What should you look for in a financial advisor?

Decide what you need, then do your due diligence to guarantee your financial health

What should you look for in a financial advisor?

Managing your investments can be complicated. So can figuring out how to stretch your income to meet all your expenses as well as your goals. So, you may want to consider working with a financial advisor because the statistics show that those who do are much more prepared and have better financial health.

Here are five questions to help you do that.

  • Why is financial planning important? A financial advisor will work with you to create a detailed financial plan. The advisor assesses your current situation and determines your present and future goals and needs before advising you on the best financial products to meet those. A good advisor takes a global look at your situation – which can include retirement planning, debt repayment, insurance suggestions to protect you and your family, and estate planning - then periodically review and updates your plan and investment to ensure that you’re staying on track to meet your goals. Because this is their wheelhouse, they have a lot of knowledge to help you get where you want.
  • What life events require financial planning? Before you talk to a financial advisor, decide what area of your financial life that you need help with so you can explain it to the advisor you find. You may be repaying school debt, marrying, buying a house, starting a family, or wanting to set up college funds for your kids. You may also have some big life goals that you want to finance – like a sabbatical or some travelling – or you may wish to starting planning for your retirement. You could also be working through a tricky tax situation or dealing with young adults or aging parents who need support while keeping yourself on track to reach your goals. A good advisor will look at your whole picture and ensure it all fits together, so you remain in the best financial health.
  • When should you get a financial advisor? You can start working with a financial advisor at any age or stage, but the earlier you do, the more assured that you’ve got a good plan and can achieve it. So, you could find one when you need budgeting help, debt management, investment advice, insurance coverage, college planning, tax planning, retirement planning, or estate planning, but then ensure that they’re looking at your whole picture so you can balance all the pieces.
  • What are the qualities of a good financial advisor? Choosing the right advisor is a personal choice. It depends on what kind of help need and who’s good at offering that. But it also depends on what traits you like your helping professionals to have as that can differ for everyone. So, ask friends and family for recommendations, then meet several advisors to check the fit. You want to find one who has the experience and expertise you need, but whom you’re comfortable with -because the more you share, the better your financial plan and success will be for meeting your goals.

Some of the things you can check are:

    • How big is their business – clients and the dollar value of assets under management?
    • What areas do they specialize in?
    • How much training, experience, and passion do they have for what you need to address?
    • How important is it to them that your interests are aligned?
    • How well do they communicate?
    • How curious are they about your situation and needs? Do you feel heard?
    • How much are they “selling” to you?
  • What questions should you ask a financial advisor? You should ask advisors several questions to determine if they’re qualified to do what you need or are the best fit for you. Take notes and compare answers, and wait until you feel that you’ve got the right fit before signing on. Ask:
    • What is your education and professional experience? 
    • What is your designation or certification?
    • How long has your firm been in business? How long have you been with it? 
    • Are you, or your firm, registered with a securities regulator?
    • What kind of clients do you normally work with?
    • Do you have any account minimums?
    • Do you have any conflicts of interest in managing my money?
    • What products and services do you offer?  
    • What is your approach to financial planning?
    • How will you help me reach my goals?
    • How will you decide what investments are right for me?
    • Are you licensed to sell any other products?
    • How are you paid? Salary? Commission? Other fees? 
    • How often will we meet? 
    • How will you keep me informed? 
    • Will you collaborate with my other advisors?
    • Do you have references from previous clients?
    • What kind of information do I need to give you?
    • Have you ever:
      • been disciplined by a regulator?
      • had any restrictions, terms, or conditions placed on your registration approval?
      • currently under investment by Canada’s securities regulators?

So, think about what you need – and why – and then do your homework to find the right person to help you. Once you find that fit, you’ll be glad you did as you’ll be well on your way to building your great financial health!