Choosing a Financial Advisor

While some people are knowledgeable enough to manage their portfolios without the aid of a financial advisor, most people will require an advisor. We set out below some tips on finding an advisor and how to manage that relationship to ensure your financial objectives will be met.

Distinction Between Financial Advisors/Dealers and Planners

Advisors and dealers are authorized to trade securities and provide services of advising clients in respect of securities. Financial planners, on the other hand, are individuals who provide you with more general suggestions about your financial affairs, which may include investment advice, insurance, estate and retirement planning, and tax planning. Except in Quebec, any only those individuals who trade securities or provide advice with respect to securities must register with the applicable securities regulators in North America.

How do I find a Financial Advisor or Dealer

  • Locate your financial advisor the same way you would look for any other professional like a doctor or lawyer. Ask friends, family and professionals that you know for a recommendation.

  • Look in the yellow pages. While this method will not give you the comfort that a recommendation will, you will at least be able to locate a well known firm.

  • Generally, the more well known firms are in the news more often. Read the financial section of your newspaper where frequent references to well known firms will be mentioned.

  • You can contact any one of the North American exchanges or commissions to obtain a list of firms in your area.

    Checklist - Is the Advisor Right For You

    Once you find an advisor, here is a checklist that you can use to determine whether the advisor is right for you. You should ask:

  • about their commissions and annual fees. Get their commission fee pamphlet or brochure so that you always know what you are being charged. Read all account agreements and if you don't understand anything, ask for clarification.

  • whether the advisor gets extra commission for selling any particular security or product. Dealers of stock are sometimes being paid to recommend stock investments. When the dealer is underwriting a stock, the firm usually is being paid to find buyers or alternatively the firm may have purchase the initial stock offering and is now reselling such stock.

  • whether the advisor is registered under the relevant securities legislation to provide these services?

  • whether the firm specializes in any particular type of investment product. Some firms focus on high-tech securities, mining securities, mutual funds and some in blue chip stocks? Ensure that the firm's expertise meets with your investment objectives.

  • about the length of time the firm has been registered to sell securities and whether it is a local, national or international.

  • about the firm itself. How many employees does it have? How many clients? Does it do its own research and trading. Does it provide research materials to its clients. Most large firms will send its clients a research summary with its recommendations for the month. Obtain all written materials describing the firm and its services.

  • whether any of the firm's advisors been subject to any disciplinary proceedings in the past few years? What about the individuals you might be dealing with? What are their professional qualifications? Even though all advisors are required to pass a basic securities course to enable them to be licensed, there are other courses that advisors may take to obtain special designations.

  • ask whether the firm is a member of a contingency fund aimed at protecting clients in case of bankruptcy? If so, what coverage does the fund provide?

    While you should get a great deal of information by asking the firm and its representatives directly, you can also contact the applicable securities regulator for more information such as information regarding the advisor's qualifications and prior complaint history.

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