In your search for a competent financial planning professional, you need to be able to recognize who you can trust.
Financial planning is not regulated in most Canadian provinces. This means that anyone can call themselves a "financial planner". However, not everyone who refers to themselves as a planner is indeed qualified; many so-called financial planners are licensed to sell products but have no financial planning training or expertise.
In the absence of government regulation, consumers must ensure their planner is indeed trained, certified, and held accountable in providing professional financial planning.
Choosing a Financial Planner: Ten Tips
1. Have an idea of your life goals: Determine your general financial goals and specific needs (insurance policy, estate planning, investments, education, etc.).
2. Be prepared: Do a bit of research to maximize your familiarity with financial planning strategies and terminology. Reading the business section of the newspaper or taking a look through some finance publications may be helpful.
3. Referrals are helpful, but not enough: Get referrals from advisors you trust, from colleagues and friends, but make sure you check into the planner’s credentials. Check to see that person is in Good Standing with their professional body.
4. Look for competence: There are a variety of different degrees and designations in financial planning and investment services, and this can be confusing and overwhelming for many consumers.
Although all the letters after the person’s name can be impressive, some designations only require day or weekend courses to earn. Others, however, offer highly specialized knowledge in certain areas of a person’s portfolio, or for a certain demographic. A Certified Financial Planner professional has met high standards of financial planning professionalism and abides by a Code of Ethics, which is strictly enforced by Financial Planners Standards Council.
5. Interview more than one planner: Ask each person to outline their education, experience and specialties, the size and duration of their practices, how often they communicate with clients, and whether assistants handle client matters. You need to make sure that you feel comfortable discussing your finances with the individual you select, as this is a personal subject.
6. Check the planner's background: call their professional associations to check on their complaint or disciplinary record. You can call FPSC to see if they are a CFP® professional in good standing or check them out online using the In Good Standing tool.
7. Ask for references: Find out if the financial planner works with any other professionals such as accountants, insurance agents or legal advisors. After the meeting, request references from these individuals.
8. Know what to expect: Ask for a registration or disclosure document detailing method of compensation, conflicts of interest, business affiliations and personal qualifications.
9. Get it in writing: Insist on a written letter outlining the specific terms of the engagement. Never agree to sign anything you are not clear about. Verbal promises should be considered a red flag. Ensure that the planner\'s compensation is thoroughly explained and documented—make sure you understand how the planner is being paid. Insist on obtaining written notification of any changes to compensation structure during your relationship.
10. Re-assess the relationship regularly: Financial planning relationships are quite often long-term. Review your relationship on a regular basis, making sure your planner understands your needs as they change and develop over time. Make appropriate alternations to your plan, as you needs evolve and your financial situation changes. It’s important for you to stay engaged with the process. Open and read all statements; ask your planner for clarification if you don’t understand something.
Compliments of the Financial Planners Standard Council
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