– You’re absolutely correct. When it comes to financial advice, there does
indeed seem to be an embarrassment of riches. But this is a good thing.
Each type of professional brings a specific skill-set to the table, which
perhaps the others lack. In the world of medicine, not everyone can be a
brain surgeon, a cardiologist, and an ophthalmologist at the same time.
Similarly, in the world of financial advice, different practioners offer
different kinds of expertise. Your challenge is to know whom to call on and
when. Here’s a summary of the kinds of advisors you’re likely to deal with
when seeking financial advice, and what each does.
To accomplish anything worthwhile, you need a plan. This will include
assessing your current financial situation by helping you gather all your
current financial information, sort it, organize it, and get it up to date.
A financial planner will help you focus in setting goals and help you
determine what’s realistic, what’s attainable. She’ll also analyze your needs, quantify your resources and apply them to
your goals. The result will be your personal financial roadmap.
The planner will then offer solutions in the form of written plan with
recommended courses of action for you, explaining how each element fits
into your overall plan.
As part of the planning service, your financial planner will also implement
your plan, from investment accounts to tax-planning to insurance needs and
estate planning. Financial planners ensure your plan gets started,
recommending investment managers, accountants, and lawyers where necessary,
and ensures your plan stays on track.
At a minimum, a financial planner should hold the Chartered Financial
Planner (CFP) designation.
Investment Advisor/Portfolio Manager.
Research has shown that up to 95% of the return you get is a result of
proper asset allocation, not just picking the right individual stock, bond,
or fund. It’s important to find an advisor who can provide documentation
that clearly outlines an asset allocation methodology that’s right for you.
Your investment advisor should be free to select investment products from
the entire universe of investments and must have access to a wide range of
investment choices, including stocks, bonds, mutual funds, and
exchange-traded funds (ETFs), and not be limited to the offerings of only
I’ve found that today many of the best financial advisors no longer attempt
full portfolio management for their clients. They in effect “outsource” the
job to professional portfolio managers who have large research teams,
better access to markets, and cost-effective trading platforms. This does
not mean that you will pay more to have assets managed in an arrangement
like this. In fact, in most cases, you will pay less than if a more
traditional investment advisor did the whole job. The fees you pay are
simply shared between the portfolio manager and the advisor.
At a minimum, a qualified investment advisor will have a recognized
accreditation, such as Chartered Investment Manager (CIM) and Fellow of the
Canadian Securities Institute (FCSI). Professional portfolio managers will
often also have a Chartered Financial Analyst (CFA) designation.
. The range insurance products on offer increases every year. While someone
may not require life insurance per se, the “living benefit”
contracts that insurance companies now offer may enhance your financial
well-being in one way or another. Insurance companies not only offer
critical illness policies and long-term care policies, but also various
investment products with features that cannot be obtained anywhere else.
For example, they offer a product that pays a guaranteed minimum monthly
income, which is often a good choice for retirees who are living on a fixed
While some insurance advisors do nothing more than underwrite various
insurance needs, it is more common today for a financial planner or
investment advisor also to be licensed in the insurance business. Some
insurance advisors also hold a securities license.
Insurance brokers and agents must be licensed. Many will also have
specialty designations, such as Chartered Life Underwriter (CLU) and
Certified Health Insurance Specialist (CHS). Insurance brokers, agents, and
underwriters must also take continuing education programs to keep their
licenses up to date. Check with your agent about their current status.
An accountant may be a necessary key member of your team if you are a
business owner, have a professional practice, or have a substantial net
worth. Most individuals and smaller businesses are typically served by
local or regional accounting or bookkeeping firms, who tend to outsource
when they require something more sophisticated.
At a minimum, an accountant will have a professional designation, such as
Chartered Professional Accountant (CPA). A CPA is a senior finance
professional, and fees will be commensurate. If keeping your accounts
organized is all you need, a bookkeeper will have a diploma from an
accredited university or college in bookkeeping, along with membership in
good standing in a professional association such as the Canadian
Bookkeepers Association, which allows members who have passed a qualifying
exam to use the designation Registered Professional Bookkeeper (RPB).
Your legal counsel will deal periodically with more your more specialized
needs related to your personal financial affairs, such as drafting wills
and powers of attorney, establishing trusts, and incorporating companies,
as well as giving advice on various corporate and business matters,
including share issues and contracts.
Practicing lawyers must have a degree in law (LL.B or J.D.) from an
accredited university, must have passed the bar exam in your jurisdiction,
and must be a member in good standing with the law society in your
As for fees in general, many financial planners have moved to a fee
structure that represents a percentage of assets under management.
(Specialized legal or accounting help, if needed, is typically charged
separately on a services-as-rendered basis.) Some financial advisors still
use a commission-based approach, charging for each transaction separately,
in addition to charging separate fees for various services. But with new
regulations regarding transparency of financial advisory fees, this model
is rapidly fading away.
Often, individual financial planners, insurance advisors, lawyers, and
accountants will have a long-standing informal network-type working
relationship formed over many years. This is the best way for you to tap
into precisely the kind of expert advice you need. The best situation is
the one in which your financial planner acts as the quarterback of a team
that includes an accountant and lawyer. – Robyn
Robyn Thompson, CFP, CIM, FCSI, is the founder of
Castlemark Wealth Management, a boutique financial advisory firm specializing in wealth management
for high net worth individuals and families. Contact her directly by
phone at 416-828-7159, or by email at
for a confidential planning consultation.
Notes and Disclaimer
© 2017 by the Fund Library. All rights reserved. Reproduction in whole or
in part by any means without prior written permission is prohibited.
The foregoing is for general information purposes only and is the opinion
of the writer. Securities mentioned are illustrative only and carry risk of
loss. No guarantee of investment performance is made or implied. It is not
intended to provide specific personalized advice including, without
limitation, investment, financial, legal, accounting or tax advice. Please
contact the author to discuss your particular circumstances.