Finding a good Financial Planner to work with can be tricky business. As I wrote about last week, not all financial planners are created equally, since the term isn’t heavily regulated in North America. To find the right person to work with, it’s going to take a bit of detective work on your part. Here are a few questions to ask when you’re trying to find the right person for the job.

#1: Are you a fiduciary?

Someone with a fiduciary duty is required to put your needs ahead of their own. Nonfiduciaries only need to recommend products and services that are “suitable” for their clients – not necessarily the best or cheapest one for the job.

Unfortunately, the vast majority of financial planners in Canada fall under the latter category, which is why it’s so important to ask both this question and the next one.

#2: How do you make money?

As I’ve written about in the past, financial planners and advisors make money in a number of different ways. Following the flow of money is a good way to understand your advisor’s motivations. For example, do they get paid by the company that issues the funds they recommend? Or do they charge a one-time fee that you as the client pay out-of-pocket, and then that’s it? Or is it something else?

Ideally, you want to choose someone who doesn’t receive commissions or kickbacks from the products they recommend, since that introduces an inherent conflict of interest into the relationship. What if the solution that’s best for you, isn’t also best for the advisor’s paycheque? Some would still recommend the right solution for you; many wouldn’t. And others have even done the mental gymnastics to trick themselves into thinking they’re doing what’s right for you, even when that’s not the case.

Again, this is why you need to ask this question. A truthful answer here leaves nothing in doubt as to where the motivations and conflicts may lie.

#3: What are your qualifications?

When asking this question, you’re looking to understand the following sorts of details:

• How long the individual has been in the business
• What training they’ve successfully completed
• What certifications they hold, if any (the Certified Financial Planner designation is considered the worldwide gold standard for this space)
• How they keep up to date with new developments in the financial planning landscape

It’s important to know who you’re dealing with, and how much knowledge they may have when working with you. Financial planning is a crazy-complex business, with a ton of nuances and areas to understand. It’s not the kind of thing that you can just get into with no training or experience!

#4: How will we work together?

Like some Realtors, Financial Planners may sometimes pass you off to more junior staff after you agree to work with their firm. It’s important to understand upfront how you’ll be interacting with your planner. For example:

• How often will you meet with them?
• What is their preferred method of communication?
• Are they available for ad hoc phone calls?
• Will they be the only one working with you?
• How much do you typically charge?
• Who, besides me, benefits from your recommendations?
• Can I get a copy of our working agreement in writing?

Getting these details hammered out upfront prevents any possible disappointment resulting from unclear expectations down the road.

#5: What is your investment philosophy?

Every financial planner is a little different, and their life experiences will have subtle influences on the recommendations they like to make for their clients. It’s important to ask this question, because the only way you’ll be willing to stick with your planner’s recommendations over the long term is if you agree with their approach.

To that end, you should be looking to understand that approach in significant detail. For example, do they tend to recommend investments from across the globe, or only in the area in which they operate? Do they shy away from certain types of investments? Why? Do they have the ability to recommend a portfolio of ethical or environmentally-conscious investments, if requested?

For example, if you’re looking for green investments, and your planner like to specialize in oil and energy funds because of the returns they offer, it may be a sign that you two aren’t destined to work together.

Bonus: Do I like this person?

It’s so much easier to work with someone when you like and trust them. As yourself: does this person take the time to explain things simply to me? Or do they try and talk circles around me with fancy language? What does my gut say when interacting with this person? Do they seem like they value my time and patronage, or does it feel like I’m somehow a burden on them?

Remember: your financial planner works for you. They are not doing you a favour in building your financial plan, unless they are doing it pro bono. If they’re making you feel like you’re not worth their time, then the truth is the other way around; they’re not worth your time.

Wrapping it Up

It can be intimidating to find a good financial planner. Like finding a good expert in any field, though, the key is to do thorough research, and know what you’re looking for before beginning to engage prospective financial planners. Ask the questions in this post, and you’ll be well on your way to making an educated decision and setting yourself up for continued financial success!