Choosing a financial advisor

From: Financial Consumer Agency of Canada

Why work with a financial advisor

Managing your investments may be difficult. You may not be comfortable investing on your own. A financial advisor, sometimes called financial professional, may help you.

Financial advisor is a general term for someone who helps you manage your money. Examples include an employee of your financial institution, an investment broker or an insurance agent. They may help you assess your financial situation and give you advice on the financial products that are right for you.

Choosing the right financial advisor for you depends on what you need. If you need specialized advice, find a professional with expertise in that area.

Meet with several potential financial advisors. Choose one that you're confident has the experience, expertise and credentials to help you reach your financial goals.

What is a financial planner

A financial planner is a type of financial advisor who helps you create a plan to reach your long-term financial goals.

They may, for example, help you plan your retirement, find ways to save on your taxes and provide estate planning advice.

Certain financial planners limit the services they offer to specific areas. While a financial planner is a type of financial advisor, an advisor is not necessarily a planner.

Who qualifies as a financial advisor

The terms financial advisor and financial planner are used broadly. These terms don’t always mean that a person has specific qualifications, expertise or certifications. In certain provinces, anyone may call themselves a financial advisor or planner.

In other provinces, there are regulations that require them to meet certain requirements to use the financial advisor or financial planner titles.

Find the regulations for financial advisors and planners in your province or territory.

What sets some financial advisors apart from others are education, training, experience and qualifications. There are many designations for financial advisors. For financial planners, there are 3 common designations: Certified, Personal and Registered Financial Planner.

There are different requirements for each designation. Ask your financial advisor about their education. This will help you determine whether they have specialized training to help you reach your financial goals.

Use this glossary to learn more about the different financial certifications.

Check a financial advisor’s registration

By law, sellers of mutual funds, stocks and bonds must complete training and register with a provincial or territorial securities regulator.

Use the National Registration Search to check an advisor’s registration.

Check if there’s been any disciplinary action against a financial advisor

You may check for complaints or disciplinary actions through the following organizations:

Paying your financial advisor

You pay financial advisors in different ways, depending on the type of service they provide.

For example, you may pay:

an hourly fee if they help you create a financial plan
a commission or a trading fee if they buy a stock on your behalf
a percentage based on the value of the assets they manage for you, also called management expense ratio

If you plan on working with a financial advisor, it's important to know:

what kind of services they provide
the cost of the services
how you pay for the services

While most financial advisors aim to give good advice, some may be influenced by outside factors. For example, financial advisors paid by commission have an incentive to encourage you to invest where they’ll earn more. Those on salary may have an incentive to promote the products and services their employers offer.

Where to find a financial advisor

Where to find a financial advisor will depend on the type of advice you need.

Banks, credit unions and caisses populaires

These institutions have staff who may help you understand and buy certain types of investments. For example, term deposits, guaranteed investment certificates (GICs) and mutual funds.

They may also help you open or contribute to a registered savings plan. For example, a registered retirement savings plan (RRSP) or a Tax-Free Savings Account (TFSA).

Stockbrokers and mutual fund dealers

They may help you buy or sell investments such as stocks, bonds or mutual funds. They may also help you open or contribute to a registered savings plan.

Insurance companies

They have employees licensed to sell investment products such as mutual funds, segregated funds and annuities. Insurance companies also offer various types of insurance products.

Independent financial planning companies or consultants

They may offer advice or may be registered to sell financial products. Some may charge you a fee.

Questions to ask a financial advisor

Ask questions to assess whether a financial advisor has the right qualifications. Determine if they would be a good fit to help you with your investments. Take notes and compare the responses of everyone you meet. Take your time. You don’t need to decide right away.

Ask each financial advisor about the following:

Qualifications and regulatory status

what are their education and professional experience
what’s their certification or designation
if they’re registered with a securities regulator
if they’re licensed to sell any other products
have they ever been disciplined by a regulator
have there been any restrictions, terms or conditions placed on their registration approval
are they currently under investigation by securities regulators in Canada

Firm and services

how long the firm they work for has been in business
how long they have been with the firm
what products and services they offer
how they decide on appropriate investments for their clients
how they’ll help you reach your goals

Working relationship and compensation

if they’re paid by salary, commission or other fees
how often you'll meet
how they’ll inform and update you
references from previous clients

What type of information will my financial advisor ask for

Your financial advisor may ask for the following information to create a financial plan:

Personal information

age
total annual income
estimated net worth
if you have any dependents
monthly expenses
amount of income tax you pay

Investor profile

investment knowledge and experience
investment goals
when you’ll need access to money you’ve invested
risk tolerance

Resources on financial advisors

Financial advisors usually belong to professional groups in their industry.

The following industry groups may be good places to start searching for more information on the industry:

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Date modified:: 2024-10-08

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