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Some advisers are downright dangerous. Look for the following qualities to ensure you end up with a competent and trustworthy professional.
They focus on the big picture
Investing is not just about picking individual products. It’s about building a well-diversified portfolio with an asset allocation that meets your objectives. If you’re paying for broader advice, you should also expect your adviser to help you set retirement targets, make appropriate use of tax-deferred accounts like RRSPs, TFSAs, and RESPs, and help you manage risk. Expect a review of your overall portfolio, including your asset allocation, at least once a year.
They don’t push risky investments
While investing involves taking appropriate risks to earn reasonable returns, you need to get the balance right. Beware of an adviser who thinks your portfolio should be almost all equities when you’re close to retirement, or who says you should borrow money to invest. Walk away from an adviser who tries to talk you into taking more risk than you’re comfortable with.
They are forthright about fees
Expect your adviser to be clear about the fees you pay, especially for mutual funds, where fees tend to be sizeable and complicated. Good advice isn’t cheap, but insist on good value.
They don’t pressure you into complicated products you don’t understand
Sometimes good financial products are unavoidably complicated (like annuities, for example). But many are simply designed to disguise hefty fees or treacherous risks. Many investors will never need anything more complicated than mutual funds, ETFs, stocks, bonds and GIC rates, so don’t get talked into buying any product you don’t understand.
They have professional credentials
Licensing requirements for brokers and mutual fund salespeople ensure only a basic level of professional knowledge. For more sophisticated planning knowledge, look for the Certified Financial Planner (CFP) designation, or the Personal Financial Planner (PFP) designation held by many bank employees. “CFPs are capable of designing a robust portfolio for you,” says investor advocate Ken Kivenko, president of Kenmar Associates. For real in-depth investment knowledge, look for the Chartered Financial Analyst (CFA) designation, or the less-prestigious but still valuable Canadian Investment Manager (CIM) designation.
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