Define Your Needs, Ask Tough Questions
How do you go about identifying a financial advisor who can provide competent advice that is in your best interests?
The first challenge is unraveling terminology confusion. Do you know the differences between a “stock broker”, an “investment advisor”, a “financial planner”, or a “portfolio manager”? Even if you do know, there are widely divergent skill levels and practice emphasis within each of these categories. Rather than guiding yourself by these confusing labels, a better approach is to screen for certain qualities or attributes associated with an advisor who is likely to be able to meet your needs.
What are your needs? In our experience most people seek, but rarely develop, a proper handle on their overall financial affairs. Their ability to positively influence their financial position is consequently limited. In order to obtain a greater measure of control over their financial future, most sense they need advice to tie all the pieces of their financial life together. But they don’t know where to go. They usually end up with an advisor who assists them with a specific transaction such an insurance policy or an RRSP investment. Their problem is often exacerbated because this advisor may have a product-specific orientation that conflicts with the client's need for a comprehensive plan.
If charting a better course for your financial future is indicative of your needs, here are some useful questions to help screen an advisor. For the answer you should expect, click the question.
Is the financial advisor or their firm affiliated with a bank, insurance company or a financial institution?
Is the organization a CIPF member?
Is the financial advisor a “full service” advisor and do their licenses allow them to recommend all products currently available?
Is the advisor also a shareowner of the company they represent?
Will the financial advisor with whom I initially engage continue the relationship and manage my portfolio?
Does the advisor have at least 5 years experience, and planning designations such as the PFP or CFP?
Will the advisor prepare a detailed written financial plan for me?
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