Finding the RIGHT Financial Advisor

Given the sheer number of articles, 10 point lists, podcasts, and even books out there on the subject, it’s time to face the truth: choosing a financial advisor is hard. We are asked all kinds of questions in many different ways that all boil down to the same thing:

How do I choose the RIGHT financial advisor?

Clearly, all those articles, lists, podcasts, and books haven’t given sufficient answers for anyone. But why? Where is the disconnect? Is it the advisors? It is the industry?

Or… is it something else entirely?

You may not be surprised to learn that your friendly neighbourhood Spring financial planners have a theory…

First, let’s talk about what we all mean when we say “financial advisor,” which is a catch-all term that could mean anything from “insurance and mutual fund salesperson” to “person I see at the bank once a year” to “portfolio manager” to “financial and estate planner”…and a few others besides.

When you use the term “financial advisor,” you probably just mean “someone who can give me the financial advice I need,” and that’s where we’re going to start: what do YOU need?

Being really clear about the kind of advice you’re looking for is the best recipe for getting the right advice. If you want to know whether to draw retirement income from your RRSP or your TFSA first, for example, talking to someone whose only job is to sell you mutual funds isn’t likely to get that question answered.

What are the questions that you keep coming back to when you’re thinking about your finances? Start by listing those, like so:

• I wonder if I should incorporate if I haven’t started my own medical practice yet?
• Are my kids ready to inherit the estate we’ve built? What if it creates a huge problem in the family?
• How much is the right kind of insurance for me going to cost?
• Now that I’ve maxed out all of my RRSP and TFSA room and am ready to invest in a taxable account, is there anything different I should do?
• We earn great money, why do we feel broke so often?
• Can we actually afford to retire?
• Is my disability insurance at work good enough if I get sick?

List your questions in as much or as little detail as you want. After each one of them, write a second question:

How will you answer this for me?

Now it’s time to use your Reflective Intelligence. Think back to a time you asked for professional advice in the past – at your bank, from your accountant, when you were getting your Will prepared – and list the things that mattered very much to you and the things that didn’t matter at all.

For example:

• I felt like I had to know a whole bunch of stuff already before they could answer my questions. I didn’t like that – if I knew it already, why would I have asked?
• They really listened to me, and asked a lot of follow up questions. I liked that – it gave me hope that the answer they gave was about me.
• I never knew what the next step was. I hated that – I just like knowing what to expect.
• I had to take time off work and drive across town to meet them. I wish it had been easier.
• Their office was pretty fancy. It certainly looks like they’re professional, but I don’t know if designer hard candies in the waiting room means anything.
• I had a lot of questions that I don’t think got answered. I don’t know for sure, because I didn’t really understand everything they said and was too embarrassed to say anything.

Between these two lists, you’re fully prepared to interview advisors.

The last and most important step to finding the right financial advice for you is to actually ask the questions you’ve worked so hard to prepare. It’s easy to be intimidated when you’re asking for advice on any topic, we understand. But if the person you’re asking doesn’t welcome your questions and encourages you to keep asking until you get your answers…well, odds are they’re not the right person for you, no matter how well-qualified or respected they are.

Your questions are important. The financial advisor (or team of advisors) that is right for you will take the time to hear you. They’ll use active listening skills to clearly understand your situation, consider your answers, and help you determine whether they are the right fit for you. A great advisor is one who understands themselves, their own service, and the ability to clarify for you how or if you fit within that service. An even greater one is the one who is dedicated to helping you, no matter what, even if that means referring you to another advisor.

There isn’t ONE right advisor for everyone, which is why there are thousands of advisors in Canada. That is definitely part of what makes choosing an advisor so very difficult. But with this thought process, your thoughtful questions, and clarity around the answers you are hoping for, you are much, much closer to adding the right people to your advisory team.