The Steak Dinner Test

A buddy of mine got taken to a steakhouse last spring. Nice place. Cloth napkins. A bottle of wine he didn't pick. His advisor ordered the rib-eye for the table before my friend even sat down.

By dessert, my buddy had signed paperwork moving $400,000 into a fixed indexed annuity with a ten-year surrender period and a 6% penalty if he touched his money early.

He called me two weeks later. He'd read the fine print.

He was sick about it.

That's not advice. That's a sales pitch with a steak dinner attached.

Here's what I've learned about spotting the wrong advisor—and what the right one looks like.

A fiduciary is legally required to put your interests ahead of theirs. That's it. Simple idea. But a lot of advisors aren't fiduciaries. They're brokers. They only have to recommend things that are “suitable”—which is a much lower bar.

Here's the test. In your first meeting, say this: “Are you a fiduciary? Will you put that in writing?”

If they pause, change the subject, or explain why it's “more nuanced than that”—leave.

A good advisor will say yes before you finish the sentence.

Ask your advisor this: “What is the total cost I will pay in year one—your fee, fund expenses, platform fees, and any commissions on products you recommend?”

If they can't give you a number on the spot, they either don't know or don't want you to.

The standard advisory fee runs about 1% of assets per year. On a $750,000 portfolio, that's $7,500. Fair enough—if that's all you pay. But many firms layer on fund fees (another 0.5% to 1%), platform charges, and trading costs. Those extras can double your real cost without a clear line item.

A 1% excess fee, compounded over 25 years on a $500,000 portfolio, can cost you over $200,000 in lost growth. That's not a rounding error. That's a house.

This is the one that got my buddy.

A real plan starts with your goals, your cash flow, your tax picture, and your existing accounts. That takes hours. Nobody can do it over appetizers.

If a specific product name comes up in the first meeting—an annuity, a whole life policy, a structured note—it's because that product pays the advisor a commission. Not because it's right for you.

A good advisor sells you a plan and uses products as tools. A bad one sells you products and calls it a plan.

▸ Check their record first. Go to FINRA BrokerCheck (brokercheck.finra.org) and the SEC's adviser lookup (adviserinfo.sec.gov). Both are free. You'll see their licenses, work history, and any complaints. Takes five minutes.
▸ Look for a CFP or CFA. These are hard to earn and mean the person has real training. Not every good advisor has one. But if they don't have any letters at all, ask why.
▸ Ask for their ADV Part 2. Every registered advisor files this with the SEC. It spells out their services, fees, and conflicts of interest. If they won't hand it over, walk.
▸ Ask how they get paid. Fee-only means they charge you directly and earn no commissions. Fee-based means they might also earn commissions on products. Fee-only is cleaner.
▸ Interview at least three. You wouldn't hire a contractor without getting bids. Same deal. The best advisors welcome the comparison.

He paid the 6% surrender charge. Ate $24,000 to get his own money back.

That hurt.

Then he did something smart. He found a fee-only CFP. No commissions. No products to push. Just a flat annual fee for a written plan and ongoing management. His total cost dropped by more than half.

I asked him last week if he missed the steak dinners.

He said, “I can buy my own steak. I'd rather keep the $24,000.”

Your advisor works for you. Not the other way around. If the first meeting feels like a sales pitch, it is one. If you can't get a straight answer about fees, there's a reason. And if they buy you dinner before they've seen your tax return, they're not planning. They're closing.

Ask the hard questions. The right advisor will thank you for it.

— Walter