What kinds of advisors are there?

What kinds of advisors are there?

So you’ve decided to see an advisor. Good!

But there are different kinds of advisors. Start to think about which one you need:

Financial Advisors should have technical knowledge about at least one common investment product, including: mutual funds, stocks, bonds, or Exchange-Traded Funds (ETFs).

They should also have the necessary expertise and experience to develop suitable financial and investment recommendations for clients.

Financial Planners should have the breadth and depth of knowledge to develop integrated financial plans for clients, and be knowledgeable in all core personal finance areas, including:

  • Estate planning
  • Tax planning
  • Retirement planning
  • Investment planning
  • Finance management
  • Insurance / risk management

Banks’ customer service representatives can help you open an account, apply for a loan or mortgage, and learn about some investment products, like GIC’s.

Insurance specialists can help you choose the insurance products that fit your life

Mutual fund representatives can tell you about the mutual funds they are licensed to sell. Make sure to learn about mutual fund fees before buying.

Brokerage firms’ investment representatives are licensed to buy and sell investments like stocks and bonds for you (always be sure to ask about fees).

Selecting a financial advisor is an important decision for all Canadians – and for many, it begins with Finding an Advisor. Advocis' online Find an Advisor tool can quickly find potential advisors in your community by language, location and designation, with the assurance that all advisors listed are also bound to the standards of professional and ethical conduct required by their membership with Advocis.

What do the letters after an advisor’s name mean?

This guide will explain.

Use it to help choose an advisor to work with. But remember: it’s only a starting point. There are other elements to consider.

Certified Financial Planner, CFP®

  • CFP professionals have demonstrated the knowledge, skills, experience and ethics to examine their clients’ entire financial picture, at the highest level of complexity required of the profession, and help them build a financial plan so that they can Live Life Confidently™

Certified Health Insurance Specialist (CHS™)

  • CHS-designated advisors are specialists in providing advice about health insurance products such as disability , critical illness , personal health and long term care insurance

Chartered Accountant (CA), Certified Management Accountant (CMA) and Certified General Accountant (CGA) are all considered to be a Chartered Professional Accountant, CPA now.

  • CPA-designated advisors provide accounting expertise including revenue and tax planning and auditing, policy planning and financial analytics.

Chartered Financial Analyst®, CFA®

  • CFA-designated advisors have investment analysis and portfolio management skills.

Chartered Financial Consultant, CH.F.C

  • CH.F.C-designated advisors are experts in retirement planning and capital accumulation strategies.

Chartered Investment Management, CIM®

  • CIM-designated advisors can offer advice on structuring a stock portfolio.

Chartered Life Underwriter, CLU®

  • The Chartered Life Underwriter (CLU®) designation specializes in providing advice about risk management, estate planning, and wealth transfer for complex personal situations and business owners, and will permit you to use the title of Financial Planner in Ontario.

Fellow of the Canadian Securities Institute, FCSI®

  • FCSI-designated advisors are financial services professionals who already hold some other designation and have met exacting standards for industry experience and advanced education.

Financial Planner (Pl. Fin.)  

  • This designation has been designed to meet the unique provincial requirements in Quebec.

Professional Financial Advisor (PFA™)

  • The Professional Financial Advisor (PFA™) Designation Program is a practice-based online program designed for financial advisors and planners. It focuses on must-have knowledge and skills that will help you drive your financial advisory practice to greater success, and will permit you to use the title of Financial Advisor in Ontario.

Qualified Associate Financial Planner QAFP™

  • QAFP®professionals have proven they have the knowledge, skills, and experience to provide holistic financial planning strategies to clients who are building their financial well-being and that are ideally suited to today’s speed of life.

Registered Financial Planner, R.F.P

  • R.F.P-designated advisors specialize in financial planning.

For more information on financial designations, see the Investment Industry Regulatory Organization of Canada’s (IIROC) site on understanding financial certifications.

Make sure to pick the advisor who’s right for you. Always feel free to ask as many questions as you need to feel comfortable, and preferably interview more than one

Here are some questions for your advisor to get you started.

Level of Service and Advice: These questions make sure that your relationship is defined ahead of time. Doing so make sure that as a client you’re satisfied and that the advisor is aware of your expectations.

  1. Will you be providing comprehensive, integrated financial advice? If not, what advice will you be providing? How often will I hear from you?
  2. How often will we review my financial plan to make sure I am on track?
  3. Do you provide a written summary of the highlights of our meetings?
  4. When I call, how long will it be before I will hear back? Will you return the call yourself or will your associate?
  5. If we have a problem, what steps should I take?

Type of Relationship: These are great questions to get an idea of what kind of organization you’ll be dealing with. Will you be a valued client or passed on to whoever can see you?

  1. Will our conversations be treated as confidential?
  2. Who besides you will have access to my information?
  3. Will I be dealing with you or one of your associates?
  4. Describe the profile of your typical client? Your ideal client?
  5. Is a minimum account size required?
  6. Is my account larger/smaller than your average account size?

The Costs: It’s important to understand how your advisor is paid so that you are aware of any costs that you could incur, be they direct or indirect, as well as any potential conflicts of interest.

  1. How do I pay you?
  2. Directly: Fee for service, commissions, fee based on the size of my account, fees based on portfolio performance.
  3. Indirectly: and/or trailer fees, other fees based on the size of your account, or salary paid by your firm.
  4. What fees and other costs, both direct and indirect, are involved in working with you and your firm?
  5. Can you give me a dollar estimate of what those fees and costs would be for someone with my needs?
  6. Do you have a minimum annual fee?
  7. Do I have to pay GST or HST on top of these costs?

Qualifications: Understanding what makes your advisor professional enough to manage your finances is critical, to both protect your hard earned money and to ensure that you can have confidence in your new advisor. This goes beyond education, it should also include their processes, their ongoing development and the dedication to the industry.

  1. Are you or your firm licensed to offer investments to the public?
  2. If yes, are you registered to provide financial planning advice?
  3. If no, are you qualified to provide financial planning advice?
  4. What is your professional training?
  5. What is your experience as a financial advisor?
  6. Do you carry professional liability insurance?
  7. How many hours of continuing education do you complete each year?
  8. Are you a member of any professional association?
  9. Has the regulator or your professional association ever disciplined you?

If You Want Them to Manage Your Investments: Questions like this will help you to understand specifically how your advisor will look after you; their process, their preferences and the details on your ongoing relationship as it relates to your investments.

  1. Will you manage the investments yourself or outsource it?
  2. Is your firm registered with a major stock exchange or a member of the Investment Dealers Association?
  3. What sort of investor protection is available?
  4. What range of products and services do you offer?
  5. What is your investment philosophy?
  6. Will you be recommending any investments that would tie me to your firm? If so, which ones and why?
  7. What types of investments are you currently recommending?
  8. What potential conflicts of interest should I be aware of?
  9. Will you be required to call me before you make any changes in my investments?
  10. 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.