Relationships are essential to life, including any professional relationships we may have. Throughout your life, you’ll likely build many relationships with professionals. This includes doctors, lawyers, accountants, and financial advisors.

More money usually introduces more complexity to your financial situation. This is where finding a good financial advisor can be extraordinarily helpful. If you pick the right advisor, they can serve as your financial quarterback, helping to simplify the complex and keeping you on track to accomplish your goals. Conversely, a bad advisor relationship can quickly cause setbacks.

As such, due diligence is required on both ends of the relationship. You have responsibilities as a client, just as your advisor has responsibilities to work in your best interest.

So, here's how to ensure you will have a terrible financial advisor experience.

1. Choose an advisor who doesn’t share your values.

“If you don’t stop giving so much to your church, you’ll never be able to retire.” Those were words spoken to a member of my church by his financial advisor. Many of our closest friends share our faith, values, and worldview. I believe the same should be said of the person who helps you steward the resources entrusted to you by God.

2. Don’t check your advisor’s background.

Did you know it’s incredibly easy to see if your advisor has anything fishy in his or her background? Any complaints or suspensions are automatically reported to the SEC and FINRA. You can go to https://brokercheck.finra.org/ or https://adviserinfo.sec.gov/ to do a mini background check on any advisor or  firm.

3. Don’t understand how your advisor gets paid.

Advisors do not work for free. They are well-compensated for the services they provide to you. It’s important for you to understand how you pay for these services. Here are some of the more common fee structures in the financial industry:

• Fee-only: With this fee structure, clients pay their advisors directly. This can be a percentage of the assets the advisor manages, a flat fee, an hourly fee, etc.
• Commission: These advisors earn money based on the products they sell. This fee structure is common among advisors who sell insurance or annuities.
• Fee-based: This is a hybrid of fee-only and commission. The advisor earns money from directly billing clients, but may also receive commission from selling certain products.

Each of these has conflicts of interest, though some have more conflicts than others. You can ask a potential advisor about their conflicts of interest.

4. Choose an advisor who doesn’t keep your best interest in mind.

Someone who has the legal requirement to act in your best interest is called a fiduciary. A simple way of looking at it is that a fiduciary must always do what is right for the client. Not all financial advisors are fiduciaries. It is worth noting that Registered Investment Advisor firms (RIAs) have a legal fiduciary requirement. These are independent firms that are not dually registered with broker-dealers. This is not to say an advisor who is also registered with a broker-dealer wouldn’t act in your best interest, but they would have no legal requirement to do so.

5. Don’t take advantage of all their services.

Advisory firms often offer a wide range of services, including investment management, financial planning, tax planning, retirement education, and more. Your advisor wants you to succeed, and they designed their services to help you do so. Not taking advantage of these services is truly a disservice to yourself.

6. Don’t let your advisor see your full financial picture.

When your advisor provides you with a financial plan, it’s based solely on the information you provide. The success of this plan hinges on openness and honesty on your part. Your advisor cannot help you plan properly if you hide things like debt, other assets, or even personal situations such as having to care for a relative or your plan to take an expensive vacation. Be open and honest and let your advisor help you.

7. Never follow your advisor’s advice.

The world is a crazy place. Wars will break out, bad legislation will pass, and new threats will emerge. You may balk when your advisor tells you to stick to the plan or to stay in the market. “You don’t understand. Nothing like this has ever happened before!” That’s true, nothing like it has happened before. But then nothing like COVID, 9/11, the Great Recession, or World War II had happened before, either. The markets proved to be incredibly resilient through each of those crises. Don’t let a news anchor who doesn’t know you be your advisor. Let your advisor be your advisor.

Be wise when choosing a financial advisor. James 1:5 says, “If any of you lacks wisdom, let him ask God, who gives generously to all without reproach, and it will be given to him” (ESV).

Choosing an advisor begins with prayer, and then with diligence. Do not be afraid to ask a potential advisor questions, even very personal ones. Here are some questions you can ask: 

• Could you tell me about your faith? How are you involved in your church and your community?
• How do you make money?
• What are your conflicts of interest?
• What is your business succession plan?
• What is your investment philosophy?
• What services do you provide?
• How often will we meet, and how will you communicate with me?
• What are your qualifications?

If you’re looking for an advisor, a good place to start would be with Kingdom Advisors. These men and women align their faith with their work and will help you steward your resources for the advancement of God’s kingdom.

About the author: Jon Matlock serves as a financial planner at Beacon Wealth Consultants in Roanoke, Virginia. He is a CFP® candidate, a professional member of Kingdom Advisors, and a graduate of Southeastern Seminary. Before pursuing financial planning, Jon served overseas with the International Mission Board and also worked in their Church Success Center. In his free time, Jon enjoys serving his church, hiking in the beautiful Roanoke Valley, and spending time with his wife and son.