Five Questions to ask your Financial Advisor

Choosing a financial advisor can be intimidating.  Most people just approach their financial institution and take the appointment with the first available advisor.  But have you stopped to consider that you are about to enter a long term relationship with this person?  Would you enter into a romantic relationship this way or even a job?  Probably not, typically there is an initial meeting, an interview or first date.  Yet for some reason we don’t do that when it comes to our finances. 


If you read my blog Is it really “All about the Benjamins?” you would remember that I discussed how we have let money be the controlling factor in the relationship and I gave you some advice on how to put money back in the toolbox and out of the driver’s seat.  Now I am here to educate you on how to date your financial advisor….sorry not date…interview…interview your financial advisor or potential financial advisor.

1.        What services do they offer?

Most importantly do they offer the services you are looking for?  If you are looking for a retirement plan in addition to investment advice it would be disappointing to find out a year into the relationship that they don’t offer planning services.  Kind of like finding out after you get married that your spouse doesn’t like Doctor Who…

2.       What are their credentials?

Did you know that anyone can call themselves a ‘Financial Advisor’ in Canada? Don’t worry they are working on that…but in the meantime find out what professional credentials and licensing requirements they have fulfilled.  Certain investments require certain licensing so if you are looking for a particular product make sure they have the ability to sell it to you. 

3.       How are they compensated/ how do you pay them?

There are lots of ways this can happen, fee for service or a percentage of assets and/or compensation from the financial products they sell you.  Some charge more than others.  The important question to ask yourself  "is this reasonable based on the level of service I require/want from them?"  I know you are saying…. but Caval….I don’t want to pay them, they should do this for free.  This is where I calmly and politely ask you if you get paid for your job?

4.       Will they work with other professionals?

I am not implying that this will become a polygamous relationship but more like a team.  Think of your financial advisor as the coach or manager and their team as the specialists.  Maybe they work closely with a lawyer and accountant and can refer you if needed.  If they are referring you to another professional they should be disclosing if they are receiving compensation for that referral.

5.       How do they make you feel?

Okay….don’t actually ask them that.  This last one is for you to ask yourself.  Remember at the beginning I stated you would be in a long term relationship with this person.  How can you do that if you don’t like the way you feel when you are around them?  Do they make you feel at ease?  Do you feel like you can trust them?  Remember that date you went on in college and you couldn’t wait for it to end?  You shouldn’t feel that when you are in their office.

So there you have it!  5 simple questions to ask the next time you are looking for a financial advisor or even if you are re-evaluating the one you have. 

Remember that money is a tool and your financial advisor can help educate you on how to wield it.

What are some concerns you have while searching for a financial advisor?  Share your comments below or tell me what other financial concerns you would like me to write about.