Are you looking for an advisor? Or wondering if your current one is the right fit?
Here are some questions to help you find the best advisor for your situation.
- What services do you provide?
Many different advisors provide varying levels of service.
Making sure you find one that fits your individualized needs will make a huge difference in achieving your goals.
A full-service holistic planner who can assist with a wide range of financial matters is often the most beneficial. They can help you create a comprehensive financial plan that considers your goals, risk tolerance, and overall financial situation.
An advisor who only picks your investments typically won’t provide value for the fees they’re charging.
Business owners should also ensure that their advisor has the necessary experience for their unique needs.
- What types of investments do you provide?
It’s important to be aware that some advisors may have limitations on the types of products they can offer due to their license or employer’s policies. This can impact the quality and variety of investment options available to you as a client.
In addition, advisors who work for large financial institutions, like banks, may be incentivized to promote certain investment products over others. They may receive incentives for selling specific products, which could compromise their ability to act in your best interest.
- How does the relationship work? How much contact will we have?
A financial plan is not a one-time event but a dynamic process that requires regular reviews and updates. As life changes and new financial opportunities or challenges arise, your financial plan must adapt and change accordingly.
Some advisors are more hands-on and proactive than others. Working with an advisor who is proactive and committed to regular check-ins and updates is essential to ensure that your financial plan is always up-to-date and aligned with your changing needs and goals.
An advisor who contacts you once a year to tell you to put money into your RRSP is not doing a complete job.
- How do you get paid?
Obviously, this is very important. Unfortunately, I find that many people actually have no idea how much they’re paying their advisor.
There are multiple ways an advisor can be paid, but I will highlight the two main ones.
First is a commission-based model. Here, your investments have embedded commissions, which are paid out to the advisor. You may also pay commissions whenever you buy or sell an investment.
The next model is fee for service, where the advisor will typically charge you a fee based upon the amount of assets you hold with them.
Whichever model you choose, ensure all the costs are fully disclosed, including both the advisor fees and the costs of the investments you own.
- What are your qualifications? What designations do you hold?
An advisor’s experience and designations are important considerations when selecting an advisor. These help to provide an indication of an advisor’s knowledge, expertise, and level of professionalism.
Two good designations to keep an eye out for are the Certified Financial Planner (CFP) and Certified Investment Manager (CIM).
For example, the CFP is awarded to individuals who have completed extensive education and training in financial planning and have passed a rigorous examination. CFPs are held to a high ethical standard, including acting as fiduciaries, and must meet ongoing education requirements to maintain their certification
- What’s your investment philosophy?
I’d be highly skeptical of an advisor whose main value proposition is their investing acumen.
Nevertheless, it’s still important to know their general philosophy on investing. Both to make sure it makes sense and that it’s a style you’re personally comfortable with.
The views and opinions expressed in this article may not necessarily reflect those of IPC Securities Corporation.