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13 Things Financial Advisors Wish You Knew

Even if you’re saddled with debt, a financial advisor can help you work towards your money goals. Before your first meeting, consider these tips.

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Check Out Titles

In some provinces, “financial advisor” is not a regulated job title. Look for a Certified Financial Planner (CFP) or Registered Financial Planner (RFP) designation, and if they will be handling your investments, choose a reputable Chartered Financial Analyst (CFA).

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Don’t Delay

If you’re trying to get out of debt, or sandwiched between dependent children and aging parents, have a seat. “We recognize that financial advisors can take a back burner,” says Vancouver money coach and CFP Sheila Walkington. “But it’s like insurance—get it before you need it.”

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Go Beyond the Usual Suspects

Using your bank’s in-house financial advisors may be convenient. But while their products might suit your needs, they’re limited. It’s best to ask for a referral from family and friends, and don’t be afraid to interview more than one candidate.

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One Size Does Not Fit All

Look for someone whose clients are roughly in the same financial situation and life stage as you.

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Everyone Gets a Little Intimidated…

One-third of Canadians don’t seek out financial planning advice because they don’t know what questions to ask. Good financial planners expect they’ll need to talk you through complex matters. “There’s a lot of shame associated with money,” says Toronto CFP Robyn Thompson. “But we don’t expect you to be an expert.”

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…But the Initial Discomfort is Worth It

A survey by Canada’s Financial Planning Standards Council found people who have worked with a comprehensive financial plan felt twice as confident that they will have enough money to retire. As a general rule, you’ll need about 70 per cent of your pre-retirement annual income available each year.

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Come Ready to Chat

Good financial advisors will spend at least a couple of hours getting to know you before recommending products or strategies. “We’ll look at your taxes, income, investments, retirement savings, estate planning, insurance, debt and any other issues,” says Thompson. Your planner should check in with you at least once annually.

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Keep Things Simple

It’s your financial advisor’s responsibility to make sure they clearly communicate concepts to you. If they talk down to you or bewilder you with jargon, bid them adieu.

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Beware the Exaggerator

Head for the door if your advisor promises to “beat the market”—no one can safely guarantee that.

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Be Honest

Lay out your income and spending, warts and all. “We can bring clarity to your financial habits, and give you tools to help,” says Walkington.

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Know How Your Financial Advisor Gets Paid

It’s fair to ask whether they receive fees for recommending some products over others, and be sure what you’re buying meets your needs.

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Know Who to Call

If you’re looking for an unbiased approach, fee-for service financial advisors will charge by the hour or project, and isn’t motivated by commissions to sell you certain products. Similarly, money coaches can help you with financial behaviour, but don’t sell securities.

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Don’t D.I.Y.

Just because you think you can handle your own securities trades, it doesn’t mean you should. Reading headlines about the latest market meltdown can make even the most level-headed investor act rashly. An experienced financial planner can keep you on an even keel through the market’s ups and downs.

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Originally Published in Reader's Digest Canada