A trusted financial advisor should be at the centre of your investment strategy. How else can you make sense of more than 1,700 mutual funds (with more being added everyday) or cope with the onslaught of everyone from bank tellers to mutual fund companies chasing after a piece of your investment dollar.
As the number of investment products continues to grow and the lines that separate service providers blur or disappear altogether, good financial advice is going to be crucial – especially during tough market conditions.
Choosing the right advisor
The right financial advisor will do more than sort through the complex investment jungle. He or she will also help to steer your portfolio towards a secure retirement, advise on how to put money aside for your children’s education, find the best way to finance a new home (or other large ticket item) and structure your finances so that taxes are not chipping away at your disposable or retirement income.
Financial advisors who sell products such as securities and insurance must be regulated in the province where they practice. The same is not true for the rest of the industry – which sometimes makes choosing a financial advisor a case of buyer beware. There is an alphabet soup of designations that financial planners put behind their names and most consumers have little idea what is involved in getting those initials.
Move toward standard training
The financial planning industry has been under pressure to move toward a standard designation. Quebec already demands its financial planners take a university-level course and become members of a professional organization, l’Ordre des administrateurs agréés du Québec.
The Financial Planners Standards Council of Canada, an agency supported by six industry groups, has been giving a standardized set of exams since 1997. Those exams lead to a designation called the Certified Financial Planner (CFP).
Look for Advocis membership
One sure way to determine that your financial advisor is qualified is to look for membership in Advocis. Advocis has been promoting excellence in the financial services sector since 1906.
An Advocis designation sends a message that the advisor has invested time to develop his or her skills and will abide by the highest ethical standards. Continuing Education (CE) is mandatory for all Advocis Full members and New Advisors. Members are required to earn a minimum of thirty (30) CE credits each calendar year. Members are also required to obtain at least one (1) CE credit from a recognized ethics program
Insurance has traditionally been a cornerstone of responsible estate planning. The insurance industry is aggressively promoting favourable investment products such as segregated funds and Insured Retirement Plans (IRP). Make sure you have a financial advisor who is qualified in the area of insurance.
Find someone you trust
Trust is the most important quality investors look for when choosing an advisor. First and foremost, find a qualified professional who understands your personal and financial situation and whom you will feel comfortable working with. Do not forget to ask about an Advocis designation. Do not be afraid to ask questions. And do not allow yourself to be hurried along. Financial planning is a detailed and complicated process. Most advisors will spend approximately 90 minutes with a potential client during the initial interview.
Ask about qualifications
Ask about your advisor’s level of experience. How long has he been practicing? Does she have specialized training? Is he involved in continuing education? Does she have experience dealing with financial situations similar to yours? Does he subscribe to a recognized code of professional conduct?
When developing your financial plan, will the advisor be working on all of your financial goals or just specific areas. Will he or she be part of a team – and who is going to help you to implement the plan. As for the plan itself, insist on an easy-to-follow executive summary that includes a clear course of action.
How is your advisor paid?
A qualified financial advisor is a worthwhile investment in your financial future. But you should know upfront just what that investment is going to cost. Most financial advisors are paid through commissions on the products purchased (either by the client or the product supplier), a salary from his or her employer, fee for service, or a combination of all three. Find out, and get it in writing along with an estimate of costs, and details of services available.
Finally, investing is a year-round responsibility. Meet with your Advocis advisor at least twice a year to review your strategy and make adjustments. The benefits will show up in your portfolio as you move closer to retirement.
This article was written by Advocis®, The Institute for Advanced Financial Education™ (The Institute™), CLU®, CHS™, CH.F.C.® and APA® are trademarks of The Financial Advisors Association of Canada (TFAAC).
For more information on finding a Certified Financial Planner, contact Lynn Cain, CFP to set up a free, no obligation meeting.
Lynn Cain, CFP
Lifecycle Planning for Lifestyle Protection.