Many of you ask me how to choose your financial advisor. A word of caution is in order with this question. Although rooted in popular language, the title of financial adviser is not recognized by the authorities, who, moreover, prohibit its use. For those who are not familiar with the financial industry, I agree that the various current professional designations have enough to make many people lose their bearings: financial security advisor, mutual fund representative, group insurance and group annuity advisor, planner financial, stockbroker…
There is no doubt that you have already used the services of many advisors from a transactional perspective. However, if you are interested in overall strategy rather than piecemeal products, you are probably unknowingly looking for a financial planner.
Better too soon than too late
The financial planner, with the help of a structured approach based on recognized standards and assumptions, will advise you with a view to establishing a comprehensive plan affecting your financial management as well as everything relating to your insurance, investments, taxation, legal and family aspects, business accounting, etc. Clearly, his work is more oriented towards advice than sales.
Many financial planners hold multiple licenses to practice simultaneously. It is therefore possible for you to benefit from their support, while being advised on the products available by working with the same person. Some like it, some don’t.
In my view, anyone who wants a fully integrated analysis of their current situation and visualizing the impacts of various possible long-term financial decisions has every advantage in using such a mandate. Certain life events could serve as a trigger: business project, founding a family, divorce, inheritance, sale of your business, lark! Although preparing for retirement is often the source of the first contact with a financial planner, it seems that one of the comments most heard at the end of the process is that it would have been better to make the exercise earlier in working life.
Finally, many believe that it takes a very high net asset value to use such services. This is probably due to the fact that financial institutions reserve this service for wealthier clients through their private management service. However, there are many financial planners trained in branches. You therefore have the option of requesting this service from your bank or even hunting for an independent financial planner.
To pay fees, or not?
If you opt for the path of independent practice, some financial planners offer fee-based compensation, that is, they charge for an independent consulting mandate. Other financial planners, when they have several licenses to practice, can also carry out the financial planning of their clients who entrust them with the management of their assets. Both practices are equal and can find takers. The important thing is that everyone’s interests are named transparently, isn’t it?
Finally, as for the amount of fees to be expected, you can expect a few thousand dollars for a complete process. If you opt for the fee-based method, you would benefit from retaining the services of a professional whose mandate and work process are complete and detailed, rather than limiting your decision to the rate requested.
For the rest, here are some questions that will help you finalize your choice:
How does a typical assignment work? How many meetings/hours are included?
What are the advantages and limitations of the software you use? Will I have a detailed report in hand? Will the scenarios be customized based on the liquidity forecast, or are they more general projections?
What support is available after the submission of the report for the implementation of the recommendations?
Is the annual review included in your services?
Will your recommendations be general or will you also recommend products? How does your product compensation work? Do you broker or represent one or more institutions in particular?
Last thing, but not least. The financial planner, in an optimal approach, will accompany you in all the important stages of your life, even on a daily basis. Human connection should therefore be just as important as professional skills and experience. You will have to lay bare yourself in front of this professional, both in terms of the numbers and the dreams that inhabit you, both in terms of your fears and the values that define you.
Moreover, we all know that a good tablet plan does not work and that we need to be encouraged, if not even pushed, to take action. As well follow your intuition to choose the person who will offer you a sincere, pleasant and effective long-term professional relationship. When it comes to deciding on human factors, flair remains your best ally.