When Should I Hire a Financial Advisor in Halifax?

Hiring a financial advisor should be on the top of your list if you want to grow your investment portfolio, make a plan of action for life after retirement, and/or manage your overall finances. A financial advisor will be needed for advice when making key financial decisions during your lifetime. 

4 things to check when hiring a financial advisor

When choosing a financial advisor make sure to look at 4 things, which include knowing who you are hiring, what kind of services you need, how does the person you are hiring earns their living, whether they work on a fee or commission basis, and lastly, checking their certification. 

Know who you’re dealing with

With many people out there calling themselves financial planners or financial advisors, you can find it difficult to choose one of them to help you in devising a financial plan.

In Canada, except Quebec, there are several different regulatory bodies and designations which govern this financial advisory and planning industry. Quebec has a more strictly regulated industry that allows only certain people to call themselves financial advisors.  

Some common acronyms for these individuals are:

CFA – Chartered financial analyst

CFP – Certified financial planner

CHFC – Chartered financial consultant

CIM – Canadian investment manager

CLU – Chartered life underwriter

CMP – Certified management professional

RFP – Registered financial planner

TEP – Trust and estate practitioner

Where to start

The primary and most basic thing to do is to decide what kind of financial advice you need so you can choose the right professional for it. Most people fail to understand that each kind of financial service will require a different expert to be hired.

For example, if you want to create an investment portfolio you will need to talk to an investment advisor or a stockbroker. On the other hand, if you wish to manage your debt and other lendings you should get in touch with a credit counselor. Or if you need an insurance policy you should contact an insurance agent. 

However, a financial planner that focuses on all aspects of your finances might be able to answer questions such as what retirement savings account should you open and how certain decisions will be best for your path to retirement. These advisors provide a range of services and they can advise you against certain financial decisions and help you to define your future goals. And also define a financial path you should take to achieve these goals.

Fee versus commission

Financial advisors or financial planners get their pay from two methods: either a fixed fee or a commission-based model. They can earn commission on products you buy or they can have a fixed fee for the advice and planning information they provide to you. A fee-based planner will provide you unbiased advice as they will not have any financial incentive to sell you a certain product.

Financial Planning Standards Council and Institute of Advanced Financial Planners regulate CFPs and RFPs. These certified professionals can lose their licenses for any malpractice or unethical behavior. However, they can still sell products and services, which leaves the possibility of them being biased towards a product that pays a higher commission.

You might not be able to identify these tactics due to limited knowledge resulting in a conflict of interests. So you should always have a quick chat about these issues with the person you are dealing with before hiring them.

Financial planning checklist

When finalizing a potential financial advisor you should go through this checklist:

1. You should think long-term by planning for the future. You will need to decide what kind of financial strategy you need. Are you saving to have a steady cash flow in retirement life or do you want to invest long-term to reap benefits later on? You would not want to get an advisor that is known for his advice on short-selling and day-to-day trading for your long-term goals. It is important to know your end goal to choose someone with the right expertise.

2. To find a trusted and reliable financial advisor you must ask your friends and family about their advisors. You will surely find someone who will be able to recommend an advisor plus give you some tips. Remember your friends and family can give you valuable lessons about what could go wrong and how you can avoid making the same mistakes. 

You can also find out about the client experience by checking online reviews and asking previous customers to get an understanding of the client relationships of your potential financial advisor.

3. Meeting the financial advisor is also an important step. You must get in touch with them face-to-face and try to understand them before you hire them. You should try to figure out whether you will be able to give them the knowledge about your finances, personal goals comfortably or not. 

4. There are several ways an advisor is paid for their services so you need to ask them how they are paid. They can be paid on a commission basis but remember that this payment method can make them give biased information which can result in a conflict of interests. It is because some products pay higher commissions than others, so an advisor will be more inclined towards selling that product to you regardless of its usefulness.

You can also plan to hire an advisor that works on an asset-based model. This model will require you to pay your advisor a certain percentage of the profit you earn from your portfolio. This percentage will grow as the portfolio grows giving the advisor an incentive to grow your portfolio.

Or you can opt for a simple fee-based financial advisor that charges on a per-hour basis. The usual rate for an hour is around $200. The initial meeting will take the most time and each consecutive one will be shorter as the financial plan starts to pick pace. 

5. The most common type of acronym you should look for is CFP or RFP which stand for a certified financial planner and registered financial planner. A registered financial planner is for people with a large investment portfolio. However, both of these professionals do not sell any financial products. Remember that a good financial planner/advisor will guide you towards your future goals instead of selling you products for a commission.

Trusted Financial Advisor in Halifax

If you are looking for a financial advisory firm you should contact Worthy Financial. Their expert NS financial advisor will be more than welcome to help you devise a strategy to accomplish your future financial goals.