Ask the silly questions
Trust is the key to any good relationship. Your relationship with a financial advisor shouldn’t be any different.
Candice Dziedziejko, investment advisor with BMO Nesbitt Burns encourages those looking for an advisor to not be ashamed of asking embarrassing questions.
“No question should be off the table, or no questions are silly or stupid,” says Dziedzejko.
Finding an advisor that you are comfortable discussing your financial questions with is essential. A fee-only advisor is your best bet, since they work for a flat fee and will provide unbiased opinions.
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Come prepared with a goal in mind
Dziedejko emphasizes the importance of having a goal, whether it be to purchase a home or car, or save for education or retirement. Having this objective gives you a tangible item to build towards, giving you a clear vision of why you’re saving your money. This will help your advisor lay out a plan for you, and give you a clear path to reaching your goals.
Dziedejko emphasizes that one person’s saving style might not work for you. Whether it’s not being comfortable with the volatility of certain stocks, or investing in a certain type of asset instead of another, asking your prospective investor how they will help you achieve what you want is critical.
Things to look for
When you’re looking for a trustworthy financial advisor, keep these tips in mind:
Are you dealing with an advisor or planner? Outside of Quebec, anyone can call themselves a financial planner or advisor. There is upcoming legislation in Ontario to formalize the use of the titles, but the process is still ongoing. While planners typically help you reach your financial goals, advisors help you manage your money.
Check your advisor’s certification. A designation of Qualified Associate Financial Planner, or QAFP indicates that the individual you are dealing with has a proven knowledge of financial planning. A Certified Financial Planner, or CFP, has a high level of skill and knowledge and will work with you to achieve both your day-to-day and long-term financial goals. A designation of QAFP can be a stepping stone towards CFP designation, which is the highest standard.
Has there been disciplinary action against your advisor? If there are complaints against your advisor or disciplinary action taken against them, you should try to find one with a clean record. The Investment Industry Regulatory Organization of Canada is a good place to start the search for any action taken against an advisor.
You should also be aware of how you pay your advisor. Some advisors work on an hourly fee, others work by commission, while others are paid by salary. Generally, fee-based advisors offer the most unbiased advice as they are not encouraged to sell a particular product.
Some things you might want to ask your advisor are where they were educated, what certification they hold, how long they have been practising and where they are currently employed. If it’s important to you to meet face-to-face with your advisor, ensure that they are able to do so.
Remember, it’s your money the advisor will be dealing with, so you should be willing to trust in them completely. Ask for references if you feel it’s necessary, and be sure you are confident that your advisor is working with you.
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It’s never too late to find a financial advisor
You may feel that you're of an age where a financial advisor won’t be of benefit to you. You may be embarrassed by the fact that you haven’t had one before, or that your finances are not where you want them to be.
For Gen Xers, now’s the time to find a financial advisor if you don’t have one already, says Dziedejko.
Goals like retirement and estate planning require careful consideration, and having the help of a knowledgeable advisor goes a long way.
“The benefit of working with an advisor is that they can really help with not only a financial plan to plan for those goals, but then also plan for all of the benefits that can be utilized through the government from a tax perspective.”
It’s never too early to find a financial advisor
“I believe that it is never too early for individuals to start saving and, and specifically actually investing for the long term,” says Dziedzejko.
Whether you’re looking to start an RESP for your child, or you’re contemplating next-steps in your relationship, it’s important to know that you can trust your financial advisor with some of the big questions you might have.
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