Picking the right type of wealth advisor is one of the most challenging things when making this decision. First, you must consider why you need a wealth advisor is the first place. Is it for a single task or ongoing assistance. A wealth advisor can assist with a variety of needs, from financial planning and insurance to tax strategies and tackling specific goals or challenges. When it comes to managing your investments, a registered Portfolio Manager offers specialized expertise. Maybe you have experienced a significant life changing or transition - your about to retire, or maybe you’re going through a divorce, selling your business or farm, or maybe just knowing how to improve your financial situation.
Next: Think about how much work you want to handle yourself:
Option 1: The wealth advisor helps with creating the plan, and then you take over and execute. Not everyone wants to do this, you will also need the know-how, time and maybe even the confidence, depending on what’s involved.
Option 2: You decide you’d rather not execute the whole plan yourself, and your wealth advisor helps with that as well.
First, what questions you should ask a wealth advisor
When you meet with a prospective wealth advisor for the first time, your gut instinct might be to tell the advisor what you’re seeking and ask if they can assist. However, if you’re looking for a truly objective wealth advisor, you’ll have to approach the meeting differently.
Before sharing a lot of details about yourself, be sure to ask a few key questions, in this order:
1. “Who is your ideal client?”
2. “How do you help your ideal clients?”
3. “What common problems do you help your ideal clients solve?”
4. “Who do you not work with?”
5. “How do you get paid?”
If the wealth advisor can clearly answer these questions, the answers don’t raise any red flags, and takes the time to explain things, then they’re probably a good fit. It also helps if you like the person.
The fifth question is important when working with any wealth professional. Whether it’s an accountant, a mortgage broker or a wealth advisor, ask them, “Who pays for your services?” Ideally, you want the answer to be “You.” This provides the highest likelihood that there won’t be any outside influence on, or any conflicts of interest in their advice. For example, if a Portfolio Manager gets a commission from selling you certain investments or insurance packages, or for recommending a specific mortgage, that could be a conflict of interest.
How to do a wealth advisor background check
Before you hire a wealth advisor, you’ll want to do your homework. This involves doing a background check and confirming credentials.
Wealth advisors should have at least one professional designation, such as Certified Financial Planner (CFP), Chartered Life Underwriter (CLU) or Registered Financial Planner (RFP), among others. You’ll want to verify with the appropriate issuing body or bodies that the advisor is in good standing. It means they have paid their membership dues and attested they completed all continuing education requirements.
Furthermore, if the wealth advisor sells investments or insurance, you can check with the industries’ regulatory bodies to ensure they’re licensed. These organizations can also tell you if the wealth advisor has been disciplined. For investing, use the online tools of Canadian Investment Regulatory Organization (CIRO) and Canadian Securities Administrators (CSA). Portfolio Managers use info.securities-administrators.ca/nrsmobile/nrssearch.aspx. For insurance, check with the regulator in your province or territory—for example, the Saskatchewan Insurance Council.
Your wealth advisor might also be willing to provide references from existing clients—just keep in mind that these are the ones who are happy with their work.
