Whether you’re making your first contribution or you’re a veteran investor, one question that commonly gets asked is: how do you find a good a financial advisor?

If you have any financial knowledge then you should probably manage your money on your own. That being said, it’s definitely worth seeking out an advisor or planner if you have certain goals, such as retirement or estate planning or you want to make sure your portfolio is on the right track. Here are some quick tips on how to find a good financial advisor.

How To Find A Good Financial Advisor

Understand that titles don’t mean a thing

You might think you’re in good shape since you work with a financial planner at your local bank or at an investment firm, but those people are often just salespeople trained to sell you their company’s product while getting rich on fees.

Markus Muhs an Investment Advisor and Certified Financial Planning professional with Canaccord Genuity Wealth Management confirmed with me that job titles generally are completely meaningless.

“A Financial Advisor can be anything from a personal banker to an investment banker making multi-million or billion dollar decisions. Outside of Quebec anyone can call themselves a Financial Planner.

Be weary of some designations that some people put on their business cards: PFPC, CSC, IFIC are not designations, they are courses. If you see these on a business card, RUN, as it says something about the “advisor’s” desperation or their company’s lack of standards.”

Know how your financial advisor is getting paid

Financial advisors aren’t cheap; your initial consultation could cost a few hundred or even a few thousand dollars. Some advisors charge a flat fee (“fee only”), while others charge a commission or fee as a percentage of assets (“fee-based”). You need to look at your individual situation to decide what the best solution is.

For example, if you have a moderate portfolio of say $100K, it probably makes more sense to just find a fee-only planner to set you up with a financial plan. On the other hand, those of us with a vault full of money ($1 million+), could benefit from a fee-based advisor according to Muhs.

“Because of their high net worth they can negotiate a lower percentage fee (1%, possibly less) and they can attract the truly top-notch advisors/portfolio managers/planners out there.”

If you’re a first-time investor with zero knowledge, I guess it’s okay for you to purchase mutual funds, however, you need to be aware of any upfront fees and possibly trailing commissions. “If investing in a discount brokerage you should ensure you choose the D-series version of the fund, which has a reduced trailing commission built into the MER, or the completely commission-free F-class, if available.”

Do-it-yourself investors are better off using Tangerine or TD e-Series funds which are low-cost index mutual funds. You can also very easily build a diversified portfolio with just a single ETF purchase, using Vanguard’s asset allocation ETFs.

Where to find a financial advisor

A couple of directories exist to get you started finding a financial advisor. If you’re looking for a fee-only advisor near you, Holy Potato’s directory is a simple Google Docs spreadsheet where financial planners have entered their own details of their practices. A new service, SeekAdvisor aims to replace the now defunct MoneySense directory of approved financial advisors by matching Canadians with an array of qualified, experienced advisors who are vetted based on their commitment to always act in their client’s best interests.

Generally speaking, I would avoid advisors associated with a bank or any investment firm which creates and sells its own mutual funds since they are primarily commission based and incentivized to sell their own products. Admittedly some of them can be great but I would only work with them if you knew for sure they are superstars (for example, through a referral from a friend or family member, not a referral from a bank rep). You should never walk into a bank and blindly ask to speak to a financial advisor.

“For the vast majority of us, looking for help both on the financial planning side and managing our investments, a commission-based advisor might be the only choice” says Muhs. “In that case, make sure their compensation aligns with your goals: that at all times they’re able to recommend the products that are best for you and not the ones that pay them the highest commissions or that bear the branding of a parent company.”

Final thoughts

A Chartered Financial Analyst (CFA) is the gold standard when it comes to designations but if you know someone who’s obtained their CFA they’re probably only managing multimillion dollar accounts so they’re out of reach for the majority of us.

Generally speaking, the designation most commonly seen behind good, qualified advisor’s names in Canada is the CFP (Certified Financial Planner) and/or CIM (Chartered Investment Manager designation. If you find an advisor who has achieved both, you can be sure that you’re in good hands.

“Advisors in Canada are not bound to a fiduciary duty (not required to put the client’s interests ahead of their own or their company’s) in Canada” says Muhs. “However, holders of some designation are encouraged (based on codes of ethics) to put the client’s needs first.”

Markus Muhs, CFP®, CIM® (www.muhs.ca) is a Portfolio Manager at Canaccord Genuity Wealth Management, located in Edmonton, Alberta. He provides comprehensive financial planning and wealth management to families with assets over $300,000 across Alberta, British Columbia, and Ontario. Markus alternatively provides fee-for-service (fee-only) financial planning to non asset-based clients.

