Question: I’m 75 with $1.5 million invested and have been with my current advisor for twelve years. He charges 1% for the first $1 million and 0.85% on balances from $1 million to $2 million. I recently met with an adviser at a big financial firm as I want to cut the fees I pay. This company has a plan with no advisory fee and a computer algorithm invests the money in ETFs based on your risk tolerance. I would have access to an adviser twice a year. I believe this could save me $150,000 to $175,000 over the next 10 years. Why wouldn’t someone take this route to save such a significant amount of money? What should I know or be aware of before I proceed?

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Answer: The very short answer is that you need to ask more questions. It doesn’t seem reasonable that someone is going to work for free, so while there may be no advisory fee, the firm or adviser may be compensated in some other, less transparent way. 

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Bill Kan, a certified financial planner (CFP) at Candent Capital says the first question to ask is: “‘If there are no advisory fees, how do you and your firm make money from managing my money?’” He adds that you should delve into the other types of fees that might be charged, noting that “there are always trade offs.” 

Indeed, Kan says you must understand the underlying management and other fees are for the funds in the portfolio. “Not all ETFs are necessarily low cost,” says Kan, adding that “if the investment companies for the ETFs compensate the adviser or the firm for using their ETFs, that would be a major red flag for a potential conflict of interest.”

Mike Palmer, a CFP at Ark Royal Wealth Management, says to ask specific questions like these: “’What are the expenses of the ETFs, what are the trading costs to buy and sell ETFs,’ and ‘what exact services will the adviser be providing?’ You need to find out if they’ll be offering tax planning or financial planning and exactly what that will entail.”

Keep in mind that a large financial services company is not a charity, says Anthony Ferreira, a CFP at WorthPointe Wealth Management. “Either they have reduced the cost of service or they are earning money from their clients another way,” Ferreira says.

Another thing to consider is that a big financial services company is likely a sales organization, says Josh Gallogly, a CFP at Milestones Financial. “If they do not earn any fees by providing advice, they will make their money on various product sales or services once they have you in their ecosystem,” says Gallogly.

As for your portfolio, Kan adds that you should ask the adviser these questions to explain what the algorithm is doing: “’Will it do securities selection and update the holdings when appropriate? Will the algorithm handle rebalancing and if so, how often? Will it try to minimize turnover and is the algorithm tax efficient?’”

You’ll also want to know whether or not there are fees associated with any in-person meetings that are often scheduled to happen bi-annually, says Kan. “Find out who you should expect to meet with and if you should expect a decline in service or attention under the no-advisory-fee program,” he says. “In these meetings, will only investments be covered? Will they include discussions on financial planning matters including how your portfolio is aligned with your goals.”

So what are your options?

You could stay with your current adviser, of course. “Your current AUM model is usually considered a full-service model and portfolios are usually more tailored to your goals and risk tolerances,” says Mark Struthers, a CFP at Sona Wealth Advisors. “The adviser is acting as a quarterback, guiding your financial players.”

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But, Ferreira adds: “Only you can decide if the value you receive from your adviser of 12 years is worth the price you’re paying.”

Another, more cost-effective option than employing a human adviser to do the job, is going with a robo-adviser, a digital platform that uses an algorithm to recommend investment advice. While robo-advisers offer fewer tailored portfolios and investment options, they come at a big reduction in cost. There are also some companies that offer a human-robot hybrid, such as Vanguard, Ellevest, SoFi and Betterment Premium.

If those options don’t align with your goals, you could also find a new adviser. To help avoid conflicts of interest, Gallogly recommends talking to a fee-only financial adviser. “That doesn’t guarantee a successful outcome, but it’s one of the best ways to receive objective advice that is always in the client’s best interest,” says Gallogly.

Asking friends, family or trusted colleagues for personal referrals can help you narrow down financial professionals and before hiring an adviser, you should further vet them by asking these eight questions.

Note that you can negotiate the fees an adviser charges. Robert Persichitte, a CFP and professor at MSU Denver, says, “Financial planners are like toilets. Some are 10 to 15 times more expensive because they look fancy, but do essentially the same job. Some are very cheap because they don’t effectively solve problems. You need to find one that gets the job done for the right price.”

Ultimately, you get what you pay for and the value of an adviser may not be measured in what they cost you but in what you get for that money, says Ferreira. “A good adviser may end up saving you more than their fee in ways that may save you on taxes or peace of mind or in the guidance they provide that extends beyond the investment recommendations they make,” Ferreira says.

At the end of the day,  hiring a professional is about making better decisions to put yourself in a better position to succeed, says Struthers. “My doctor often does not do anything different than I would have done, but having their opinion assures me that I’m in the best position to succeed,” says Struthers. “It can save time and money because I’m not second-guessing my course of action.”

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Have an issue with your financial adviser or looking for a new one? Email [email protected].

Questions edited for brevity and clarity.