Seven Questions You Should Ask Any Potential Financial Advisor

Feb 16, 2018 | Robert McLennan


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Seven Questions You Should Ask Any Potential Financial Advisor

Choosing a financial advisor is one of the most important financial decisions you will ever make. Before entering into any partnership, ask the following questions, and make sure you are comfortable with the answers.

 

1. How are you accredited or registered?

Your advisor’s firm should be a member of the Investment Industry Regulatory Organization of Canada (IIROC), which regulates all investment dealers in Canada. IIROC monitors and enforces rules regarding the proficiency, business and financial conduct of these firms and their advisors. Visit www.iiroc.ca to learn more.

 

2. How are you compensated?

Many advisors are paid by commission for the products they recommend, while others receive a flat fee. Find out how your advisor is compensated, how much the services will cost, and payment options.

 

3. What is your experience?

Your advisor should be forthcoming about their industry experience and qualifications. Also, fewer years as an advisor may not necessarily mean less expertise. Many advisors enter the profession after many years of working with the people who would later become clients, in industries they now specialize in as an advisor.

 

4. What kinds of products and services can you provide?

Ask if your advisor is limited to certain investments: proprietary products offered by their firm, GICs or mutual funds, or if you can draw on a greater range of investment products. Make sure you ask about your advisor’s access to investment research, portfolio strategy teams, and risk management groups. Find out if your advisor focuses on investment solutions only, or can also provide additional services that may help you achieve your financial goals, such as financial, tax, retirement, and estate planning services.

 

5. What clients do you serve?

Some advisors specialize in helping a particular client group, such as business owners, medical professionals or retirees. Don’t be shy about asking for references either; your advisor is in many ways applying for the job.

 

6. How will you help me reach my goals?

Your advisor should ask you to outline what you hope to gain – for example, preserving income, building wealth, retiring comfortably – and guide you if your expectations are unrealistic.

 

Ask about your advisor’s investment process, and how they create and manage your portfolio. Is each portfolio custom-crafted, or is the advisor following a set of established models? Confirm that you are comfortable with this process.

 

7. What kind of service will I receive?

Your advisor should clarify at the outset the level of service you can expect. This includes how often you will meet to review your progress; how your advisor will update you on portfolio performance; and what sort of contact you can expect from your advisor or support staff.

 

As you search for the right financial advisor, don’t hesitate to ask any questions that help you feel more confident in the management of your wealth. For more information, please visit www.iiroc.ca or contact myself at robert.mclennan@rbc.com.