How to choose a financial advisor

By: Sound Choices • October 12, 2017 • Personal Finance

Working with the right advisor can help you build a financial plan and reach your long-term goals.

Ask the right questions, find the right advisor

If you’ve decided to work with a financial advisor, good for you! Over the years, studies have shown that a professional advisor can help you start saving earlier, save more and stay committed to your savings plans.

So, how do you choose an advisor? Part of your decision-making boils down to personal preferences. Male or female? Younger or older? Able to communicate in another language? In your neighbourhood – or at least easily accessible?

Answering these questions will help narrow your search, but here are some key questions to ask every candidate before making your final decision.

Top 10 questions to ask a financial advisor

  1. What are your qualifications and credentials? Check for recognized designations such as Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA) to see if they have sufficient qualifications and ongoing professional training.
  2. What experience do you have? How many years has the advisor been in practice and roughly how many clients do they manage?
  3. Do you focus on a particular type of client? Some advisors work mostly with affluent clients while others may specialize in working with doctors, small business owners, etc.
  4. What services do you offer? Some advisors provide full financial, tax and estate planning services, some focus on investment portfolios, while some offer services somewhere in between. Match your needs with the advisor’s services.
  5. How do you charge for your services? Depending on portfolio size, the complexity of your financial situation and how often you make transactions, you may select an advisor who charges transaction fees and receives ongoing compensation from fund companies, one who is paid based on a percentage of assets under management, or one who charges an hourly rate for services.
  6. What type of investment products do you prefer? Some advisors like mutual funds while others prefer exchange-traded funds (ETFs) and stocks. You want to invest in products that suit your risk tolerance, time horizon and financial goals.
  7. Will other specialists work with me? Not every advisor can meet your financial needs on their own, so they may engage the services of other financial professionals. If so, find out more about these business associates.
  8. How often should I expect to meet you or be called by you? Do you need regular contact or is an annual review and occasional phone call sufficient?
  9. Can I see a sample financial plan? This will help you see the level of detail and areas of coverage you should expect from the advisor.
  10. Do you have references I can contact?If you talk to existing or past clients of an advisor – preferably people in similar situations to you – their opinions and experiences can generate valuable insights.

Take notes and read any materials that each candidate may provide. Once you’ve interviewed candidates, you can compare notes and select the advisor who best matches your needs and preferences. Working with the right advisor can strengthen your financial situation and allow you to reach your short- and long-term goals.

The contents are provided for informational and educational purposes, and are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting or tax. Please consult with your own professional advisor on your particular circumstances.

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