Good financial advice can be hard to find, but does every Canadian really need to hire their own financial planner?
Everyone has some form of assets and liabilities, but it’s the complexity of their personal balance sheet that should be a determining factor. If your financial situation is as simple as putting aside money for retirement and aggressively paying off your mortgage, there’s not necessarily a need to bring in another party.
However, for many Canadians, going solo on your financial future probably isn’t worth the risk. I do like the idea of avoiding a planner, but I’m still in the old-fashioned camp of leaving that for a person who knows enough about finance.
In an ideal world, every Canadian would take a college or university course to broaden their knowledge of personal finance. However, getting Canadians enthused about their finances is an uphill battle.
A lot of people spend less time choosing a financial planner than they do researching the purchase of a new vehicle. That new vehicle loses value when you drive it off the lot. When you’re choosing a financial planner you’re choosing someone to assist you with your financial management for maybe the next 20 to 30 years.”
Beginning the hunt for an adviser can be one of the hardest steps, but a little preparation can go a long way. Once you’ve selected a few candidates, I suggests writing a list of questions with your specific needs in mind.
Ask the planners about their investment philosophies, how they perceive your financial needs, and from there gauge whether you feel they’re attuned to your expectations. If their answers don’t feel right to you, look for a different person to work with.
You should ask, as a client, how your financial planner is paid. Not only that, it should be disclosed in writing. Financial planners generally make their money through either commissions or hourly service rates. Both have their pros and cons, and depending on how much money you’re planning to invest, you might find that one of the options better suits your goals. While commission-based advisors/advisers/planners are commonplace, some have levelled criticism on their approach, suggesting they come to their clients with a bias for certain investment products with a higher payout.