For most Canadians, the idea of investing money in the stock market without expert help would be extremely daunting. After all, most people choose to take their broken-down car to a mechanic rather than try and fix it themselves. In the same way, why would you try and invest your money without the help of a professional?
This is why millions of Canadians hire financial advisors: to reduce their financial stress, invest their money on their behalf and help them become more financially secure. However, you would be putting your current and future savings into their hands, so you’d need to feel comfortable that they’re a financial advisor you can trust.
To help you make this important decision, we’ve put together this list of the key traits you should look for in a financial advisor you can trust.
Are they an expert in personal finance?
When you’re entrusting your money to an advisor, you need one with extensive knowledge of personal finance and experience with managing a wide range of portfolios (and, ideally, an advisor who holds the CERTIFIED FINANCIAL PLANNER® or similar designation).
Trustworthy financial advisors will also help you grow your own financial knowledge by providing you with regular insights and resources related to financial topics that matter to you.
Do they provide much more than just investments?
Trustworthy financial advisors are concerned about your whole financial well-being, not just your investment portfolio. Look for an advisor who provides a comprehensive financial plan that includes:
- A custom-built investment portfolio.
- Cash flow and debt management.
- Retirement planning.
- Mortgage strategies.
- Tax efficiencies.
- Being prepared for the unexpected.
- Philanthropy.
- Estate planning (including having an up-to-date will and a power of attorney).
- Helping your business to thrive.
They’ll revisit your plan regularly to ensure that it still fits in with your goals and any major changes that may have happened in your life.
Are they open and transparent?
When finding a financial advisor you can trust, honesty is an essential trait, especially as regards the investments they’ll recommend for you, the reasons behind their choices and the costs involved. They won’t hide fees from you or avoid giving you a full explanation for their portfolio choices.
Complete openness from a financial advisor is non-negotiable; steer clear of any advisors who are reluctant to give you straight answers or who seem to be hiding anything from you.
Do they have excellent communication skills?
Trustworthy financial advisors will not simply set up your financial plan and then disappear. They’ll keep the lines of communication wide open and will always respond to your emails and messages quickly.
They’ll also schedule regular meetings in a way that suits your needs and organize reviews of your financial plan to ensure that it’s always up to date and aligned with your goals.
Are they able to recommend financial strategies?
Good financial advisors will constantly suggest and explain financial strategies to help you grow your money faster (such as dollar cost averaging). They’ll also recommend a wide range of tax strategies to help keep more of your money in your pocket.
Do they have a team of experts they can lean on for advice?
The most trustworthy financial advisors have access to a team of experts who can help them manage even the most complex of client issues. This team should include investment portfolio strategists, legal and tax professionals and estate planning experts. Having a financial advisor with this amount of support is essential for providing you with a superior level of advice.
Do they offer a wider set of investment options?
You don’t want to work with an advisor who can only offer you traditional mutual funds, stocks and bonds. A financial advisor you can trust will also be able to offer more exclusive investment options, which are usually only available to large or corporate investors (such as infrastructure, private credit and other alternative investment opportunities).
Can they deliver high levels of security?
All financial advisors should have the security of your identity and financial information as their highest priority. Only deal with financial advisors whose company provides layers of protection to ensure that your personal and financial information doesn’t fall into the wrong hands.
Will they provide you with a detailed retirement income plan?
One of the key goals of trustworthy financial advisors is to make you feel confident that you’ll have a comfortable retirement. They should be able to provide you with a plan that includes detailed projections of how much income your savings will provide during your retirement and how long they’ll last.
They should also be able to provide you with the ability to run hypothetical scenarios (such as saving more each month) so you can consider options such as delaying or bringing forward your retirement date.
Do they provide you with tax-saving strategies?
Trustworthy financial advisors will consider the tax impact of all financial decisions. They’ll make sure that you benefit from every available tax-saving strategy, such as:
- Maximizing tax savings from registered accounts, such as TFSAs, RRSPs and RESPs.
- Using income splitting to reduce taxes by moving income to a lower-earning spouse.
- Ensuring that your charitable giving reduces your tax liabilities in the most efficient way.
- Maximizing all permissible tax deductions and tax credits, according to your unique situation.
- Withdrawing retirement income from your investments in the most tax-efficient way.
They’ll also have a team of tax specialists to lean on to provide expert tax advice to clients who have complex finances.
Are they invested in you?
Do they have skin in the game? Financial advisors who run their own practice are likely to give you a higher level of service than someone who works for a financial institution. They’ll take the time to get to know you, understand what you hope to achieve and what’s most important to you, as well as what it will take to make you feel financially secure and happier in life.
They’ll be far more likely to be committed to helping you in the long term and will work on building lasting relationships with you and your family members.
Do they have a list of client testimonials?
Advisors with a wide range of client testimonials are likely very experienced, trustworthy and able to provide excellent advice. This will also reveal if they have experience of working with people like yourself, with your particular set of needs.
Are they experienced in helping entrepreneurs?
If you own your own business, you’ll want to work with a financial advisor who not only has proven experience advising entrepreneurs on their personal financial issues, but also with their business’s finances and success. Trustworthy financial advisors will understand the challenges that you face and be able to offer additional advice to help you make a success of your business.
How to find a financial advisor you can trust near you
IG Advisors are trained to deliver exceptional advice to their clients; all of them either have (or are working towards having) their Certified Financial Planner designation. They’ll build your custom-made IG Living Plan that integrates every aspect of your financial life.
They’ll always explain the reasoning behind their decisions and provide you with details of costs up front. You’ll have regular contact with them, so you’ll feel comfortable that your finances are being well looked after. They’re not only able to provide a wider range of investment options, they also have a team of financial experts at hand to help with more complex issues.
Finding a financial advisor you can trust starts with one simple step: go to IG’s Find an Advisor page and enter your city or postcode; you’ll receive a list of IG Advisors who are based in your area and ready to discuss your financial needs with you.
Written and published by IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Wealth Management Advisor.
Commissions, fees and expenses may be associated with mutual fund investments. Read the prospectus before investing. Mutual funds are not guaranteed, values change frequently and past performance may not be repeated. Mutual funds and investment products and services are offered through Investors Group Financial Services Inc. (in Québec, a Financial Services firm). And Additional investment products and brokerage services are offered through Investors Group Securities Inc. (in Québec, a firm in Financial Planning). Investors Group Securities Inc. is a member of the Canadian Investor Protection Fund.
