Posted on October 3, 2021
1. Define your needs
This step is essential. Already, at the beginning, if you are looking for a professional to invest your savings for you, the financial planner is not the professional you need. This is not his job. It is designed to plan your personal finances in seven points: legal aspects, your insurance, your finances, taxation, your investments, your retirement and your estate. The financial planner looks at your goals with you (buying a house, raising children, traveling, retirement, optimizing your tax situation, preparing your estate, etc.) and develops a personalized action plan to achieve them .
“The big trend is to buy a second home. But do you have the means according to your goals? Do you want to send your children to private school? Will you retire at 55 or 75? Travel? This is all that the planner has to take into consideration to help you get a picture of the situation and make a good decision,” explains Chantal Lamoureux, CEO of the Institut québécois de planification financière (IQPF).
“The financial planner advises on investments? No, it is not his role, argues Chantal Lamoureux. If he has another license that allows him to sell products and you need this service, in this case, he has to say that he changes his hat.”
2. Find the one with the right title
Venturing on the Internet in search of the best planner, one is quickly slowed down by all the different titles that create great confusion among the uninitiated. Chinese suddenly seems easier to master.
If the professional you’ve found claims to be a ‘financial adviser’, run away, says IQPF CEO. “It is not a title recognized by the AMF.”
The financial planner first studied at university, then took training at the IQPF, passed the exam and obtained a license from the Autorité des marchés financiers. This is the meaning of the letters “Pl. Fin”. which follow his name.
Some planners also have a mutual fund representative license. This means they can sell investment funds. Many are also financial security advisors.
Chantal Lamoureux, CEO of the Quebec Institute of Financial Planning
“They have a license to sell insurance products. They can accompany you in this, but not in their role as financial planners. Financial planners have to say that,” insists Chantal Lamoureux.
If you have seen a portfolio manager who has the CFA or CSI designation, they can manage your money for you, but they will not make a plan like the financial planner. The investment advisor, for his part, has no training as a portfolio manager and therefore cannot make a transaction without your agreement. And the personal banker? Grants loans to individuals.
3. Unravel Service Offers
Is there a minimum amount required to access certain divisions within the same bank? Who can access these seemingly more specialized services? Browsing the websites of various financial institutions and private companies, we see that there are no absolute rules. Even for what is called private management.
At Desjardins, the service of a financial planner is offered both in the caisses and in specialized services for clients whose situation is complex (Signature Service, Securities and Private Management), explains spokesman Richard Lacasse. These three services have, for example, tax experts and lawyers in their team. “There is no required or minimum qualifying sum. We work to understand the needs and then offer the most suitable formula.”
BMO offers a variety of traditional core services, including the expertise of financial planners. As for the divisions BMO Nesbitt Burns and BMO Private Banking, the two entities were combined in 2019 to become BMO Wealth Management, which is aimed at high net worth clients. “A client may have complex needs that require specialized advice from a professional expert, despite an amount of less than $1 million,” explains Mario Rigante, Quebec Regional President, Wealth Management.
As for the National Bank, the vision of the concepts differs slightly. “It’s a question of affinity, trust, proximity, some just prefer a planner who is closer to work or home, or who knows the whole family,” says Éric Bujold, president of the Bank’s private management National 1859.
He explains that in National Bank Financial, the professionals are like franchisees. They have clients with wealth ranging from $100,000 to several million.
Financial planners in the branches of the National Bank do the same type of work, they take clients who can have up to 2 million, but their situation is simple. “If someone only has an RRSP of $1 million, a planner can take care of that. But if they have a management company, they need financing, that’s where we will direct them to private management, which takes care of the complex needs .”
4. Determine how you want to pay
Generally, a planner at a financial institution will be paid through all the other services and management fees you pay, while a planner at a private firm will be paid hourly depending on your situation and level of complexity. “If you have assets abroad or are an entrepreneur, it will be different than someone who has a stable salary and a defined benefit pension plan,” explains Chantal Lamoureux.
