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Finding The Right Financial Advisor / Certified Financial Planner

When it comes to understanding and managing financial goals, it’s best to work with a qualified financial advisor or Certified Financial Planner. With dedicated expertise, they’re able to illustrate what’s required to meet specific retirement goals, investment opportunities and create wealth optimally. This is a wonderful way to build for the future and grow financially.

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Clients are able to utilize the services of a financial advisor or planner by creating goals (i.e. buy a car) and having them provide guidance. Each financial advisor brings a unique set of qualifications and specializations making it easier to hone in on the right professional. For example, there are mortgage specialists that are able to help manage house-related opportunities and goals. These advisors are trained to make the management of money as easy as possible.

Understand the Credentials and Their importance

In this case, it’s important to realize the value of specific credentials and designations before moving forward. A qualified financial advisor or CFP will have a state-issued license to work in the area and it’s best to make sure they’re valid as a client.

This can help distinguish between different options including advisors and planners.

Remember, while being a financial advisor is a professional designation, this doesn’t mean people can’t claim to be financial advisors. In fact, there are times where people pretend to be qualified by skirting around the regulations using unrelated credentials. For example, there are some professionals that are qualified as being “Personal Finance Planners” but pretend to be qualified financial advisors. There is a difference and it’s essential to realize the difference and look out for dubious specialists. The same applies to those who may have taken the Professional Financial Planning Course (PFPC) as it is not active now and has been discontinued.

If the goal is to find a great wealth management expert then it’s always best to look for a Registered Financial Planner (RFP) or a Certified Financial Planner (CFP). For those residing in Canada, there are over 18,000 CFP holders. Remember, these designations are not only approved in North America but are recognized worldwide. Each professional is fully regulated by the Financial Planning Standards Council (FPSC), which means specific standards and regulations are in place for all designated specialists. These standards have to be upheld for them to remain in good standing with the council. Clients should always take a look at their status before moving forward.

Potential Fees and/or Commissions

In general, the average financial advisor or Certified Financial Planner is going to be working on their own and as a result, will have distinct fee structures.

Most will have a set fee that is going to be established based on the actual service. This is how advisors get paid. However, advisors can be paid with a commission and/or flat-fees depending on their preference.

1) Commission

When it comes to commissions, financial advisors will have a set percentage in place for each financial product that’s sold. Let’s assume a financial advisor is under a specific mutual fund, they will gain a small commission for every dollar that is spent on the mutual fund (i.e. 2%). Of course, this can lead to issues for the client.

When there is an incentive to promote a certain financial product, it can blur the advisor’s approach to managing a client’s financial goals. There is a fine line in this regard and it’s important to look at how the commissions are set up.

However, this can also be a good idea for those with a smaller amount of assets. It keeps things simple and helps save for the future at the same time.

2) Flat Fee

Other advisors prefer to go with a flat-fee structure or are often referred to as a fee only financial planner. This means they ask for a set fee that is paid in advance for their services. This rate is charged on a certain date and that’s it. Everything else is established based on their advice and has nothing to do with their gains.

This is easier for most clients as it keeps things on the straight and narrow.

If a client has a multitude of assets and wants to keep things organized, a flat-fee based option can go a long way in the management process. It keeps things cost-efficient.

Is it Best To Use a Bank-Hired Financial Advisor or an Independent Financial Planner?

There are times when a financial advisor from the local bank is an option. Independent financial planners tend to work on their own as the name suggests while offering similar services.

Bank-Hired Financial Advisors

It’s important to note any bank-hired financial advisor is going to be attached to the hip with their financial institution. This means they are going to be asked to promote the bank or financial institution’s products (i.e. mutual funds). There may even be an incentive for doing so at a financial level.

However, there are benefits to think about with a bank-hired financial advisor that cannot be ignored.

  • These Financial Advisors Are Consistent and Easy to Access
  • They Follow and Apply to Rigorous Policies and Guidelines
  • The Bank’s Brand is a Source of Comfort for Clients

Advisors will often be paid in a similar manner (i.e. salary + bonus). This is ideal for those who want to know how the structure works before selecting a particular planner.

Another advantage comes in the form of potential financial perks that are on offer with bank-hired financial planners. The bank or financial institution will likely provide discounts on its products to new clients (i.e. discounted annual service fees, free chequing accounts).

Independent Financial Planners and Advisors
image of coins indicating financial growth

These professionals can’t be found through a financial institution but there are several online resources available with the best options for wealth management and retirement planning.

Due to their independent nature, these financial advisors and planners will have distinct services. They will be running a personal small business, which comes along with specific specializations. For example, some are only going to work with businesses while others are only going to work with doctors. It’s important to find the one that works in your niche and is able to manage your income/assets.

It’s important to note some financial advisors are going to be related with a separate franchise (i.e. team of independent advisors). A good example of this would be Investors Group as they bring all of the specialized financial planners under one brand and go from there. It can help in finding the ideal fit for your needs as a client and what you’re going for over the long-term.

By going through the online resources, you are able to find the right fit for your needs and end up with an ideal Certified Financial Planner or financial advisor in a timely manner.

Online resources include:

  • WealthPrep – Database of Canadian Financial Advisors
  • Advocis – Database of Canadian Certified Financial Planners (CFP) and Financial Advisors
  • I.A.F.P – Database of Registered Financial Planners (RFP)