Getting a Financial Advisor in Canada
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 :
- 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.
- 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.
- 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 .
- 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.
- 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.
- Are there any regulatory body governing financial advisors?
- FPSC governs CFPs . You can find if your advisor has a CFP designation here .
- 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 .
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Also, any resource recommendations (books, blogs, etc.) to quickly learn about financial management?
- This is a book you need to read on Financial Planning.
- This site is a good resource . You can go in depth on various topics and the articles are simple yet captures the most important points.
- This is a famous Canadian Finance Blog . He also has a list of some good books on different topics .
- This is another famous Canadian Investing Blog . Good to read for understanding index investing etc.