First, what questions should you ask a financial advisor?

When you meet a potential financial advisor for the first time, your instinct may be to tell the advisor what you are looking for and ask if they can help you. However, if you’re looking for a truly objective financial advisor, you’ll need to approach the meeting differently, Chapman says.

Before sharing many details about yourself, he recommends asking the advisor these questions, in this order:

“Who is your ideal customer?” “How do you help your ideal customers?” “What common problems do you help your ideal customers solve?” “Who don’t you work with?” “How do you get paid?”

If the advisor can answer these questions clearly, the answers don’t cause red flags, and the advisor takes the time to explain things, then you’re probably a good match. It also helps if you like the person.

The fifth question is important when working with a financial professional, Chapman says. Whether it’s an accountant, mortgage broker, or financial advisor, ask them, “Who pays for your services?” Ideally, you want the answer to be “you.” This provides the greatest chance that there will be no outside influence or conflict of interest in their advice. For example, if an advisor receives a commission for selling certain investments or insurance packages, or for recommending a specific mortgage, that could be a conflict of interest.

How do you conduct a background check for advisers?

Before hiring a financial advisor, you’ll want to do your homework. This includes doing a background check and confirming credentials.

Financial advisors must have at least one professional designation, such as Certified Financial Planner (CFP), Chartered Life Underwriter (CLU), or Registered Financial Planner (RFP) among others. You want to check with the appropriate issuer or agencies whether the advisor is reputable. “It means they’ve paid their membership dues and certified that they’ve met all continuing education requirements,” Chapman says.

In addition, if the financial advisor is selling investments or insurance, you can check with industry regulatory authorities to ensure they are licensed. These organizations can also tell you if the advisor is disciplined. For investing, use the online tools of the Mutual Fund Dealers Association of Canada (MFDA), Investment Industry Regulatory Organization of Canada (IIROC), and Canadian Securities Administrators (CSA). For insurance, contact the regulator in your province or territory, for example the BC Financial Services Authority (BCFSA).

Your advisor may also be willing to provide references from existing clients – keep in mind that these are the ones who are happy with their work.

This post How to choose a financial advisor in Canada

was original published at “https://www.moneysense.ca/save/financial-planning/how-to-choose-a-financial-advisor-canada/”