21 Questions to Ask Your Financial Advisor

Most clients’ definition of excellence in wealth management is tied to the concept of sustainability. In other words, don’t lose our money! But as a client, how do you make sure you establish a relationship with the right advisory firm, one that is not only credible but can competently manage your assets in a tailored and prudent manner?

Step 1: Judge Credibility

The credibility questions are the baseline set of questions that need to be answered. Typically, they include:

1. Please describe the history, size, ownership, and management of your firm.

We believe that investors should seek an investment firm that has a proven historical track record of successful money management as well as a firm ownership and management structure that ensures investors will be well-served by a team of engaged investment professionals.

2. Is your firm registered with a securities regulatory body?

All investment firms in Canada are required to be registered with a provincial securities commission if they’re providing investment advice and/or trading in investment securities. The purpose of this regulation – as stated by the Ontario Securities Commission – is three-fold:

  • To provide protection to investors from unfair, improper, or fraudulent practices.
  • To foster fair and efficient capital markets and confidence in the capital market.
  • To contribute to the stability of the financial system and the reduction of systemic risk.

As a result, investors should ask if a prospective investment firm is registered, how long they’ve been registered, and in what category of registration. Ideally, investors should seek out investment firms that have a fiduciary obligation to their clients.

Investors can also check with the website of each provincial securities regulator to confirm the registration of any investment firm.

3. Who are the key investment professionals in your firm?

We believe that investment management, done properly, is a profession in which success highly depends upon the quality of its team. As a result, investors should look for firms in which the key investment professionals have a long-standing and proven track record of managing money. Investors can also check the website of each provincial securities regulator to confirm the registration of key investment professionals as well as their history of any regulatory sanctions.

4. What is your industry experience, financial education, and professional certification?

Financial advisors servicing investors should have a sufficient level of experience and professional certification through designations such as the Chartered Financial Analyst (CFA), Chartered Investment Manager (CIM), and/or Certified Financial Planner (CFP). Each professional designation – CFA, CIM, CFP – has an industry group associated with it that investors can use to validate online the registration a given financial advisor.

5. Have you and/or your firm ever received any regulatory and/or professional sanctions?

This is a key question to help assess the quality of the firm and its investment professionals. Firms, and investment professionals within those firms, who have track records of regulatory and/or professional offences, should be major ‘red flags’ for investors. Investors can check the website of each provincial securities regulator, as well as each professional certification body (i.e. CFA, CIM, CFP) to confirm the registration of a given firm and its key investment professionals as well as their history of any regulatory sanctions.

6. Please describe the investment professional and administrative support team who would be managing our wealth?

Given the deepening and broad technical expertise required in the investment management industry, we believe that the days of having a single financial advisor provide all of the servicing for investors has passed. As a result, investors should look for firms who provide a ‘team’ of professionals who collaborate for the benefit of clients across various technical areas. In the case of affluent families, such professional areas can include investment, financial planning, and insurance. Finally, given the range of servicing needs that can arise with clients, investors should also ensure that there are people on the team who can service their administrative needs as well.

Although the answers to these questions help you decide whether or not you want to even consider engaging a given financial advisor, to determine if they’re actually good at what they do you need to assess a financial advisor’s professional competency.

21 Questions to Ask Financial Advisor

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