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Choosing a financial advisor is an important decision. Advisors play a key role in helping you set financial goals, select investment products, and monitor your progress towards achieving your goals. Below are seven questions to ask a potential financial advisor.

Tell me about your ideal client.

How a financial advisor describes their ideal client should be similar to your situation. If an advisor tells you they work solely with retirees and you are a small business owner in your early years, this isn’t the best fit.

How long have you been a financial advisor? What are your qualifications?

Look for a financial advisor that has at least five years of full-time experience. The advisor should have a strong combination of knowledge and experience. Choose an advisor who is a Certified Financial Planner (CFP), as this designation can only be obtained once educational requirements are met and a minimum of three years financial planning experience is obtained. Other designations include: CH.F.C. (Chartered Financial Consultant) and CLU (Chartered Life Underwriter), which are also highly regarded in the financial planning industry.Ask the advisor if they are registered, as securities regulators will only allow registration of individuals or firms that are qualified.

What level of service can I expect?

It is important that you know, upfront, the level of service you will receive. Ask how often you will meet face to face and how service levels differ among clients. How often will your financial plan be updated and how often will you be updated on your investment performance? How quickly will your emails and phone calls be returned, and who will be returning them?
Ask how many clients are serviced. An advisor may be very good at what they do, but have too many clients, which will negatively impact the advisor’s overall performance.

What kinds of products and services do you offer?

It is important that the advisor you choose can provide a wide range of financial products. Depending on your situation, your plan may require a variety of products. Some advisors only specialize in certain types of investments so you will need to ask whether they can provide you with access to the products you need.

How are you paid?

A financial advisor can be paid by salary, commission, fees, or a combination of these methods. The majority of financial advisors are commission based – they earn a commission on the products they sell. If this is the case, ask what products they sell and if they sell products mostly from one company, and if so, why? Fee-based financial advisors are compensated only by the fees customers pay them. This provides an incentive for them to give you advice and service that is in line with your goals and is not reflective of any commission they will receive.

Tell me about the team that you have supporting you.

A financial advisor should have access to specialists in different areas to meet all your needs. A team approach will ensure that you are getting the right advice in all areas.

What is your investment philosophy and process?

Ask the advisor to explain their approach to building a portfolio, and if they use money managers to help them do so. Some advisors will work with a Chartered Financial Analyst (CFA) who will assist in choosing and monitoring a qualified money manager. Some advisors will monitor the market and speculate regarding investments, while others will invest in quality companies that pay a steady, increasing cash flow. Ask the advisor which approach they take and determine if you are comfortable with it.

In most initial meetings with financial advisors, it is the advisor who asks the questions to determine if they can be of service to you. However it is important that you interview the advisor. Make sure you take the time to ask the appropriate questions before forming a partnership. It will be one of the most important decisions you make.

Glenn Ayrton is registered as an Investment Advisor through Sora Group Wealth Advisors Inc., a Member of the  Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund (CIPF). This information is general in nature, and is intended for educational purposes only. For specific situations you should consult the appropriate legal, accounting or tax expert. This update is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell any securities. The views expressed are those of the author and not necessarily those of Sora Group Wealth Advisors Inc.