Everyone needs some help sometimes. Even with investing. Choosing the right adviser for you is important to reach your financial goals. An adviser can help manage your investments for you if you are not comfortable doing this work yourself due to a lack of knowledge, time or interest.
When you’re looking for the right adviser there are some quick questions you can ask yourself and your potential candidates to make sure you get the most out of the client-adviser relationship.
Are they registered?
“In Canada, anyone trading securities or in the business of advising clients on securities must be registered with their provincial or territorial regulator.” It is essential to make sure anyone you are doing business with, or you will be putting in a position to manage your money, is registered. Securities regulators, such as the NSSC, will only register firms and individuals that are qualified and have passed the necessary courses and requirements for registration.
What is their background?
What kind of education or training do they have? How many years’ experience do they have in the industry? How many clients do they have? Have they ever been sanctioned or had any disciplinary action against them from a regulator? This background and history not only gives you piece of mind about who you are dealing with, but also helps you decide if they are the right fit for you and your goals.
How are they paid?
You should always know how your adviser is being paid. There are a number of different ways advisers are paid, including by salary, commission, flat fees, or possibly a combination of these options. Find out how an adviser is paid and how much it will cost you to do business with them.
What products and services do they offer?
The category of registration an adviser has will tell you what product or services they can offer. This is important to know going in so you can be sure the products you are interested in will be available to you. For example, if you are simply interested in mutual funds a mutual funds representative would be all you need. However, if you also want to invest in equities and buy stocks, you would need a portfolio manager or stock broker.
What level of service can I expect?
This is a good question to ask to ensure the expectations you have will be met by your adviser? If you simply want regular statements and annual check-in, all advisers should be able to provide that. However, if you want more frequent contact or updates, make sure this is adequately communicated before you become a client of an adviser.
Once you have chosen an adviser you feel is right for you there are some expectations they should always meet. These include…
• make clear and specific recommendations
• explain the reasons for the recommendations
• point out the strengths and weaknesses
• outline the risks involved
However, an adviser cannot and should not…
• predict the performance of the markets with certainty
• recommend investments that are always profitable
• act on vague or general instructions to buy or sell investments
• meet unrealistic goals or expectations of profit
When choosing your adviser sometime the best place to start if by asking friends and family for referrals. This can give you a starting point but remember there is no one-size-fits-all adviser. it is still up to you to ask the right questions and choose the right adviser for you from your referrals.