How To Find A Good Financial Advisor

16 Comments

  1. Virna on February 3, 2015 at 3:56 pm

    We have a “fee only” advisor. It’s a bit costly but the advice I received was definitely worth it. The previous advisor I had was only concerned in getting his commission.

    • Barry Choi on February 3, 2015 at 3:59 pm

      Virna,

      Yes many people don’t realize that fee only planners can be money well spent. It could make a huge difference when it comes time to retore.

  2. Potato on October 15, 2015 at 10:35 pm

    The MoneySense Directory has been retired, and the MoneySense Approved replacement still isn’t out yet. Fortunately there’s a new directory of free-only planners!

  3. Cameron Bennett on November 22, 2017 at 10:13 am

    I like that you mention seeking out recommendations from people you know when looking for a financial planner. You can never be too careful while looking because you want to be sure that you’re hiring someone trustworthy that will do a great job for you. It’s a big decision because if they have the expertise and skills, they can really help your business.

  4. live 22948 on October 24, 2018 at 8:13 pm

    Tracking an additional part of blog marketing you have
    got to record. Kim has 392 fans and keeps them well entertained and
    knowledgeable. Press a petal or a flower and
    laminate it before attaching to the page.

  5. […] trained to sell company products. The good thing is, there are quite a few resources out there to help you find a good advisor. There are advisors who specialize in retirement planning so in this case find one of those. In the […]

  6. Bob Spartus on December 10, 2018 at 12:46 pm

    After years of getting poor service and even worse returns we recently located an new Advisor using http://www.seekadvisor.ca – we couldn’t be happier to finally be working with a professional advisor who clearly has a mandate to work in our interests only. Awesome! Thanks for providing the link Barry and Markus!

    • Kim on January 8, 2019 at 10:01 am

      I’ve had paralysis by analysis in this regard and I’m very much in need of a referral to a good advisor. Are you willing to share the name of the person you found?

      • Bob on May 23, 2019 at 6:06 pm

        Little late to the game here but we hired the team at RT Mosaic in Calgary – here is their profile on SeekAdvisor.ca – https://www.seekadvisor.ca/profile/christopher-rawles/1007

        Although we live in Northern Ontario we really couldn’t find anyone close by that we were comfortable with – there are several advisors on the SeekAdvisor site that matched what we were looking for, however I find myself in Calgary several times a year, so I was most comfortable hiring this team for the job. Best of luck.

  7. joy on December 12, 2018 at 11:35 am

    Use my own experience to remind my friends to stay away from this investment company.
    Details: BMO Nesbitt Burns
           Yujie Liu (Financial Planner)
         905-305-0603
    they don’t do anything just focus on commissions, bad behavior!!

  8. Rex on January 2, 2019 at 7:42 am

    Which financial to work with, who charge hourly or who charge monthly?

    • Barry Choi on January 2, 2019 at 7:57 am

      Hi Rex,

      THere are quite a few fee only advisors who work in Canada.

  9. Alexdom A on March 15, 2019 at 7:55 am

    The financial advisor should be more concerned about their customer’s financial plans. their comments should be in a right way that should be enhanced customers financial plans only then customers will trust them. you can ask these all from their previous customers.

  10. Nancy Mable on March 19, 2019 at 8:41 am

    There are a number of reliable financial advisors in Edmonton, Alberta who provide best services. These experts can provide you the best financial and tax plans and will make your life financially stable. The best approach for finding a reliable advisor is to search them online or by searching some Directories like Yelp, Yellowpages, etc. However, I recommend the following approach.

    1. Search them online on Google Locally (Google results are good to follow) with search terms like financial advisors
    2. Analyze the website of each company and check the portfolio of financial advisors (research them and check their credibility and customer reviews)
    3. Contact with them through Call or book a free consultation

    If you found them highly skilled and expert in providing effective financial plans then hire them and get a complete financial solution from them. That’s it!

  11. Kathy Your Net Worth Manager on June 4, 2019 at 10:50 am

    Saskatchewan fee for service Registered Retirement Consultant http://www.yournwm.ca. Hello to Markus, often read his great comments on FB groups I hang out in. The problem is we have an industry that holds itself out as professional but works to a suitability standard. Its all about sales. Most plans lead to the sale of their own product. If we had a fiduciary, best interest standard like the UK, Australia, New Zealand then you would be able to trust what you are being told. I am on the Holy Potato List.

  12. Mirketa on November 13, 2019 at 4:05 am

    Thanks for sharing this valuable information

Leave a Comment