Getting a Financial Advisor in Canada

Getting a Financial Advisor in Canada

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A friend of mine reached out to me recently with some questions about getting a financial advisor in Canada.

He had some very specific questions :

  1. How do you know if a financial advisor is any good ?

    • A large percentage of  financial advisors are sales people and are paid depending on what they are able to sell you.  Two questions you always need to ask.

      1. How are they paid ? Are they paid by the products they are recommending you? With a proper financial planner you are supposed to have an agreement that clearly states in writing how he/she is paid.
      2. What are their qualifications ? You most likely want an advisor with a CFP (Certified financial planner) or RFP ( Registered Financial Planner) . They should have spend time understanding your needs and be able to generate a written plan for you and should meeting with you on a regular basis to evaluate your plan and execution.

    • They should be able to discuss with you a variety of topics ( TFSA, RRSP, RESP, Investments, Mutual Funds vs Index Funds, WILL) and refer to experts in different fields as needed ( similar to a General Doctor to a Specialist relationship )
    • Best way to find one is through a referral of someone you trust.
    • Some additional questions to ask your advisor  can be found here .

  2. How do you trust one?

    • Referral is recommended – especially from someone with a similar wealth level
    • Go with your intuition – If someone is recommending you put a large % of your investment in one stock – there is something off or if someone promises you guaranteed  return etc.
    • Make sure you understand the fee structure on any  product offered and any referrals recommended.
    • Make sure they have a CFP or a respected designation –  if someone is passionate in their field they should have obtained the required designation.

  3. Are there any regulatory body governing financial advisors?

    • FPSC governs CFPs . You can find if your advisor has a CFP designation here .

  4. Any gotchas that I should watch out for when getting one?

    • I prefer Financial Planners with a fee vs people who are paid based on the products they sell. I think it is human nature to maximize self interest. A CFP is good if you want someone for general financial planning. If you are mainly looking for help with investing your money for the future then you are looking for a CFA and someone who manages money for wealthy investors. If that is your primary reason then your CFP planner should refer you to a money manager .

  5. Also, any resource recommendations (books, blogs, etc.) to quickly learn about financial management?

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