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How to find the best financial advisors in Canada

If you want to make the most of your money, or just need advice on what financial product to get, a financial advisor can help.

What is a financial advisor?

A financial advisor is a professional who offers you advice and recommendations when you’re looking to take out a specific financial product, or want help planning your finances.

Most financial advisors are required to have specific qualifications depending on their area of expertise. Those who trade securities must be registered with the Investment Industry Regulatory Association of Canada (IIROC).

What does a financial advisor do?

Financial advisors generally offer advice and help you make the right decision on a range of financial products. These include:

Depending on the type of advisor, and your own preferences, they may provide general advice, help you find a particular financial product, or even personally plan your finances on your behalf.

Which are the best financial advisors?

J.D. Power Associates ranks the top full-service investment firms in Canada each year, based on customer satisfaction. These were the top 10 firms in 2020 (scores are out of 1,000 points):

  1. Edward Jones (836)
  2. Assante (829)
  3. Raymond James (813)
  4. National Bank (809)
  5. BMO Nesbitt Burns (797)
  6. RBC Dominion Securities (793)
  7. iA Securities/HollisWealth (790)
  8. Investment Planning Council (790)
  9. Scotia McLeod (790)
  10. Industry Average (790)

Statista also published a 2020 customer satisfaction study ranking full-service Canadian investment firms. Except for the Investment Planning Council, all the firms listed in the J.D. Power Associates study made Statista’s top 15.

Assante took first place with 714 out of 1,000 points. National Bank placed second with 696 points, and iA Securities/HollisWealth placed third with 690 points.

Types of financial advisors

A financial advisor helps you manage your money. This includes making decisions about investments, insurance, savings and assets. Types of financial planners include:

  • Stock brokers
  • Managed fund advisors
  • Mutual fund salespeople
  • Insurance agents
  • Bank financial advisors
  • Financial planners

A financial planner is a type of financial advisor who helps you prepare for the future by identifying your financial goals and developing a plan to reach those goals. Financial planning services could include retirement planning, creating a budget, estate planning and finding tax advantages.

How do I choose the best financial advisor for my needs?

This will depend on factors like the type of advice you need, the types of investments you want to make, your risk profile and budget. Ultimately, the best financial advisor will be a matter of personal preference, but there are a few things you should keep in mind when looking to find the best financial advisor.

4 tips for finding the best financial advisor

  1. Do your own research and planning.

    Before you even begin approaching financial advisors, it’s best to have a clear idea of your own financial goals and expectations, and the type of advice or products you need. The better informed you are about your potential options, the easier it will be to find an advisor who can help you achieve your goals.

  2. Check their accreditation.

    In Canada, anyone who trades securities (such as stocks, bonds and mutual funds) are subject to provincial/territorial law and must be registered with the Investment Industry Regulatory Association of Canada (IIROC). Additionally, there are 60+ types of certifications and designations financial advisors can get. Look for designations such as Qualified Associate Financial Planner (QAFP) or Certified Financial Planner (CFP), which are given to IIROC-registered professionals who have demonstrates they have a certain level of knowledge and training. While not required to work as a financial advisor, these types of certifications can help you identify competent, trustworthy professionals.

  3. Consider their character.

    When you employ the services of a financial advisor, they ultimately become partly responsible for your financial future and livelihood. It’s extremely important that you feel you can trust them, and that you’ll be able to maintain an honest and communicative relationship. There are plenty of high-profile stories of people who have been misled or defrauded by their financial advisors. Visit the IIROC website to search for registered financial advisors. You can also check to see if there are any disciplinary reports listed for advisors you’re interested in working with.

  4. Confirm the costs.

    Financial advisors can charge for their advice in a variety of ways, so it’s important to make sure you’re getting the most cost-effective advice you can. If you want ongoing financial advice or planning, it may be better to employ an advisor who charges a low annual percentage fee. If you only need one-off advice, it makes more sense to use an advisor who charges a single flat fee. You’re also free to negotiate a better rate if you think they’re overcharging, so don’t be afraid to haggle.

How much does a financial advisor cost in Canada?

This will depend on the type of advisor you need, and the type of fee structure they use, which is generally one of the following:

  • Percentage fee. This is the most common fee model used by financial advisors and can range from 1% to 2%. For portfolios worth $1 million or more, the fee may fall under 1%. Mutual fund managers charge a management expense ratio (MER) that’s usually about 1.5% to 3.5% annually. You may be required to pay an upfront percentage fee when you become a client. Plus, advisors may take a commission worth a percentage of your earnings, or they may charge an ongoing fee on a monthly, quarterly or yearly basis.
  • Fixed fee. Other financial advisors will charge a fixed fee every time you require their services, which can be cost effective for those who only need sporadic, one-off advice or recommendations.
  • Hourly fee. Although it’s rare, some financial advisors charge for their services on an hourly basis. Most will charge upwards of $100 to $275 per hour, so it’s important to make sure you’re getting value for your money.

Some studies have found that most Canadians don’t know how much they’re paying for financial advising services. Many believe they do not pay any fees, when in fact, they do.

It’s critical to know your advisor’s fee structure. According to Questrade, a 1% difference in fees could amount to 27% to 29% more in earnings over 30 years for a tax-sheltered portfolio of $1,000 to $50,000 (assuming a 7% to 8% rate of return).

Ultimately, what you end up paying will vary based on the type of advice you need and the specific advisor you use.

Are financial advisors worth it in Canada?

This is a difficult question to answer. Some people may believe financial advisors are overpriced or ineffective, and so you’re better off making your own financial decisions. Others may see them as a vital way to save time and money, and ensure you’re making the right financial decisions and getting access to the best financial products available.

Either way, financial advisors can be very expensive, so it’s important to know that you’ll be getting trustworthy and valuable advice. There may also be certain times in your life when it makes sense to get a financial advisor, such as when you’re about to retire, or when you’re getting married and consolidating your finances.

Which bank has the best financial advisors?

Most major Canadian banks offer financial planning services and advice, and some may also have dedicated financial advisors or brokers that can help you select the best product for your situation. Keep in mind that advisors that are attached to certain banks may only be able to recommend products from that specific bank, and you may not receive the same unbiased advice you could get from an independently-employed advisor.

Before picking an advisor, check their fee structure, if they work independent or for a company, if they have any certifications and, if possible, their financial track record.

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Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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