Looking for a Financial Planner? Know What to Ask!

How many of us would love to be in control of our finances? All of us want to be financially literate and make effective and informed financial decisions. Many of us, however, still seek mentorship and guidance in this area, which is why we look into hiring financial advisers.

We all know that this world is expensive. The average Canadian salary is just under $50,000 per year (as of November 2016), and with the amount of debt and expenses that most of us have, it can feel difficult to live in the moment, not to mention to plan for the future. However, if we don’t plan now, we will definitely have to pay later. Having a savings plan and a retirement plan is crucial in ensuring financial stability. Many people also want to consider different investment options or start looking into larger purchases, such as a new house.

The issue is, many of us don’t have the time and the energy needed to do the research and evaluate different options that would be suitable for our situation. And even if we do, it can be difficult to navigate through various financial solutions with no guidance. This is why many people request the help of financial advisers.

Financial advisers, also known as financial planners or (if specialized in investment planning) investment advisers, are professionals that specialize in helping their clients make informed and responsible financial decisions.

Financial advisers work with individuals, couples, families and/or businesses to find the best possible solutions tailored to each client’s specific situation, their long-term and short-term goals and desired financial outcomes.

Choosing Your Financial Adviser

Whether you are just starting to learn about managing your finances or are looking for more advanced financial support, financial planning can be a great option for you. The question is, how should you choose your financial adviser? Below are the key questions you should ask.

Does your financial planner have the necessary credentials?

Financial Services professionals are not currently regulated by the government, so anyone could call themselves a financial adviser. Recognizing that it is a problem, many financial organizations now encourage or even require their employees and partners to have financial designations to ensure they are equipped to help their clients. Here are the key designations you should be looking for:

  • Certified Financial Planner (CFP): this designation signifies that your financial adviser has the knowledge and expertise in creating a comprehensive financial plan;
  • Canadian Investment Funds Course (CIFC): this designation demonstrates that your financial planner has the in-depth specialized knowledge of mutual funds;
  • Elder Planning Counselor (EPC): this designation prepares industry professionals to best communicate with and adhere to the 50+ age group, helping them with specialized needs and planning they may require;
  • Financial advisers may also hold other designations, such as Chartered Life Underwriter (CLU), Certified Health Insurance Specialist (CHS), Chartered Professional Accountant (CPA), to name a few.

The key designation to look for is the CFP. It is the most widely-recognized designation across Canada. Financial advisers that have this designation possess a thorough understanding of the key financial areas (investment strategies, retirement planning, estate planning, insurance and taxation) and how they interplay in each client’s financial plan. CFP Certification is also an indicator that the financial planner adheres to high ethical standards in their work.

What services does the financial adviser specialize in?

Some advisers specialize in comprehensive financial plans, while others work mostly with investments and mutual funds. Financial advisers can also have their specializations or preferences for the types of clients they work with (for instance, some may work exclusively with business owners) or the types of planning that they do (for example, retirement planning or estate planning). Asking your planner about their strength zones can help you make the right decision depending on your own goals.

How will the adviser keep you informed?

It is important to know how often you will be meeting with your adviser, how often they will be communicating about the progress and/or changes, and what would their financial report look like.

  • Meetings: Some financial advisers have a set number of in-person check-ins, such as once a quarter, or twice a year. Others may not be having meetings as often in person but may have their assistants or team members communicate with each client more frequently. Think about your own preferences when you ask this question to find the best match.
  • Communication: Are you the type of person to ask lots of questions, or do you prefer to entrust decisions to the adviser and check on progress a few times a year? How accessible do you want your financial adviser to be? What kind of relationship would you like to have? Those are some of the factors that can impact your final decision.
  • Financial Reports: Most financial planners prepare financial reports for their clients, but those reports can look very different. It may be a good idea to request a sample financial report to determine whether you already grasp the financial information there, or you would prefer a simpler version.

What payment does the adviser charge for the services?

Different financial advisers have different rates and fees. For example, some financial advisers charge a service fee or an hourly fee for their work. Other advisers operate based on the assets that they manage, charging a set percentage of your investment. There are also advisers that get a sales fee based on the investments or specific products that they sell. It is important to know about the fees, both to know the amount you will be paying and to understand if the planner has any incentives to promote specific products to you.

When you choose an adviser, make sure you go through the terms and conditions of your agreement to fully understand the scope of the services and their costs.

Additional Tips

  • Interview several advisers: You don’t have to choose the first adviser that you talk to. Meet with several advisers and/or organizations, and take your time to pick the one that best suits your needs, is trustworthy, and who you can see yourself working long-term with.
  • Do your homework: Before you choose your financial adviser, make sure that they are credible. You can always talk to them about their professional ethics, ask them for references from previous clients, or do a background check on them or their organization online. Make sure that the person who you choose can be trusted with your money and your time.
  • Make sure they understand your goals: You adviser can help you find the best solutions, but only if you let them help you. Communicate your short-term and long-term goals to your adviser and see how they can help you achieve those. If your goals change, communicate that to your adviser as well, so that adjustments can be made to your financial plan.
  • Stay engaged! At the end of the day, as dedicated and knowledgeable as financial advisers can be, no one cares more about your money than you – and no one should. If you don’t understand something or have any concerns, do not hesitate to ask your adviser more questions and seek to learn more about their recommendations and why they suggested them.
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