Most people ask a financial advisor about past performance. It's the wrong question. Here are seven questions that actually tell you whether an advisor is worth hiring.
Somebody sits down across the table from us, we get through the handshakes and the weather, and then it comes:
“So what kind of returns do you get your clients?”
Fair question. We understand why people ask it — it's the only measuring stick anybody ever handed them.
But it's the wrong question. And we're going to tell you why, knowing full well how convenient that sounds coming from the people who'd rather not be graded on returns. So let us make the case first. Then we'll hand you seven questions that will actually tell you something about the person sitting across from you.
We're Mike Dunlop and Casey Redmond, the CFP® professionals behind Ignite Financial here in Cedar Falls, Iowa. We're a flat-fee, fee-only firm — no commissions, no percentage of your nest egg, nothing to sell you. Mike was trained as an accountant, so we run our numbers on the conservative side and we're a little obsessed with not leaving Uncle Sam a tip. More than anything, we've both got the heart of a teacher. If you don't understand what we're doing together, we haven't done our job.
Three reasons.
We build portfolios out of low-cost index funds. Roughly ten holdings. We buy the whole market and then we stay the course.
Which means the return you get is the market's return, minus a fee you knew about in advance. So if we put a chart up on the screen and said “look what we did for these people,” we'd be taking credit for something we didn't do. John Bogle said it better than we're going to: American businesses find a way to make money, and when they do, they share those profits. That's where the return comes from. It isn't coming from us.
And here's the other part of that. If we take the credit in the good years, we've signed up to take the blame in the bad ones. We are going to have years where this thing drops. We're not going to lie to you and tell you we're not. It isn't if, it's when. An advisor who built the whole relationship on performance is in a rough spot that year — which is usually right about when people make the most expensive decision of their lives.
Say you and your neighbor both walk in here the same week, and we put you in the exact same portfolio on the exact same day. Ten years later your numbers are different. Sometimes different by a lot.
Because you retired in year three and he kept working. Because he inherited $200,000 in year six and dropped it in. Because you took Social Security at 62 and pulled from the portfolio, and he waited until 70 and didn't. Because two-thirds of his money is in a Roth and two-thirds of yours is sitting in a pre-tax IRA.
So any “typical client return” we handed you would be an average of a bunch of situations that have almost nothing to do with each other. That's not really a number. That's mush.
The reason you're asking is to stack us up against the advisor across town. That makes sense. But a return by itself doesn't tell you what risk somebody took to get there.
If his clients made 14% and ours made 9%, maybe he's better than us. Or maybe he had a 72-year-old widow in 100% stocks. One of those is worth hiring and the other one is going to hurt somebody in the next downturn, and you cannot tell which from the number.
There's a regulatory piece here too, and it's worth knowing. Advisers face strict rules about how performance can be advertised at all — the SEC's Investment Adviser Marketing rule governs what can be shown, over what time periods, and with what disclosures. So when an advisor is cagey about handing you a performance chart, that isn't always evasion. Sometimes it's the rules.
Now, here's something we can show you, and it's better anyway: what a portfolio built like yours has actually done over the last 20, 30, 40 years. That isn't a sales pitch, it's just index history, and you can go verify every bit of it yourself in about ten minutes. You'll get that, minus a fee you know in advance. That's kind of the neat thing about being boring. It's checkable.
And so here's what we'd want to know if we were sitting on your side of the table. Take these to every advisor you talk to. Watch how quickly they answer, and watch whether they answer the question you actually asked.
Don't ask “do you act in my best interest,” because everybody on earth says yes to that one. Ask about the 100%. Plenty of people can wear the fiduciary hat while they're doing your planning and then set it on the desk when it's time to sell you a product.
Then ask them to write it down. One sentence: I will act as a fiduciary in every part of our relationship. If somebody won't sign that, you just learned everything you needed to know in about four seconds, and it didn't cost you a dime.
You can also check this yourself before you ever walk in. Every firm has to give you a plain-English Form CRS relationship summary that spells out whether they're an adviser, a broker, or both, and how they get paid. Read it. It's two pages.
Not a percentage. Dollars.
One percent doesn't sound like much. On a million bucks that's $10,000 a year — call it $833 a month — and it climbs every single time your account climbs.
Think about your money like a snowball rolling downhill. Every year it picks up more snow and gets bigger. But if somebody's shaving a slice off it every time it rolls over, it doesn't pick up as much, and that compounds decade after decade after decade. Over 25 years the difference is very often hundreds of thousands of dollars. It's insane when you actually sit down and run it.
We built a calculator for this exact thing. Put your own number in and watch what a percentage fee costs you versus a flat fee over the runway you've got left: 1percentfee.com.
And then ask the follow-up: is that all of it? Are there fund fees stacked on top? Commissions? Trails? A surrender charge if you decide to leave in three years? Get the whole number, not the headline.
This is the question that separates people.
If the answer is “we manage your portfolio and we meet once a year,” then you're paying a planning fee for an index fund you could have bought yourself in about eleven minutes.
What you want to hear is all the rest of it. Multi-year tax planning. Roth conversions. When to turn on Social Security. Medicare, and the surcharge that sneaks up on people. An estate plan that actually exists instead of one you've been meaning to do since 2011. Insurance you're probably overpaying for. A real strategy for pulling the money out once the paychecks stop.
That's the work. That's where the money actually is.
Mike was trained as an accountant, so we'll admit we kind of nerd out on this part.
Your tax preparer is looking in the rearview mirror. Their job is to tell you what already happened last year. Somebody needs to be looking out the windshield — what's coming, and what we can still do about it while there's time to do anything.
