10 Questions To Ask A Financial Advisor

Finding the right planner is extremely important because your choice will almost certainly affect your financial future. The questions in this checklist will help you interview and evaluate several financial planners to find a competent, qualified professional with whom you feel comfortable and whose business style suits your financial needs.

• What are your qualifications? Many people offering financial services call themselves financial planners. However, financial planning is a detailed, comprehensive process. It requires hands-on experience and a strong technical understanding of topics such as personal tax planning, insurance, investments, retirement planning and estate planning and how a recommendation in one area can affect the others. Ask the planner what his or her qualifications are to offer financial advice and if, in fact, they are a qualified planner. Ask what training has been successfully completed. Ask what steps are being taken to stay current with changes and developments in the financial planning field. Ask whether he or she holds any professional designations including the Certified Financial Planner designation, which is recognized internationally as the hallmark of the competent, ethical professional financial planner.
• What experience do you have? Experience is an important consideration in choosing any professional. Ask how long the planner has been in practice, the number and types of firms with which he or she has been associated, and how their work experience relates to their current practice. Inquire about what experience the planner has in dealing with people in similar situations to yours and whether they have any specialized training. Choose a financial planner who has a minimum of two years experience counseling individuals on their financial needs.
• What services do you offer? The services financial planners offers will vary and depend on their credentials, registration, areas of expertise and the organization for which they work. Some planners offer financial planning advice on a range of topics but do not sell financial products. Others may provide advice only in specific areas such as estate planning or taxation. Those who sell financial products such as insurance, stocks, bonds and mutual funds, or who give investment advice, must be registered with provincial regulatory authorities and may have specialized designations in those areas of expertise.
• What is your approach to financial planning? The types of services a financial planner will provide vary from organization to organization. Some planners prefer to develop detailed financial plans encompassing all of a client's financial goals. Others choose to work in specific areas such as taxation, estate planning, insurance and investments. Ask whether the individual deals only with clients with specific net worth and income levels, and whether the planner will help you implement the plan they develop or refer you to others who will do so.
• Will you be the only person working with me? It is quite common for a financial planner to work with others in the organization to develop and implement financial planning recommendations. You may want to meet everyone who will be working with you. Financial planners often work with other professionals including ones you already use such as your lawyer and accountant. If the planner works with professionals outside their own practice, get a list of their names to check on their backgrounds.
• How will I pay for your services? Your planner should disclose in writing how they will be paid for the services they will provide. Planners can be paid in several ways:

  Commissions: The advisor is compensated if you purchase financial products to implement a financial planning recommendation. In some cases, the commission is paid by the suppliers of financial products such as an insurance company. In other cases, you pay the commission, for example, if you buy shares of a publicly traded company. Commissions are usually a percentage of the amount you invest in a product.

  Salary: The company for which the planner works pays the planner a salary. The planner's employer may get its revenues from fees paid by clients such as yourself or in commissions paid by clients making a purchase or by the suppliers of financial products.

  Fee-for-service: Planners paid on a fee-for-service basis may charge on an hourly rate, set a flat rate for a specific service or be paid a fee based on a percentage of assets or income.

  In some cases compensation would be a mix of fee and commission. You should also ask if the planner or organization receives any benefits other than commission, such as advertising and promotion subsidies, from suppliers of financial products.



• How much do you typically charge? While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs would include the planner's hourly rates or flat fees or the percentage they would receive as commission on products you may purchase as part of the financial planning recommendations.
• Could anyone besides me benefit from your recommendations? Ask the planner to provide you with a description of their conflicts of interest in writing. For instance, any business relationship with the companies or ownership interest in any company that supplies financial products sold by the planner and the planner's employer.
• Are you regulated by any organization? Financial planners who sell financial products such as securities and insurance or who provide investment advice are regulated by provincial regulatory authorities and may also subscribe to a code of ethics through a professional association. Others who are members of the accounting and legal professions are usually members of professional bodies that govern their fields. Planners who hold the CFP designation are subject to disciplinary proceedings of Financial Planners Standards Council. It is a fair question to ask if they have ever been the subject of disciplinary action by any regulatory body or industry association. You can verify the answer by contacting the relevant organization. Ask the financial planner whether they subscribe to a professional code of ethics such as the Certified Financial Planner Code of Ethics.
• Can I have it in writing? Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.