The 12 questions your advisor must answer in writing.
Before you hire one — or if you already have one and never asked. Each question comes with what a clean answer looks like, and the dodge to watch for.
Consumer education, not investment advice. Paul Powell is not currently a licensed financial advisor.
The truth behaves differently on paper
Here’s something nobody ever told you: when a corporation with a $300 million retirement plan hires an advisor, they don’t take him to lunch and see if they click. They send written questions. The advisor answers in writing. The answers become part of the record.
They do it that way for one reason: the truth behaves differently on paper.
In a conversation, a skilled advisor controls the room. He’s done ten thousand of these meetings; you’ve done one. Every question you ask gets a smooth, warm, practiced answer — and twenty minutes later you can’t remember exactly what he said, only that you liked him.
In writing, there’s nowhere to go. The question sits there. The answer sits next to it. You can read it twice, show it to your spouse, compare it against another advisor’s answer word for word.
If you’ve never asked an advisor questions like these, that’s not a failing. Nobody taught you. The industry’s economics depend on nobody teaching you.
You’re allowed to do exactly what the institutions do. This page gives you the questions — and, more importantly, tells you what each answer means.
You’ll notice some of the twelve come with follow-ups bolted on. That’s deliberate. The first part asks; the follow-up closes the exit. Institutions write their questions the same way — a question without its follow-up is an invitation to answer something easier.
“Are you a fiduciary — legally required to act in my best interest — 100% of the time, on every account and every recommendation? Will you confirm that in writing?”
Why this question: “Fiduciary” is the highest standard in the industry: your interests first, period. But many advisors are dually registered — a fiduciary when giving advice, a salesperson when selling products. Same person, same meeting, two hats. The word you’re forcing out is “always.”
A clean answer: “Yes. I am a fiduciary on all accounts, at all times, and I’ll confirm that in writing.” Short. No qualifiers.
Watch for the dodge: “I always put my clients first” is not a yes — that’s a slogan, not a legal standard. So is “I’m held to the highest standards in the industry.” And if they’ll say it on the phone but won’t put it in writing, you have your answer.
“Please list every way you and your firm are compensated for working with me — including anything you receive from third parties, such as commissions, revenue sharing, or bonuses tied to specific products.”
Why this question: The fee you see is rarely the whole story. Advisors can be paid by fund companies for shelf space, earn commissions on insurance products, or receive bonuses for steering clients into the firm’s own funds. None of that appears on your statement. All of it shapes what gets recommended to you.
A clean answer: A complete list, in plain language: “I charge X. I receive nothing from any third party.” Or an honest disclosure: “I receive commissions on insurance products; here’s how that works.”
Watch for the dodge: An answer that restates their advisory fee and stops. You asked for every way. Also watch for “my compensation is fully disclosed in our Form ADV” — that’s a 40-page document they’re betting you won’t read. Ask them to summarize it in the answer.
“What will I pay, all-in, in dollars per year? Please include your advisory fee, the expense ratios of the investments you’d put me in, platform or account fees, and estimated trading costs.”
Why this question: “One percent” sounds small. But your real cost is the advisory fee plus the cost of the funds inside the account plus platform and trading costs — often double the number you were quoted. And percentages anesthetize; dollars wake you up. On a $500,000 account, 2% all-in is $10,000 a year, every year, whether the market goes up or down.
A clean answer: A dollar estimate with the components broken out. Any advisor who runs real financial plans can produce this in ten minutes.
Watch for the dodge: “It depends on the portfolio.” Fine — ask them to price the portfolio they would actually recommend for you. If they can’t tell you what you’ll pay, they’re telling you it’s a number they’d rather you not see.
“Do you or your firm earn more by recommending certain products or funds over others? Are there any products you’re incentivized — or required — to offer?”
Why this question: Some firms run sales contests. Some pay more for proprietary (in-house) funds. Some advisors have quotas on insurance or annuity products. When the person advising you earns more for Option A than Option B, you deserve to know before Option A gets recommended.
A clean answer: “No — I have no proprietary products and no incentive tied to any specific recommendation.” Or the honest version: “Yes, our firm has in-house funds; here’s how I handle that conflict.”
Watch for the dodge: “Any conflicts are disclosed in our regulatory filings.” Translation: yes, and I’d prefer the filing tell you instead of me.
“What professional designations do you hold, what did each one require, and how many years have you spent personally advising clients?”
Why this question: The industry runs on alphabet soup. Some designations (CFP®, CFA®, CPA) require years of study, hard exams, and ethics obligations. Others can be bought with a weekend course and a check — they exist to decorate business cards. Tenure matters too: you want someone who has advised real clients through at least one full market cycle, not someone whose entire career has been a bull market.
A clean answer: Specific designations, what each required, and a straight number of years actually advising clients — not “years in financial services,” which can include selling gym memberships for the bank.
Watch for the dodge: A wall of initials with no explanation, or experience described in vague terms (“decades in the industry”). Precision is free when the facts are good. Decode the letters here.
“Who is your typical client — asset size, situation, stage of life? How many client households do you personally serve?”
Why this question: You want an advisor for whom you are a normal client, not the biggest (you’ll get experiments) or the smallest (you’ll get voicemail). And capacity is real: an advisor “serving” 400 households isn’t advising most of them — the software is.
A clean answer: A specific profile that sounds like you, and a household number under roughly 150 (or a clear explanation of the team model if it’s higher).
Watch for the dodge: “I work with everyone from young families to retirees.” That’s not a specialty — that’s a sales territory.
“What is your investment philosophy, and what evidence supports it? If you use actively managed funds, how do you justify their higher costs against their track record?”
Why this question: This is the one question where decades of data exist — and most of the industry loses to it. The long-run evidence shows the large majority of actively managed funds underperform their benchmark after fees. An advisor charging you extra for active management should be able to explain — in writing — why the evidence doesn’t apply to them.
