Choosing a financial advisor can be one of the most important decisions you’ll ever make. So it’s worth taking the time to find the person who’s right for you.
What do you need from your advisor?
To choose the right kind of advisor, you should start by understanding what it is you’re looking for. Do you want someone to help you set goals and create a financial plan? Or are you just interested in investment advice? How involved do you want to be in making decisions? What are the financial issues that keep you awake at night?
What type of advisor is right for you?
While everyone who sells investments must be certified, advisors differ in their education, expertise and what they’re allowed to sell.
Regardless of qualifications, you’ll also find that advisors have different areas of focus. Some are only interested in investing and don’t have the time, interest or experience to help you with personal finance. Others are more concerned about helping clients with all their financial issues.
If your needs don’t match what an advisor does, the relationship is bound to be frustrating.
How can you find a reputable advisor?
There are several sources for identifying candidates:
- Friends and family
- Financial institutions you deal with or people you know who work in the financial or investment industry
- The various associations that license advisors
Most advisors have websites, which can give you a sense of their style, interests and qualifications.
It’s important to be alert to the possibility of poor ethics or even fraud. Even sophisticated investors have been taken in by investment cons, and scam artists often work through groups and associations. So even recommendations from those you trust the most should be checked out.
Resources for vetting advisors
You can easily check the history and status of any advisors you’re considering on the websites of national and provincial securities regulators. (You’ll also find some excellent information about finding and working with advisors, and how to spot fraud.)
The Alberta Securities Commission has a short video on how to find and work with an advisor.
Be suspicious of anyone who:
- talks about returns that are guaranteed or higher than normal,
- has an unconventional scheme for making money,
- claims to have inside information, or
- pressures you to “act now.”
If you’re uncertain, check what an advisor is offering with another financial professional or association.
What should you expect?
Your candidates should be ready with answers to these questions:
- What is your main focus – investments, financial planning, tax, insurance, estate planning? If you don’t provide certain services, do you have access to someone who does?
- What account sizes do you handle and where do I fit into the picture? Do you have other clients similar to me? (Often senior advisors will only deal with large accounts.)
- What products do you offer? (Some advisors can only sell certain types of investments or products supplied or approved by their firm. That isn’t necessarily a problem, but you need to know and be comfortable with the restrictions.)
- How often can I expect to hear from you? What reports will I get?
- Will you be handling my account personally? Who do I talk to if you’re not available?
- How do you get paid and what costs will I be paying?
Meanwhile, your candidates should be asking you what your financial goals and concerns are.
Who’s the right advisor for you?
Your sense of comfort with an advisor is just as important as practical issues. Look for:
- a similar attitude toward money and investing,
- a sense that the advisor listens to and understands your concerns, and
- shared values.
A little difference of opinion can be helpful, however. An advisor who’s more conservative or aggressive about money matters can help you see a different perspective.
While you shouldn’t let charm stop you from doing your research, chances are that when you meet the right person, you’ll know it.
Don’t short-change yourself
Choosing the right advisor can make a big difference to your future. So take the time you need. You should probably meet with at least three candidates before deciding, and you may want to meet more than once. They should also be willing to provide you with client references.
And don’t be afraid to discuss problems and even make a change if an advisor isn’t meeting your needs. After all, it’s one of the most important professional relationships in your life.
For definitions of technical terms in this piece, please visit iaclarington.com/glossary and speak with your investment advisor. Commissions, trailing commissions, management fees, brokerage fees and expenses all may be associated with mutual fund investments, including investments in exchange-traded series of mutual funds. The information presented herein may not encompass all risks associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. The iA Clarington Funds are managed by IA Clarington Investments Inc. iA Clarington and the iA Clarington logo, iA Wealth and the iA Wealth logo, and iA Global Asset Management and the iA Global Asset Management logo are trademarks of Industrial Alliance Insurance and Financial Services Inc. and are used under license. iA Global Asset Management Inc. (iAGAM) is a subsidiary of Industrial Alliance Investment Management Inc. (iAIM).