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How to choose a financial planner

When it comes to planning for retirement in Canada, making sure you’re financially ready is a significant priority. We cover the basics of retirement finances during our free retirement planning workshops. One question we’re often asked is, “how do I find a financial planner?”

We’ve pulled together some answers to common questions about working with financial planners, including how to find one.

Here’s what we’ve covered:

  • the purpose of a financial planner
  • do you need to be wealthy to have a financial planner
  • cost of having a financial planner
  • the difference between a financial advisor and a financial planner
  • web-based financial advising services
  • tips for finding a financial planner
  • questions to ask when considering working with a financial planner

Note: this article isn’t meant to be financial advice. Our goal is to share some information for you to consider. RTOERO doesn’t provide financial planning or investment services.

What’s the purpose of a financial planner?

Whether you’re close to retirement or not, you may want to consider working with a financial planner. A financial planner’s purpose is to help you create a detailed plan for your finances to achieve the type of future you want. They can support your overall well-being by giving you peace of mind that you’re financially ready for whatever the future may bring.

A financial planner will:

  • assess your current situation
  • talk through your goals
  • educate you
  • help to keep you accountable
  • provide advice
  • review and update your investments and strategy periodically

Most financial planners will provide a document that shows the projected growth of your net worth and whether you’re on track to meet your goals. They can show you what may happen if you make small adjustments.

Some financial planners may help you identify ways to save money on taxes, provide estate planning advice and offer feedback on major purchases you’re considering.

Do I need to be wealthy to have a financial planner?

While some financial planners work only with individuals with a certain amount of wealth, you don’t necessarily need to be wealthy already to work with one.

Some financial planners specialize in working with people at various life stages, from young families to older adults.

Here are some things to consider when thinking about whether you might want a financial planner at your stage:

  • Are you or do you want to be saving beyond your employer pension?
  • How complicated is your financial situation? Are you navigating a transition like retirement or a divorce?
  • How important is a personal relationship to you? Do you want someone you can email or call?
  • How interested are you in learning about investing yourself?
  • If you were managing your own investments, might you be prone to panic selling when markets dip?

Will it cost me a lot to have a financial planner?

There is a cost to having a financial planner. Often that cost is covered by fees deducted from your investments – so a percentage of what you earn pays for the service you’re receiving. Some planners may have a fee they charge.

Make sure to ask about the fee structure as part of your initial conversations with a financial planner. The value you receive from working with a financial planner should outweigh the costs.

Financial advisor vs. financial planner – what’s the difference?

A financial advisor is a term that applies to anyone who helps you manage money. That could include an employee of your bank. A financial planner is someone who helps you create a plan to reach financial goals.

In Canada, except for Quebec, anyone can call themselves a financial planner. There are certifications available for financial planners through FP Canada. Look for someone with the CFP designation to know you’re working with a reputable provider.

Are there lower-cost alternatives to having a financial planner?

There are different web-based robo-advisor services available. These services automatically create your investment strategy based on your responses to questions. Robo-advisors can be a good alternative to complete do-it-yourself investing. A web-based service will tend to have lower fees.

How can I find a financial planner?

So, the idea of having someone working with you to secure the future you want may be appealing. But how do you find that person? Here are some suggestions to get you started.

Ask for referrals

There’s a good chance you have friends and colleagues who are already working with financial planners. Ask some people you trust if they have a financial planner and if they’d recommend them.

Use FP Canada’s lookup tool

FP Canada is a professional body that provides financial planner certifications. You can use their lookup tool to find a certified financial planner near you.

Check with your bank or credit union

Many banks and credit unions have financial advisor services. If you want to work with a financial planner, some banks also have a wealth management service within their brand (for example, RBC has RBC Dominion Securities, TD has TD Wealth). Investigate what’s available through your bank.

Investigate robo-advisor services

It’s worth considering whether a web-based service might be a good fit for you. They can be a good option if your situation isn’t complicated or you don’t desire the personal contact and accountability that a financial planner can provide.

What questions should I ask when considering hiring a financial planner?

Here are some sample questions you can ask when interviewing a financial planner.

  • What’s your education and experience? Do you have any professional certifications?
  • How long has your company been in business? How long have you been with the firm?
  • What products and services do you offer?
  • How are you paid?
  • What’s your process for helping me achieve my goals?
  • How often will we meet?
  • How will you keep me informed?
  • How do you decide on appropriate investments?
  • Have you ever been investigated or are you currently under investigation by securities regulators?

You may also want to look into the financial planners you’re considering by searching their name on Google to see what comes up and searching their name on the Canadian Securities Administrators disciplined persons list.

Whether you need a financial planner or is a personal decision. We’ve provided some general information to help you consider your situation and find the right person for you. Yes, there are online alternatives to help you create an investment plan. So, you’ll need to consider how important having a personal relationship with an individual is to you and whether the value that comes from that is worth the costs. As you approach retirement, finances can become more complex, and so, that might be a stage where the personal touch will pay off.