The Landlord’s Guide to Choosing a DST Advisor: 8 Questions That Separate Fiduciaries From Salespeople

The DST 1031 exchange industry is populated by two very different types of professionals. The first genuinely helps you navigate a complex strategy that can preserve hundreds of thousands of dollars and transform your retirement. The second treats your property sale as a sales opportunity and may guide you toward higher-commission products regardless of whether they’re right for your situation.

The challenge: both types often use the same language, present the same impressive statistics about tax deferral, and appear equally knowledgeable in initial conversations. The difference only becomes clear when you know what questions to ask.

This guide gives you the specific questions — and the answers that separate advisors you can trust from those you should walk away from.

---

Why Finding the Right Advisor Matters So Much

A DST 1031 exchange is not a commodity product. It involves:

• The single largest financial transaction many investors will ever make
• A legal structure that requires coordination across securities law, tax law, real estate law, and estate planning
• A commitment of illiquid capital for 5 to 10 years with limited ability to reverse course
• Commissions to the selling advisor of 5–7% of your invested capital — which means the financial incentives are significant

The advisors with the highest-paying commission structures may not be recommending the highest-quality DSTs. And advisors who aren’t properly licensed may not legally be permitted to recommend DSTs at all — even if they’re willing to do so.

Getting this relationship right is worth the effort. Here’s how.

---

The Non-Negotiable: Licensing Requirements

Before you evaluate any advisor for DSTs, confirm their securities licensing. DST interests are private placement securities, and selling them requires proper licensing.

Minimum licensing requirements for a DST advisor:

• Series 7 license: General securities representative license, issued by FINRA (the Financial Industry Regulatory Authority). This license authorizes brokers to sell most types of securities, including DST private placements.
• Series 65 or 66 license: Investment Adviser Representative (IAR) license. Advisors with a Series 65 or 66 can provide investment advice and, if affiliated with a registered broker-dealer, can also facilitate DST transactions.
• Affiliation with a FINRA-registered broker-dealer: The advisor’s firm must be registered with FINRA and maintain appropriate compliance oversight.

You can verify any advisor’s licenses and disciplinary history for free at FINRA BrokerCheck (brokercheck.finra.org). This takes 5 minutes and is non-negotiable. An advisor who can’t be found on BrokerCheck should not be recommending DST investments to you.

Also check: The SEC’s Investment Adviser Public Disclosure database (adviserinfo.sec.gov) for Registered Investment Advisors.

---

Question 1: “Are You a Fiduciary With Respect to This Recommendation?”

This is the most important question you can ask.

A fiduciary is legally required to act in your best interest — not just recommend products that are “suitable” for your situation. The distinction matters enormously when financial incentives exist to recommend higher-commission products over better-suited lower-commission alternatives.

The fiduciary answer you want to hear: “Yes. As a Registered Investment Advisor, I’m a fiduciary. That means my recommendations must be in your best interest, and I must disclose any conflicts of interest.”

The suitability-standard answer that requires more scrutiny: “I’m required to recommend suitable investments. Under the SEC’s Regulation Best Interest (Reg BI), I must act in your best interest in my recommendation.”

Reg BI is an improvement over the old pure suitability standard but falls short of the full fiduciary obligation that RIAs carry. An advisor operating under Reg BI is still permitted to recommend a higher-commission product over a lower-commission alternative, as long as the recommendation considers your best interest in that moment.

A pure fiduciary RIA must make a complete best-interest determination and disclose any conflicts of interest in writing.

Red flag: Any advisor who cannot clearly articulate their regulatory standard, deflects the question, or responds with “I always put my clients first” without specifying a legal obligation should be pressed further.

---

Question 2: “How Are You Compensated When I Invest in a DST?”

DST advisors are paid commissions from the DST offering. The typical structure:

• Selling commission: 5–7% of your invested capital, paid by the DST sponsor to the selling broker-dealer, which shares it with the advisor. A $1 million investment generates $50,000–$70,000 in commission.
• Due diligence fee: 0.5–1%, sometimes charged in addition to or as part of the selling commission
• Advisory fee (fee-only RIAs): Some advisors charge an annual advisory fee (0.5–1.5% of assets) instead of or in addition to commissions. In a true fee-only arrangement, they may receive no commission.

The answer you want to hear: A clear, specific disclosure of how they’re compensated — ideally in writing before you make any investment. Something like: “I receive a selling commission of 6% from the sponsor when you invest. On a $1 million investment, that’s $60,000. This is disclosed in the offering documents.”

The answer that requires caution: Vague responses like “the sponsor pays me” without specifics, or the implication that their advice is somehow “free.”

What to watch for: Does this advisor have a meaningful financial interest in getting you to invest (large upfront commission)? Is their income heavily concentrated in high-commission DST sales? Understanding the incentive structure helps you calibrate how to weigh their recommendations.

This doesn’t mean advisors who earn commissions are bad advisors. But you should understand the incentives before accepting the recommendations.

---

Question 3: “How Many DST Sponsors Do You Work With, and Why?”

DST advisors vary significantly in the breadth of their sponsor network. Some advisors have access to 10–20 DST sponsors and can offer genuine choice. Others work primarily with 2–3 sponsors, which limits the options they can recommend.

The answer you want to hear: “We work with [X] sponsors. I can explain the criteria we use to evaluate sponsors and why we include the ones we do.” Followed by a genuine explanation of their due diligence process for sponsor evaluation.

The answer that raises questions: “We primarily work with [one sponsor], they’re the best.” An advisor who routes essentially all of their business through a single sponsor is either a de facto sales agent for that sponsor, or has a financial arrangement that limits their independence.

