Many people will spend more time researching which new car to buy than they will “kicking the tires” on the type of financial advisor they should hire. A financial advisor works to appreciate assets; a car depreciates the minute it rolls off the lot.

Investors should not be intimidated by what they perceive to be a difficult process of selecting a financial advisor. The interview could be your most important ever. Here are some suggestions to get the most out of your search.

First, do a little research and set a few appointments with financial advisors. There is literally a smorgasbord of options to consider, but start by considering the advisor’s personality. When I meet with prospective clients, I intend for us to work together for decades. But if we don’t seem to be a match for building a good relationship, it might not be wise for us to work together. On the flip side, be wary of the smooth salesmanship all too common in my industry. Pay attention to what is being presented and keep old adage in mind — if it seems too complex or literally too good to be true, it probably is.

Longevity is critical. As the advisory field ages into retirement, who will take over for your advisor in a few years if they retire? This is really important and crucial. My business partner and I have at least two decades to work with clients. For some, that seems to resonate and provide a sense of consistency. The turnover rate in my field can be over 90 percent in some firms so be weary of experience — many newer advisors leave the field before too long.

Be sure to ask about how the advisor will be paid. No advisor will work for free and continue be your advisor for long. Compensation usually comes either directly from you (fee-only fiduciary) or from the products that the advisor sells to you (commission-based and fee-based).

A fee-only advisor will disclose all fees in writing while a commission-based advisor doesn’t have to. Know your expectations and what you feel most comfortable with. A gray area is the fee-based advisor who offers fees and accepts commissions. I am a fee-only advisor and have given up the right to earn any commissions. It seems to fit my personality style and reduces the inherent conflict of interest for my type of clientele.

After you understand the style of advisor pay, ask “How much?”

Commission based investing often involves upfront sales charges of 5 percent or more. Managed portfolios often start at 1.5 percent annually and I recently saw one hit 2.25 percent. And many variable annuity produces exceed 3 percent internal costs. This is a drag on performance. But corporate overhead can drive these costs. Most fee-only, independent firms have low overhead so you should expect to pay 1 percent or less, depending on portfolio size and perhaps a few other factors. A 40 percent to over 100 percent difference is a massive difference when compounded over a few years.

The second area to ask about is how much does the firm receive in compensation for selling the recommended investments. Often times a firm receives economic incentive to sell only certain mutual funds. A fiduciary firm won’t, but among brokerages, this remains common.

As for cost, cheaper doesn’t always mean better, so ask what else you get out of the advisory relationship. Does the advisor coordinate your other financial planning needs with independent third parties for your insurance needs/review, tax reviews, and estate planning needs? A comprehensive approach with objective advice is important in many circumstances. I enjoy attending estate planning meetings with my clients and their attorney — it helps me understand their financial dynamics and to also make sure I have their beneficiary designations correct, so I can protect their heirs.

All of this is bunk if the advisor can’t show you the money — how he or she plans to invest your funds. Avoid the artistically designed sales materials — those might look pretty, but black and white often presents the most direct information regarding investment strategy.

Go a few steps further. Ask to see the existing portfolios, ask how your funds will be invested, monitored, what trading fees might be, and how market gyrations will be addressed. You should have a clear overview, mixed with an educational approach, as we want clients to learn from us along their personal financial journey.

Patience is the key to finding, and working with, an advisor. That means getting past the gloss of the sales pitch and asking the right questions as part of your interview process. Remember, you are the hiring manager; it’s not the other way around.

Ryan Fox is partner/owner in Huston-Fox Financial Advisory Services in Gettysburg and Hanover. 717 398-2040 or

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