At the beginning of a career, is it worth consulting a personal financial advisor to guide us in our investments? The answer is neither black nor white. It all depends on our wallet and the person to whom we have entrusted it.
For his part, Jean-Pierre Gueyie, professor at the École des sciences de la gestion at UQAM, is categorical: “I recommend that all people who do not have qualifications in finance resort to a specialist in personal finance.”
Yes, the fees of such a professional can be high, for the management of your assets, but you can lose more (or pocket less) without his valuable advice, according to the professor.
“There are pennies to take the importance that is worth paying the costs.”
Never better served than by yourself
Hubert Coté Lecoin, founder of the personal finance podcast Freedom 45, doesn’t see things the same way. His answer is equally firm: “No, it’s not worth it.”
For him, the management fees are too high.
“If we decide to invest, for example, $10,000 a year with an advisor, the costs after 20 to 30 years represent tens and tens of thousands of dollars lost.”
To anyone with an investment portfolio of less than $100,000, Hubert Côté Lecoin suggests stand-alone investments. “In no situation will an advisor give you a better return on investment than doing it yourself,” he believes.
Good to know: management rates are lower the more money you have. For example, those with a capital of $500,000 pay a lower percentage in management fees on the shares of people who invest less than $100,000.
To promote autonomous investments, Hubert makes a culinary analogy. People who take care of their investments are like people who want to learn how to cook. It can be a little long and complicated before you really master the kitchen, but, in the end, you can make good meals without spending too much.
Requiring the services of a consultant is like doing business with a ready-to-eat delivery service. Everything is already done for the customer, but it is expensive.
Instead, what Hubert recommends is passive investing in exchange-traded funds. “It’s the equivalent of a good old family dinner,” he explains. You don’t need to know how to cook, you don’t need to pay anything, go to dinner, sit down, eat, enjoy yourself.
This way of investing works, with no management fees, in just two or three clicks on any online brokerage platform, such as Questrade or Wealthsimple.
Continuing with his gourmet analogy, Hubert explains that these platforms work like a grocery store where the baskets are already full. These are forecast baskets filled with already diversified stocks. It’s just a case of take one and go home for fun.
For Hubert, self-directed investment has never been easier than in 2022; that is why he advises not to miss the opportunity.
“If you have someone else invest your first $1,000, it is the equivalent of asking someone to learn to walk for you: you will always be on all fours,” he explains.
But in addition to financial advisors, a term that includes everyone who helps manage your money (broker, insurance agent, employee of your financial institution), there are financial planners who go beyond portfolio management .
His work focuses more on the long term, helping clients achieve their life goals. They analyze their finances as a whole considering, among other things, all the legal and fiscal dimensions related to their objectives to be achieved.
Goals range from buying a house, financing children’s education, becoming self-employed, or moving in with a romantic partner. We usually consult a planner for important events in our lives.
“Yes, it can cost money, but it’s an investment that can bring us peace of mind,” said Chantal Lamoureux, president and CEO of the Quebec Financial Planning Institute (IQPF).
Indeed, every service has a cost. Depending on the complexity of the financial situation, the rate – often hourly – will vary.
It is also possible to buy your planner by checking his profile on the website of the Autorité des marchés financiers to ensure his skills and thus develop a bond of trust.
The golden rule according to the IQPF CEO is to use it sooner rather than later.