How to Select a Financial Advisor: A Guest Blog

Isaiah Douglass, FInancial Advisor for Dental Practices and businesses in Indianapolis.

Financial Advisor VS. Financial Sales: A Guest Blog

by  Isaiah Douglass


Click for Podcast 

As humans, we appreciate and desire friendships, as they allow us to build trust and develop more meaningful connections. In the realm of financial advice or a Financial Advisor, trust and relationships matter, but often to a fault. If that sounds counter-intuitive, let me explain via a little story regarding having  a Financial Advisor vs a Financial Sales Consultant.

I recently met with a new client and at the end of the meeting, he half joking half serious mentioned, “You should have pushed me harder to move earlier. This is so different than what we had before.” His reasoning for the comment was a missed opportunity based on annual enrollment for benefits. No one ever explained that as a high-income earner with strong cash flow, how a Health Savings Account (HSA) could benefit the family. If you are looking for information on HSA’s check out this blog post. The previous advisor-sold products to solve financial concerns. He never talked about the financial items outside of how he was compensated.  Therein lies the difference between financial advice and financial sales. Interested in learning more on that check out this post.

Taking a Chance or Not:

He and his wife remained with their current advisor for some time even with some questions because of the existing friendship they had. They had known each other for several years and crossed paths with mutual friends. The inertia to make a change would mean having an awkward conversation. If things were “good enough” the advisor-client relationship stayed intact. I spoke to a group via a presentation; after that talk, there were some seeds of doubt. The seeds began to sprout as he considered if the previous advisor indeed had his family’s best interest at heart. At last, there was a realization that the fundamental issues with his current advisor were more significant than any friendship bond.

There is not enough stringency on the title for a business card or LinkedIn profile. It is hard to know the difference as a consumer. A recent study found the trust level of a financial advisor trust ranking is below a member of Congress and slightly above a used car salesperson. That reputation has been earned over the years. Far too many financial advisors have regarded clients as a revenue source, providing little to no real advice.

So how does one understand what is financial advice and what is financial sales?

Here’s an easy list to determine the difference

  • Are they a fiduciary? The term is abused lately as well, but a fiduciary is someone that has a legal obligation to put client’s interest above and before their own. To be considered a fiduciary they need to be an investment advisor.
  • Are they registered as a Broker? The easiest way to check is to search for BrokerCheck and type in their name. Here is my profile; you can see I’m listed as an Investment Advisor. In a prior role, I was a Registered Broker. A Broker only earns compensation for a transaction or sale of a financial product.
  • Are they fee-only? Fee-based is another popular term, but it is not the same. The details can be found here. Fee-based means they can charge a fee. Fee-only means that the fee you pay is the ONLY compensation they earn. The fee-only title means no product sales. For more data on Fee-Only click here.
  • Are they dually registered? One of the most convoluted and confusing items in the world of financial advice today is dual registration. Dual registration means being able to earn a commission (broker) and then turn around and charge for advice (investment advisor) depending on preference (aka which one pays more). While a complex topic, here is two excellent blog posts about it here and here.
  • Are they a CERTIFIED FINANCIAL PLANNER™? The challenge with the CFP┬« is it means someone has the necessary training on financial planning, but there are still salespeople with the title. Fee-only and CFP┬« is a combination that is ideal.

Difference between Financial Advisor VS. Financial Sales

We know the difference between financial advice and financial sales, why don’t all advisors move to a more transparent fee-only model? The answer lies in one of the following three ways: Na├»ve, Stupid, or Lazy.


Some are too new to the industry and caught up in firm culture, can have the blinders on. There can be a sense of only knowing what one way and drinking a bit too much of the firm Kool-Aid. I’ve encountered such na├»ve advisor; they are often hired out of college and placed in a sales role at a large insurance company or national bank. I give the na├»ve advisor a pass for the first three to four years of their career.


After four years if they do not understand the dynamics of the industry and the conflicts of interest that are so prevalent they are stupid. The dictionary definition of stupid explains it all: having or showing a significant lack of intelligence or common sense. While harsh, there is no way around it; they see enough meetings and conversation to grasp the issues at hand. Often, the money and the carrot many of these organizations dangle out in front of them drives them forward. Learning the industry is not hard via blogs, podcast, videos, and Twitter (yes #FinTwit is a thing).


The older, gray hairs usually fall into this category. Many seem fed-up and tired of operational headaches. The awkward conversations that the firm puts them into with clients. They have comfort in a business built based on relationships and friendships with clients for whom trust the advice. They take off a lot of time and still earn a substantial income. Why bother changing? Especially, when there is a bonus and deferred compensation in place to keep these advisors. Finally, many firms own the clients and not the advisors. The clients are the profit center for these firms. An advisor who is older does not want to risk their livelihood to leave.  The risk of legal action is often a threat firms use; I can speak from experience. Some advisors know there is a better way, yet until clients leave will never change.

It is my hope, the three reasons above provide clarity on why there are so many advisors still operating in a broken model. Not putting clients first is and will be a losing game. Financial advice by nature should be advice only. The term advisor by the Webster Dictionary definition is, “a person who gives advice, typically someone who is an expert in a particular field.”  It is difficult to make an argument for someone to be a financial advisor if compensation is for anything outside of their advice.

Financial Worth of Friendship

How much is your friendship worth? Is it worth $10,000? $100,000? More? You may feel that is exaggerating, but odds are the cost could be even greater for bad financial advice. The next time you meet with your financial advisor whether friend or not, ask more questions about their business structure and model. If you don’t like the answers, ask why they haven’t made the switch? Encourage them to, if they tell you they are considering it, help empower them to make the jump as it is scary and often a risk. If they defend where they are at you can almost guarantee that they fall into one of the three camps listed above: na├»ve, stupid, or lazy.

There are far too many amazing advisors doing the right thing to work with a bad one. The one screening tool I’d equip you with to keep away 90% of the bad apples is ensure they are a CFP┬« and Fee-Only. If you do those two simple steps, you are on the path to finding someone who can improve the financial advice you receive. The easiest way to begin the process is to check out the following advisor search portals below. Your financial future should not be in the hands of a financial salesperson. If you take steps to do some due diligence and education, you will be surprised with what you find.

To learn more about about how a Financial Advisor can help visit our podcast with Isaiah Douglass and LEAP Managed IT’s COO Michael Thomas at  or click here to watch the podcast.

Find an Advisor Resources:

Questions to ask any Financial Advisor:


Patrycja Thomas

Author: Patrycja Thomas

Fortune 500 sales and marketing veteran dedicated to helping small businesses change the world with technology.