Is Your Financial Advisor Offering You Great Value? Top 10 Things You Should Consider

With the client relationship model (CRM) rules introduced by the Investment Industry Regulatory Organization of Canada in mid-2016, clients now have a much clearer picture of the fees they’re paying and rates of return they’re earning. For many investors, the CRM rules and subsequent simplified statements prompted a closer examination of their financial advisor’s services. Rightfully so, investors started asking, “Now that I have a better understanding of the fees I pay, am I getting value for my fees?” To assess this question, it is important to consider both the amount paid and the services and benefits received. Here are 10 important factors to consider in determining the value offered by your financial advisor:

1. A holistic approach

A good financial advisor should offer much more than just buying and selling investments on your behalf. Great value comes from an innovative, team-based approach to wealth management that addresses the entirety of your life —your family, your business, your future—one facet at a time. This includes clear, written and comprehensive financial planning that reflects a deep understanding of your short- and long-term goals. Your written plan should provide a roadmap to achieving those goals.

2. Accreditation

Except for Quebec, anyone in Canada can call themselves a financial advisor. It’s vital that you closely examine your advisor’s qualifications. Has he or she received licenses, certifications and other credentials from respected industry bodies? Some of the accepted designations to look for include: Chartered Financial Analyst (CFA), Certified Investment Management (CIM), Certified Financial Planner (CFP), and Financial Management Advisor (FMA).

3. Professionalism

Related to accreditation, you want an advisor who is knowledgeable about the entire spectrum of investment, tax-efficient and other strategies to build and sustain your wealth. Is he or she committed to continuing education and certifications to keep pace with the industry? Are they on top of what’s happening in Canadian and global markets to ensure your portfolio is not only well diversified and matches your tolerance for risk, but also in sync with what is happening globally? Does your advisor adhere to the Financial Planning Standards Council’s rigorous code of ethics? These are questions you want to ask to ensure you’re working with someone who observes the highest ethical and professional standards.

4. Easy-to-understand language

Along with statements that you can easily read and understand (thankfully much easier with the new CRM rules), your advisor should speak to you in language that is just as clear. If he or she speaks in financial jargon or doesn’t bother to explain investment terms, don’t be afraid to ask for clarification. Of course, two-way communication isn’t just about talking. Listening is just as important. Does your advisor ask you probing questions to ensure they have a clear understanding of your goals or concerns and do they take the time to thoughtfully listen to your responses?

5. Proactive communication

How often do you hear from your advisor? Once a year? Twice a year? Is it a form email, a phone call or an in-person meeting? Can you call or email your advisor and get a response within 24 hours? Communication preferences differ from client to client. While some clients may prefer regular communication with lots of face-to-face meetings, others are content with an annual meeting. The point is, you should determine how and when you communicate with your advisor, not the other way around. In fact, an advisor that provides great value will co-create a communication process with you, and state it clearly in a personal service agreement.

It’s equally important that your advisor contact you if the market has taken a big dip and you’re worried about how your investments are doing, hopefully your advisor has called to explain how the news may (or may not) impact your portfolio.

6. Broad scope and expertise

Whereas some clients prefer to work with one advisor, others prefer access to a larger team of advisors and specialists they can call upon. The one thing to keep in mind about larger advisory firms is that you benefit from a much wider pool of expertise than a one or two-person team can provide. Larger advisory firms and their team of specialists have specific knowledge in estate planning, business and succession planning, retirement planning, insurance, tax-efficient strategies, philanthropic giving, and many other disciplines. If your personal or business financial situation is complex, you may wish to work with a larger firm that can address your diverse needs at every stage of your life.

7. Respect

This word captures so many other important things. To me, respect also means being objective by solely focusing on the client’s needs, treating their personal and financial situation with the utmost confidentiality and ensuring that we are creating a comprehensive investment and savings strategy that reflects their unique needs and current situation. Does your advisor make you feel like you are a valued client? If you have a spouse, have their views and goals been addressed?

8. Financial knowledge

In my experience, the more knowledgeable a client is about their investing style, risk tolerance and investment portfolio, the more positive the interaction and outcomes. Does your advisor host client events, invite you to speaking engagements, or send you articles to increase and enhance your knowledge? The more your advisor works to educate you, the stronger your working relationship can be.

9. Tax-efficient strategies

Of course, results are important. At the end of the day, you want to know that your savings are working as hard for you as you worked to save in the first place. And as I often say, it’s not just what you make, it’s what you keep. It’s key to create a savings strategy that not only builds on your wealth but is also tax-efficient. You want to accumulate tax-efficient, lifelong income that can sustain your lifestyle well into retirement (which can last up to 30 years or longer) and leave a meaningful legacy to the people and communities that are important to you.

10. The Right Fit

This is probably the most personal element of the advisor/client relationship. In addition to assessing an advisor’s credentials, communication style, organizational structure and investment philosophy, the most important question to ask yourself is, “Do I trust my advisor to manage my money?” You can’t overestimate the value of trust.

If you’re not receiving the full scope of services from your advisor, then it might be time to ask for more or interview other candidates. You’ve worked hard for your money, and your advisor should work just as hard for you—to help you plan for and achieve the things you value most deeply.

Darren Farwell is a Senior Wealth Advisor and Director, Wealth Management with The Farwell Group at ScotiaMcLeod®, and an Insurance Advisor at Scotia Wealth Insurance Services Inc., both members of Scotia Wealth Management™. You can follow Darren on Twitter @DarrenSFarwell or visit his website at www.thefarwellgroup.com.

Scotia Wealth Management™ consists of a range of financial services provided by The Bank of Nova Scotia (Scotiabank®); The Bank of Nova Scotia Trust Company (Scotiatrust®); Private Investment Counsel, a service of 1832 Asset Management L.P.; 1832 Asset Management U.S. Inc.; Scotia Wealth Insurance Services Inc.; and ScotiaMcLeod®, a division of Scotia Capital Inc. Scotia Wealth Insurance Services Inc. is the insurance subsidiary of Scotia Capital Inc. When discussing life insurance products, ScotiaMcLeod advisors are acting as Life Insurance Agents (Financial Security Advisors in Quebec) representing Scotia Wealth Insurance Services Inc. Scotia Capital Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.