These questions will help you decide whether a particular financial advisor can provide the advice you need.
Remember that you are considering hiring them, so treat the questioning like a job interview.
Level of Service and Advice
- Will you be providing comprehensive, integrated financial advice? If not, what advice will you be providing? How often will I hear from you?
- How often will we review my financial plan to make sure I am on track?
- Do you provide a written summary of the highlights of our meetings?
- When I call, how long will it be before I will hear back? Will you return the call yourself or will your associate?
- If we have a problem, what steps should I take?
Type of Relationship
- Will our conversations be treated as confidential?
- Who besides you will have access to my information?
- Will I be dealing with you or one of your associates?
- Describe the profile of your typical client? Your ideal client?
- Is a minimum account size required?
- Is my account larger/smaller than your average account size?
- How do I pay you?
- Directly: Fee for service, commissions, fee based on the size of my account, fees based on portfolio performance.
- Indirectly: Deferred sales charges and/or trailer fees, other fees based on the size of your account, or salary paid by your firm.
- What fees and other costs, both direct and indirect, are involved in working with you and your firm?
- Can you give me a dollar estimate of what those fees and costs would be for someone with my needs?
- Do you have a minimum annual fee?
- Do I have to pay GST or HST on top of these costs?
- Are you or your firm licensed to offer investments to the public?
- If yes, are you registered to provide financial planning advice?
- If no, are you qualified to provide financial planning advice?
- What is your professional training?
- What is your experience as a financial advisor?
- Do you carry professional liability insurance?
- How many hours of continuing education do you complete each year?
- Are you a member of any professional association?
- Has the regulator or your professional association ever disciplined you?
If You Want Them to Manage Your Investments
- Will you manage the investments yourself or outsource it?
- Is your firm registered with a major stock exchange or a member of the Investment Dealers Association?
- What sort of investor protection is available?
- What range of products and services do you offer?
- What is your investment philosophy?
- Will you be recommending any investments that would tie me to your firm? If so, which ones and why?
- What types of investments are you currently recommending?
- What potential conflicts of interest should I be aware of?
- Will you be required to call me before you make any changes in my investments?
- How often will you be reviewing my investment performance?
A good financial advisor expects you to discuss these topics and any other issues you feel would be pertinent to establishing a solid working relationship with them.
Excerpted with permission from Who’s Minding Your Money? Financial Intelligence for Canadian Investors by Sandra Foster (published by John Wiley & Sons, 2000).
© Copyright. No material can be reproduced in whole or in part without the written permission of Sandra Foster.