The Canada financial advisor industry is in a state of flux, and with good reason. It is complex, and the overlapping regulatory systems across Canada (and the world) are confusing. As a result, newcomers to the country often struggle to identify which advisors are best for their needs.
It is not easy to discern the differences between financial planners and advisors – which can include everything from bank employees, stock brokers and insurance agents, to those with the official titles of investment specialists, wealth managers or certified financial planners. Further, there is no single definition of the term “financial planner,” and anyone can use the title as long as they don’t run afoul of securities laws.
Financial Advisor Canada: Choosing the Right Professional for Your Needs
Experts say that the proliferation of the designation is making it harder for consumers to assess what they are getting in return for their money. Unless an advisor is salaried, most are paid through commissions or management fees (MERs), which can significantly erode your portfolio growth over time.
As a result, Heath and others believe that many Canadians are not receiving the full range of advice they need to build their wealth. In their view, too many advisors are focused on selling products and chasing sales quotas, rather than taking the time to listen to what their clients’ real money concerns are. A recent study by Questrade found that only 6% of investors are receiving comprehensive advice, that addresses all aspects of the client’s finances and wealth management goals; includes a financial plan; demonstrates a deep understanding of the client’s lifestyle and goals; puts their interests first; and is free from conflict of interest.