Choosing a financial advisor

From: Financial Consumer Agency of Canada

Why work with a financial advisor

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

They can create a detailed financial plan that includes:

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. 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. In certain provinces, anyone can call themselves a financial advisor or planner.

What sets some advisors apart from others are education, training, experience and qualifications. There are many designations for advisors. For financial planners, there are 3 common designations: Certified, Personal and Registered Financial Planner. There are different requirements for each designation. Ask your financial advisor about their education. This will help you determine whether they have specialized training to help you reach your financial goals.

Use this glossary to learn more about the different financial certifications.

Differences between a financial advisor and a financial planner

A financial advisor is a general term that can apply to anybody who helps you manage your money. This could include an employee of your financial institution, a stockbroker 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.

Financial planners may offer you a variety of services, such as:

help you create a budget
identify ways you can save money on your taxes
help you plan your retirement
provide estate planning advice

Certain 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 National Registration Search to check whether an advisor is registered.

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

You can check for complaints or disciplinary actions through the following organizations:

Paying your financial advisor

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

For example, you may pay:

an hourly fee if they help you create a financial plan
a commission or a trading fee if they buy a stock for you
a percentage based on the value of the assets they manage for you, also called management expense ratio

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

what kind of services they provide
the cost of the services
how you pay for the services

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 more. Those on salary may have an incentive to promote the products and services their employers offer.

Where to find a financial advisor

Where to find a financial advisor will depend on the type of advice you need.

Banks, credit unions and caisses populaires

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

They can also help you open or contribute to a registered savings plan. For example, a registered retirement savings plan (RRSP) or a 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 open or contribute to a registered savings plan.

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 has the right qualifications. You also want to determine if they would be a good fit to help you with your investments. Take notes and compare the responses of all the advisors you meet. Take your time, you don’t need to make a decision right away.

Ask the financial advisors 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’re registered with a securities regulator
what products and services they offer
how they’ll help you reach your goals
if they’re paid by salary, commission or other fees
how often you'll meet
how they’ll inform and update you
references from previous clients
how they decide on appropriate investments for their clients
are they licensed to sell any other products
have they ever been disciplined by a regulator
have there been any restrictions, terms or conditions placed on their registration approval
are they currently under investigation by securities regulators in Canada

What type of information will my financial advisor ask for

Your financial advisor may ask for the following information to create a financial plan:

age
total annual income
estimated net worth
if you have any dependents
monthly expenses
amount of income tax you pay
investment knowledge and experience
investment goals
when you’ll need access to money you’ve invested
risk tolerance

Resources on financial advisors

Advisors belong to professional groups in their industry.

The following industry groups can be good places to start searching for more information on the industry:

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Date modified:: 2023-09-11

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