Proper Credentials Key to Hiring the Right Financial Advisor
Insight Finding the right financial planner can be difficult. Ensure you’re asking the right questions and finding an advisor that fits your needs.
At any stage in life, Canadians should have access to the peace of mind that comes from knowing they have a well-thought-out financial strategy for their future. Professional financial advisors and planners can help consumers make sound decisions that ultimately lead to greater financial stability and independence.
According to a 2016 study by CIRANO entitled The Gamma Factor and the Value of Financial Advice, up to 76 percent of consumers who work with a financial advisor believe they are “better off financially,” and 93 percent of Canadians say they “trust their financial advisor and agree having a professional advisor helps them feel financially secure.”
“If you are looking to hire a financial advisor there are a few critical things to consider,” says Greg Pollock, President and CEO of Advocis, the Financial Advisors Association of Canada.
“Always look for what credentials an individual holds related to the provision of financial advice,” he says. “Consumers should also find out if the advisor holds designations from the industry or ask if they are a member of an association that maintains professional standards and follows a professional code of conduct.”
Pollock believes people should look for advisors who are Chartered Life Underwriters (CLU), Certified Health Insurance Specialists (CHS), or Certified Financial Planners (CFP), among others.
Ask the right questions
Due to limited regulatory oversight, financial advisors and planners are not required to hold any credentials. Nor do they have to advertise whether they have them. Making sure someone is properly licensed and up-to-date in their field is key to assessing the right fit, notes Pollock — and that job falls on the consumer.
Advisors and planners are not obligated to join a trade association, but those who have may meet additional standards not required of the average advisor. Members of Advocis must agree to work within its Code of Professional Conduct so that the public knows they are being held to a clearly defined standard. For its part, Advocis will conduct an internal disciplinary process where it can investigate complaints lobbied by dissatisfied customers against one of its members.
You want an advisor who’s credible and who can provide advice about what strategies will work best for your current lifestyle and future goals. Speak at length with them about the types of clients they have. “It helps a lot in terms of giving some assurance that this advisor has the client’s best interests in mind and knows what they’re talking about,” Pollock says. “Gain an understanding of the advisor’s client base to gauge whether you are reflective of it.”
Find the right fit
Pollock points to this lack of clarity as a key issue that may have led to larger frauds instigated by people posing as advisors or planners without any licences or memberships.
“If someone is guaranteeing record returns, that’s a red flag and not someone you want to be working with,” he says. “Good advisors aren’t just picking the right investment. They’re helping to modify people’s behaviours to pay off bad debt first, save more, and develop medium and long-term strategies. Those things combined make the difference.”
There are varying specialties and specializations to consider as well, which Pollock notes can be explored by visiting the ouradvisor.ca website. These can range from tax planning, estate planning and retirement planning to securities, mutual funds, and risk management.
“Consumers tend to trust financial advisors, giving them a very high pass rate,” he says. “It’s good to see, but it’s also worth knowing who you’re dealing with. It’s difficult to ask questions, but it’s important to do it.” Ensuring you have a trusted and qualified advisor is an important first step towards achieving financial well-being.