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5 questions to ask a potential financial advisor

Professional financial advice can reward investors with significantly higher returns.

In fact, according to a study from CIRANO Institute, a Montreal-based non-profit, investors who received professional advice were found to accumulate almost four times more assets after 15 years than comparable investors without advisors.

When you think about it, a financial advisor should be an expert in investing, just like other professionals are in their fields, so unless you want to spend a lot of time managing your own money, it’s a good idea to have a professional do it for you.

But how do you find the right advisor to work with? After all, it isn’t easy to hand over your hard-earned dollars to a complete stranger. So if you, like many Canadians, are looking for an advisor who you can trust and who is also a good fit for you, here are some questions you should ask any of your potential candidates.

1. What are your qualifications, and are you registered?

Financial advisor is a broad term and in Canada there is a long list of titles and designations you may see including Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Fellow of the Canadian Securities Institute (FCSI), Chartered Strategic Wealth Professional (CSWP), and Chartered Investment Management (CIM). Getting a designation isn’t always easy, but more than that, it shows a level of commitment and professionalism you may want to look for.

Another thing to look for is whether your potential advisor is registered. Registration helps protect you because securities regulators will only register individuals if they are properly qualified. Plus, individuals selling investment products including stocks, bonds, mutual funds or ETFs must be registered with regulators in the provinces and territories where they do business. You can go to the National Registration Search database from the Canadian Securities Administrators (CSA) and see if your potential advisor is there. If they’re not included in the database, it’s probably a sign to keep looking.

2. What is your background?

You’ll want someone who is not only qualified but has the experience you’re looking for too, so find out how long they’ve been working in the industry and what firms they’ve worked at. You can also do a little investigative work yourself with a simple search on the internet. It’s amazing what you can find out just by googling someone’s name! You can also find out if the advisor has ever been disciplined for bad practices by going to the Canadian Securities Administrators (CSA) Disciplined List. If they’re on the list, you’ll be able to see a record of the violation and the discipline they received. The list, however, does not include advisors who are currently under investigation or involved in a hearing or settlement process.

3. How will you help me reach my goals?

Education members have unique financial situations with regards to things like pay grids, pension contributions, deferred leaves, and more. Understanding a potential advisor’s investment philosophy and their approach to asset allocation, risk management, and investment recommendations specific to the education community is important. Their approach should fit with yours and align with your risk tolerance, time horizon, and financial objectives.  You should also find out how often they’ll meet with you or update you on the performance of your investments and make sure that also aligns with your expectations.

Potential advisors should ask about your financial goals and investment objectives. The more your advisor knows about you, the better the recommendations they can make to help you reach your goals. That’s why all our financial advisors have the knowledge and expertise to offer educator-specific advice and recommendations.

4. Who are your past or current clients?

Knowing that your potential advisor has a good track record working with other clients who have similar backgrounds and goals to yours can bring you a level of comfort. Ask the advisor to describe a typical client. You can also look for client testimonials and reviews online. Finding out about other clients’ experiences can give you insights into the type of service and professionalism you’ll receive.

5. How are you compensated?

This one’s a biggie as many investors end up feeling like there are hidden costs and fees associated with their investments so it’s important to be clear (and feel comfortable) with how your advisor is paid. Advisors can be paid by salary, commission, a flat fee, or a combination of these methods. Find out how the potential advisor is paid, how much their services will cost you, and what you’ll get for your money.

“Financial advisors at Educators Financial Group don’t earn a commission. Our clients feel this is in their best interest because we’re focused on offering unbiased advice based on each of our client’s unique needs,” says Dan Martonfi, Regional Vice-President.

While asking these questions will be very helpful, you should also trust your gut. Creating a relationship with a financial advisor should be something that you’re looking to do over the long term, so the fit has to feel right. Meet with multiple advisors and choose someone you feel comfortable working with and who demonstrates integrity, transparency, and a genuine interest in helping you achieve your financial goals and putting your best interests first.

Want more information on our approach to financial planning? We can help with that.

Since 1975, Educators Financial Group has been helping members of the education community plan for the future they want. Our financial advisors understand your pay grid, pension, and the unique financial challenges you face. That means they’re uniquely positioned to offer educator-specific advice and create the right plan for your goals. Plus, they don’t work for commissions.

RRSP season is always a great time to book a complimentary consultation with one of our financial advisors. Ask the questions above and any others you may have.

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