Colleen Hailley has retirement savings, and an advisor too. But she can’t tell you much about either one. “It’s something I keep meaning to do, but I put it off,” says the 47-year-old Winnipegger about getting in touch with her advisor.
Once you define your goals, talk about what success might look like. A win isn’t necessarily measured by a portfolio beating its benchmark.
Hailley, who runs her own hairstyling business, puts money monthly into one equity mutual fund held inside her RRSP, but she has not heard from her advisor in at least a couple of years. “I actually can’t remember the last time we talked. I’m not even certain she is still my advisor,” she says.
Hailley is like many Canadians. They have investments, but rarely talk with a financial professional. According to a 2017 survey sponsored by the Financial Planning Standards Council, four in 10 Canadians feel like their financial futures are not under control.
That number, suggests Brent Allen, a Senior Vice-President at IG Wealth Management, is a sign these individuals may not be well-served by their advisors. “This speaks to the quality of advice people are getting, or lack thereof entirely,” he says.
Even if Hailley did meet with an advisor, she says her lack of knowledge about finances and investments makes her feel intimidated about the whole process. “Frankly, I wouldn’t even know where to start,” she says.
For the advisor–client relationship to work, though, communication is key. But what kind of conversations should you have? Here’s what you should be discussing.
“What are my goals, and how can you help me achieve them?”
The first place to start is to set some goals, says Allen, who adds that working with an advisor is about more than saving for retirement. Goals might include retirement, but also buying a cottage, saving for a child’s education, taking annual trips and more. Your advisor should help you define your goals and then develop a plan to reach them, he says. That can only be done if you and your advisor are talking regularly. “It’s not a spectator sport,” he adds. “Everyone needs to be involved.”
“How do we measure success?”
Once you define your goals, talk about what success might look like. A win isn’t necessarily measured by a portfolio beating its benchmark. It could be taking that vacation, or buying that cottage – or just seeing assets increase. If you ask an advisor how they define success for themselves, the answer, says Allen, might be how many clients have hit their goals. If you’re speaking to a new advisor, ask for some references to see if they’ve been able to achieve success with others.
“What qualifies you to provide advice?”
Whether you’re looking for a new advisor or already working with one, it’s a good idea to find out why they’re qualified to give financial advice, says Allen. Ask them about their qualifications and how they’re continuing to educate themselves in a constantly changing world. Advisors often have many areas of expertise, from investments to life insurance to estate planning. What most people need – especially when seeking advice for the first time – is a certified financial planner. “That is the gold standard,” says Allen.
“What is your approach, and what services does it involve?”
How an advisor invests is also an important conversation to have. Is the person picking stocks and bonds, or choosing professionally managed portfolio solutions? Does that line up with how you want your money to be invested? Also, talk to your advisor about the other services they offer. Many now do comprehensive estate plans or help business owners create succession plans and more. Another important discussion to have is around availability. Unlike Hailley’s advisor, you want someone who can keep these conversations going outside the office – perhaps meeting in your home or over video calls, says Allen.
“What am I paying for all of this?”
Advice isn’t free, so a discussion about fees should be up-front and clear. “Are you, the client, writing a cheque at the end of every month, or are you paying a percentage out of your investments?” Allen says. It’s important to understand what you’re paying for and to determine whether you’re getting value for the price. “If the cost is X, and you’re getting 3X in return – financial planning, portfolio management, tax-savings strategies – that’s good value,” he says.
Hailley knows that if she can find someone who is willing to have these conversations, then she’ll be one step closer to reaching her goals. “Having the basics about what to ask is certainly helpful, especially for someone like me,” she says. “I don’t know much about financial planning and investment, but I should.”