Where is the right financial advice?

If you don’t mind, I would like to give the floor to Pascale, 31 years old. Allow me to slowly return from the holidays while introducing you to a person who is exceptional and representative of many savers.

Here is what she wrote to me:

I often read that it takes a global strategy with a financial planner, but it is still very difficult to find when you start in “savings”. It is difficult to find good, unbiased advice, based on my situation, at a reasonable cost, and I find that people often try to sell me almost anything after 10-12 short questions.

I work very hard to put money aside, but since I don’t have large amounts saved, I’m not happy with the “made in advance” advice from the big banners. I am a single mother with an income from work of about $50,000 a year (excluding child benefits) and manage to save a little over $10,000 a year. As I said, I worked hard to save money (45,000 saved), but I can’t find anyone to really help me grow this money.

I mention Pascale, but it could be Émilie, Étienne or Claude who wonders how and where to find good advice. This should also be the case for all those who write to me, without detecting anywhere an ear to confide their financial concerns.

If I retained Pascale’s e-mail, it is first of all to highlight that there are people who save in conditions that, for others, are more appropriate to self-pity and debt.

It also reveals that not all young people find their needs met in fintech, and not only in the generic answers regurgitated by the branch staff of large financial institutions.

It also shows that financial advice is not highly valued.

One could conclude that young people no longer want to pay for anything, but I have another hypothesis.

In the beginning, the industry has accustomed us to a rather average service offered by staff with fake titles who are often less concerned with the needs of customers than with the achievement of their sales goals, be it insurance products, investment funds and credit of all. types.

The first impression given to young people by the financial services sector does not seem to me to be the most positive. This industry raises suspicions, at least certainly not trust.

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I have no doubt that there are many competent and well-intentioned financial advisors out there. I am thinking of the financial planners that Pascale is referring to. Individuals are not the problem.

The few places where they can practice are in bank branches or cash desks. There are also insurance companies, companies like Investors Group (IG Wealth Management) or private management companies.

Personally, I know of only two financial planners who practice their profession for a fee and are totally independent, meaning that they do not earn income from commissions on the sale of investment and insurance products or that they are not not employed. of a wealth management company. Of course, there are others, but not many.

I know a third, I’ll forget that one, but he left private practice as soon as he could, he didn’t make much money. He found his happiness in the army where he advises soldiers and their families according to his principles, that is to say without having to shove credit cards down the throats of his clients.

The website of the Quebec Institute of Financial Planning lists more than 4,500 financial planners. The question that immediately comes to mind is this: but why so few financial planners practice on a fee basis, without depending on the sale of products?

The answer is simple: without commissions, they will struggle to survive.

To an independent, a basic plan costs at least $1000, much more for complex situations. Since too few people are willing to take such a sum from their pockets, an amount that also reflects the value of the professional service, most financial planners have no choice but to practice in a financial institution.

I’m looking for jobs for financial planners. All emphasize business development and the offering of savings, insurance, mortgage and credit card products.

You don’t have to have worked in the industry for very long to understand that the role of adviser is in conflict with that of financial product salesperson, the latter often not fully meeting the client’s needs, or not at all. .

The way that the planner, in his heart of hearts, arbitrates between his two functions depends on his professional conscience, but also on the pressure exerted on him by the leaders of his branch, a pressure that is expressed more or less subtle. , sometimes by the carrot, sometimes by the stick. The quality of advice often depends more on the little boss who lines up the columns of figures without ever meeting a client than on the professional who is at the front.

I have emphasized the financial planner, but the same can be said for brokers (stock portfolios), mutual fund advisors (mutual funds) and financial security advisors (life insurance products). Remember that the same person can combine all these functions.

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When you start in the economy like Pascale, you will rarely be offered the services of a financial planner in the branch. You have to insist and be open to getting banking products, a mortgage, insurance or investment funds in an RRSP. So you need some resources. I don’t see any big problems, almost all of us need these financial products one day or another, although sometimes we find solutions that are a little more suitable elsewhere. At the cost of some compromises, we can very well go down.

To do this, the right council must be in the right branch managed by good managers who put the interests of customers before the sales objectives of their business unit. Again, we cannot like the advice assigned to us, no matter how good. Just a matter of compatibility. Values ​​come into play, and we may have very little in common with whoever is giving us advice.

Need another tip? But will it be okay? Change institutions then? The whole problem arises again. Finding your ideal financial advisor is no small feat and I am always annoyed when people ask me the question: where is he?

Unless you want to pay a fee, I’d say “on the other side of the maze”.

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Some advice, though

Ask your advisor, whether it’s a financial planner, broker, mutual fund advisor or all of the above. Ask him what corresponds for him to an ideal financial life, what are his values? Does he value wealth, security, personal experience, family, social causes? If he is a broker or a portfolio manager, what kind of investor is he himself?

Ask how he is paid, if he has performance bonuses and sales targets and on what products.

When you are offered a product, ask yourself which of your needs it meets? So ask yourself “Do I really need it”? (Thanks PY). To life insurance for children, to permanent life insurance for yourself, to the third credit card, to balance insurance, to the leveraged loan and to all matters that seem complicated to you, the answer is “no” 97% of the time.

If he is paid on the sale of the product, make sure he has more than one license. I would not entrust my assets to someone who can only sell insurance products. You risk being overinsured, seeing your REER invested in segregated funds that are too expensive and ending up with an RESP for children whose fees are too, but too high.

Avoid doing business with family and friends, especially if they count on you to build a reputation in portfolio management. If it is set, it is fine. But don’t jeopardize the bonds that unite you with your loved ones for money.

Ask for referrals from similar people who are satisfied with the services they receive.

Inform yourself and be interested, this will allow you to better recognize the quality of the advice.

Research. Google it. call Encounter. Ask. Start again.

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Got questions, is your wallet faltering? Write me at daniel.germain@tc.tc. entering in the subject “Mail from the wallet”.

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