I know myself. I’m not the type of person who can manage my money alone. So how do I go about finding a financial adviser?
Most people put more time and energy into shopping for a coffee maker than they do choosing a financial planner. Coffee is important, no question, but a financial planner can have a huge impact on your financial health. This impact can be felt in tangible ways — you reach your financial goals or you don’t. And intangible ways — you feel clear, confident and empowered about your money or you feel unclear, unfocused and stressed.
Here are the basics steps to follow to find a financial adviser. Note that this will take you at least eight hours over the course of a few weeks, but it will be worth it. Really.
Determine your search criteria
What you want in a financial planner can be different from what your best friend wants. So take a few minutes to think about the criteria that are most important to you. Here is my basic list. If you want a more detailed description, click here. Feel free to borrow the points that are relevant to you or come up with an entirely new list:
- Delivers performance that meets the benchmark index over time
- Communicates in a way that works for you
- Provides solid advice and doesn’t just sell products
- Understands and works on all your goals
- Holds you accountable for achieving those goals
You will notice that “nice” is not on my list. Neither is “fancy car/suit.” I don’t really care if the financial planner is nice or well dressed. Sadly, those external attributes reign supreme for many people, to their detriment.
Develop a list of advisers to interview
Interview? Yep. Interview. I know that this is a totally annoying step, but it is critical. Here are two ways to find people to interview.
1. Ask for referrals from people in your community
Send an email to your friends and family that outlines your search criteria. The mistake many people make it to simply ask for a referral. That will give you some names, but not necessarily names that fit what you want. Don’t be surprised if your friends and family don’t have suggestions. My experience is that a lot of people have financial advisers, not a lot of people have a relationship that is good enough to lead to a referral.
2. Access online resources
A referral from someone you know can be a great way to find an adviser, but it doesn’t always get you the result. There are a bunch of online resources to help you build your short list. They provide names and numbers, but don’t vet the candidates.
- Moneysense has put together a list of fee-only financial planners.
- The Financial Planning Standards Council has a “find a planner” tool on its website.
Interview at least three advisers
Financial advisers aren’t regulated in the way that many service providers are. Doctors and lawyers, for example, have very clear education requirements and a regulatory body that oversees it members. Not so here. The most recognized designation in Canada is the CFP or certified financial planner, but there are lots of people who call themselves financial planners who have no designation at all.
The interview questions I recommend cover off a number of areas, but aren’t exhaustive.
- Get to know your financial planner
How long have you been in this line of work?
What designations do you have and what did it take to get them?
How would you describe your approach to advising clients?
Do you provide a written financial plan and what does it look like?
Can you provide me with a few references to check?
Based on a portfolio of my size, how much will I pay in commissions and other fees?
What do you recommend that your clients do to get the most out of the money they pay you?
Can you show me an example of the performance statement you use?
Will you provide with updates on how my portfolio is doing versus the benchmark index?
- Life goals
How do you factor in life goals that aren’t related to retirement or investments?
Choose your best candidate
Take some time to reflect on the candidate’s answers to your questions, and reference back to your criteria. Have you found someone who will be able to do what you want? If yes, proceed. If no, keeping interviewing.
Yes, this is a lot of work and it still won’t guarantee you’ll find someone great. But it will sure increase the probability.