304 | 5 Questions Every Tax-Aware Investor Should Ask Before Hiring an Advisor

[00:00:44] Hilary Hendershott: Here’s something most people don’t realize. Choosing the wrong advisor won’t just cost you money, it can also cost you clarity, peace of mind, and in some cases, years of missed opportunities. So, today, I want to walk you through five thoughtful questions every tax-aware investor should ask when evaluating an advisor, especially if your finances are becoming more complex.

[00:01:09] If you’re managing equity compensation, concentrated stock, or outside taxable investments, some of which may be illiquid for years at a time, the presence of these types of investments in your financial ecosystem means a single move can dramatically alter your financial possibilities. Therefore, in thinking ahead to retirement and managing your overall tax strategy, the role of your financial advisor should elevate.

[00:01:36] At this stage, the right advisor is not just managing investments. They are managing a complex series of choices around investments, diversification, and tax alpha so that your money supports the life you’re building. The first question, and this one is foundational, is how do you think about my after-tax returns?

[00:01:58] Many advisors talk about performance before taxes, but what actually matters is what you keep after taxes year after year. If an advisor can’t explain how taxes factor into their investment decisions throughout the year, that’s a red flag. Tax-aware planning is not a once-a-year conversation. It should be an ongoing strategy.

[00:02:19] Second question: How do you work with my CPA and bookkeeper? Your financial life doesn’t live in silos, and neither should the advice you pay for. A strong advisor doesn’t just ask for copies of your tax return once a year. They actively collaborate with your CPA and any bookkeepers you may have throughout the year.

[00:02:38] That team of people should be sharing information, flagging planning opportunities, and of course, aligning investment decisions with tax and business strategies. If that coordination isn’t happening, opportunities will get missed, and unnecessary tax drag can creep in quietly. As your financial life becomes more layered, you deserve, and in fact, you need a team-based approach, one where everyone is working from the same playbook.

[00:03:06] Third question: How can you help me reduce my overall tax bill this year and in future years? This becomes especially important if your financial life includes things like equity compensation, concentrated stock positions, potentially very large Roth conversions, outside or alternative investments, business income, or multiple accounts spread across institutions. In these situations, decisions don’t exist in isolation.

[00:03:34] Selling stock likely triggers taxes. Exercising options probably affects cash flow. Business income can change your tax profile. Not every advisor is equipped to work through those layers, and that’s okay, but it’s something you want to understand before you commit. Sophisticated planning requires more than a standard portfolio model.

[00:03:56] It requires experience, coordination, and a process that’s built for real-life complexity. Fourth question: How are you compensated, and what’s included in your fee? Working with a fee-only fiduciary means the advice you receive isn’t influenced by commissions or product sales. But beyond that, it’s important to understand what you’re actually getting.

[00:04:18] You know, is it just investment management, or is it comprehensive planning, portfolio construction, tax strategy, tax alpha, tax mitigation, and ongoing strategic advice that comes from really understanding you, your goals, your resources, and the things you care about. Cost matters, but value matters more.

[00:04:40] And the fifth question, one that often gets overlooked, is how do you help clients make decisions? A great advisor doesn’t overwhelm you with information. They bring clarity, they bring patience, and they educate. They help you understand your options so you can move forward thoughtfully. Your advisor should feel like a partner, not a source of pressure or confusion, especially as decisions become more complex and stakes get higher.

[00:05:08] When you step back, these five questions really come down to one thing: Does your advisor have the technical capacity and team strength to understand the complexities of your unique situation and strategize to your advantage, or are they just managing your portfolio? As your financial life becomes more complex, the right guidance isn’t about having more information.

[00:05:30] It’s about having the right conversations with the right people. You deserve an advisor who understands complexity, who considers your after-tax outcomes, and who works as part of a team, so you’re not navigating these decisions alone. My hope is that these questions give you clarity and help you move forward thoughtfully wherever you are in your financial journey.

[00:05:52] If you’re thinking about your next financial chapter and want a partner who looks at the full picture, not just your investments, we’d love to connect. We’re a fee-only fiduciary team focused on after-tax outcomes and long-term planning, helping our clients keep more of what they earn so their money can support the life they’re building.

[00:06:12] If that sounds like the kind of guidance you’re looking for, you can schedule a complimentary conversation with one of my lead advisors by visiting hendershottwealth.com/contact to see if our approach is the right fit for you.