Benefits of using an adviser
When you outline your investment goals with your adviser, they can help you determine the level of risk you are comfortable with (part of a requirement called “Know Your Client”*). Based on this, they can help you build a plan, choose suitable investments, track your progress and adjust your plan when needed. Once your plan is in place you can expect your adviser to:
- make clear and specific recommendations (including recommendations on investment products)
- explain the reasons for the recommendations
- point out the strengths and weaknesses
- outline the risk involved
* The Know Your Client (KYC) requirement in the investment industry ensures investment advisers know detailed information about their clients' risk tolerance, investment knowledge and financial position. KYC requirements are met through the collection of information on forms designed to protect both clients and investment advisers. Clients are protected by having their investment adviser know what investments best suit their personal situations and investment advisers are protected by knowing what they can and can not include in their client's portfolio.
Whether you're new to investing or like to take the lead, it's just a matter of finding the right match. Fill out our Budget Worksheet (PDF) to get you more prepared.
How to choose an adviser
Finding the right adviser is important, so take time to choose one who has the necessary qualifications, experience and, as importantly, is someone with whom you feel comfortable.
Factors to consider in choosing the right adviser include: what products and services you need and how much you’re willing to pay for advice. Advisers can work at places like banks, financial planning firms, brokerage firms and investment management firms. Not all advisers offer the same products and services or have the same expertise. Some specialize in certain kinds of investments while others can offer you a wide range of investments and services. Read more on getting the help you need with our Working with a financial adviser (PDF) booklet.
Ask for referrals.
Your friends, family or work associates may have financial advisers, but never assume that someone who's right for them is right for you. Do your own research by using the tools on our Check First page.
Interview and meet
Once you have a list of potential advisers, contact them for a brief telephone interview. Talking to potential advisers over the phone can help you narrow your search and decide which ones you'd like to meet. If you like what you hear, arrange an in-person interview, where you'll ask more detailed questions.
Once it's time for a face-to-face meeting, keep the interview short (about half an hour should do) and stick to the topics at hand.
Here are some questions to get you started:
- Are you registered? (anyone selling investments is required to be registered – you can find out more about registration on the Canadian Securities Administrators' website).
- What is your background and who are your typical clients? (e.g. credentials, references)
- What kinds of products and services do you offer?
- How are you paid? (ask about fees)
- What level of service can I expect from you?
- How will you help me reach my investing goals?
This handout may also help: Questions to ask a potential advisor (PDF).
A potential adviser should be able to provide you with a few references; talk to them before you make your final choice. Contacting references is a great way to learn more about a potential adviser and to confirm any suspicions that may have arisen from your interview. These questions can help you learn more:
- How long has your adviser worked with you?
- How satisfied are you with his/her services?
- What are his/her strong points? Weak points?
- Does your adviser have any special areas of expertise?
- Have you ever been disappointed or surprised by anything in your relationship with your adviser?
- How often do you hear from him/her regarding your investments?
- Who normally initiates the calls?
- How quickly are your calls returned?
Your relationship with your adviser is not one-sided. It is, after all, your money, and you're in control. There are a few things you can expect a good adviser to do for you, and there are several things you can do to ensure your relationship with your adviser is productive.
Your relationship with your adviser is intended to be long-term, but it's okay to make a change if you find your needs have changed. If you do change advisers and the new one suggests switching products, ask questions about fees, the respective long-term performance of your current portfolio and the product(s) he/she is recommending. Also ask about potential compensation for him/her should you switch. Make sure it makes sense for you, not just for your adviser.
Have a clear understanding of your values, your goals, and your wishes in life – both short and long-term. Have clear expectations about what you want your adviser to do.
Investors should regularly review investments and reconcile goals with risk tolerance and time horizon. This is especially important when there is a material change in your circumstances (e.g. birth, death, inheritance, positive or negative career change). If you use the services of a financial adviser, be sure to notify him or her of any personal or financial information changes. Watch Scenario #3 in Who's Taking Care of Your Money? to find out more.
Going it alone
Some investors prefer to do their own research and select their own investments. If you are thinking of taking this approach, ask yourself the following questions to help decide if you are ready:
- How much time am I willing to spend sorting through investment choices and keeping up with the markets?
- How confident am I with my investment knowledge and ability to meet my investment goals?
If you feel you need some guidance, you will likely need to seek the services of a registered financial adviser.
Do your research
Contact the ASC to:
- Check if an individual or firm is registered, or has had any enforcement activity.
- Get more information on Portfolio Managers, Investment Counsel, Scholarship Plan Dealers, and/ or Securities Advisers.
- Find out if a company is on the ASC's Reporting Issuer List (permitted to issue securities to the public and obligated to make continuous disclosure). To do this, open the most recent PDF listed, look for the name of the company (the two adjacent columns tell you if company is cease-traded or otherwise in default). For more information about the company, visit www.sedar.com.
- Check out brochures on choosing and working with financial advisers.
Contact the Investment Industry Regulatory Organization of Canada (IIROC) to:
- Get information on investment dealers (brokers).
- Research the background, qualifications and disciplinary information of advisors at IIROC-regulated firms using AdvisorReport.
Contact the Mutual Fund Dealers Association of Canada (MFDA) to:
Other helpful sites: