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Choosing the right financial planner for your needs

A guide to choosing a financial planner that understands your needs

Financial planners are not just for the rich; everyday Canadians also use financial advisory services. Of course, your goals must be realistic – financial planners are not magicians. Discover how to find a planner who can help you organize your finances and investments.

Financial planners are qualified to give you personal financial advice and can actively manage your investment portfolios to create wealth and safeguard against loss. By considering your personal and financial situation, as well as your life goals, a financial planner creates an investment plan to give you the lifestyle you want now – and in the future.

What’s the difference between a financial advisor and a financial planner?

Both terms are used very broadly in Canada; however, according to the Government of Canada website, there is a difference:

  • A financial advisor is a general term that can be applied to someone who helps you manage your money. This might include an employee of your financial institution, a stock broker 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. Services offered usually include helping you create a budget, identifying tax deductions, maximizing your tax return and planning your retirement.

What types of financial advice are available?

  • Personal advice. Financial planners can provide you with personal financial advice, which can be for a single issue or for more comprehensive, ongoing issues. Your financial planner will charge you a fee based on the type of advice you require.
  • General advice. General financial advice is available on websites such as finder Canada and is free of charge. General financial advice does not consider your personal financial circumstances.

How can a financial planner help?

A financial planner can do the following:

  1. Help you identify your short-term and long-term financial goals.
  2. Give recommendations about investment products relevant to your personal situation and goals.
  3. Actively manage your investment portfolio(s) to make sure your investments are working towards your financial and personal goals.
  4. Help you apply for important financial products such as your pension, life insurance and investments.

Why should I use a financial planner?

A planner can usually provide the following:

  • Expert skills and knowledge. The finance industry is a very complicated environment with complex legislation and an increasing number of wealth creation and investment options which are constantly evolving. Instead of embarking into this uncharted territory alone, a highly trained and skilled finance professional can walk you through your options and present opportunities which could improve your financial position.
  • Personalized plans. A financial planner should provide a customized strategy and plan that is created especially for your needs, interests and current financial situation as well as your goals and objectives.
  • Goal documentation. Another characteristic of good financial advice is it will help you discover, document and update your financial goals and objectives. Written goals can act as a constant reminder to both yourself and your advisor as to what needs to be accomplished. You should keep in mind that written goals tend to be accomplished, while non-written goals tend to remain a dream.
  • Unbiased decisions. Objective and unbiased financial advice can help you make fact-based and strategic financial moves that can be beneficial in both the short and long term.

What’s the difference between an accountant and a financial planner?

AccountantFinancial planner
  • Prepares and sends personal and business tax returns to the CRA
  • Maximizes your tax deductions
  • Provides personal and business taxation advice
  • Provides business structure advice
  • Conducts an audit of financial accounts
  • Identifies your personal financial goals
  • Creates an investment plan to help you reach your goals
  • Helps you invest your money
  • Optimizes your current investment portfolio
  • Recommends and helps you apply for financial products like insurance
  • Provides budgeting and debt consolidation advice

What fees do financial planners charge?

Your first meeting with a financial advisor will likely be free of charge. Financial advisors use this opportunity to find out more about you as a person, discuss how they can help you and outline the fees for their service.

You can usually pay your advisor in one of three ways:

  • You can pay an hourly fee for helping you create a financial plan.
  • You can pay a commission or a trading fee if the advisor is managing investments.
  • You can pay a percentage based on the value of the assets they manage for you – this is known as the management expense ratio.

Important note about fees

Know how much you will pay. Make sure you get your financial planning fees expressed as a dollar sum rather than a percentage whenever possible. This will help you avoid any surprises when your financial planner sends you your bill.

Financial planner qualifications and regulation

In Canada, only the province of Quebec has strict regulations on individuals who can use the title “financial planner”, which is titled as “planificateur financier” or the acronym “Plan. Fin.” in French. In Quebec, financial planners must meet the following criteria:

  • Have a certificate issued by the Autorité Des Marchés Financiers.
  • Be members of a professional association with which the Autorité Des Marchés Financiers works with.

Outside of Quebec, the terms financial advisor and financial planner are used very broadly. Since there are no regulations anywhere else in Canada, any individual can call themselves a “financial advisor” or a “financial planner.” While it can be a challenge to find the right advisor for your needs, you can assess an advisor based on the following:

  • Professional experience
  • Education
  • Training
  • Qualifications
  • Certifications like the Certified Financial Planner

How do I choose a financial planner?

Banks, financial institutions, law firms, advisory businesses and independent operators can all offer professional financial advice. Here are four tips you can use to choose the right financial planner for your needs.

1. Check the Better Business Bureau and other associations

Industry associations like the Better Business Bureau and Advocis are a good place to start your search for a financial planner.

The Better Business Bureau can help you determine if there have been any complaints from customers regarding a specific business.

Advocis list different financial designations which can help you choose a professional and qualified financial advisor.

To find a qualified financial planner in Quebec, visit the Autorité Des Marchés Financiers website.

2. Get help from the Financial Planning Standards Council

The FPSC can help you find the right planner for your circumstances. You can use their website to discover advisors in one of three ways:

  • By location
  • By their name
  • By qualifications and specializations

3. Ask friends and family for recommendations.

If any friends or family members have used a financial advisor in the past, ask for their recommendations. It’s best to consider several different advisors before you dive right in with one.

4. Have a face-to-face meeting

When you’re ready for a meeting, you can usually get a consultation free of charge. You can use this opportunity to review the planner’s qualifications and to discuss the scope of planning and advice services.

Questions to ask your financial plannerQuestions your financial planner should ask you
  • Ask about their qualifications
  • Ask about their education and professional experience
  • Ask what areas they are qualified to give advice in
  • Ask for references from previous clients
  • Ask whether they are a member of any professional bodies
  • Ask how often you’ll meet and how they will keep you informed
  • Ask if they charge a flat fee for ongoing service
  • Ask how they will help you meet your goals
  • Your age, annual income and net worth
  • Your investment goals and risk tolerance
  • The size of your family and whether you have dependent children
  • Your plan for caring for your family if you pass away
  • Your expected education costs for your children
  • Your plans for investing in property
  • When you plan to retire
  • Inheritance for your children

Financial planning and debt consolidation

A financial planner is qualified to provide advice about debt consolidation and they can help if debt consolidation is part of your overall investment strategy. A financial planner can recommend strategies and financial products for debt consolidation such as debt consolidation loans and credit cards.

This type of financial advice may be included in a financial planner’s ongoing fees or you may have to work out a new payment plan. If you’ve been unable to pay down debt and you’re going to be charged for the financial advice, you may want to consider the ongoing value of this advice.

In many cases, general financial advice can provide some good tips on how to consolidate debt. A financial counsellor can also provide debt consolidation advice.

Is a financial planner worth it?

Financial planning can help you realize and reach your goals as well as help you understand the changing nature of the markets and your own financial circumstances. In addition, you can create and build an ongoing relationship with a financial planner to get the greatest benefit.

You can assess the value of your financial planner by determining how much you’re paying for the services provided, and if you’re paying for advice that can be tangibly measured, such as debt consolidation advice, you can make an assessment of the worth of this service when it’s time for your annual review.

While financial planners can help you navigate the world of financial markets, this information is becoming increasingly accessible to the public. There are many resources in the online world which can provide invaluable financial advice.

Frequently asked questions about financial planners

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