Choosing the right personal financial advisor isn’t easy, especially within Canada where the industry is not particularly regulated province-to-province. Financial advisors vary both in training, experience and qualifications, while others may be registered with a regular to provide investment advice.
So, how do you go about choosing the right personal financial advisor? Here’s a few things to consider.
#6) Is My Financial Advisor Qualified?
This is an important step in determining whether a financial advisor is right for you. While they may be poised, professional and courteous, that’s not nearly enough to make a decision. Similarly, it’s unwise to listen only to referrals, as they don’t always paint an accurate picture. Instead, you should determine their qualifications and professional designations, are they a Certified Financial Planner, Chartered Life Underwriter, Certified Investment Manager, Chartered Financial Analyst. With so many designations out there, it is important to be aware of what they are and how those skills reflect your needs. A warm smile and some friendly banter are good indicators that a person is genuine, but sometimes they can be used to mask unscrupulous intent.
#5) Who Are Their References?
While checking up on a financial advisor’s background is a recommended step, you should also listen to references and referrals to hear the human side of the equation, too. Often times, the enthusiasm of a referral can go a long way in fostering trust with your potential specialist. Always remember that references and referrals were probably culled specifically by the financial advisor, and won’t include any negative feedback, unless the advisor has been utterly careless. That being said, don’t allow minor negative feedback to paint your financial specialist in the worst light. Honest mistakes happen to us all. Ask the reference how the advisor dealt with those mistakes, and what steps he/she took to rectify the issue.
#4) Grill Your Advisor
Feel free to interrogate your financial advisor freely. After all, it’s your money and financial future on the line! Sit down and have an open exchange with the advisor, and find out their level of education, their client roster, what they’re registered to sell, and whether they’ve gotten into any hot water in the past. Don’t forget to ask personal questions as well, such as how they deal with pressure, or a crisis situation. You don’t need to be an expert, but try to keep an eye on body language and vocal patterns. If something doesn’t feel right, don’t be afraid to press farther.
#3) Talk About Your Wealth Goals
Make sure you’re adequately communicating your wealth goals to your financial specialist, as they aren’t all suited for every type of person. For instance, you may wish to choose an advisor who is registered with a securities regulator if you plan on investing. For things like insurance, retirement planning or other financial goals, a different advisor might be better suited to you. Make sure you’re comfortable talking about your personal finances, because anything you leave out will lend less information to your advisor, which makes it harder for them to help you.
#2) Have Them Lay Out Fees
This requires a bit of comparison work on your part, but it’s a good step. Financial advisors are paid a number of different ways, and they can include things like service fees, asset-based fees, and sales commissions. When you’ve identified these, don’t hesitate to compare their rates with other advisors. You may find out that two similar financial advisors have drastically different pay structures, and that can be a determining factor in your decision. And finally, make sure to get everything in writing before you sign an agreement.
#1) Talk About Potential Issues
A good tit-for-tat with a financial advisor can open up the lines of communication and get you both on the same playing field. This tends to open another door, as well – talking about any conflicts or issues down the road. Dive into the nitty gritty, and figure out what your financial specialist is willing to do for you, and where the buck stops. This can help identify any problems in the relationship as you move forward.
For more information on how to choose the right financial advisor for you, please contact us today so we can answer your questions, and help you achieve your wealth-building goals!