Tips to choose the right financial advisor for you

Life moves fast, but your investments can move faster. Keeping up with the markets and individual investments may sound exciting, but finding time to do the research and analysis to ensure your portfolio meets your long-term goals can be stressful. Fortunately, you don’t have to go at it alone.

Many Canadians get investing and financial planning help from financial advisors – and they’re often better off when they do. According to the 2024 Fidelity Retirement Report, 60% of people surveyed who had a financial plan said they felt prepared for retirement, by contrast only 38% of respondents without a financial plan felt financially prepared for retirement.  

Seeking help from an advisor is a great first step, but it’s equally important to find the right advisor who aligns with your goals. How can you ensure you get the support you need?

Here are some key considerations.

Financial advisor or financial planner? What credentials should I look for?

Financial planners and financial advisors may sound the same, but there are some important distinctions between the two. The Financial Consumer Agency of Canada describes financial planners as professionals who can help you develop a plan to meet your long-term financial goals. They can help with retirement planning, creating budgets, identifying potential tax savings and offering advice on estate planning. They don’t manage your money, though.

“Financial advisor” refers to anyone who can help manage your money. That can include an employee at a financial institution, a stockbroker or an insurance agent. It can also refer to someone who invests and does all of the things a planner would do, too.

Financial planners and advisors must maintain certain qualifications, such as the Certified Financial Planner (CFP), Chartered Financial Analyst (CFA) or Chartered Financial Consultant (ChFC) designations. Planners can also have accreditations, such as the Registered Financial Planner (RFP) or Personal Financial Planner (PFP).

How do I start my search?

First, think about how much support you need from your financial advisor or planner. Do you want help creating a plan to execute yourself? Or do you want someone to help you formulate a plan and put it in place for you?

To help you determine what you need, Fidelity Investments has put together a comprehensive toolkit that outlines the various services advisors provide and the responsibilities you’ll want a professional to handle. That can range from creating a financial plan to recommending and buying investments to managing your portfolio to estate planning and more.

It’s important to find a professional you can trust, so ask family, friends or colleagues who work with advisors for recommendations.

Questions to ask a potential financial advisor

It’s important to interview an advisor to ensure you’re getting what you need.

Ask them about

• their educational background
• their credentials
• how long they have worked for most of their clients
• their investment philosophy
• how they will help you reach your financial goals
• what other professionals they work with to provide the services their clients need
• their specific area of expertise
• what financial products they are licensed to sell

If you like what they’re saying and feel as though you can develop a good rapport, ask for references. Follow up with those contacts to ask about their relationship and get a better sense of what you might expect. Be sure to ask the reference how long they’ve worked with the advisor, if they are satisfied, how often they hear from them and how they are progressing toward their financial goals.

How do they get paid?

One of the most important questions to ask is how the advisor gets paid. Financial planners typically charge a one-time fee to create a financial plan that you then implement on your own. Whereas financial advisors typically provide ongoing management and advice.

As for advisors, rather than paying for their services separately, they often receive a salary, and may charge a commission or trading fee when they buy securities on your behalf. If your advisor recommends a mutual fund, that person may collect a trailing commission, which is paid out from the management fee collected by the fund. For larger accounts, advisors may charge a fee based on a percentage of the total assets they’re managing on your behalf.

Making the final decision

After doing your research and meeting with several financial advisors, evaluate who is the best person for you. You want to ensure you feel comfortable talking to the advisor and able to share your true financial situation with them, so you get the best service to meet your needs and reach your financial goals.

Need help asking the right questions? Download Fidelity Investments’ Getting Good Advice - Toolkit: Working with a financial advisor (fidelity.ca)