Are you a person who spends sleepless nights worrying about money and whether you’ll have enough of it when you retire? Are you looking for someone who can answer questions about how to manage your money? Or do you need to start looking for advice from new sources? If any of these scenarios apply to you, here are five tips to help you find the financial advisor that is right for you.
1) Check for qualifications
Make sure you choose a financial advisor who has the Certified Financial Planning (CFP) designation, or equivalent licenses. These special designations ensure that a financial advisor is well-versed in fund management and that they understand the ethical codes that they should abide by.
2) Do extra research
Interview a potential advisor the way you would interview a babysitter for your child or a photographer for your wedding—in-depth. Additionally, you should look for referrals from family and friends. The Internet is another important resource—from Facebook to LinkedIn, you can learn a lot about a candidate online.
3) Ask how well they know their clients
Be wary of an advisor who pushes you into doing something you are not comfortable with, or who tries to sell you a product that “guarantees” you a high rate of return. If it sounds too good to be true, then it most likely is. A financial advisor who is aware of differences in the personalities and preferences of their clients will make use of the Know Your Client (KYC) rule, or a similar guideline. This helps them determine whether you are a conservative, moderate or aggressive investor. They are then able to give you investment advice which suits your personal tolerance for risk.
4) Use your Employee Assistance Program (EAP)
If your workplace does offer this valuable program, you can ask your EAP provider for financial advice. A good EAP provider will be able to help you with financial concerns in a range of topics including credit/debt management, bankruptcy, separation and divorce, and early retirement. This useful service is free of charge.
5) Refer to the Certified Financial Planning (CFP) website
Another great resource to consult is the CFP website. This site has a search feature which helps you locate practising CFP professionals in your area. Just follow this link: http://www.fpsc.ca/directory-cfp-professionals-good-standing
You may decide to delve into do-it-yourself investing rather than enlisting a financial advisor. In this case, a terrific book to get you started is The Wealthy Barber by David Chilton. The book provides some excellent financial planning advice in a storytelling format. You can read its review as well those of other useful financial books from here. Best of luck!
Busiku Mwinga, MBA
Senior Financial Consultant