How to Choose the Right Advisor

My Worry-Free Ideal Retirement Plan

I was talking with a client recently who, after investing for 10 years with one advisor, had not made a cent! In fact, he actually lost money by not keeping up with the rate of inflation. But, you can be sure he paid fees and his advisor made money every year! 

Have you ever wondered how financial advisors get paid? 

Typically in Canada Advisors get paid either by a commission when buys or sells are done, from trailers paid by fund companies or from the "Fee for Service" advice they provide. 

For example, if you have $500,000 invested with your advisor, you have likely paid $10,000 - $12000 per year to have your investments professionally managed (the advisor doesn't get all of that, of course). Let's imagine you are with the advisor for 10 years. That would represent at least $100,000 of fees. You probably would not have a problem with that if your portfolio grew to $1.2 million in that time. But, what if it was still $500,000? How would you feel then?

When paying fees you have to ask yourself whether or not what you are paying represents good value. If not, you may need to make a change. Probably the worst part of investing is not knowing what you are paying in fees because many fees are hidden. 

Knowing what you are paying in fees is important for 2 reasons:

1.) It helps you determine what kind of investments to place inside your portfolio, and

2.) It helps you determine if you are getting good, or any, value from your advisor

Right now the Canadian Securities Administrators are implementing a mandatory initiative called CRM2. Starting in January 2017 there will be big changes to how fees are reported in the investment industry. You will begin to see, on your monthly or quarterly statement, exactly what you're paying in fees and how your portfolio has performed. Many advisors are nervous about this change and about the calls they're going to get from upset clients in the new year. Why? Because they haven't been doing anything for many of their clients.

It is our practice to over deliver on service and advice to ensure that our clients are receiving top value for the fees they are paying. That's why we provide educational resources such as this newsletter, seminars, and events. In addition to that, we provide numerous value-added services like:

  • Retirement Transition Planning
  • Tax Planning
  • Retirement Planning
  • Estate Planning
  • Income Strategies
  • Cash Flow Planning
  • Asset Protection
  • Clarity around values & goals
  • Financial Advice at anytime

For us, it's not just about getting assets under management. Basically, everything we offer is for the purpose of getting your financial house in order and keeping it that way forever. A good advisor does far more than just give one-time investment advice or suggest a place to park your money and then never look at it, or you, again.

As with many other industries, not all Financial Advisors are created equal. Indeed, selecting the advisor that is right for you can be a quite stressful undertaking. Before you can trust that an advisor is the right fit for YOU, you need to feel that they are trustworthy and that they can support their claims of being able to make your money work for you.

At our first meeting with prospective clients, we start with a casual interview to inquire about past experiences with a Financial Advisor. Many of the people we meet have had multiple dealings with advisors that have left them unsatisfied; hence the reason for them coming to us. During this initial conversation, common responses range from "no communication was given after I signed up" or "I was too small of a client" or "they only called when trying to sell me something else" to "just poor service". 

This process can be very frustrating and time-consuming for clients. 

One of the best pieces of advice I have ever received on being successful is to get advice from people who have already succeeded at the very thing I want to do. Let's now apply this to our finances. If a person wants to get out of DEBT the last place they may want to go to is to a retail bank. I don't know if this happens to you, but every time I go to a bank teller, the first thing they say is that I am pre-approved for a new Credit Card or a Line of Credit. Does this make sense to you?

If a person wants to be in the best possible physical shape, they hire a Personal Trainer. Just buying a gym membership will not get you fit. If someone wants to be the best Chef, they need to go to the best culinary school, not just buy a cookbook! Choosing someone to help you achieve your financial goals is the same. You need to choose someone who will focus solely on your best interests, not upsell you products that you don't need, or worse -- products that could damage your credit even further or make your money disappear!

What to consider in choosing a Financial Advisor:

  • Have they personally succeeded at the things they are advising you on? (Why they have succeeded?)
  • Are they up-to-date on paying their income taxes?å
  • What are their debts? (If they are drowning in debt, are they qualified to advise you on yours?)
  • Ask them if they have a Will, and if they do ask when it was last updated. If they don't, just leave. A Will is the foundation of any sound Financial Plan.
  • Where do they have their money invested? Are they invested in the same things they recommend to their clients?
  • What kind of Advisor do you need? Options include building wealth, estate planning, retirement planning, generating income, and many others. Not all advisors can be all things to all people. They should have a team of trusted experts that they can recommend to you to ensure that the right people are assisting you.
  • Do they really follow their own advice?

Now think about this: Is the person sitting across from you really qualified to give you sound and credible advice, or are they just a salesperson trying to sell you products? You are about to place your trust and money in a potential stranger. It's important that you do your due diligence and that the one you choose is worthy of your trust.

For further information, here's a new Advocis SURVEY which proves that people who have a Financial Advisor are much more financially successful those that don't. 

Book a 15 Minute Call

 


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