At certain points in life, financial decisions can begin to involve more moving pieces and greater coordination. Maybe it’s approaching retirement. A business transition. An inheritance. Or simply the realization that the pieces — income, taxes, investments, estate — aren’t connecting the way they should.
That’s usually when the search begins.
Type “financial advisor near me” into Google and you’ll get a long list of names, credentials, fee structures, and firm descriptions that all start to blur together. Everyone sounds qualified. Everyone sounds trustworthy. Knowing what questions to ask, and what structural differences actually matter, isn’t always obvious.
This guide is meant to cut through that. Not to tell you who to choose but to help you ask the right questions, understand the structural differences that matter, and walk into that first conversation with a clear sense of what you’re looking for.
What a Financial Advisor Does
A financial advisor helps you make more informed decisions about your financial life. Depending on the firm and the scope of the relationship, that can include retirement planning, investment management, tax strategy, income planning, estate considerations, and planning around major life transitions.
The scope of services varies widely from firm to firm. Some advisors focus primarily on investment management. Others take a broader planning approach that looks at how different financial decisions connect including income, taxes, investments, and long-term goals. Understanding which approach a firm takes is one of the more useful things to clarify early in your search.
Does Working with an Advisor Actually Make a Difference?
It’s a fair question and there is some third-party research that addresses it directly.
Vanguard’s whitepaper Putting a Value on Your Value: Quantifying Vanguard Advisor’s Alpha (July 2022) examined the various ways an advisor may add value beyond investment selection. Their analysis concluded that advisors can potentially add up to or exceed 3% in net returns on an annual basis. The largest contributing factors identified were behavioral coaching — helping clients stay disciplined during volatile markets — followed by spending and withdrawal strategy, asset location, cost-effective implementation, and rebalancing.
A separate analysis by Russell Investments, Value of an Advisor (2024), estimated that the value of a financial advisor in the U.S. is approximately 5% annually before fees, or approximately 4% net of a typical 1% advisory fee. Their framework identified similar drivers: behavioral coaching, holistic planning and customization, tax-smart investing, and rebalancing.
These figures are not guarantees, and results will vary based on individual circumstances, market conditions, and the quality of the planning relationship. They are presented here because they reflect how independent researchers have attempted to quantify something that is often discussed in vague terms. The value of advice, when it is delivered well, tends to show up in decisions made and decisions avoided.
The Fee Debate — and Why the More Important Question Gets Ignored
You will encounter a lot of discussion online about fee-only versus fee-based advisors. By fee-only, we mean advisors who are compensated directly by the client. By fee-based, we mean advisors who may also receive compensation through other means, such as commissions associated with certain insurance or investment products.
This distinction is worth understanding. But it is worth asking: is this a debate driven by substance or by marketing?
Imagine you are meeting with two advisors. One emphasizes their compensation structure and spends much of the conversation explaining why their model is the ethical standard and that others cannot be trusted. The other spends most of the time understanding your situation—your goals, taxes, income needs, and tradeoffs—and explaining how they would approach those decisions. They sit down, explain exactly how they are compensated, where potential conflicts exist, and then walk you through a clear picture of how they plan to help you.
The question isn’t which compensation model is ‘better’ in the abstract, but which conversation actually helps you make clearer, more informed decisions.
Which conversation was more useful?
Every compensation model can carry conflicts of interest and that includes all of them. A fee-only advisor managing assets that charges an aum fee has an incentive to grow assets under management. A fee-based advisor may have an incentive tied to certain product recommendations. An advisor charging a one-time planning fee may have little structural incentive to ensure the plan is actually implemented or revisited as your life inevitably changes. And an advisor on a flat retainer may have limited motivation to go beyond the minimum when there is no direct connection between their effort and your results.
None of these are reasons to disqualify any particular model. They are simply the reality of how compensation may shape human behavior. What matters is whether an advisor acknowledges these dynamics openly, explains how they manage them, and can demonstrate that their process is genuinely structured around your ongoing interests.
When speaking with any advisor, consider asking:
- How are you compensated, and where might conflicts of interest arise?
- How do you disclose those conflicts to clients?
- What does the value you provide look like in practice — beyond investment management?
Other Questions Worth Asking
These questions tend to help clarify how an advisor works and whether their approach is a reasonable fit for your needs:
On their process:
- Do you begin with a financial plan, or do conversations typically start with investment recommendations?
- How do you approach the relationship between tax planning and investment decisions?
- What does ongoing service look like — how often do clients typically meet with you?
On registration and compensation:
- Are you registered as an investment adviser, a broker-dealer, or both?
- How are you compensated, and where might conflicts of interest arise?
- In what contexts are you acting in a fiduciary capacity?
On fit:
- What kinds of clients do you typically work with?
- Who else at your firm would be involved in my planning?
- How do you communicate with clients between meetings?
Things to Consider in Your Evaluation
Credentials. A CFP® (Certified Financial Planner) indicates broad training across financial planning disciplines. A CPA can bring tax expertise. Other designations — CFA, ChFC — can reflect more specialized focus areas. Look for credentials that are relevant to your actual situation but know that specific designations do not necessarily mean that you will have a better outcome.
Scope of services. Consider whether you need investment management only, or a broader relationship that addresses planning, tax strategy, income, and related decisions together. Clarifying this early helps you evaluate whether a given firm is structured to serve what you actually need.
Communication style. An advisor should be able to explain their thinking clearly. If an initial conversation leaves you with more confusion than clarity, that is a reasonable data point.
The ongoing relationship. Financial planning tends to be most useful as an ongoing process. Ask how a firm structures the relationship over time and not just the initial plan.
Registration and background. You can verify an advisor’s registration and review their background through FINRA’s BrokerCheck or the SEC’s Investment Adviser Public Disclosure (IAPD) database. Both are publicly available and free.
We’re Here If You’d Like to Talk
At Babb Financial Group, we have been working with individuals, families, and business owners since 1981. Our approach is planning-first and we begin with a thorough understanding of your situation before making any recommendations. Our work spans financial planning, investment management, tax strategy, and related services.
If this is something on your mind, we would be glad to be a resource. Contact us to start a conversation with no obligation.
This article is intended for educational purposes only and does not constitute personalized investment, tax, or legal advice. The research figures cited from Vanguard (2022) and Russell Investments (2024) are third-party estimates based on modeled assumptions; individual results will vary and past performance is not indicative of future results. The opinions contained herein are subject to change without notice.
Frequently Asked Questions
How do I know if a financial advisor is a fiduciary? Ask directly — and ask in what contexts the fiduciary standard applies. Some advisors are registered as investment advisers and held to a fiduciary standard in that capacity, while also holding licenses that operate under a different standard. You can verify registrations through FINRA’s BrokerCheck or the SEC’s IAPD database.
When does it make sense to work with a financial advisor? Common triggers include approaching retirement, navigating a major life change such as a business transition or inheritance, or simply wanting a more coordinated approach to financial decisions. There is no single right time — it depends on the complexity of your situation.
