Like most other countries, Canada has its own financial landscape and ecosystem. Without proper resources and advice, figuring out a plan for your financial success in Canada can be a challenge. As a result, many newcomers turn to financial advisors to better understand financial products and feel more confident with their investments.
Before you choose a financial advisor, here are seven questions you should ask:
How are you accredited or registered?
All financial advisors are required to be registered with the Investment Industry Regulatory Organization of Canada (IIROC). The IIROC regulates all investment dealers in Canada and also monitors and enforces rules regarding the proficiency, business and financial conduct of these firms and their advisors. Therefore, ensuring that your financial advisor is accredited or registered is important.
How are you compensated?
Financial advisors may receive a fixed salary or a flat fee or commission or a combination of these. Inquire how your advisor is compensated, the total cost of services being provided to you, payment options, and the exact nature of products/services that will be provided in return.
What is your financial/investment experience?
Don’t hesitate to ask your advisor questions about their industry experience, professional qualifications, memberships, education, or even the meaning of their designation/title. Note that fewer years of experience doesn’t necessarily equate to less expertise as some advisors enter the profession after many years of work alongside individuals who would later become clients.
What kinds of products and services can you provide?
There are different types of financial products: GICs, mutual funds, other proprietary financial and investment products. Make sure you check your advisor’s access to investment research, portfolio strategy teams, and risk management groups and inquire if they’re limited to certain investments or can also provide additional services (such as financial, tax, retirement, estate planning services, etc.) that may help you achieve your financial goals.
What kind of clients do you serve?
Check if your advisor specializes in specific types of clients and is able to manage complex financial situations. Don’t be shy about asking for references — after all, your financial advisor is in many ways applying for the job of managing your financial future!
How will you help me reach my goals?
Discuss your financial goals (such as preserving your income, building your wealth, retiring comfortably within a certain period of time, etc.) with your advisor and ask for their approach to managing your portfolio. Verify if each portfolio is custom-crafted or if they follow a set of established models and ensure you are comfortable with the process. It also helps to get clarity on any value-added services that your advisor can offer to ensure that your financial needs (other than investments) are in sync with the rest of your affairs.
What kind of service will I receive?
Before you decide to partner with a financial advisor, inquire about the level of service: the meeting frequency to review progress, the process to update you on your portfolio performance, and contact options to and from your advisor and support staff.
Learn more such tips and explore your investment options in Canada by registering for our upcoming webinar.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by the Royal Bank of Canada or any of its affiliates.
Source: RBC Dominion Securities, Inc.