Finding a Trustworthy Financial Advisor: What You Need to Know

Managing Your Money

In a recent article, we explored the reality that not everyone requires a financial advisor. Some investors thrive in a do-it-yourself (DIY) approach, enjoying the challenge of managing their portfolios and keeping up with market trends. Others, especially those with complex financial situations, high incomes, or significant assets, stand to gain tremendously from comprehensive professional guidance. But if you do decide to work with an advisor, the world of financial advice is vast, and finding the right one is critical! So here are some things to consider.

“Independent advisors can provide recommendations based on your specific situation, usually with a full spectrum of investment options.”

Many Canadians turn to their bank’s financial advisors for guidance, assuming they offer broad financial planning. The reality is that most bank-affiliated advisors are limited to selling their institution’s products – often mutual funds or insurance solutions that align with corporate sales targets. While many bank advisors can offer competent guidance, their ability to tailor strategies using products from different institutions is extremely limited.

In contrast, independent advisors can provide recommendations based on your specific situation, usually with a full spectrum of investment options. But even within the independent advisory world, not all advisors operate at the same level of expertise or objectivity. Independent advisors can range from one-man or one-woman operations, to large publicly traded independent wealth firms.

‘While investment management is important, a strong financial plan is what ties everything together – ensuring you have a clear path toward financial security.’

If you’re looking for a well-rounded financial expert who can guide you through all stages of wealth management, you should prioritize these credentials:

1. For Professional Investment Management –  CIM (Chartered Investment Manager), CFA (Chartered Financial Analyst), and (PM) Portfolio Manager

A CFA, CIM, or Portfolio Manager designation qualifies an advisor to manage investment portfolios with a higher level of expertise than most other financial advisors. Portfolio Managers (PMs) with these designations operate under a fiduciary duty, meaning they are legally obligated to act in your best interest—unlike many other financial advisors.

Advisors with these designations can provide customized investment strategies that go beyond mutual funds, including tax-efficient investing, alternative investments and strategies, and risk-adjusted asset allocation. This is crucial if you want a long-term strategy that maximizes returns while minimizing fees.

2. For Holistic Financial Planning – Pl. (Financial Planner in Quebec), CFP (Certified Financial Planner in other parts of Canada)

A Fin.Pl. or CFP designation ensures that an advisor is trained in comprehensive financial planning, covering retirement planning, tax strategies, estate planning, cash flow and debt management, risk management as well as insurance needs.

While investment management is important, a strong financial plan is what ties everything together – ensuring you have a clear path toward financial security. Advisors with only an investment focus (CIM or CFA without a Fin. Pl. designation) may overlook important aspects like tax implications or risk mitigation.

3. For Risk Management and Estate Protection – Insurance Licensing (or CLU)

A well-rounded advisor should also be able to guide you on insurance solutions that protect your wealth. This includes life insurance, disability insurance, critical illness coverage, and long-term care planning. Without insurance knowledge, even a skilled investment advisor may leave you exposed to unnecessary risks. For example:

•  What happens if an unexpected illness prevents you from working?
•  How will your estate be transferred tax-efficiently to your heirs?
•  Do you have sufficient coverage to protect your family and assets?

An advisor who is only investment-focused may not ask these questions, leaving gaps in your financial security. To know if your advisor has insurance credentials along with investment credentials, look for the titles such as Wealth Advisor or the CLU designation.

“For true holistic financial guidance (that incorporates comprehensive financial planning, integrates investments, insurance, tax efficiency, and retirement strategies), the best choice is an independent advisor with all the designations and experience to support your needs.”

Transparency in how an advisor is compensated is one of the most crucial aspects of choosing the right professional. Over the years I’ve had countless investors come into my office looking for a second opinion who don’t even realize they’re paying fees.  Often, investment fees are embedded in the investment, making them harder to recognize. These “hidden” fees provide for the advisor’s compensation. To ensure transparency, always ask, “How are you compensated?” A trustworthy advisor will clearly explain their cost structure without hesitation.

Once you’ve shortlisted potential advisors, here are some other questions to ask in order to assess fit and transparency:

•  “Are you a fiduciary?”
•  “What credentials do you hold?”
•  “What types of clients do you typically work with?”
•  “Do you provide a written financial plan?” (Comprehensive advisors should.)
•  “How do you handle market downturns and risk management?”

For true holistic financial guidance (that incorporates comprehensive financial planning, integrates investments, insurance, tax efficiency, and retirement strategies), the best choice is an independent advisor with all the designations and experience to support your needs. By choosing wisely, you can ensure your financial future is in capable, trustworthy hands—without worrying about biased sales tactics or hidden fees.

Lynn MacNeil, F.PL., CIM®, is a Senior Wealth Advisor and Portfolio Manager with Richardson Wealth Limited in Montreal, with 30 years of experience working with professionals and pre-retirees. For a second opinion, private financial consultation, or more information on this topic or on any other investment or financial matter, please contact Lynn MacNeil at 514.981.5796 or [email protected]. Or visit our website at www.MVEWealth.com

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth Limited or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. Richardson Wealth Limited is a member of Canadian Investor Protection Fund. Richardson Wealth is a trademark of James Richardson & Sons, Limited used under license.