The meaning of money I recently spoke with James P. Gunn, a certified financial planner and registered retirement consultant at Halton Wealth Management Inc., an independent wealth management firm. We asked Gunn how Canadians can expand their search and find the money manager that best suits their long-term goals. Here’s what he had to say:
Q: What’s the best way to find a new financial advisor? What should they look for and where should they look?
AND: The first step is identification What you are looking for. Prepare a detailed list of the services that suit you best, as well as a series of questions to ask. For example, does the advisor offer financial planning or retirement planning? Do they offer additional services like tax planning and estate planning, rather than just retail solutions you can get anywhere (like mutual funds, segregated funds, and ETFs)? Do they offer discretionary portfolio management – meaning they will actively manage your portfolio of stocks, bonds and other securities on your behalf? Can fees be negotiated depending on your specific situation? And whether they are experts in retirement income planning – an area that requires specialized knowledge if you want your money to last a lifetime.
It’s best to focus your search on advisors licensed by the Investment Industry Regulatory Organization of Canada (IIROC) and actually check to see if they are in good standing with the regulator. You can do it Here.
Q: What do you think are the biggest mistakes people make when looking for a financial advisor?
AND: They limit their search geographically. Don’t limit yourself to a location convenient to where you currently live or work. After all, you may someday move or live in a small town where there aren’t many options. Expand your search to find the best advisor for your needs. Choose quality over comfort.
Many also do not pay enough attention to the appointment of an advisor. In my opinion, you should look for an IIROC-licensed advisor with the CFP designation. See how long the advisor has been serving clients, because experience really counts.
Choosing an independent advisor is a huge challenge. The advisor’s interests are consistent with the interests of investors, because they are not limited only to investment solutions approved by their company.
Finally, not discussing fees is another common mistake. Overpaying fees will significantly reduce your wealth over time. Just a 1% savings in annual fees can put several thousand dollars more in your wallet in the first year.
Q: Do you think that the best advisors can be found in Big Banks?
AND: No, I believe that the best advisors are usually independent. It is their independence that allows them to provide tailor-made solutions that may not be available in many large institutions.
Many investors mistakenly believe that their assets are safer with a large financial institution. But the fact is that the protection of your shares is identical across all IIROC member companies. Don’t be fooled by the convenience of the bank logo – your results are influenced by the advisor, not the institution.
At the end of your search, you should have an advisor whose interests are completely aligned with yours, not the institution where he works.
Q: What are the most important benefits of having an independent advisor?
AND: It can be argued that independent advisors are more client-oriented and personalize their services to meet their needs. They are privately owned, so customers deal with the owner, not an employee or contractor.
They are not affiliated with a sales organization that sets sales quotas or other systems for their compensation, which is disadvantageous because these types of sales incentives can often lead to conflicts of interest. Eliminating incentivized selling reduces potential conflicts of interest.
Independent financial advisors also often work in teams and rely on a portfolio manager who can provide discretionary management of their clients’ portfolios. The investor then benefits from a direct relationship with both the portfolio manager and the financial advisor.
I have found that managing a portfolio’s investments is best left to a specialized portfolio manager, while financial planning responsibilities are best left to a certified planner. Most advisors simply can’t do it all.
So start by talking to at least three advisors to see what they have to offer and make sure they have what you’re looking for. Ask for a free consultation. Many counselors will do this for you if they really want your relationship to be right for both of you.
Q: One of the areas you specialize in is retirement income planning. Why is this area so important, and will become even more important as the baby boomer generation ages?
AND: Baby boomers are retiring in droves every day, a trend that will continue for years to come. So many investors today need the services of an advisor who has a deep understanding of managing the profitable phase of retirement. This means understanding how your investments will be used and maintained throughout your retirement years. Tax planning and estate planning are also crucial at this stage. This is a critical stage in your life where you cannot afford to make mistakes and risk outliving your money. The right advisor can make all the difference and ensure you have a comfortable, happy and hassle-free retirement. This is the real end for all of us.
James P. Gunn CFP®, RRC®, CPCA®, Founder and President of Halton Wealth Management Investments Dealer: Aligned Capital Partners Inc.
