Finding the right advisor

How to make sure you get value for your money

The wealth advisory landscape has changed over the past few years. Registered advisors need to be a lot more transparent about the fees and services they offer. By the same token, wealth management clients’ attention has become more focused on what value precisely they are getting for the fees they pay. Many advisors have already adopted a completely transparent approach to fee and cost disclosure. But for many wealth management clients, what they pay and for what services still remains a mystery. Indeed, many wonder if they are receiving advice appropriate to their circumstances.

So here are six questions clients of wealth management firms should ask to help determine if they are getting advice appropriate to their financial needs and circumstance for the fees they pay.

1. Does the advisor offer comprehensive financial planning? A competent advisor should gather necessary information at the outset, to determine goals, needs and priorities, identify and evaluate strategies, submit recommendations, agree on action, responsibilities and time frames, monitor and evaluate ongoing implementation.

2. Does the advisor develop a written investment management strategy? A written personal financial strategy statement identifies the client’s target, asset allocation, investment objectives, risk tolerance, and outlinea the steps needed to implement the strategy. In addition, the advisory firm should assist clients with, or provide background services for, the myriad administrative details involved with managing investment accounts, including account opening forms, asset allocation and risk tolerance questionnaires and follow-up, portfolio evaluation reports, portfolio reviews, assisting in arranging for deposits and withdrawals, and meetings with the portfolio managers

3. Does the advisor provide an exhaustive portfolio-manager search? At Castlemark Wealth Management, for example, we routinely interview, conduct reviews of, negotiate with, and recommend third-party discretionary portfolio managers. We review each firm’s profile, history, ownership, and people through publicly available sources as well as our own private network. We extensively research a portfolio manager’s philosophy and style and drill down into a manager’s historical performance – something not always easily available for individual clients. We ensure clients receive top value for fees to portfolio managers, and we have always disclosed all fees fully on client statements. Perhaps most importantly, we continuously monitor managers through regulatory and industry listings to ensure they remain compliant with the regulatory framework.

4. Does the advisor do comprehensive portfolio and performance monitoring? This is an aspect of wealth management often overlooked by clients, mainly because it is intensely time-consuming, but it is critical to achieving long-term financial goals. An advisor who takes their profession seriously continuously monitors and reviews client portfolios for management style, compliance, investment policy, performance (including Alpha, Beta, and peer/benchmark comparison, service quality, administration, and tax-efficiency). Advisors should also provide ongoing analysis, research, liaison with portfolio managers, and regular reporting to clients, including quarterly performance reviews and semi-annual/annual client review meetings. Yes, it’s a lot of paperwork (for the advisor), but that’s what clients are paying them for. If you’re not getting that level of service, what exactly are you paying for?

5. Does the advisor offer a holistic planning framework? In addition to those all-important portfolio management services, a client will know they’re getting value from an advisor who ties in their investment plan with a comprehensive retirement planning strategy, an education planning strategy, a family lifestyle protection strategy (including assessing the need for life, disability, or critical illness insurance), and an estate plan.

6. Does the advisor have recognized professional credentials? Those seeking wealth management advice should also ascertain that the advisor has bona fide credentials and training from recognized professional organizations such as FP Canada, the association for Canadian financial planners. In the case of advisors with a fiduciary relationship, it must be clear that the advisor has a structure in place to comply with the industry rules and regulations set out by the Investment Industry Regulatory Organization of Canada (IIROC), the Mutual Fund Dealers Association of Canada (MFDA), and the provincial securities commissions in the jurisdications they operate in.

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 rthompson@castlemarkwealth.com for a confidential planning consultation.

Notes and Disclaimer

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.