6 Questions to Ask a Financial Advisor Before You Trust Them With Equity Comp
Sam's List Editorial | 2026-06-23
6 Questions to Ask a Financial Advisor Before You Trust Them With Equity Comp Your RSUs vested. Your company withheld 22% for federal tax. You are in the 35% bracket. Nobody mentioned the gap. That gap is why the right questions for advisor equity compensation matter more than the advisor's website, their office, or how confident they sound on the intro call. Equity comp is where generic financial advice quietly falls apart — and where a sharp advisor earns their fee in a single conversation. Most advisors can talk about index funds and Roth conversions. Far fewer can tell you, off the vetted of their head, what happens to your alternative minimum tax when you exercise incentive stock options in March instead of January. The six questions below are designed to find out which kind you are sitting across from — before you hand over the most complicated part of your financial life. 1. Are you a fiduciary at all times — and exactly how are you paid? Ask it as one question, because the two halves check each other. A fiduciary is legally required to put your interests first. The catch: some advisors are fiduciaries only part of the time — when they manage your portfolio, but not when they sell you an insurance product or an annuity. The phrase you want to hear is "at all times," in writing. Then the money. Fee-only means they are paid by you and only you. Fee-based means they may also collect commissions on products they recommend. Those two words look almost identical and mean completely different things for whose side they are on. This is the question that filters out conflicts before they cost you. Ask it first, and watch whether the answer is a clean sentence or a paragraph of qualifiers. 2. How do you coordinate with my CPA on RSU withholding and ISO AMT? Here is the math nobody warns you about. RSUs are taxed as ordinary income the moment they vest, but your employer withholds at the flat federal supplemental rate of 22% (37% on amounts over $1 million in a year). If your marginal bracket is 32% or 35%, you are under-withheld on every single vest. Say $300,000 of RSUs vest in a year. At 22%, the company sets aside $66,000. At a 35% marginal rate, you actually owe roughly $105,000 federal on that income. That is a $39,000 surprise — before state tax — waiting for you in April. The right questions for advisor equity compensation include this one because the answer reveals whether your advisor and your CPA actually talk. ISOs add a second trap: exercising them creates a "bargain element" that counts as income for the alternative minimum tax on Form 6251, even...
