Why your relationship may be the biggest obstacle to financial success

The New Year usually comes with many good intentions of eating better, exercising more, or getting on top of your finances. This doesn’t necessarily mean that you’re not already doing well, but maybe you think you can do better.

When people come in to our offices for the first time, they often tell us how they’ve been meaning to get a handle on things for the longest time, but just keep putting it off. This procrastination seems to be common when it comes to doing something about one’s finances, and there are many reasons for it.

Sometimes people don’t know to whom they should turn for advice. They might have someone they deal with at the bank, or a broker looking after their investments, but they feel something is missing. Maybe their questions are not being fully answered, or maybe there’s not a high degree of trust in the relationship, or the advisor is limited in the type of investment, or tax advice he/she can provide.

Others feel insecure about their level of knowledge, and think they should learn more on their own before meeting with a financial professional. This is usually counterproductive, and can actually hold them back from gaining a better understanding with the help of a financial coach.

More and more, investors are becoming sensitive to fees. This can lead some people to “do-it-yourself” investing and to avoid getting professional advice. While this can work well for those who have the knowledge and interest, and are willing to invest the time, several research studies have shown that investors working with an advisor are more successful than those who don’t. Fees are an important consideration when investing, but ultimately, what you are getting for those fees is what really counts.

The bottom line is, whether you have an advisor and just want a second opinion, or you’ve been doing things mostly on your own, and you’d like some guidance, the New Year is a great time to revisit current strategies, venture into new ones, and make sure you’re on track.

The most important thing to consider when choosing an advisor, in my opinion, is the relationship. I usually suggest to people that they meet with a couple of professionals to determine who they feel the best “vibe” with. There are many great sales people in the investment industry, so try to push aside the smoke and mirrors, and go with your gut, but also do your homework. And it’s okay if you need a few meetings to get a good feel. If you’re about to begin a long term relationship with someone, making sure you feel confident about your choice is critical for financial success.

Consider also their credentials, versus what you are looking for.  If you’re looking for someone to consider all aspects of your finances, including debt-restructuring, tax strategies, investment planning, etc., you should turn to a qualified Financial Planner. Taking it one step further, most Financial Planners are either licensed to offer a wide range of investment products (including stocks, bonds, ETFs, and mutual funds), or they may only be licensed to offer mutual funds.  Matching an advisor’s licensing to what is important to you, is something to consider early on. Also, many Financial Planners are licensed in insurance as well.  You should consider whether you need to protect your family or yourself or your business, or are looking at using insurance or annuities as part of your investment strategy. Finding someone who can build a comprehensive plan with your specific needs in mind would make sense.

A few other things to consider when choosing an advisor:  what your expectations are versus what they promise to deliver, what kind of transparency they have in terms of fees, what services they provide, and don’t provide, etc.  Getting an understanding of the advisor’s values and investment philosophy will give you a better chance of finding someone who’s on the same page as you.

It may seem like a lot of work to go through the process of finding the right advisor, but in my experience, the benefits of working with a financial partner whom you trust, who is competent, and who you enjoy working with, are well worth the effort in the long run.  

ANNOUNCEMENT: Please note that as of October 1^st, 2015, Lynn MacNeil has joined Richardson GMP, Canada’s largest independent wealth management firm. Please see below for her updated contact information.

Lynn MacNeil, F.PL. is a Financial Planner with Richardson GMP Limited in Montreal, with 20 years experience working with retirees and pre-retirees. For a private financial consultation, or more information on this topic or on any other investment or financial matter, please contact Lynn MacNeil at 514.981.5795 or [email protected].

The opinions expressed in this article are the opinions of Lynn MacNeil and readers should not assume they reflect the opinions or recommendations of Richardson GMP Ltd. or its affiliates. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them, having regard to their own particular circumstances. Richardson GMP Limited, Member Canadian Investor Protection Fund.