Choosing The Right Financial Advisor For You

Dear Pete,

My husband and I recently interviewed two different financial advisers in an attempt to find one who could help our growing family make better investment decisions. I expected to like one more than the other and have that guide our decision, but we never got to that point. Both advisers gave us such different investment strategies that we left their offices simply wondering how could the strategies be so vastly different. How does a financial adviser decide what’s the best path for a family? The two paths presented to us were so different, I can’t imagine they would both get us to the place we want to go. 



Nearly every Sunday afternoon from September to February, I sit in my favorite chair and watch professional football.

My favorite part of the game is analyzing why the quarterback decides to do what he does. Why did he throw it to one guy, when the other guy was very clearly more open. Why did he pass the ball, when a run would have made more sense? The real sport I’m talking about here is as old as the game of football itself: armchair quarterbacking. From the comfort of my home, with a beer in my gullet, I feel somehow qualified to second-guess the best athletes in the world, primarily because I’m not being chased by men the size of a late-model Volkswagen.

With all due respect to financial advisers of all types, Tara, I’m going to spend the next few hundred words trying to help you understand how two seemingly intelligent professionals can arrive at two completely different proposals.

I’ll never forget my first month as a financial adviser in the summer of 2000. I was 22, eager to help others, and thirsty to learn more about financial advising. “If someone needs an IRA (individual retirement account), this is what we use to accomplish that,” my trainer said. Made sense to me. What did I know? For six months I proceeded to do exactly what they told me. But then I realized not only did I not have to use the product they urged me to use, but the investments I really wanted to use weren’t even available to me.

Three really complicated ideas can be gleaned from this example. First, a well-meaning adviser can unknowingly provide objectively subpar advice because they simply aren’t experienced enough. Second, a well-meaning adviser can unknowingly provide objectively subpar advice because their firm doesn’t provide them access to investments or financial products which would allow them to better serve their clients. And third, even if an adviser can provide whatever product or process they desire, it’s simply their opinion.

These seem like obvious points, but when you’re in the moment, feeling the heat of making a decision, it’s hard to remember what influences your adviser’s ideas. Just like professional football, your adviser’s decisions seem much more obvious when you’re sitting in your recliner, as opposed to the chair in their office.

There’s also another really simple explanation as to why different advisers advise differently. Good ‘ole personal preference. I like creamy peanut butter and my friend Gary likes crunchy. Do I think this makes Gary an ignoramus? Of course I do. But that doesn’t make him a bad guy. Some financial advisers prefer individual stocks, others prefer ETFs (exchange traded funds) and some prefer insurance-based solutions (e.g. annuities or life insurance). All of these solutions have different fees, different benefits, and different compensation for the adviser.

I’d be doing you a disservice if I didn’t bring up compensation. Yes, some financial advisers will be influenced by the amount of compensation they receive for their recommendations. Generally this discussion meanders its way to the commission-based versus fee-based versus fee-only debate.

To make this even more complicated, while an insurance-based solution may result in more immediate compensation for the adviser than a non-insurance based solution, over time the other solutions could more handsomely compensate an adviser if the investments are held in fee-based accounts. Simply put, I don’t believe compensation alone tells us enough about an adviser’s motives or preferences.

Back to football. Why does a quarterback throw to the same receiver over and over again? Because he previously experienced positive results from doing so. But eventually this habit will create major problems. It can cost your team a touchdown, a game, or even a season. Financial advisers aren’t any different. They may go back to the well for the same solution over and over again, despite the fact the solution may not apply to your particular situation. When you’re evaluating a financial adviser, your goal is to focus on whether their solution actually jibes with your life, your risk tolerance, and your overall comfort level.

But ultimately you’re evaluating whether or not you believe the prescribed path is both possible and a path you’re willing to endure. I believe the best way to accomplish this goal is to ask people who’ve been down those particular paths whether or not the path is working out well for them.

Ask your friends, family, or co-workers what path their adviser has them on, and then ask them how it’s working. Because when you take the time to do that, you get to be the armchair quarterback we all love to be.

Have a question for Pete the Planner? Email him at or visit

This article is published courtesy of The Indianapolis Star.

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