Ask the follow-up: “Have you ever NOT recommended a DST from one of your sponsors because it didn’t meet your standards?” The answer reveals whether they have a genuine vetting process or whether sponsor relationships drive their recommendations.

---

Question 4: “What DST Offerings Have You Declined to Recommend, and Why?”

A great DST advisor declines to recommend offerings that don’t meet their standards. If they’ve never declined anything, they’re either working with only excellent sponsors (possible but rare) or they’re not doing serious due diligence.

Signs of genuine due diligence: They can name specific concerns that led them to pass on an offering — leverage levels that were too aggressive, sponsor track record they couldn’t verify, a market they were uncomfortable with, projected returns that didn’t match current market fundamentals.

Sign of a salesperson: “We’ve been very happy with all of our sponsors’ offerings.” Undifferentiated enthusiasm for every product is a warning sign.

---

Question 5: “What Is the Actual Performance Record of DSTs You’ve Previously Recommended?”

This is the question that separates advisors with genuine knowledge from those who are new to the business or haven’t bothered to track outcomes.

What you’re looking for: Some ability to reference outcomes — projected vs. actual distributions for investors who’ve been through the full hold period, or at minimum, anecdotal knowledge of how prior recommendations performed.

The honest but acceptable answer: “I can show you sponsor-level data on exits, but I don’t have investor-level tracking across all recommendations.” This is reasonable — advisors don’t always know every investor’s outcome.

The red flag: Complete inability or unwillingness to discuss past performance in any form. An advisor who has been doing DST transactions for years and can’t offer any data points on performance has either not tracked outcomes or is actively avoiding the question.

Also ask: “What happened during the COVID period for investors who held DSTs with retail or hospitality exposure?” This specific question probes whether the advisor has real experience with market stress, not just bull-market success.

---

Question 6: “What Would Disqualify Me From Being a Good DST Investor?”

This question tests whether the advisor is willing to tell you “no.”

A fiduciary advisor who genuinely cares about your outcome should be able to articulate circumstances where a DST would NOT be the right strategy for you — and ask you probing questions to determine whether those circumstances apply.

The answer you want to hear: “DSTs aren’t right for everyone. If you need regular access to this capital, if your gain is relatively small, if you might need to move the capital within 5 years, or if you don’t have adequate liquid reserves outside of this investment — I’d want to think hard about whether this is the right fit. Can I ask you about some of these factors?”

The answer that raises flags: Minimal engagement with this question, or rapid reassurance that “DSTs are right for most real estate investors in your situation” without digging into the specifics of your situation.

An advisor who won’t tell you “no” when no is the right answer is an advisor who is prioritizing the commission over your outcome.

---

Question 7: “How Do You Approach the Selection Between DSTs for a Specific Client?”

Understanding an advisor’s process reveals whether they’re doing genuine analysis or fitting clients into whatever inventory they currently have.

The process you want to hear:

• They start with your financial picture: gain size, retirement income needs, liquidity requirements, estate goals
• They filter the DST universe against those requirements: distribution rate needed, hold period tolerance, property type preferences
• They present 2–4 options that genuinely fit — not everything in their inventory
• They explain specifically why each option fits your situation, and why you should choose among them based on your specific priorities

The process that raises flags:

• They start with DSTs currently available and work backward to fit your situation
• They recommend a full allocation to 1–2 sponsors they consistently use
• Their recommendation process seems disconnected from your stated financial goals

---

Question 8: “What Team Does Your Firm Have for Ongoing Service After I Invest?”

The relationship with a DST advisor shouldn’t end when you wire your investment capital. You’ll need support for:

• Annual K-1 questions and coordination with your CPA
• Monitoring sponsor updates and performance reports
• Planning for the DST’s eventual exit (12–18 months in advance, ideally)
• Evaluating your options at exit: new DST, 721 path, or taxable disposition

What good ongoing service looks like: A dedicated service team or associate who handles investor communications and K-1 questions, a regular advisor review process that includes DST portfolio performance, and proactive outreach as DSTs approach their exit windows.

A potential gap to watch for: Some DST advisors are excellent at the front-end sale but don’t have a robust service infrastructure for the 7–10 year hold period. You want an advisor who’ll still be engaged with you at year 8, not one who moved on after closing the deal.

---

Building Your Advisor Selection Shortlist

With the questions above as your framework, here’s a practical process for finding 2–3 advisors to evaluate:

1. Ask for referrals from your CPA or estate attorney. Professionals who coordinate with DST advisors regularly have seen which ones actually serve clients well over time — not just in the initial transaction.

2. Search for “DST 1031 exchange advisor” in your metro area. Look for advisors who specifically advertise DST expertise, not generalist financial planners who happen to know about DSTs.

3. Verify licenses on FINRA BrokerCheck before your first meeting. This is non-negotiable.

4. Interview at least two advisors. Comparing two responses to the same questions dramatically improves your ability to distinguish quality from sales polish.

5. Ask each advisor for client references from investors who’ve gone through a full DST hold and exit. (References may be limited due to privacy, but the request itself is revealing.)

---

The Bottom Line

The right DST advisor can be one of the most valuable professionals you work with in the final decade of your professional life. They can help you preserve hundreds of thousands of dollars in capital, generate superior after-tax income, and structure an investment that serves your legacy goals alongside your retirement income needs.

The wrong DST advisor can cost you just as much — through inappropriate product recommendations, inadequate due diligence, or advice that serves their commission structure more than your retirement security.

The difference is knowable. Ask the questions in this guide. Verify the licenses. Understand the compensation structure. And don’t sign anything until you’ve found an advisor whose answers give you genuine confidence — not just polished reassurance.

Your real estate equity deserves that level of care.