Broker Check

How to Use a Financial Advisor









Patrick J. Lynch III, CFS, Senior Partner

WhiteStone Wealth Management Services

559 E. Huisache Ave.
San Antonio, TX 78212



As you begin to ask yourself questions about a new relationship with a financial advisor, you first want to explore the methods that give the relationship a high probability of success.  You have either never had an advisor or are looking to replace one that you may be unhappy with.  On the other hand, you might only be looking for a second opinion.  Whatever the situation, you will be interviewing a person in your community that ostensibly holds themselves out to be knowledgeable in their profession.  During this process, you must be organized and straightforward because the bottom line is that the ultimate responsibility for your family’s money is yours.  You are the managing partner, and with that position, your advisor or anyone else who services your investments should work with you as an equal.  Although you don’t have the time, inclination or the investing skill of a professional advisor, you are responsible for ensuring that your goals and objectives are on course and that your assets are serviced appropriately.  However, in choosing an advisor that works well with you and your set of financial requirements, the process is not yet a partnership and should not be treated as one.

I have been in practice since 1981 and I have noticed that some people are more adept at finding the right advisor relationship for their goals and objectives. This paper, “How To Use A Financial Advisor” is based on almost three decades of experiences that I believe will help those that are truly interested in working with a financial professional. This certainly is not the only way to approach the process, but it may help some of you navigate an important search that can be exhausting. To summarize - it’s a “process”, it’s based on “communication skills” and it begins and ends with “insightful questions”.

In the following pages, we will discuss “How to Use a Financial Advisor”, which covers the initial interview process and the eventual periodic review process which helps to create a successful partnership.




                                                       Patrick J.  Lynch, III, CFS, Senior Partner

WhiteStone Wealth Management Services

8620 N New Braunfels Ave Suite 205

San Antonio, TX  78217

(210) 341-1515


Securities by Licensed Individuals Offered Through Investacorp, Inc.

A Registered Broker/Dealer                      Member FINRA, SIPC







Referrals are generally the lifeblood of all business.  Whether choosing a doctor, a CPA, a good restaurant or an honest mechanic, we all use the referral process.  When broaching the subject, let it be known that you are on a serious quest for a competent, well-established financial advisor.  Without getting too personal, ask the referrer several questions about the extent of his interaction with the advisor.  Finally, ask the referrer if they had it to do over again (knowing what they know now), would they choose this same person to oversee their assets?

One-on-One Meeting

Occasionally, you may get an invitation to a “One-on-One” meeting with a potential advisor to discuss any concerns that you have with respect to your financial assets.  However, first call his office and ask a couple of general questions such as: “How long have you been in business?”, “Do you have a minimum account size?” etc.  Some pre-screening in this vein can save you time and help you decide if this is someone you would even like to meet with.  This is a good opportunity to evaluate an advisor and see if you would be interested in working with him and his firm.

Educational Seminars

Similarly, you may be invited to attend a dinner seminar.  One of the best screening criteria here is the invitation itself.  Always remember, “if it sounds too good to be true…it probably is”.  Common sense may tell you that this is most likely not someone you would like to work with.  Most people are good at assessing competency, general character and communication skills by simply observing someone during a presentation.  If you have any type of uncomfortable feelings or feel that an incomplete and/or biased story is being told, then leave the seminar with a good dinner and an advisor that you can cross off the list.  However, if the advisor has done a good job providing a well-rounded presentation and piqued your interest, then consider making an appointment and go to stage two in the screening process.


In the 21st century, more and more information is being accessed via the internet.  Depending on the sophistication of the web site, you may be able to look at streaming video of the firm, read the firm’s philosophy and investment methodology, and get an overall “feel” for the financial planning entity.  This will allow you to apply an initial screen in your process to finding a financial advisor.  This is efficient, timely and can represent your first step in your search.  Further, you may ask questions and carry on communications until you are comfortable scheduling an appointment.  Remember, all of these modalities are tools that should be used wisely.

The initial screening process is one of the most critical areas to your eventual success in working with an advisor.  Begin the process methodically and ask questions that will elicit content-filled answers.





