Finding Help with Your Money – Part 2
Posted by Gail | Filed under Smart Shopper
Once you narrow your list down, check your candidate’s credentials and their references. Check with your regional licensing bodies like the Securities Commission or Insurance Commission to see if any complaints have been registered against any of the bodies you are considering.
Now it’s time to interview your short list. A face-to-face will go a long way in helping you get a sense of the person. Will you be comfortable working with this person? Do you like his manner? Do you like her communication style? Finding an advisor whom you respect and trust, and with whom you will enjoy working, is important if you want to have confidence in his or her recommendations.
Be up-front about the fact that you are evaluating several candidates and that you hope to make a decision soon. Expect your candidates to ask you questions too. They’ll want to know your priorities in terms of the financial goals you’re hoping to accomplish, along with your expectations, and how you’d like to work with them.
While horror stories abound about advisors who don’t know their stuff and who don’t take their fiduciary responsibilities seriously, there are some very good advisors out there. In my opinion your best bet will be to focus on those who work on a fee-only basis and are willing to draw you up a plan on paper. I think you should avoid anyone with an affiliation in the mutual funds industry since many employees are bound to sell their employer’s funds… often with sales targets that have them churning their clients’ portfolios. And when you’re asking for references, make sure you say, “I’d like one of the three references you give me to be someone very much like me.”
Questions to ask advisors
- How will you help me establish my goals and determine my best course of action?
- How long have you worked with your most long-lived client?
- Do you only provide direction or can you also help me with implementation?
- What are your areas of expertise?
- What are your greatest strengths?
- What are your greatest weaknesses?
- What ongoing training and education have you received?
- Tell me about the team with which you work for things such as estate planning, tax counseling and investment management?
- Do you have a team of professionals such as lawyers, accountants, and insurance specialists with whom you work?
- What financial products are you licensed to sell?
- Are you limited to selling products for certain companies?
- How are you paid?
- What is YOUR investment philosophy?
- What information will you provide to me to support your recommendations?
- How often will you contact me, and how?
Questions to ask references
- How long have you worked with this advisor?
- Are you happy with the services you’ve been receiving?
- What are this advisor’s strong points?
- What are this advisor’s weak points?
- What have you been disappointed or surprised by in your relationship?
- How often do you hear from your advisor?
- Who normally initiates the calls, and for what reason?
- How quickly are your calls returned?
- What is it that you really value about your relationship with your advisor?
December 22, 2009 at 8:25 am
Those are some great questions to ask. When I looked around for my financial advisor, I asked around half of those questions. I settled on the guy I use because his overall plan fit my plan. The decision has been a good one so far.
regards,
Jason
December 22, 2009 at 9:53 am
Sigh. If one absolutely must hire a financial planner, the first and most important question I would ask is “How are you paid?”. The planner must disclose all compensation schemes to you.
If you don’t pay this person out of your own pocket per hour (and even then), you should be sure that all the mutual funds you will be offered are going to be the ones that return him/her the biggest commission. Isn’t this obvious to everyone? That person does not work for free. So no, they do not work for you, please remember. They work for themselves.
I would trust someone at the bank much more than any type of financial planner, but I trust myself even more. I’m saying that because a financial planner at a bank is less likely to only make commission from a very small pool of funds.
http://www.canadiancapitalist.com/finding-a-financial-advisor-part-1/
December 22, 2009 at 10:31 am
Ioana, I’m curious about your last POV. My understanding was that bank employees are the *most* limited in the products they can even offer you since banks have very few (and not very good, in my experience) investment products, even compared to their own investment affiliates. I’m thinking Scotia Bank vs Scotia McLeod, for example.
How is a bank employee a better choice as a well-rounded financial advisor?
Other than that, I’m with you: no one works for you except you.
Thanks.
December 22, 2009 at 10:57 am
I truly think the most important issue is do you trust the person you have advising you. If you trust the person at the bank, then use the bank.
I have a financial advisor that I have used for years. As I haven’t always been the best with my money, he definitely has not made a lot of money off of my investments but when I call him he always returns my calls and makes time for me if I want to meet with him. That is my idea of a good advisor. Someone that treats the little person (meaning small investments) the same as the big guy.
Educating ourselves and getting a good advisor are excellent steps in the right direction.
December 22, 2009 at 1:30 pm
I have always wanted my investments to be with someone I trust and connect with. When my portfolio was managed by someone and they moved (without telling me) I was put with a different rep, and nobody bothered to tell me. I just got the annual statement and there was a different face and name on my statement! I felt cheated, they just asked for their commission annually and never communicated on anything. It was the same products as always, but it wasn’t right from a person-person point of view.
Then I met someone who reminded me so much of Gail that I had to know more. She had an extensive background in money matters from banking to insurance to investing and no matter what question I threw at her she had a fantastic explanation that made sense to me with REAL words…. I could tell she was passionate about her job and genuinely likes helping people understand more about how it all works… kind of like Gail! I knew I had a winner with her, so that’s where we moved everything.
