There are many things to consider when looking for a financial planner who can help you meet your wealth goals. It can seem overwhelming, especially when you consider that a relationship with a financial planner or wealth advisor is a journey. It’s one that can start with a current financial goal — a new home, a wedding or retirement — but can grow and change as life does. A good financial planner on this journey will encourage you to revisit your financial plan, help ensure you’re on track and can even give you a nudge when you need it most. If you’re actively looking for some financial advice, great. Sometimes, that can be the most important first step. As for some questions you can ask, here are five that can help you get a sense of whether a financial planner is right for you.
There’s no shortage of money experts out there. Some go by “wealth advisor” or “financial planner”. The reality is almost anyone in Canada can call themselves a financial planner. Only Quebec requires that individuals hold their Certified Financial Planner (CFP®) designation before they can use that title. There are certainly other designations that a planner or wealth advisor may hold — Chartered Financial Analyst (CFA), Personal Financial Planner (PFP) among them — but the CFP® is one of the more common certifications in the industry. It's important to understand if the person you’re working with has been specifically trained to build financial plans, and has a good understanding of taxes, estate planning and other issues related to your family’s financial needs. When you meet with a wealth advisor, don’t feel shy to ask for their credentials.
This is a key question people should ask, along with, “How many clients do you have?” While the answer you wish to hear may depend on what you’re looking for, you may wish to work with someone you can relate to, who thinks like you, has similar life experience to you and has the training and accreditation to help you. However, while some of us put a premium on experience, others may respond better to knowledge or relatability.
Many good financial planners will raise this issue up front. In Canada, planners and wealth advisors can be paid in a number of ways, but two very common ones are commission-based and fee-based. If it’s commission-based, your planner will receive compensation from the products you buy. You won’t pay directly for the services they provide, and while that’s been the status-quo in financial planning for many years, some find it challenging to calculate the full amount they’re paying monthly or annually. In a fee-based arrangement, you would pay a total amount based on the value of assets being managed. It can provide some transparency and a direct line of sight to exactly what you are paying for the services provided. Regardless of how a planner gets paid, they should be able to say, “This is how I’m compensated; this is how and where you will find it on your statements, and this is what you will receive in exchange.”
This goes hand-in-hand with any discussion of fees: What are you getting for your money? The value of working with a planner or wealth advisor is rarely about beating a benchmark or index. It’s about helping you to make decisions and connecting you with the tools and resources that will best help you reach your wealth goals. A financial planner should be able to advise you on each of the four major areas of your financial plan: building your net worth, implementing tax-efficient strategies, helping you protect what matters and leaving a legacy for future generations. That may mean your financial planner is trained to help you deal with business issues or estate and tax planning, or they can provide access to people who do. Either way, you should ask what services they offer.
Your ability to understand the financial plan you’ve set out, stick to it and adjust when needed will be key to your success. But each of us is unique and have different needs in terms of communication. Some may panic every time the market drops, or international tensions arise and may appreciate a call or a note from their financial planner or wealth advisor. Others are fine with a regularly scheduled check-in. At the very least, look for a commitment to get an annual progress review to make sure any plan remains relevant and is on-track to meet your established goals.
These are five questions that you may want to ask your financial planner. The reality is the answers you’re looking for will be based on your wealth personality and your needs. Above all else, you can look for someone who will give you confidence that they’re going to partner with you in drafting an action plan and help achieve the wealth goals that matter to you.
Discover your Wealth Personality and what influences your wealth decisions.