Doing Your Homework

Prior to any in-depth meeting with a financial advisor, you should have your personal investment objectives and risk tolerances laid out and fully exposed for you to analyze.  Start with the simple question: “What’s important about money to me?”  List your answers, having no less than five.  Next question: “What’s important about an income to my family?”  Question: “What’s important about spending time with grandchildren and traveling?”  This process is an excellent exercise in taking the obvious, peeling away layers of fluff, and getting to the root of questions like: “What’s important about money to you?”  Once you have identified your true goals, motivations, objectives and risk tolerance, only then can you begin to lay out short term and long term strategies.

You must now dispassionately look at your personal financial status. Start with the calculation of your average monthly expenses.  This number must include all dollar outflows, including annual expense items reduced to a monthly number.  It is important not to marginalize this exercise or to make assumptions that make your monthly expenses look better than they actually are.  During this process, you can footnote any specific expenses that may be gone within the next five years (i.e. credit cards, car payments, mortgage payments, etc…).  This expense number is vitally important, especially if one of your goals is to supplement or replace income at retirement.  Are you looking at using a financial advisory firm for accumulation of assets or are you looking at a distribution of assets for income purposes?  Note that the answer to this question goes directly to the heart of how assets are allocated.  The concepts of accumulation and distribution are two vastly different disciplines within the financial planning profession.  However, the subtleties and gross differences in risk and tactical allocation between the disciplines are not necessarily intuitive.  Use this information to formulate questions that should be asked during the interview process with a prospective advisor candidate.

Set specific health and financial strategies in motion.  The objective of an advisor should include a full review of not only investment assets but also health insurance, long-term care concerns, life insurance, wills, trusts and tax impacts on both income and estate taxation.  All of this information should be available in a central depository (i.e. file cabinet, safe deposit box) where a spouse, children and/or a trusted confidant can find this information easily.

Once you have targeted your financial motivation, goals and objectives along with rigorously evaluating your current financial situation, you should proceed with the process.





With the preliminary work done, you must prepare a meeting agenda of salient topics that you want to cover in detail.  These should include questions that you feel are of particular importance.  However, the most important questions are usually those that you have not already considered.  Examples of good questions to ask are, “How many prospective clients do you reject during the interview process?” and “How many prospective clients elect not to go with your firm during the interview process?”  You, as a prospective client, want an advisor to be somewhat selective in their choice of appropriate clients.

Educational Questions

Probing questions during the first meeting are the fuel that drives the engine.  Remember it is not an adversarial relationship, but rather an inquiring one for both parties.  The advisor should also be asking insightful questions which elicit responses that you had not fully considered.  Answers to well placed questions not only give you an idea of the advisor’s command of the subject, but will also let you judge the advisor’s communication skills.  This communication process will connect you and the advisor in the strategic servicing of your assets.  Communication is generally where the success or failure of the Advisor/Client partnership is determined.  Is he talking over your head?  Do you feel comfortable with an understanding of the answer he has given?  Listed below are some other examples of questions you might ask a financial advisor:

1.       What is your approach to financial planning and wealth management strategies?

2.         Describe, in detail, the “process” that we will be going through.  What topics will we be covering in each meeting? (You are looking for a structured process that is used successfully with new clients to gather data and confirm preliminary findings.)

3.          I would like a copy of your investment policy. (This policy should be readily available. It describes the firm’s overriding strategy in its money management process.)

4.         Who else will be working with me? (Will you be “handed” to another representative?  This is not necessarily a negative concern; however, you should know the arrangement in advance.)

Well thought out questions for an advisor are the keys to determining whether this advisor is a good fit for you.  It is not only the answers, but also the confidence of the tone, the quality of the communication and the overall feeling that you come away with after an interview that’s important.