To this day I don’t know whether it was a “BETTER” set up with her, but I know that I trust her more. She gives advice to help us on our taxes (present and future), she has offered ideas to help us reach our goals faster (that don’t always involve her products) and all in all has beed very kind. When the ca-ca hit the fan with stocks, she was phoning and emailing to help us through the stress, reminding us how long we have still to ride it out, and she gives us regular reports about what is going on in the money world. Her communication skills are superior in every way than who I have dealt with in the past, so I think I have found my financial planner for life.
December 22, 2009 at 1:37 pm
I’ve had good and bad experiences with advisors. When I first started, I assumed I was safe if I talked to a woman because she would understand my needs. My first advisor at RBC was very inept and filled out the wrong paperwork and approved me for a LOC and then the next day called me and said she had made a mistake and couldn’t offer the LOC. She offered a loan instead with a higher interest rate, which had me doubting her.
I did more research the next time and my favorite advisor ever was with Standard Life. She started off our conversation by telling me about herself, professionally and personally, and sharing some of her investment theories. She helped me focus my financial goals and she understood my investment ideas and had some great input. Although I chose my mutual funds she helped me create the long term plan and helped me stick to it, which luckily gave me a 13-15% return for all the years I was with her and Standard Life.
When I look back to my first experience, I laugh, because back then I would have put more effort into purchasing a pair of shoes than I did with getting a loan. Lesson learned.
December 22, 2009 at 1:57 pm
Gail does suggest some great questions for people to ask when they are in search of a financial professional. As a Financial Coach I spend the majority of my time educating my clients so that they can work to do a lot of the things when it comes to managing money on their own. I do understand that not everyone has the time or the ability to manage their own finances, which is why I have a team of professionals that I work with that are there to eleviate the stress that comes with money.
My point being, we all have a job or a career doing something. We will pay someone to change the oil in our car, cut our hair, clean our teeth, but to pay someone to manage our money or to help get us on the path to financial prosperity, we stuggle to justify paying them to do their job.
The last client I helped I was able to redo their budget, set them up on a 12 month debt repayment plan, readjust 6 years of tax returns to claim a disability tax credit that they were entitled to but were not claiming and provided them adequate life and disability insurance through the services of a licenses insurance advisor. Retirement plans were set up and a hole host of things, all for $395, which is not bad considering that they are receiving about $12,000 in refunds after the tax adjustments.
December 22, 2009 at 10:04 pm
Yesterday I posted my story about how my bank financial representatives have helped me. I trust their judgement not only because of the past help but because:
- they really listen and understand MY needs
- they want the best for me to succeed and they use Gail’s percentages to ensure I don’t go over my head with something.
- they show me all the options that are available not only by them but even options outside the bank, such as bonds. We then talk about all the options and I make the final informed decision accordingly.
- I check outside the bank to see if they are correct and on the ball. So far they have always given me better information.
- because they want not only my business but my whole family’s they look at what is best for me not just now but long term and they know they have to be honest and correct to keep me and my other family members.
- they too have given me hard truths when I was young to bring me in line. I sometimes didn’t like what they had to say but it was for my own good.
- I also meet with the person and get a feel for whether they are really listening and then ask them to repeat what I said and what they think I want financially. This is a good indication as to whether we are compatible.
- I must admit I have been fortunate to have really knowledgeable bank reps, but I have always checked them out. In a small town/city words gets around as to who is good, honest, and knows their stuff. The local restaurant at breakfast time is a good time to get great info on who’s good or not from the table of the “radoteurs” which is an Acadian word that means a group of men that meet to gossip and talk about what is going on. You want to know anything about anything they know it. And when it comes to money they are always in the know.
I think the key is not which type of financial is the best, but which is best for each individual. We all live in different type of towns and cities, have different needs, and have different experts. I found what works for me, and I hope others find what is best for them.
December 23, 2009 at 2:31 am
Quote @Anne: ‘they too have given me hard truths when I was young to bring me in line. I sometimes didn’t like what they had to say but it was for my own good.’
I have found it really hard to find someone who will tell you when you’ve messed up.
December 23, 2009 at 11:03 am
@financial coach .
To paraphrase Canadian Capitalist… sure, I hire someone to cut my hair alright.
But if the person who cut my hair made a big bold hole at the top of my head, painted my hair blue instead of brown, stepped on my shoes all the time in the process AND then charged me extra for the priviledge, you bet I’d cut my own hair.
December 26, 2009 at 12:09 pm
As the author of the book “Inside The Huddle – Don’t Plan Your Future Without It,” as well as a fee-based, fiduciary financial planner, I can tell you that you should never trust your advisor (not even yours truly) with your money, and that you should trust that your financial advisor will make his or her financial fortune off of your financial illiteracy. The key to your financial success rests in your ability to know the difference between Homeownership vs. Home-Owership (not a typo), Saving for Retirement vs. Investing for Retirement and why a 401(k), 403(b), IRA or RRSP may not be the best place place your money. You will also need to learn why why the Rule of 72 or Buy Term Insurance and Invest The Difference or Dollar Cost Averaging has led many to their financial ruin. Additionally, If you want to learn how to pay off your house, cars, student loans and credit cards in 9 to 12 years without refinancing or taking out a loan, this book is must read for you.
For more information on these topics and more, please visit http://www.plancorr.com.
Happy Holidays!