How do I choose a financial advisor as a doctor?

An investment advisor owes you a fiduciary duty for the whole relationship. The SEC describes it as two duties. The duty of care means advice in your best interest, based on a reasonable understanding of your situation and goals. The duty of loyalty means the advisor can't put its own interest ahead of yours, and has to tell you plainly about its conflicts so you can agree to them or say no.

It doesn't mean an advisor has no conflicts. It means the conflicts have to be disclosed. The duty also follows the scope you agree on: an advisor hired only to manage one account isn't taking on your whole financial life. It can't be signed away in a contract.

Some people work as both an investment advisor and a broker. A broker also has to act in your best interest when recommending an investment, but under different rules. Ask which role someone is in when they advise you.

Ask who your day-to-day contact is, and whether that person stays the same. Then ask which legal entity you would sign with. A firm's brand and the registered firm that gives the advice aren't always the same name; the advisory agreement and the Form CRS will say which.

If other professionals are involved, such as a tax preparer or an insurance agent, ask whether they work for the same firm, an affiliate or an outside business.

Ask which decisions you'd work on together: your retirement accounts, loans, insurance, a contract, a home. Then ask what you'd receive, who prepares it, and when you'd look at it again.

Some work belongs to other people. Your CPA prepares your tax return. An attorney drafts a will or trust. Your employer runs your benefits. A good advisor will say where their part stops and help you bring the pieces together.

First, how is the advisor paid? The common ways are a percentage of the assets they manage, a flat or fixed fee, an hourly rate, or commissions on products sold. Some firms combine them.

Then ask for every charge, not just the advisory fee. Funds carry their own yearly expenses, and accounts can have trading, transfer or maintenance fees. The SEC suggests asking for it in dollars: if you invest $1,000, how much goes to fees and costs, and how much is invested for you?

Flat fee or percentage of assets: which costs a doctor less? Our own fee is on Fees & pricing.

Every way of paying an advisor creates some pull. A percentage fee rewards the advisor when more of your money is in accounts they manage, which matters when you're deciding whether to pay down a loan or roll over a 401(k). A commission rewards a sale. Ask how the firm makes money and how the person advising you is paid.

Ask about affiliates too. If the firm is linked to a broker-dealer, an insurance agency or a tax practice, it may earn more when you use them. That's allowed if it's disclosed, and you can still choose someone else. Our own conflicts are in our Form CRS.

Each Form CRS uses similar headings and covers the same topics in the same order, so it's easy to read two side by side. To look a firm up, go to adviserinfo.sec.gov, search by the firm's name or its CRD number, and open the firm's page. Its brochure and relationship summary are there, and you can check that the firm is registered.

The SEC requires a Form CRS from advisors registered with it that work with individuals. A smaller advisor registered with a state may not have one, but will still have a Form ADV brochure.