Whether you already have a financial advisor, or are now looking for one as a result of completing the Money Mastery Matrix, I’ve shared below important information everyone should be aware of when it comes to knowing more about the people managing your money.

Regardless of where you’re at, there’s no need to be intimated in communicating with your [prospective] advisor. Remember they work for you. You’re the client. It's your money.

As a result of the work you’ve done in Week 1 you’re now in the driver's seat. Have your advisor confirm with you:

  • The age at which you plan to retire

  • How many years will you be required to "draw" from your retirement funds (when do you plan to pass over)

  • The amount of money you’ll need, per year, given the lifestyle you plan to live

  • Do these funds include you selling/retaining your home(s)

  • The annualized rate of return on your all your retirement funds (exclusive of their fees)

  • Given the past performance of the investments they’ve recommended, when do they plan to transition you out?

  • Where will they transition your funds to?

  • Did they account for CPP payments? If so at what rate?

  • Have they taken your Pension Plan funds into consideration? How?

  • How can they help you optimize your RRSP, TSFA and Pension plan to mitigate taxes?

  • Do they work with an Accountant, Insurance Broker and/or an Estate Planner they can recommend?

The Rule of Three

When seeking professional advice, whether it be an advisor, lawyer, accountant, or insurance broker, I always advocate for the Rule of Three approach.

Find three potential experts, and ask of each of them the same questions (see below). Write down their responses. When you’ve interviewed all three, review and weigh their answers. Base your decision on which answers most resonated with you, and which person you feel is the best fit for you and your situation.

The Queen of Questions

In addition to the questions proposed below, Blair Lukan, CFP with Edward Jones, shared with us an invaluable tip. Any advisor can make money when markets are good. The real value is in knowing how they’ve protected and grown the wealth of their clients during downturns.

Ask you [potential] advisor what their recommendations/reactions were for 2008 and in the early days of Covid. That will help you determine where the real value can be found.

The following content is sourced from the Financial Consumer Affairs of Canada.

Why work with a financial advisor

Managing your investments can be complicated. You may not be comfortable investing on your own. A professional financial advisor or planner can help.

An advisor can create a detailed financial plan, which involves:

  • assessing your current situation

  • determining your present and future goals and needs

  • giving advice on the financial products that are right for you

  • reviewing and updating your investments periodically

Choosing the right advisor depends on what help you need. If you need specialized advice, look for an advisor with expertise in that area.

Meet with several potential advisors. Ask your friends and family if there is an advisor they recommend. Choose one that you're confident has the experience, expertise and credentials to help you reach your financial goals.

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. Outside of the province of Quebec, anyone can call themselves a “financial advisor” or “financial planner.”

What sets some advisors apart from others are education, training, experience and qualifications. There are many designations for advisors. For financial planners, a type of financial advisor, there are three common designations: Certified Financial Planner, Personal Financial Planner and Registered Financial Planner. There are different requirements for each designation. Be sure to ask your financial advisor about their education so you can determine whether someone has specialized training to help you achieve your financial goals.

In Quebec, only certain trained individuals are allowed to use the title “financial planner”. The title is “planificateur financier” or the acronym “Plan. Fin.” in French.

This includes financial planners who:

  • have a certificate issued by the Autorité des marchés financiers

  • are members of a professional association with which the Autorité des marchés financiers has entered into an agreement.

The difference between a financial advisor and a financial planner

A financial advisor is a general term that can be applied to anybody who helps you manage your money. This could include an employee of your financial institution, a stock broker or an insurance agent.

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

Some financial planners will offer you a variety of services, such as:

  • help creating a budget

  • identify ways you can save money on your taxes

  • help planning your retirement

  • provide estate planning advice

Some financial planners limit the services they offer to specific areas.

Check if a financial advisor is registered

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

Use the Canadian Securities Administrators’ National Registration search to check whether the advisor or firm is registered and what kind of registration they hold.

Check if there has been any disciplinary action against a financial advisor

Check for disciplinary action or complaints against a financial advisor and make a complaint.

Look into whether an advisor or firm has been subject to disciplinary action, check for complaints or make a complaint through the following organizations:

Paying your advisor

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

For example, you may pay:

  • an hourly fee to an advisor helping you create a financial plan

  • a commission or a trading fee to an advisor buying a stock for you

  • a percentage to an advisor based on the value of the assets they manage for you, also known as the management expense ratio

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

  • what kind of services the advisor provides

  • the cost of the services

  • how the advisor is paid, such as through a commission, fee for service or salary

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

Where to find a financial advisor

Banks, credit unions and caisses populaires

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

They can also help you start or contribute to a registered savings plan, such as a registered retirement savings plan (RRSP), registered education savings plan (RESP), registered disability savings plan (RDSP) or Tax-Free Savings Account (TFSA).

Stockbrokers and mutual fund dealers

These are licensed individuals who can help you buy or sell investments such as stocks, bonds or mutual funds.

They can also help you start or contribute to a registered savings plan, such as a registered retirement savings plan (RRSP), registered education savings plan (RESP), registered disability savings plan (RDSP) or Tax-Free Savings Account (TFSA).

Insurance companies

These companies 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

These companies or consultants can offer advice, or may be registered to sell financial products. Some charge you a fee. Others are paid by the companies whose products you buy.

Questions to ask a financial advisor

Ask questions to help you decide whether a financial advisor is qualified, or if they would be a good fit to help you with your investments. Take notes and compare the responses of the different advisors you meet. Don't feel rushed into making a decision.

Ask a financial planner about the following:

  • their education and professional experience

  • their certification or designation

  • how long the firm they work for has been in business

  • how long they have been with the firm

  • if they or their firm are registered with a securities regulator

  • what products and services do they offer

  • how they will help you reach your goals

  • if they are paid by salary, commission or other fees

  • how often you'll meet