Compensation Structure

During this first meeting, you want to touch on the subject of compensation structure.  It is important that you have a rudimentary understanding of how the advisor is paid during his interaction with you.  Several structures can be employed, with the most common being:

1.   Fee-based (through an SEC Registered Investment Advisory Firm)

2.   Commission based


The advisor and his/her firm should have a detailed menu of services available for you.  This service menu is important in that it lets you know how you may leverage your relationship with the firm to obtain maximum value.  Other services and products may include, but not be limited to, the following:

-          Third Party Managed Accounts*          -  Variable & Fixed Annuities

-          Equity Strategy                                      -  Estate Analysis

-          401K, SEP, Pension Plans                     -  Trust Analysis

-          REIT Strategy**                                    -  Long Term Care Insurance

-          Oil and Gas Strategies**


*Through a SEC Registered Investment Advisory Firm

**For accredited investors

As you become acquainted with the firm’s services, please ask for an explanation of anything that you are unclear about.  If you are a novice and don’t really feel that you have a very good understanding of any of these terms, ask questions!  Never forget that it’s your money.

Value Added

Financial planning and wealth management services have unfortunately become commoditized.  Most of the above services can be found at the higher quality firms.  So what is it that will separate one firm that you interview from another?  This is a very difficult question to answer and may depend on your interpretation of the quality of services rendered.  The “value added” in any business is based on the personal interaction of a service provider with the client/customer.  As we all know, there may be a fine line between “You don’t need to give me weekly updates on my account” and “Why don’t I hear from you more often about my account?”

Value Added can be defined as “Reasonable Expectation Plus”.  You should have a reasonable expectation of the following:

  • On time appointments
  • Periodic Reviews
  • Reminder Calls
  • Understandable and Complete Statements
  • Conscientious and Active Oversight
  •  Explanation of New Strategies


The “Plus” may involve the following:


  • The beverage of choice during review appointments
  • Remembering special occasions
  • Tangential conversation about important non-financial issues
  • Be seen as a resource for all things financial
  • Client outings
  • Unexpected recognition


There are very few ways that you know what you will be getting in the way of service, experience, and value added without gathering references.





During the first and second meetings, the advisor should be addressing meaningful issues that center on your goals, objectives and risk tolerance.  You have completed a self-analysis in the “Doing Your Homework” section of Chapter 2; however, the advisor should be asking the probing questions without you simply volunteering information.  If at any time during the initial process the advisor asks, “How much money do you have?” and states “Here’s what I can do with it,” you should end the appointment and begin searching for a different advisor.  These queries are appropriate but not without asking the more encompassing questions first that will give a “big picture” feel to the wealth management process.  The advisor’s interests must always be subordinate to that of yours.  As the advisor probes to find your motivations, goals, risk tolerance etc. you can and should share specific information that will help him in putting together recommendations that are fitting to your set of circumstances.

If you have agreed to a second meeting, it is at this point that you can share specific financial data.  Account information is extremely confidential and should be handled as such.  The advisor must be able to see the existing financial structure in order to form opinions, conduct research and to give an overall assessment of the current holdings.  If you are comfortable with the process to this point, it is imperative that you give as much information as possible.  You will be able to assess the smoothness of the process simply by the way you interact with the advisor.  Is it easy and flowing or is it uncomfortable?  Once you have shared all of your financial data and if this is a retirement needs analysis, the advisor may then ask: “What is your gross monthly expense?”  If this is not a retirement needs analysis but rather a wealth management strategy, the advisor should move directly to a discussion of volatility, risk and time horizon.




If you’ve gotten to the third meeting with an advisor, then you are feeling fairly comfortable with him. It is at this meeting that you will get preliminary feedback in the form of what strategies will be used to address your goals.

Advising the Advisor

If your objectives involved retirement income supplementation, then the blueprint will show how this “plan” will be put into action and how the action steps will unfold over time.  Both the direction and the velocity of a well thought-out plan will be readily apparent.  The core data upon which the retirement recommendations were based should be information that you provided to the advisor and, therefore, within your zone of risk tolerance, return on asset expectations and inflationary assumptions.  If, in your opinion, any of the core data requires adjustment, now is the time to request another scenario or to look at several “what if” situations.  In addition, any plan should include a portion earmarked for “shock” claims against the assets. These unexpected events may require large capital outputs that are generally not part of the day-to-day capital requirements of running a household.





If you are satisfied and “feel” comfortable with this advisor, references should be provided to you at the end of the third appointment.


