11.3.6 Assessing your financial professional

From: Financial Consumer Agency of Canada

You can use the checklist below to review the advice you get from your financial professional and your relationship with her or him.

Assessing your financial professional

Yes No
The Basics
Do you know the state of your finances?
  • If you're working with a financial professional, the first thing you need to know is how your finances are doing overall. If a professional helps with a specific area, you should have a clear idea of how you are doing in that area.
Do you know your total annual costs?
  • A financial professional should be able to tell you the total costs of managing your finances, including not only his or her fees, but also any included costs, such as the management fees of mutual funds. (If you feel the fees you pay are too high, ask for suggestions on how to reduce them.)
Does your financial professional listen to and understand your questions, concerns and priorities?
  • This is essential to getting the right advice. A financial professional that understands your priorities should help you choose the products and services that suit you.
Does your financial professional set goals and expectations with you?
  • You and your financial professional have to agree on appropriate goals, and focus your strategy on the goals. Does your financial professional monitor these goals in the appropriate timeframes?
Does your financial professional clearly explain why he is recommending a new product?
  • There should be little reason to change the right products. Ask your financial professional to show why new products offer better value than what you currently own.
Does your financial professional make referrals to resources from other companies, or are they limited to his or her company?
  • Internal products and services can create a conflict of interests. Ask your advisor for objective recommendations and a full explanation of the costs and benefits of internal products versus external products.
Does your financial professional recommend low-cost options?
  • Investments such as index units or exchange-traded funds or low-cost mutual funds often have fees far lower than equity or bond funds. Your financial institution may have simple, low-cost financial services. Ask your financial professional to tell you about low-cost options that match your goals and risk tolerance.
Do you understand your financial professional's strategy and are you comfortable with it?
  • Holding on to investments that perform poorly may not be wise. The same can be said about trading in anticipation of major market swings. Even the best professionals rarely forecast market changes successfully on a consistent basis. Building a strategy of buying and selling investments based on market sentiment will most often result in higher costs and more losses. The right financial strategy should do well without frequent changes, in good markets and bad.

Ensure that the professional you are working with still meets your investor needs.

Remember: the decisions that you make with a financial professional are your responsibility. While most financial professionals work with their clients' best interests in mind, it's important that you do your homework, and are comfortable with any changes to your investment or financial plan and your investments.

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