Top 7 Things To Look For In A Financial Advisor

Posted on July 18, 2014 and updated May 30, 2018 in Financial Advisors, Life Insurance Canada News 11 min read
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Managing your finances is just as important as making sure your house is neat and tidy. If your finances are all over the place and you have no idea where your money is going, then that certainly will pose a problem in maintaining a well-rounded financial life.

Choosing a professional financial advisor requires some time and an understanding of what you really want out of the partnership. Rudy Luukko from the Toronto Star states, “The right person for you will depend on how much you have to invest, the range of investments you’ll hold and your financial-planning needs.”

Advocis mentions, “Only 20 percent of Canadians have confidence in their math and money skills as they relate to helping plan for a secure financial future.” Therefore, most Canadians rely on a good financial advisor to help them with money. So, here are seven things to consider when looking for a financial advisor.

7. Is Your Financial Advisor Commission-Based Or Salaried?

It’s important to know if the advisor that you are choosing to plan your financials will be compensated based on the number of products he or she sells to you or if they are paid regardless of what is sold to you. Greg Pollock, CEO of Advocis, explains that some may charge you a fee for services or a combination of all three.

It’s also good to note that it depends mostly on what you are looking for and the type of product you would like, if it is included in what they offer. Do not be afraid to ask questions about their compensation, as this will make it easier for you to choose comfortably.

6. Conversations About Selling

As a client, it’s important to realize when your financial advisor is trying to sell you a product, or way too much of it. Choosing the right financial advisor can be a little tough and may require some research via the cyber world and the real world.

As Will Britton, a certified financial advisor, mentions in his video about finding the right financial advisor, if the conversation between you and your financial advisor always ends up with them trying to sell you a product, then unfortunately they may be making commission and it might not be the best suit for you.

5. Communication

Communication between you and your financial advisor is integral as the partnership will only work when both parties know exactly what they want and are willing to do.

Ted Rechtshaffen from The Globe and Mail points out, “Clear understanding of fees: There should be an easy and clear answer to the question, ‘What do I pay for your services and products?’ This is important because the client should know what is being offered, how it is being offered, and how much is being charged for these offerings.”

4. Understanding The Client’s Needs

Everything in this article is important, but this may be slightly more important: finding a financial advisor that understands the client’s needs. The advisor that you plan to work with to manage your finances needs to be able to understand your needs and goals.

Rechtshaffen also mentions that it is important to know what kind of products they are making available to you: “If they can only offer limited options, such as only mutual funds or only products from their own firm, this is a weakness that you should be wary of.”

This can be tied back into our previous point — it is important to clearly understand what is being offered and the limitations of these offers.


3. Trust

Trust builds the foundation for the relationship between you and your financial advisor. However, it’s not an easy thing to obtain during your initial stages of searching.

Most clients will search around the Internet or ask people they know for recommendations. Angela Self from The Globe Mail states, “According to recent research from the Canadian Securities Administrators (CSA), more than a million Canadians have lost money in an investment fraud. And we’re all the more likely to become a victim when a fraudulent investment opportunity is presented by someone we trust.” It’s important that the client truly feels that their financial advisor is looking out for their best interest and not their own.

You may not find the absolute right person, but if there is a guaranteed possibility that your financial advisor is the right fit for what you are looking for, then you are on the right track.

2. Experience

Just like any professional career, it’s important to choose a financial advisor that has had previous experience in the industry which will make him or her excel in their job as an advisor.

Just like how past experience is valuable to employees when applying for a job, professional financial advisors need good experience as well.

When doing your research, the best way to get a good idea about a specific financial advisor is to ask their previous clients about their experience with this individual. In this day and age, it is easy to Google professionals and read about their previous experiences.

Britton also mentions that as a client, you should not be shy about asking for references, as this will help you in choosing the right financial advisor for you.

1. Professional Designation

When you’re looking for a professional financial advisor it’s a MUST to inquire about his or her credentials and certification. Anyone can label themselves as a financial advisor, but it takes good educational background with good experiences to make an excellent financial advisor.

Britton states that it’s important to drill deeper to know what educational credentials they may have and to check if they belong to any professional bodies, such as Advocis: Professional Association of Financial Advisors.

Pollock states that it’s appropriate to interview at least three advisors because at the end of the day, the relationship you and your advisor will have should ideally be long-term.

So, there you have it! Some of the top seven tips that LSM Insurance has to offer about choosing the right financial advisor (What Makes A Good Life Insurance Broker?). The list of things to look for doesn’t end with what we just listed. There’s more, but these are definitely something worth considering in your search.

Here’s what Chantal Marr, president of LSM Insurance, has to say about finding a good financial advisor:

Make sure you are comfortable with the person. A good financial plan is not static. It evolves and must be adaptable to life’s changes. the financial advisor you work with must be trustworthy, reliable, flexible, and a good communicator. You have to feel relaxed and at ease with that person, as it is an ongoing relationship”

Here are some tips from the Twitter world:

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Lizz
Lizz

Thanks for the info! I think knowing up front if you advisor is salary or commission based is important as well as any potential conflicts of interest. I’ll out watch out for some of your other points in my hunt for a good financial advisor.

LSM Insurance
LSM Insurance

Thanks Lizz. I’m glad the information was useful

Anne Smith
Anne Smith

Great tips! Definitely things to consider when looking for an advisor. I think the most important one is that you have to be able to trust him or her.

LSM Insurance
LSM Insurance

Good point Anne. Trust is most definitely a key element.