You want to do an excellent job in the vetting process of the clients that have been given to you as references from the advisor.  As should be expected, the clients given will generally be chosen because they are seen as friendly and complimentary toward the advisor.  Knowing that, you must have questions that will deliver more objective information than the normal fare that is generally of little value.  You should request no less than five references, with each reference having a different tenure with the advisor.  A few sample questions designed to elicit more information are:

1.         What is the best thing about your advisor?

2.         What is the worst thing about your advisor?

3.         What has been your biggest surprise since being with this advisor?

4.         What’s been you biggest disappointment?

5.         How often do you meet with your advisor?

6.         Who initiates the calls for a client review?

7.         What one thing could the advisor do better as far as you’re concerned?

8.         Have you ever referred someone to your advisor that became a client?

9.         How much turnover is there in the administrative staff?

Until now, you have had to form your own opinion based on your interaction with this advisor.  You now have an opportunity to gather objective opinions about the person you have been interviewing from people that have had years of experience with him and his firm.  Write down as much information as possible to your questions and review your notes once you have contacted at least five references.  If you have any concerns regarding the feedback you have received, you should immediately address them with the advisor.  Remember, at this point, you are comfortable with the advisor and it should take something important to derail the relationship (i.e. trust issues, competency problems, follow-up grievances etc.).  If possible, contact all references between the third and fourth appointment.

Plan Execution

Generally, the plan recommendations have been laid out in the third appointment; however, the execution of the plan, including any revisions, will be discussed during the fourth appointment.  During this meeting, details will be provided for the types of strategies that will be used with your authorization to address our goals.  Each strategy that is being proposed should be suitable for the plan.  In addition, each strategy has pros and cons that should be disclosed.  Make sure that the details of every recommendation are discussed in depth.  For example:

  •  Expenses
  • Penalties (if so, for how long?)
  • Tax treatment
  • Transfer by Will or Beneficiary
  • Should it be included in a Living Will?
  • Spousal benefits and continuation


As you look at your choices available to fund the strategy, make sure you have at least a rudimentary understanding of their use and the application for which they are being used.  If something does not make sense, it is imperative that you ask the advisor to again explain what is being used in that situation and why.





Congratulations on your detailed approach to finding a financial advisor that is right for you and your family.  While some of you may be employing the services of an advisor for the first time, others may be looking for an alternative to your current advisor.  Whatever your situation is, the discipline of finding and using a financial advisor to help you manage family assets is both important and critical to the maintenance and growth of those assets.  Not all advisors will follow the exact steps that have been detailed over the last several chapters; however, this should serve only as a possible guideline to locating and properly using the experience of an advisor.

Setting Expectations

Throughout the process, a reasonable range of expectations should have been set.  As we all know, the saving, investing and managing of assets is not without bumps in the road.  These “bumps” should have been fully explored and tested against an emotional yardstick.  The strategy that is being used to reach both short and long term goals should be reasonably understood.  Understand that you have made your choice for this advisor and you must seek his counsel and follow the strategy that was agreed upon.

If there are administrative questions that come up - questions that do not pertain to asset management strategies, performance etc. - the advisor’s team is your best resource.  If you have a question for your advisor and he/she is unavailable, leave a message and allow for a reasonable amount of time for a return call.  Many advisors work in tandem with another advisor or utilize junior advisors as a backup; therefore, you may also call them for any questions that may arise.

Quarterly Review

Ideally, you should meet for a full review every quarter (at least for the first year).  You want to understand the advisor’s thinking and his response to situations that will arise over time.  Further, you want to continue to understand the tactical aspects of the plan and to expand your understanding of the products that are part of the plan.

This is an extremely important process that you and the advisor should be prepared for.  It is meant to review and measure progress of the underlying investments being used in the strategy.  It is also a wonderful opportunity to ask the advisor questions of a general nature to see what his views are of the U.S. and world economy and how this might affect ongoing strategy.  During this review process, the advisor should be asking for your input and opinions and measuring your responses.  Being an advisor for almost three decades, I recognize this review process as an invaluable opportunity to gauge the client’s understanding of the overall plan and to continue to measure the comfort level of the client throughout all economic cycles.

Questions - The Heart and Soul of Understanding

The successful use of a financial advisor is dependent upon one crucial aspect - the use of insightful and information-eliciting questions.  The proper use of questions will give a wealth of information from which critical decisions can be made.