can also include brokers and insurance agents.”

There are several types of certifications that an investment advisor may hold, with the Financial Industry Regulatory Authority (FINRA) providing a more comprehensive list.

• Certified Financial Planner (CFP)
• Chartered Financial Analyst (CFA)
• Accredited Investment Fiduciary (AIF)
• Certified Investment Management Analyst (CIMA)
• Certified Private Wealth Advisor (CPWA)
• Chartered Alternative Investment Analyst (CAIA)
• Registered Investment Banker (RIB)
• Retirement Management Advisor (RMA)

A professional’s perspective

“In the fine print, when you see ‘advisory services offered through …’ and then a different company, it means the advisor is representing two different firms.”

“Ask directly:

• For each recommendation you make, will you tell me if you’re acting as a fiduciary?
• Exactly how will you be compensated before I make any decisions?”

“A trustworthy advisor should answer transparently and put everything in writing.”

Asher Rogovy

Chief investment officer of Magnifina

Fortunately, there are several online tools you can use to confirm an advisor’s credentials and registration, such as FINRA’s BrokerCheck tool and the SEC’s Investment Adviser Public Disclosure (IAPD) database.

Here’s how you can check credentials and registrations with different agencies:

Before signing any agreements, be sure to thoroughly research the backgrounds of both the investment advisor and their firm.

“Do a quick website-footer check. If you see ‘securities offered through’ or ‘Member FINRA/SIPC,’ that signals a brokerage affiliation, which can be fine, but it means they may wear two hats,” said Steven Rogé, chief investment officer and CEO of R.W. Rogé & Company. “If you want one hat only, get it in writing that your advisor will act in your best interest as a fiduciary at all times, and that their recommendations are free of commissions.”

Compensation models

Before committing to an investment advisor, it is critical that you consider their compensation so you can determine how it will affect your total wealth over the long term.

A wealth manager is typically preferred by high-net-worth investors, while robo-advisors and online brokers are often best for portfolios less than $100,000. Because they differ in the breadth of their services, wealth managers typically charge significantly higher fees than robo-advisors.

Investment advisors employ several different compensation models.

• Percentage of assets under management (AUM): This is when an investment advisor’s fee is a percentage of the total value of the assets they manage.
• Hourly fee: You may also find that some advisors use an hourly compensation structure for their services, although this is typically used for consultations or other temporary projects.
• Commission-only: Your investment advisor may use a commission-based model where they receive a percentage based on your chosen investments. This is less of a concern when your advisor has a fiduciary duty, but it can be risky for those who do not, as your advisor could recommend products that are in their interest instead of yours.
• Flat fee: Some attorneys may charge a one-time fee for straightforward short-term services. Others may charge a one-time fee for ongoing services.
• Subscription: High-net-worth investors and businesses may find a subscription-based compensation model more appropriate for their needs. This features a set monthly or annual fee in return for ongoing guidance and portfolio management.

Your investment advisor may assess additional fees, with common charges including the following:

• Transaction fees
• Subscription-based fees
• Administrative costs
• Management charges
• Markups and markdowns

“If a large cash balance sits in the account, confirm whether it is billed, what it earns today and whether there is a higher-yield option on the same platform,” recommended Rogé. “Price should line up with service. Large accounts often land near 0.6% to a little over 1% all-in, depending on complexity and planning depth.

“Near the top of that range,” he explains, “you should see proactive tax work, retirement modeling, coordination with your tax professional and attorney and regular planning meetings that follow a clear agenda.”

Before committing to an investment advisor, be sure to read the disclosure documents or obtain a comprehensive fee schedule so you can run the numbers and see if they make sense for you.

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3. Conduct in-depth interviews and ask key questions

Once you have your list of candidates, it’s time to meet with them.

Try to set up meetings with two to four advisors so you can compare their services, fees and investment style. It is critical that you take a few hours to ask the right questions so you can accurately assess your options.

This checklist can help:

General interview questions to ask investment advisors:

• Who will handle my account on a daily basis?
• Are you registered with the SEC, state securities regulator or FINRA?
• What are your professional credentials?
• Does fiduciary duty apply?
• What is your investment philosophy?
• If my portfolio is underperforming, what will be your plan of action?
• What kind of compensation structure do you use?
• Do you or your firm receive any pay, incentives or benefits for selling certain products?

4. Assess advisor fit

After you interview your selected investment advisors, sit down and review your notes. It is important to consider your overall expectations for your advisor and then compare that to your list of candidates.

Consider how each advisor approaches financial management, taking note of their investment and communication styles. For example, while some investment advisors offer a passive management style, others may offer more active management that will better suit active traders.

“My first suggestion is to notice how advisors answer your questions, especially when you ask something straightforward. I think being clear is more important than flaunting a fancy title,” said Chris Heerlein, CEO of REAP Financial, an investment advisory firm. “If they begin rambling, making everything more complicated, or talking over your head like you’re a kid, that’s a warning sign right there.”

They may also differ in how and when they communicate with you, so be sure to discuss your expectations for portfolio reviews and ongoing performance. Then, consider your comfort level with each advisor’s approach.

At the end of the day, it is critical that you feel confident in your investment advisor’s ability to handle your investments so you have a solid working relationship going forward.

Red flags to watch out for

• Ambiguous fees: If a fee schedule is not presented to you, it is possible that your advisor is not being upfront with you about all of the charges you will face.
• False credentials: Be sure to check an advisor’s credentials and certifications to ensure they are accurate and up-to-date.
• Past disciplinary action: Be sure to ask for a written explanation giving more details on the incident.
• Guarantees and promises: No investment manager should guarantee a certain performance, as it is impossible to predict exact market movements.
• Poor communication: If your advisor does not have good communication with you during the interview process, it is not likely that that will improve once you are a client.
• High-pressure sales: If an advisor tries to pressure you into signing a contract, it is possible that they are not being upfront with you about their services.
• Cold calls: Many cold calls investors receive employ high-pressure sales tactics to get you to commit immediately over the phone, leaving you no time to do your due diligence. These may include offers of free lunches, workshops and freebies.

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5. Finalize your advisor selection and set review expectations

After you have chosen the right investment advisor, it is time to finalize their services.

Carefully review all documents and agreements, paying special attention to the fee schedule. Make sure you fully understand the terms of service and ask for clarification if you don’t.

Once the agreement is finalized, you should meet with your investment advisor to create a financial plan. This is based on various factors, including your investment preferences, risk tolerance and short-term and long-term financial goals.

Once you and your advisor have developed your financial plan, investing will begin. As the market fluctuates and your needs evolve with age, your investment advisor can help you adjust your financial plan to help ensure it grows with you.

Ask your advisor how and when portfolio reviews will be conducted so you can plan accordingly.