Finding the Right Advisor

By Dan Bortolotti on May 3, 2011
Estimated reading time: 4 minutes

One of my favourite financial authors, William Bernstein, used to recommend that investors ditch their financial advisor and handle their portfolios themselves. But in his 2010 book, The Investor’s Manifesto, Bernstein recanted that advice: “I was wrong. Having emailed and spoken to thousands of investors over the years, I have come to the sad conclusion that only a tiny minority will ever succeed in managing their money even tolerably well.” I’m not quite as pessimistic as Bernstein, but I agree that most people would benefit from professional financial help, even if they use an indexing strategy. The problem is that too many advisors focus on products rather than process, and their compensation models often create conflicts of interest. I discussed these ideas last week in a guest column for the Toronto Star about what you should expect from a financial advisor. Many of my views on this issue were shaped by Warren Mackenzie of Weigh House Investor Services. I first met Warren three years ago, when he was part of MoneySense’s 7-Day Financial Makeover. The magazine invited three couples and one single woman — all self-confessed financial messes — to Toronto, put them up in a fancy hotel and subjected them to a week-long fiscal boot camp with the help of Warren and several other trusted experts. (Although I was supposed to just be a reporter that week, I ended up becoming a Couch Potato myself.)

Professional help for passive investors

So when Warren told me about his upcoming AdvisorSEARCH Workshops, I was happy to spread the word. On May 17 and May 18, Weigh House will be hosting a pair of events designed to help investors looking for a new financial advisor. They’ll invite three carefully screened fee-only advisors — all of whom use low-cost, passive strategies with ETFs or Dimensional Funds — and give each one about 40 minutes to make their pitch. Weigh House will provide each investor with a booklet to help them rate the advisors according to several criteria, and will offer guidance about how to make a good choice. Weigh House doesn’t receive a finder’s fee of any kind from the advisors. If you attend the workshop and decide to work with one of the advisors, Weigh House will start you off with a financial plan for $750, and the advisor will then help you put the plan into practice. If you’re in the Toronto area and you’re looking for an advisor who can help you build an index portfolio, take advantage of this opportunity and sign up for the workshop. The cost is $125 for a single person or a couple, and the minimum portfolio size is $200,000. (If you’re looking for professional help with a smaller portfolio, visit my Find an Advisor page.)

Vote for your humble spud

I’m also pleased to announce that Canadian Couch Potato has again been shortlisted for best investing blog by The Globe and Mail. The Globe’s Rob Carrick had these kind words to say: “One of the blogs on my favourites list is Canadian Couch Potato, which is all about index investing using exchange-traded funds and index mutual funds. While some blogs fill space with personal musings and platitudes about saving more and spending less, this blog gives you hard analysis.” Last year, I was runner-up to Preet Banerjee and Where Does All My Money Go. Now that Preet has sold out to the mainstream and become a Globe columnist himself, he’s no longer eligible, and he can’t invite thousands of his relatives to stuff the ballot box again this year. I’d be grateful if you’d take a moment to cast your vote here. Many thanks, and best of luck to the other nominees!