How to Talk to Your Financial Advisor about Angel Investing

Know what you want to accomplish with your money and be prepared to articulate those goals with your financial advisor, writes Groove Capital partner Mickayla Rosard.
Mickayla Rosard

How to Talk to Your Financial Advisor about Angel Investing

Conversations around angel investing have become more mainstream, but if you feel like you’re hitting a roadblock with your financial advisor when you bring it up, you’re not alone. Many angel investors share this frustration. As someone who has sat on both sides of this conversation, I understand the barriers that frequently get in the way of a productive conversation. I hope to help you navigate this conversation.

Prior to Groove Capital, I worked at a financial advisory firm based in New York City. Our firm was a registered investment advisor and had broker dealer services. This meant our team had the appropriate knowledge and licenses to advise clients on wealth advisory questions (general coaching and planning), serve as a fiduciary (invest for them), and suggest investment opportunities suitable for their goals (such as private equity, real estate, or alternative investments).

You can leverage this experience in your own conversations by taking these steps:

Build your investment thesis

As with any investment, it is important to first understand your own motivations and goals. In angel investing, your motivations and goals become the building blocks of your investment thesis. I like to think of this as your goal posts to keep you on track when considering opportunities.

Angels often express motivations such as:

  • Desire to diversify investments beyond traditional asset classes
  • Interest in keeping some of their investment dollars local
  • Focus on specific industry sectors or verticals they care deeply about
  • Motivation to invest in underrepresented founders
  • Seek opportunities with a high return potential
  • Craving connection to other changemakers
  • Goal to pay it forward through mentoring and sharing expertise with others (founders and other angels)

Be prepared to share these motivations and goals with your advisor, so that they understand why angel investing is important to you and must be considered.

Update your financial information with your advisor

Angel investing is generally only available for accredited investors, which is defined by U.S Securities and Exchange Commission (SEC) as:

  1. An individual with income over $200,000, or $300,000 jointly with spouse or partner, over the prior two years, OR
  2. Net worth over $1 million, excluding primary residence. The value of second homes, cabins, or investment properties can, however, count toward your net worth.
  3. Investment professionals in good standing, holding the general securities representative license (Series 7), the investment advisor representative license (Series 65), or the private securities offerings representative license (Series 82).

Advisors make suggestions and provide advice based on what your account or intake form says about your financial situation. If you haven’t updated your financial information with your advisor, or perhaps filled it out incompletely, this could limit the investment opportunities you consider.

Angel investors seem to be getting younger and younger. According to Forbes, “the average age of an angel is around 55 years old, but that number will move lower with the growing influx of emerging young angels.” If you are a young aspiring angel, you will want to discuss with your financial advisor how you can best prepare to be an angel investor once you hit that accreditation status. This will look different depending on your situation, but could include maxing out your annual 401(k) contributions, first investing in crowdfunding offerings, or perhaps building some equity in real estate investments that don’t have the same accreditation requirements.

Know (and articulate) your risk tolerance, time horizon, and liquidity preferences

Angel investing is a high-risk, long-term, illiquid investment. It isn’t suitable for everyone, and your financial advisor knows that.

Potential angel investors need to be prepared for startup failures in their angel portfolio. This risk is best managed by writing smaller checks into multiple startups to build a diversified portfolio. Angels should consider a 5- to 10-year investment time horizon before they will see returns on their investment.

When entering a conversation with your advisor to discuss angel investing, you will need to be able to articulate your risk tolerance, your appetite for a longer-term investment, and your comfort with your money being tied up. You may also need to update your account information to make these things explicit. If any of those three things don’t match up, your advisor will not likely suggest adding angel investing into your investment portfolio.

Remember: angel investing should be a smaller percentage of your investable assets, the total amount of money you have to invest across all asset classes. Angel investing will likely be less than 15 percent of your total portfolio, depending on your goals. You can direct the conversation by asking your advisor how they would suggest balancing your total portfolio with other investments that are more liquid or less risky.

Understand how your advisor is getting paid

Financial advisors generally get paid in one of two ways: by charging you a flat-rate fee to provide a financial plan and/or consulting services, or through a commission based on assets under management. In the latter scenario, be aware that your advisor has a financial incentive to keep money on their platform. For example, if you take money from your brokerage account and diversify that into angel investing, you have reduced the total assets under management, in effect reducing your advisor’s commission.

If you continue to get derailed in conversations about angel investing with your advisor, double check to see how they are getting paid. Unfortunately, it would not be the first time I’ve seen this conflict of interest create real roadblocks for investors.

Broker dealers cannot recommend off-platform investments

If you work with a registered representative (an individual licensed under a broker dealer), it is important to understand their legal limitations when working with clients—most specifically a consequential scenario called “selling away.” This means a registered representative can only recommend investment opportunities that their broker dealer is affiliated with. So even if there is an awesome off-platform investment opportunity (and they know it!), your registered representative cannot legally recommend that investment. Additionally, because your registered representative gets paid by commission, they might even attempt to persuade you against the off-platform investment.

In short, know what you want to accomplish with your money, and be prepared to articulate those goals with your financial advisor. Continue to advocate for yourself and your interests. Ensure your financial advisor is aligned with and focused on achieving your goals. With this background in mind, I hope you go into conversations with your advisor more confidently and with greater clarity.


Mickayla Rosard has worked in private equity and financial services for 10 years and has overseen the procurement of $138 million of investment into the upper Midwest. Mickayla served on IIUSA’s Public Policy Committee from 2016-2018 and co-founded the Rural Alliance, which has grown into one of the top advocate groups in the EB-5 industry. She holds FINRA series 63 and 82 securities licenses. Mickayla has established a proven track record in fund monitoring, investor relations, and organizational management.

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