How to Choose a Financial Advisor: 12 Red Flags to Consider

By Joe Dowdall, CFP®, RICP®, CRPC®, CCFC

When starting out on a financial journey, the most important decision is not where to invest, but how to choose a financial advisor.

Partnering with a financial advisor is a big deal. You’re trusting someone to guide you through some of the most important financial decisions of your life (retirement, taxes, investments, legacy planning), the works.

There are a lot of great advisors out there, but not all of them will be the right fit for you. Some might push products you don’t need. Others may not take the time to truly understand your goals. That’s why it’s important to know what questions to ask and what to watch out for.

In this article, I walk you through 12 red flags I’ve seen over the years—signs that should give you pause before signing on the dotted line. Some are obvious, others are more subtle, but all of them are worth keeping on your radar as you search for the right advisor.

12 Signs an Advisor Might Not Be the Right Fit

Not all advisors are created equal, and the wrong fit can cost you time, money, and confidence. Here are 12 red flags to keep on your radar as you evaluate potential financial partners:

A commitment to fiduciary standards: Look for an advisor who is legally bound to act in your utmost interest at all times. This commitment confirms that their recommendations are based solely on your financial goals, not on commissions or other incentives.
Clarity in fee structure: A reliable professional provides a straightforward and easy-to-understand explanation of how they are compensated. This includes a clear breakdown of all fees, commissions, and costs, confirming that you know exactly what you’re paying for.
Open and proactive communication: The strongest relationships are built on clear communication. A good advisor prioritizes consistent contact, provides regular updates on your investment portfolio, and is readily available to answer your questions and address your concerns.
A clearly articulated investment philosophy: Your advisor should be able to explain their investment strategy in simple terms that align with your risk tolerance and financial objectives. Their approach should be consistent and grounded in sound financial principles.
Holistic and broad-based proficiency: An ideal advisor looks at your entire financial picture, not just your investments. This includes skills in areas like tax planning, estate planning, insurance, and retirement income strategies.
Verifiable professional qualifications: Trustworthy advisors should have recognized certifications, such as CERTIFIED FINANCIAL PLANNER®, which requires rigorous training, exams, and a commitment to ethical standards. You should feel comfortable verifying their credentials.
A clean professional history: It’s wise to review an advisor’s professional background for any past disciplinary actions or complaints. Resources like the SEC’s IAPD database can provide a comprehensive history of their professional conduct.
Respect for your decision-making process: An advisor should present options without applying pressure for an immediate decision. They give you the time and space you need to fully understand their recommendations before moving forward.
Realistic and balanced prospects: Be mindful of advisors who promise unrealistically large returns or guarantee specific outcomes. An advisor should focus on a sustainable, long-term plan and manage your hopes with honesty and transparency.
A focus on your financial goals: The conversation should always revolve around your personal life goals. Whether it’s a comfortable retirement, a child’s education, or leaving a legacy, the conversation should be about your situation, rather than on specific products or investments. That means the financial strategy should be tailored to you, not to their products or services.
A strong personal connection: The working relationship with your advisor can last for years, so it’s important that you feel a genuine personal connection. They should be a person you trust and feel comfortable sharing your financial details with.
A client base with similar needs: An advisor who specializes in working with clients in a similar life stage or financial situation as you may have a deeper understanding of your specific needs and challenges. They need to be thoroughly prepared to guide you through your unique circumstances.

Reach Out to a True Partner Today

Learning how to choose a financial advisor is no small task, and that’s a good thing. You’re trusting someone with your financial future, so it’s worth taking the time to find the right fit.

The best advisors don’t just manage investments. They help you make smart decisions about the moving parts that work together to support your bigger goals:

Tax planning
Income streams
Risk management
Insurance
Wealth optimization
Asset management

That’s what we focus on at Worth Asset Management: honest conversations, straightforward advice, and a plan that’s built around you.

If you’re looking for a second opinion or you’re just not sure where to start, I’d be happy to chat. Schedule a quick 15-minute call online or reach out at (469) 423-1989 or joe@worthassetmgmt.com.

About Joe

Joe Dowdall is a CERTIFIED FINANCIAL PLANNER® professional at Worth Asset Management, a financial services company in Dallas, TX, that provides a wide range of wealth management services. With over 15 years in the financial services industry, Joe is a fiduciary who creates tax-focused financial plans for people nearing or in retirement—to help them build and safeguard their wealth through all life stages. He desires to offer clients the best financial planning experience while developing a friendship based on mutual respect. Joe’s philosophy as a financial planner is rooted in his experience as a teacher, where he learned the importance of explaining complicated concepts in understandable terms. He’s passionate about working with a select group of clients to help them achieve their financial goals with confidence and clarity.

Joe has an education degree from the State University of New York and an MBA in finance from Saint Joseph’s University. In addition, he has obtained the CERTIFIED FINANCIAL PLANNER®, Retirement Income Certified Professional®, Chartered Retirement Planning Counselor℠, and Certified College Financial Consultant (CCFC) designations. Joe resides in Frisco, TX, with his wife, Leila, and their two daughters. During his free time, he enjoys traveling with family, exercising, and hiking the national parks. To learn more about Joe, connect with him on LinkedIn.

The information provided is for general guidance and informational purposes only. Please consult with a qualified tax professional for advice tailored to your specific financial situation.