In many financial institutions or private companies, the rule is simple: the more money you have, the lower the percentage of management fees.
“But in absolute terms, it costs more,” says Éric Bujold. If we take 0.5% of $100,000 and 0.5% of $1 million, it is not the same amount. »
5. Ask your friends for referrals
Financial institution, insurance company, wealth management company, private financial planning company? Which place to choose?
In general, I recommend working for recommendations. Ask the people around you if they are satisfied and if they have established a good relationship of trust with their planner.
Antoine Chaume, financial planner at Lafond+Associés
On the IQPF website, a search engine by region allows you to find licensed financial planners.
6. Check if he has a license
It is true that Vincent Lacroix, CEO of Norbourg, had all his permits, which did not prevent him from defrauding 9,200 customers of $113.5 million. It is also true that when you do business with a financial institution, you assume that you hire employees with permits.
On the website of the Autorité des marchés financiers (AMF), you can easily search by name. You will not only know if the professional has the right to practice as a financial planner, but also if he has other permits. For example, he could also be a “dealing representative”, which allows him to buy and sell a large amount of investments for you. He could also have a “personal insurance” license and sell insurance.
This simple search will give you a lot of relevant information about the professional to whom you are considering entrusting your entire financial history.
7. Collect your documents in advance
If you are the scattered type, go ahead and prepare yourself psychologically to search. The game is worth the effort, because once and for all you have a 360-degree view of your personal finances. What exactly do you need to find? All your investment statements, your last participation statement to the Régie des rentes du Québec, the texts of your current and past pension plans, your insurance policies and your will.
8. Check the chemistry
Make an appointment with three different planners. “People generally spend a lot of time buying cars, bikes and electronics. To find the right planner for your situation, you definitely have to invest time,” recalls Antoine Chaume.
“On our part, the objective is to work long-term with our customers. It is therefore important to ensure from the beginning that there is a good fit, otherwise there will be a lot of time together for 20 or 30 years”, points out Antoine Chaume.
“I think it’s wise to meet a few people and not go with the first one,” says Chantal Lamoureux. When you want to make renovations in the house, you will meet many contractors. It’s the same thing. You have to trust them with the biggest goals and dreams of your life, so it is important to feel completely confident with this person. »
“You need a relationship of trust with the institution and with the individual who serves you. If you are not compatible with your planner, you do not have the reflex of trust, adds Éric Bujold. It is like with a doctor , if you don’t tell him all your little wounds, he might not make the right diagnosis.”
Four questions to ask him
We do not choose a financial planner at random. Don’t be afraid to ask about their background.
Ask him exactly what services he will provide, advises Chantal Lamoureux, CEO of the IQPF. “Will you be forced to buy financial products? Because the financial planning license is not a license to sell products. If the person only has this license and wants to sell investment funds or an insurance contract, that must warn.”
Ask the planner to see examples of written planning reports they give to their clients. You have to read here the different options for the purpose that is set, for example buying a house, and the rates of return or loan that he used for his projections. “If he says, ‘I’ll only tell you if you have enough money to buy a house and retire at 50,’ it won’t work,” explains Chantal Lamoureux.
What are the limits of their independence?
Try asking if he can advise you to put your first tranche of $5,000 of annual savings in the Fonds de solidarité FTQ or in the Fondaction de la CSN, suggests Antoine Chaume, financial planner at Lafond+Associés. “The planner must act in the interest of his client, such as telling him that it is possible to get $1,500 in additional tax credits per year.”
Who are their customers?
Find out about their customers. Are they doctors, engineers or teachers? suggests Antoine Chaume. “If the firm works with ultra-high net worth individuals or in a specialized niche [médecins, informaticiens, ingénieurs] and you are not part of the target clientele, you may not have access to the same level of service. On the other hand, if you are a couple of teachers and it is in your target market, you will be happy to give a triple A service and accompany you as you wish. »