In this column, which appears every two weeks, we give you concrete ideas for investing.
This question comes up most often in my email inbox: How do I find a (good) financial advisor?
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Nothing is more normal than being intimidated by choosing a financial advisor. This is a worrying decision as it impacts our financial future. Not everyone needs an advisor, but a good advisor can help you manage your money better.
“Often people say that they don’t have a good financial advisor, but we realize that they have never really taken the steps to find one,” says Youcef Ghellache, professor at Collège Montmorency and president of Educfinance.
So let’s go step by step:
1. Set your goals
Do you need someone to help you prepare to purchase a home, finance renovations, or plan for your retirement? If your situation is complex or you have multiple goals at the same time, you may consider hiring a financial planner to review your finances. A full analysis can cost over $1,000, but may be worth it in some cases.
2. Untangle the titles
A person commonly referred to as a “financial advisor” may have various titles. In the area of investments there are two.
Firstly, the “collective savings representatives”. As their English name (mutual fund dealer representative) makes clearer, they are primarily sellers of mutual funds. They are particularly found in bank branches and credit unions, where they offer funds and products managed by the institution in exchange for relatively high fees.
Then there are investment brokers. They work for brokerage firms such as Securities Desjardins or National Bank Financial. They can trade company stocks, bonds, mutual funds and ETFs, among others, on your behalf. You can also call yourself a portfolio manager or wealth management advisor. They often charge fees that are calculated as a percentage of the value of your assets.
3. Check the records
Before making an appointment with a consultant, check whether his name appears in the AMF register, which is very complete. Financial planners can also consult the Quebec Institute of Financial Planning registry. For more information about an investment broker, visit the IIROC Advisor Info (OCRI) tool.
4. Shopping
Take the time to “interview” two or three advisors before making your decision, whether in person or via video conference. “Very often the first meeting is free,” explains Mr. Ghellache. It allows you to see the person’s approach, ask questions about the work done, management, performance and also remuneration, as it is not always transparent.
5. Give yourself the right to be wrong
“Sometimes, like other professionals, you have to try several things before you find the right one,” emphasizes Youcef Ghellache.
“There are consultants who have a huge number of customers – 500, 1000 or even 1500 customers,” says the specialist. You will often contact them once a year during the RRSP period. There are clients who say, “My advisor just contacted me on my birthday to wish me a happy birthday!” That’s not the reason we need an advisor, but to make sure we have the best financial plan . We work hard to make money, so we need to manage it well and be able to fully trust the professional we entrust it to.”
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