Financial advice: how to find the right one?

A few years ago, Marie-Pierre Larin’s personal finances were on the brink of disaster. “I spent generously and I was always in debt. I stubbornly refused to set a budget. For me, a rigorous management of my money was synonymous with deprivation,” he says.

Then, without warning, the pandemic came. And Marie-Pierre wonders. “I realized that I was no longer able to live with the financial stress. I decided to go get help,” says the thirty-year-old who lives in the Beauharnois region, on the outskirts of Montreal.

While attending entrepreneurship training, he met an advisor who gave him the tools to get his finances back on track. “I have completely changed my attitude towards money. I make a budget, which I respect, I contribute to my REER and I no longer feel like I’m depriving myself if I don’t spend” says this student of neurolinguistic programming.

Unless you are passionate about stock market investments, insurance products and Excel spreadsheets, there is little chance that you know in depth the keys to good management of your personal finances. This is why counselors can guide newbies. But who should we do business with? A financial planner, wealth manager, mutual fund representative, investment broker?

In fact, not knowing where to turn is completely normal. “The terminology used in this field is not easy to understand,” admits Antoine Bédard, senior director of client assistance at the Autorité des marchés financiers (AMF), the regulatory and supervisory body of the sector, institution finance of Quebec.

Target the right person

Before starting the search for one or more representatives, you must define your needs. Do you want to have a global view of your portfolio, purchase financial products, evaluate the feasibility of a project, improve your protection or a little of all of the above?

If you want to get an overview, you should consult a financial planner, such as Fabien Major, who compares his work to that of an architect. “This expert studies your situation in its entirety: tax aspects, insurance, budget, investment allocation, etc.”, says the main partner and founder of Équipe Major. He will then develop a plan that will achieve the desired objectives .

Only people who have followed the training and passed the exam of the Institut québécois de planification financière (IQPF) carry the title of financial planner. “This guarantees customers that their representative has extensive training in the field,” says Chantal Lamoureux, president and CEO of the Institute.

Note that a professional with the appropriate training can do financial planning without using the title, because it is the use of the title that is legislated, not the act. An accountant can therefore do financial planning, for example, without officially being a financial planner.

Outside of Quebec, anyone can claim the title of financial planner.

If you are considering purchasing insurance products, such as life or disability insurance, contact a financial security advisor. “This professional sells all the products offered by personal insurance companies, which includes segregated funds, a type of investment similar to a mutual fund,” points out Antoine Bédard, of the AMF.

If you are looking to optimize your investments, several stakeholders can provide valuable help: the mutual fund trader, the investment trader or portfolio manager. Each title delimits a field of action.

Thus, a seller of mutual funds can only offer mutual funds, while an investment seller can also recommend individual stocks or bonds. A portfolio manager has carte blanche. “It has the power to modify your investments at any time, taking into account your interests,” explains Fabien Major.

One specialist, many titles

Most professionals have more than one title. “A planner can also be an advisory representative and a financial security advisor. This gives him the opportunity to offer a range of services to his clients. It is an option that many people appreciate,” explains Chantal Lamoureux, of the IQPF.

How to find the rare pearl? The most effective way, according to Antoine Bédard, is word of mouth. You can also consult the IQPF directory, which lists financial planners according to their location, or register – not very user-friendly – of the Autorité des marchés financiers. Once we have seen a few of them, we interview them. “We find out their permits, their training, their experience, their history, their method of remuneration and the way they evaluate our situation”, continues Antoine Bédard.

In short, we buy. “It is important to find someone with whom you can relate. Otherwise, it will not work”, says Fabien Major.

How much does it cost? Different methods of remuneration coexist in the financial services industry. For example, financial institutions do not directly charge fees to their clients for the advice they provide. Instead, they get paid to sell financial products. “Since people are generally reluctant to pay fees to access financial planning services, this way of doing things helps make advice more accessible,” says Chantal Lamoureux.

As for financial planners, many work on a fee, like a lawyer, not on commission. “The cost depends on the assets under management and the complexity of the client’s situation,” says Fabien Major, who bills like this. In the industry, fees vary on average from 1% to 1.7% of the value of the investments. There are also financial planners who work on an hourly rate, but these are rare birds…

Training to get there

Before turning to a professional, you can deepen your knowledge of personal finance by following the training courses of the Institut québécois de planification financier, on the website planié.org. “Our 14 modules prepare for the first meeting with a professional,” says Chantal Lamoureux, of the Institute.

The Autorité des marchés financiers also offers the document online Choose your representative – 9 principleswhich outlines the elements to consider before choosing your financial services adviser.

Fraud, how to avoid?

Before entrusting your money to a financial services advisor, contact the AMF Information Center (1 877 525-0337) to find out if they have the necessary authorizations to sell investments or insurance. We then require complete information on the investments offered and ensure that the documents presented are true. To do this, we visit SEDAR, a site that contains data from members of the Canadian Securities Administrators (CSA). Finally, we are wary of promises of fabulous returns. Easy wins don’t exist!

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