It can be hard to ask for help. As the “one in charge,” you’re used to moving swiftly and confidently, whether it’s a new direction for a business, a team or even a family. You may have a vision for where you want to go, or perhaps you just have a sense that it’s the right thing to do.
Yet when it comes to your financial future, it may not be best to DIY it. Planning for an extended lifetime requires more in your retirement savings than you may have anticipated. And you can’t afford to make a mistake.
The Role of the Financial Advisor
When you’re sick, you go to the doctor. When your furnace stops working, you call the HVAC specialist. Similarly, if you’re considering your financial goals, now and in the future, it’s a good idea to work with a specialist.
Financial advisors can help you review your evolving financial goals, needs and circumstances. Many operate in a holistic manner, bringing in other experts, such as estate planners, risk management professionals, tax advisors and others.
Although it seems clear that the financial advisor is helpful, experts disagree on exactly what a good advisor is worth in dollar terms. One asset firm reports the value of working with a financial advisor is 4.9%.[1] In more concrete terms, Canadians who worked with an advisor over a 15-year period wound up with four times the assets of those who didn’t.[2] In addition, nearly 75% of Canadians working with a professional have greater peace of mind about their financial situation and 70% feel they are reaching their financial goals.[3]
5 Tips to Choose the Right Financial Advisor
Even after you’ve decided to hire an advisor, it can be a challenge to find the right one. Every advisor has a different expertise, and it’s important to find someone who can support your needs. Consider your current family situation and financial circumstances, and use these tips to make the right choice:
- Identify the services you need. Decide what kind of help you’re looking for, and focus your search on advisors who can provide that support. The most common services include: budgeting help, debt management, investment advice, insurance coverage, tax planning, retirement planning, estate planning and even education planning.
- Clarify all fees. Advisors are paid in a variety of ways, so it’s best to understand the differences before you begin. Fee-only advisors charge a monthly, quarterly or annual fee for their services, while commissions-based advisors earn money based on the products they sell or the accounts they open.
- Research, research, research. Many people rely on a referral, but it’s a good idea to go above and beyond when it comes to your money. Research any recommendations online to check on qualifications and reviews.
- Make an appointment. Choose several advisors who seem like strong possibilities, and make an appointment. Speak generally about your situation and what you hope to gain from the relationship, and see if you feel comfortable. Clarify their expertise, areas of support and fee structure.
- Choose an advisor. Consider all your options and make a choice. If you clicked right away with one of the advisors, the decision may be easy. If you weren’t comfortable with anyone, think about what didn’t work and look for someone else.
It may be uncomfortable to ask for advice. But professional guidance can mean the difference between making a plan that can see you comfortably through your later years – and just hoping it all works out.
[1] Russell Investments, “Value of an Advisor,” 2022.
[2] RBC Global Asset Management, “The value of working with a financial advisor,” July 2020.
[3] Financial Planning Standards Council, “The Value of Financial Planning,” 2013.