A big pre-tax IRA is kind of a ticking time bomb. It sits there looking wonderful on the statement until your mid-70s, when required distributions start shoving you into a bracket you never planned on and drag your Social Security taxation and your Medicare premiums up right along with it. Start early, spread it across a bunch of years, and it's very manageable. Start at 75 and it isn't.
We have to pay our share. But we don't have to leave Uncle Sam a tip.
And so if an advisor has never once asked to see your 1040, they are not doing tax planning. They may well be doing something else that's worth paying for. But it isn't that.
Both of us have the heart of a teacher, and there's a practical reason for that, not just a nice-sounding one. If you don't understand what we're doing, you're not going to be comfortable. And if you're not comfortable, you're going to bail out at the worst possible moment.
So ask them. And if what comes back is a wall of words you couldn't repeat to your spouse in the car on the way home, that's your answer right there. Complicated isn't the same thing as smart. Sometimes complicated is just expensive.
Again — not if. When.
You want to hear two things. First, a plan that was built already expecting it. Cash set aside, two to five years' worth, so that nothing has to get sold at the bottom to pay your grocery bill. Second, a straight answer about what they'll actually do, and mostly that answer should be: call you, talk you off the ledge, rebalance, and buy some more while it's on sale.
Nobody gets hurt on the roller coaster. People get hurt jumping off of it while it's still moving.
And if the answer involves getting you out before it drops and back in before it recovers — go ahead and leave. Nobody can do that. Not them, not us, not anybody.
And here's where we circle back around to where we started.
If the answer is “we'll compare your return to the market,” you're right back to the question that can't be answered. So ask for a scorecard you can actually check:
We use guardrails for that last one. Picture driving up a mountain road with sharp drop-offs on both sides, and there are guardrails there to keep you in the middle. If you're spending too much, we're going to say something. And if you're spending way less than you could be, we're going to say something about that too, because it's okay to retire and it's okay to start spending some of this money. Too many people don't do the things they wanted to do, and then they die, and that's a shame.
Every one of those is something a person can be held to. A market return isn't.
The performance question feels like the smart question. It isn't — because it's asking about the one piece of this that nobody in the room controls.
Those are the parts a good advisor can genuinely do something about, and those are the parts worth paying for. So ask about those.
None of this means an advisor should dodge your questions about investments. Ask what you're invested in, ask what it costs, ask why. Just don't let a number that belongs to the market decide who you trust with the next 30 years.
Does that make sense? If not, or if there's a question we didn't cover here, by all means, just give us a holler.
Start with these: Are you a fiduciary 100% of the time, and will you put it in writing? How do you get paid, and what does that cost me in dollars? What do I get for that fee besides investment management? Have you read my tax return? What's your investment philosophy? What happens when the market drops 30%? How will we know if this is working? Write the answers down while you're sitting there.
Sometimes it's the rules — the SEC's Investment Adviser Marketing rule tightly governs how performance can be presented. But often it's simpler than that: in a low-cost index approach, the return belongs to the market, not the advisor. There's also no honest way to produce a “typical client” number, because two clients in the same portfolio get different results depending on when they contributed, when they retired, and which accounts the money sits in.
Ask directly, ask for it in writing, and then check for yourself. Every firm must provide a Form CRS relationship summary explaining whether they act as an investment adviser, a broker-dealer, or both, and how they're compensated. You can also look up a firm or an individual's registration and disciplinary history through public regulatory databases before you ever sit down with them.
It depends entirely on the dollars and what you get for it. On a $1 million portfolio, 1% is $10,000 a year, and it rises as your account rises. Over 25 years that can compound into hundreds of thousands of dollars of lost growth. The right way to judge it is to convert the percentage into dollars over your actual time horizon, then ask what work that money is buying beyond managing an index portfolio.
Multi-year tax planning and Roth conversion analysis, Social Security claiming strategy, Medicare and IRMAA surcharge planning, estate document review and beneficiary checks, insurance analysis, education funding, and a withdrawal strategy for turning a portfolio into a paycheck. If the relationship is only about the portfolio, you're paying planning prices for investment management.
Not by itself. A year of trailing the index tells you very little, and chasing performance is how people end up buying high and selling low. What should concern you is an advisor who never asked for your tax return, can't explain what you own, won't tell you their total cost in dollars, or promised to get you out before the next downturn. Those are process problems, and process is what you're actually hiring.
If you'd like to put these seven questions to us directly, we'd be glad to sit down with you. No sales pitch, no commitment, and if we're not the right fit for you we'll say so and point you somewhere better.
Book a free intro meeting with Ignite Financial →
And if you want to see the fee math on your own numbers first, our calculator at 1percentfee.com will show you what a percentage-based fee costs you over the years you've got left.
Ignite Financial is a flat-fee, fee-only registered investment adviser based in Cedar Falls, Iowa, founded by Mike Dunlop, CFP® and Casey Redmond, CFP®. We help individuals and couples approaching retirement build clarity, confidence, and a plan they actually understand — with transparency, integrity, and no conflicts of interest.
This content is for informational purposes only and should not be considered investment, tax, or legal advice. Past performance is not indicative of future results. All investments involve risk, including possible loss of principal. Any figures used are hypothetical and for illustration only; they do not represent actual clients or guaranteed outcomes. Individual results will vary based on personal circumstances. Consult a qualified tax professional for guidance specific to your situation. Ignite Financial is a registered investment adviser in the State of Iowa. Registration does not imply a certain level of skill or training.