It's Your Money  

Important to ask questions when selecting a financial advisor

Finding the right advisor

Whether you’re shopping around for a new advisor or already have one, there are some key topics you should discuss and consider.

Many Canadians who have investments work with but rarely talk to their financial professional. And according to a survey conducted by FP Canada, four in 10 Canadians feel like their financial futures are not under control.

That number is a sign that these investors are not being well served by their advisors. This speaks to the quality of advice people are getting, or entire lack thereof. Even if the average consumer does meet with an advisor, their lack of knowledge about finances and investments often makes them feel intimidated about the whole process.

So, what kind of conversations should you be having? The questions to ask your financial advisor fit into two distinct categories: one set to ask when choosing a new financial advisor and the other to ask your financial advisor during your annual review.

Let’s start with this week’s column focusing on what you should discus when finding a new advisor:

1. What qualifies you to provide advice?

Whether you’re looking for a new advisor or already working with one, it’s a good idea to find out how they’re qualified to give financial advice. Ask them about their qualifications and how they’re continuing to educate themselves in a constantly changing world. Advisors often have many areas of expertise, from investments to life insurance and estate planning.

What most people need — especially when seeking advice for the first time — is a Certified Financial Planner (CFP) professional. The CFP certification is widely considered the global gold standard and it takes years of studying and examinations to achieve.

2. What is your approach, and what services does it include?

Discussing the advisor’s investment style is also an important conversation to have. Are they picking stocks and bonds, or choosing professionally managed portfolio solutions? Does that line up with how you want your money to be invested? Also, talk to them about the other services they offer.

Many now offer comprehensive estate plans, succession plans for business owners and more. Another important discussion to have is around availability. You want someone who can keep these conversations going after the initial meeting and plan regular updates and reviews.

3. What am I paying for all of this?

Of all the questions to ask your financial advisor, this is often the most eagerly anticipated. We all know that advice isn’t free, but you deserve to have a frank and open discussion about fees before agreeing to hire them.

It’s important to understand what you’re paying for and to determine whether you’re getting value for money. If the cost is X, and you’re getting 3X in return — financial planning, portfolio management and tax-savings strategies — that’s good value.

4. What should my goals be, and how can you help me achieve them?

The first place to start is to set some goals – which includes far more than simply saving for retirement. Goals might include retirement, but could also include buying a cottage, saving for a child’s education, taking annual trips or more.

Your advisor should help you define your goals and then develop a plan to reach them. That can only be done if you and your advisor are talking regularly, reviewing progress and making adjustments as needed.

5. How will we measure success?

Once you define your goals, talk about what success might look like. A win isn’t necessarily measured by a portfolio beating its benchmark. It could be taking that vacation, buying that cottage or just seeing assets increase.

If you ask an advisor how they define success for themselves, the answer might be how many clients have hit their goals. Ask for some references to see if they’ve been able to achieve success with others.

When on the hunt for a new advisor, take the time to ask a lot of questions, meet with multiple options and trust your gut if something doesn’t feel right.

I will follow up next week with part two – Questions to ask your current advisor during your annual review.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Brett, designated as a chartered investment manager and certified financial planner, is the regional director (Okanagan) for IG Wealth Management.

In addition to his “day job," Brett was appointed to the board of directors of FP Canada (formerly FPSC) in 2014, named as the board’s vice-chair in 2017 and took over as board chairman in 2019. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FP Canada board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected]

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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