Finding a trusted advisor

You know you need some help in developing a financial plan – but how do you find someone to help you? Most people find their financial advisor through referrals from friends, family, an accountant or lawyer. Others do research on firms and planners using the internet, professional organizations and publications. Any of these routes will work, but regardless of how you source an advisor there are still some questions you need to ask to evaluate their expertise. In fact, plan to interview several advisors before you make your decision.

1. Ask about the advisor’s qualifications, and how long they have been practising.
2. Are their clients in the same type of financial situation as yourself – or do they deal with another segment? Ideally you would like someone who has experience in handling financial situations like your own.
3. What exactly will the advisor do for you – what specific services will he/she provide?
4. What range of issues do they offer planning advice (i.e. estates, tax, retirement, asset accumulation etc)?
5. Are they licensed to sell financial products? If so, ask if there are any issues related to a conflict of interest?
6. Will you work with them directly, or will they hand you off to an associate or other individual? If so, take the time to meet them and ask many of the same questions.
7. Make sure you ask and understand how they expect to be compensated for their work.
   a. Is it fee only? Confirm the fee is based on a flat rate for a specified service, an hourly rate, or a percentage of the assets that they are managing on your behalf.
   b. Is it commission based? These would be commissions that they earn based on the products that they sell as your plan is put in place. You are not paying for their advice or preparation of the plan.
   c. Combination of both a fee and commission.
   d. Fee-offset? In this arrangement commissions are offset against fees charged for the planning process.
   e. Salary ? Some planners, especially those that work for a financial service company work on a salary.
   f. Bonus? Ask if they receive any bonuses or incentives for selling/recommending specific products and services.
8. Get an estimate of the cost in creating your financial plan and its on-going maintenance.
9. Make sure the advisor understands your risk profile when selecting your portfolio.
10. Ask them to set target rates of return and to write an investment policy statement for you.
11. How often will he/she assess your portfolio and give you updates? When do they make adjustments? How will they keep you informed?
12. Since this will be a long-term financial partner – do you feel comfortable with them? If not, you need to keep looking until you find the right ‘match’.