A clean answer: A coherent philosophy, stated plainly, that acknowledges the evidence: low costs, diversification, discipline over prediction. If they use active funds, an honest rationale and a willingness to show the data.
Watch for the dodge: “We have access to institutional managers most investors can’t get.” So did the pension plans I sat across from for twenty years — and most of those managers still trailed the index. Access isn’t performance.
“How will you manage my accounts for taxes? Specifically: asset location, tax-loss harvesting, and how you think about turnover in my taxable accounts.”
Why this question: Returns get reported before taxes; you get to keep what’s left after. An advisor who ignores which investments go in which account type, or who trades constantly in your taxable account, can quietly cost you a percent a year — and it never shows up as a “fee.”
A clean answer: They name specifics: what goes in the IRA vs. the taxable account and why, when they harvest losses, how they minimize taxable turnover, whether they coordinate with your accountant.
Watch for the dodge: “We take a tax-sensitive approach.” That’s a phrase, not a process. If they can’t describe what they actually do, they don’t do it.
“Walk me through what you did for clients in the last major market decline. What did you tell them, what changes did you make, and what should I expect from you in the next one?”
Why this question: Anyone can advise in a rising market. The moment that decides whether an advisor was worth it is the moment your account is down 30% and you want out. You’re asking for their crisis playbook — before the crisis.
A clean answer: A specific story: “Here’s what we sent clients that week, here’s what we changed and didn’t, here’s why.” Bonus points if the honest answer includes “we mostly kept people from selling at the bottom” — that’s real value, plainly stated.
Watch for the dodge: “We moved our clients to safety before the drop.” Be very careful here. Consistently timing markets is something the data says essentially nobody does — an advisor claiming it is either misremembering or marketing.
“Have you or your firm ever been subject to disciplinary action, regulatory sanctions, customer complaints, or arbitration? Please describe any events.”
Why this question: This one is special: you can check the answer. Every advisor’s disciplinary history is public — on BrokerCheck (brokercheck.finra.org) for brokers and the SEC’s IAPD site (adviserinfo.sec.gov) for investment advisers. So this question isn’t only about the record. It’s a lie-detector test. You’re comparing what they tell you against what the regulators show you.
A clean answer: One that matches the public record exactly — including an honest explanation of anything that’s there.
Watch for the dodge: Any daylight between their written answer and their public file. A minor complaint honestly explained is survivable. A “clean record” claim that BrokerCheck contradicts ends the conversation — not because of the event, but because they lied about it in writing. How to pull the file, step by step.
“How will we measure whether you’re doing a good job? What benchmark will my portfolio be compared against, how often will I get that comparison in writing, and what happens when you underperform it?”
Why this question: Institutions never hire an advisor without defining, in advance, what success looks like and how it’s measured. Individuals almost never do — which is why underperformance can drift on for a decade, papered over with good meetings and nice charts. No agreed benchmark means no accountability, ever.
A clean answer: A named, appropriate benchmark; reporting on a set schedule, in writing, showing performance after fees against that benchmark; and a grown-up answer about underperformance.
Watch for the dodge: “We measure success by your progress toward your goals.” Goals matter — but this answer is also how the industry made performance unmeasurable. You can have both: goal planning and a benchmark. Insist on both.
“If I decide to leave, what does it cost and how long does it take? Are there any surrender charges, exit fees, or investments in my portfolio that couldn’t move with me to another firm?”
Why this question: The most revealing question on the list, because it exposes plans they hope never to discuss. Some products (many annuities, certain proprietary funds) carry surrender charges or simply can’t be transferred — meaning leaving costs you real money or forces a taxable sale. Advisors know which products lock clients in. Some choose them partly for that reason.
A clean answer: “Nothing. You could transfer your accounts to another firm next week; everything I’d put you in is fully portable.” Anything else deserves a written explanation of exactly what’s locked and why.
Watch for the dodge: Surprise or mild offense that you’d ask (“planning your exit before we start?”). Institutions negotiate the exit before they sign. The easier you are to leave, the better you’ll be treated while you stay.
What if they won’t answer?
Then you have your answer.
These are twelve questions about fees, conflicts, credentials, and accountability. Every one of them has a factual answer that a professional acting in your interest can produce in under an hour. There are only a few responses you’ll get:
They answer, in writing. Whatever the answers reveal, this advisor respects your process. That itself is data — good data.
They call you instead. Warm, charming: “these things are easier to discuss in person.” No. What can be explained on the phone can be confirmed in writing. Reply: “Happy to talk after I have your written responses.” An advisor who will not write down what he’ll happily say is telling you the words don’t survive on paper.
They go silent. A professional who won’t spend an hour answering basic transparency questions to win (or keep) your business has shown you exactly how much accountability to expect after they have your money.
A refusal is not a failed process. A refusal is the process working.
The email to send
“Dear [Advisor Name] — I’m using a structured process to evaluate financial advisors, and the next step is written due diligence. Attached are twelve questions about your practice, compensation, investment approach, and client service. I’d appreciate your written responses within the next 7 days. If that timeline is difficult, let me know what’s realistic. I’m happy to meet after I’ve reviewed your responses. Thank you — I appreciate your help in making this an informed decision. [Your Name]”
Already have an advisor? Same email, one changed line: “As part of an annual review of my financial relationships, I’m asking my advisor to answer the following in writing.” Same steps. Start at question one.
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Read the guide →The Red-Flag Checklist
Every sales tactic and fee trick on one page. Check the ones that sound familiar — then count.
Take the checklist →Get the questions — and the five steps around them.
The free Method PDF includes all twelve questions, the answer guide, and the email template — ready to send.