Four questions to ask when choosing a financial adviser

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by Natalie MacLellan on October 20, 2010

in Working with an Adviser

Last week we discussed the low number of Nova Scotians who do not have a financial plan (only 25%), which led to a few of you vowing to put together your own plan in the coming months. The first question asked was: Can you recommend a good adviser? While we are not able to specifically recommend anyone, we do have resources available to help you hire the best possible adviser.

Choosing a financial adviser is a big decision. An adviser can help you set financial goals, choose investments and track your progress. It is an important relationship, and you want to get it right. When choosing an adviser, you want to ask the following questions:

1. Are you registered?

Nova Scotia law requires financial advisers to be registered (some exceptions apply). Registration helps protect investors because firms and individuals can only be registered if they are properly qualified. Firms and individuals are registered by category—each category has different education and experience requirements, and permits different activities.

2. What is your background?

You want someone who is qualified and has the right experience to give you the help you need. Ask follow-up questions like:

  • What are your educational and professional qualifications?
  • How long has your firm been in business?
  • How long have you been with the firm?
  • How long have you worked in the industry?
  • What professional associations do you belong to?

3. How are you paid?

Advisers can be paid by salary, commission, a flat fee, or a combination of these methods. If an adviser is paid by salary, the cost of their advice is built into the products you buy. Many advisers are paid a commission for every product they sell. Other advisers charge a flat fee based on an hourly rate or a percentage of the assets in your

4. What kinds of products and services do you offer?

Not all advisers offer the same products and services or have the same expertise. Some specialize in certain kinds of investments. Others can offer you a wide range of investments and services.
If you’re an experienced investor, you may want an adviser who offers a wide range of products and lets you choose. If you’re newer to investing, you may be more comfortable with fewer choices and more guidance from an adviser.

For more information, download our brochure Working with a financial adviser.

What other questions would you (or have you) asked your adviser? Is there information you wish you had known before hiring an adviser?

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{ 3 comments… read them below or add one }

1 Graham 10.20.10 at 1:29 pm

I have been investing for several years. For the last few I have been with a company. Recently my advisor has moved on to pursue other things which leaves me with a company I like but waiting for a new advisor to take up my portfolio (since June). The article addresses some issues but doesn’t deal with someone like myself that has been investing and am married to a corporation and find myself being playing advisor roulette.

2 Natalie MacLellan 10.26.10 at 8:54 am

Graham, you should never feel married to a corporation, or obliged to deal with any adviser they assign to you. Remember that they work for you, and if you are unhappy you can move your business elsewhere. Some firms will even cover transfer fees to entice you to move your business.

3 Simon 10.29.10 at 12:25 pm

I think the very first question to ask is to yourself! Is an advisor really worth it to me?

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