ARTICLES & REVIEWS
JUST WHAT SHOULD A FINANCIAL ADVISOR DO?
London Free Press
The financial services industry is largely unregulated and undefined as to who can call themselves a financial planner, advisor or consultant a.k.a. stockbroker, life insurance agent, mutual fund representative or some combination of the above. With fairly low licensing requirements and no apprenticeship, the public is open to the opinions of any newly licensed person who has passed a basic examination required by the Ontario Securities Commission or the Ontario Insurance Commission. These freshly, well-intentioned advisors are thrust upon the public with no practical experience, no time to article, and no apprenticeship. Unlike a lawyer, plumber, electrician, millwright or chartered accountant there is no requirement to wait to practice. In essence after the licensing examination, the new advisors practice on the public.So what should a good advisor be doing for you and how would you identify a good advisor?A good advisor should have tenure. Sure everyone needs to start somewhere, but wouldn’t you want to know a period of apprenticeship has been attained? Since there is none required in this industry, you need to seek someone with experience related to the area and advice that you need. Specialty is becoming more common; you wouldn’t want a group specialist helping you with retirement income planning or a stock jockey sorting out your estate plan. At least you shouldn’t.Education requirements in the financial services are like alphabet soup. The attached chart may help. Every advisor should have some credentials or be working on them to demonstrate a level of commitment to their vocation above the very basic licensing requirements. For example, a good financial advisor that specializes in retirement income planning should provide a detailed retirement plan that demonstrates to you year by year what you need to save or not save to meet your income requirements given your lifestyle needs. This retirement plan will also demonstrate what rate of return, thereby risk level or no risk level, you may require to meet you retirement objectives given inflation.
A good advisor should introduce you to a habit of excellent international professional money managers. Surely the best minds in New York, London England, San Francisco, Chicago and Toronto that manage billions of dollars have a better chance of managing money than you or your advisor trying to make picks.Your advisor should monitor your progress to the written plan or compare it to the written plan on an annual basis and review your portfolio with you in person or by telephone on a quarterly basis.Estate Planning – Once it has been established that you have enough assets to provide a comfortable lifestyle for you and the ones you love, a good advisor should assist you in considering charitable gifting techniques and tax avoidance programs to reduce taxes now and ultimately at death. In our new book "Harvesting Your Wealth", we dedicate one-third of the book to Estate Planning techniques.Your relationship with your advisor and his or her team should be one in which you feel a profound amount of respect for you, your family, your wishes and your desires. No detail should be left unanswered.
Over the last few years, we have noticed investors who seem to be bound to their advisors and are getting poor service, treatment and returns but continue to tolerate it. Stop it! If you don’t feel you’re being treated with respect and dignity, consider moving your account.Finally, remember this is your money and you’re in control. Question and challenge your advisors if you’re feeling any vagueness and discomfort. Feel free to seek out second opinions. Stay educated and stay in power. A good financial advisor will make you feel relaxed, will listen intently and interpret your needs. You will know that you have a good financial advisor by the questions they ask..
