Seven tips for choosing a financial advisor

Getting the financial advice you deserve

Whatever your situation, finding and evaluating a financial advisor can be a daunting task. But it is a critical one. Too many Canadians do not have a financial plan – but working with a competent, professional financial advisor is a great way to get one started or to refine the one you already have.

You may be at a point where you have decided it's time to start planning in earnest for your retirement or to reach other life goals. Perhaps you've experienced a significant event – such as an inheritance, career change, or birth of a child – that is prompting a re-evaluation of your current financial plan. Or maybe you’re simply dissatisfied with your current financial advisor.

Here are seven things for you to consider when choosing the right advisor for your needs.

Will the advisor provide a comprehensive assessment and long-term plan?

Successful financial management requires a disciplined, structured approach, not only to investing, but to all aspects of your financial health. A good financial advisor will take you through a step-by-step process to assess your present situation, taking into consideration current investments, savings, debts, insurance, income, and other circumstances.

They’ll also ask you about your short- and long-term goals and determine your tolerance for risk. Then they will work with you to develop a comprehensive plan and communicate the steps you will need to take, along with a practical timeline. Finally, they'll periodically review the plan with you and adjust it as needed.

Is the advisor well qualified to help you?

Your advisor should have a solid combination of expertise and experience. One easy way to assess the level of an advisor's expertise is by looking into their credentials.

A common and highly regarded designation is Certified Financial Planner (CFP), which involves extensive education and requires a minimum of three years of financial planning experience as well as ongoing education. You may also find other designations, such as CIM (Certified Investment Management) which focuses on structuring a stock portfolio or FMA (Financial Management Advisor) which focuses on wealth management, as well as a number of others.

More importantly, however, is their experience. How long has the advisor been in the business? Have they worked with people like you? In your area? Can they provide references? You'll want to know that they have extensive real-work experience and accomplishments in addition to proper education and training.

How will the advisor be paid?

Financial and investment advisors can be compensated in a number of ways, and it's important to know and understand how your advisor earns their pay. Find out whether the advisor earns commissions on the products sold or if there is an up-front or annual flat fee (and how much it is).

Can the advisor provide you with a complete range of products?

A well balanced investment portfolio may require a range of products from secure term deposits to more volatile market-based investments. In addition, your overall financial plan may also include various banking and insurance products such as mortgages, lines of credit, credit cards, GICs, chequing and savings accounts, or life, disability, or critical illness insurance. Will the advisor be able to provide easy access to what you need?

Is your advisor backed by a team of specialists?

Ideally, your advisor should have access to a broad range of expertise to meet your needs. A team approach will ensure that you get the professional advice you require to meet any specialized investment, wealth management, insurance, or debt management objectives.

Will your advisor offer objective advice and have your best interests at heart?

Many people are concerned that their advisor will recommend only products that offer the best commission. It's important to keep in mind that credit unions and other financial institutions are "fiduciaries" which means that by law they must put their clients' interests ahead of their own. Look at the organization that stands behind your advisor – its reputation, core values, and length of time in business are also important.

“84% of BlueShore clients say their financial advisor works with their best interests in mind as compared to 71% of client dealing with advisors at other financial institutions.” Ipsos, 2022

Does your advisor instill a sense of confidence and trust?

How you feel about your advisor? A warm and personable relationship is critical to your final decision. An advisor may be exceptional at financial planning but may simply not "click" with you. Does the advisor explain things in a way you understand? Do you get the sense that you can trust this person and have confidence in their recommendations? If the answer is yes, and you are satisfied with the results from the other questions, you may have found your ideal financial advisor.