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Investor Clinic

I need help finding a fee-only financial planner Add to ...

I’m seeking an independent and comprehensive assessment of my financial position. Could you recommend a fee-only financial planner who will charge a flat fee to draw up a detailed plan?

I don’t recommend specific financial professionals because, as a journalist, I need to remain independent. However, I can provide some general guidance on how to find a fee-only planner.

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First, a bit of background. The main advantage of using a fee-only – or fee-for-service – planner is that your costs are transparent. While most financial planners are paid through commissions embedded in mutual funds, insurance or other products they sell, fee-only planners charge you a flat fee or hourly rate for the work they do.

That means they’re less prone to conflicts of interest, so you’ll be getting the advice that’s best for you – instead of what’s best for the planner’s wallet.

But make sure you know exactly what you are paying for before you agree to anything.

“I have heard from people who solicit the services of a fee-only planner, who prepares a plan for them, but then they are disappointed when that person asks for another fee to actually implement the plan,” said Heather Mills, manager of marketing communications with the Financial Planning Standards Council, which administers the certified financial planner (CFP) designation.

In other cases, a fee-only planner may not be licensed to sell investments, so you’ll have to do that part on your own or have the planner refer you to an adviser or investment counsellor.

The Financial Planning Standards Council’s website (fpsc.ca) offers tips on choosing a planner and 10 questions to ask (look under the “Financial Planning” tab, then under “Financial Planning Process”). There’s also a tool that allows you to find a planner in your area; it’s supposed to let you search by compensation method, but I couldn’t get that part to work (FPSC tells me it is trying to fix the problem.)

I had better luck on the website of the Institute of Advanced Financial Planners (iafp.ca), which oversees the registered financial planner (RFP) designation. When I entered my city, Toronto, and selected “100-per-cent fee” in the compensation drop-down box, I got a list of 16 RFPs in my area.

You can also search for planners that charge by commissions only, or that charge a combination of fees and commissions.

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In a recent column, I wrote about an individual who contributed $25,000 to his RRSP without realizing that there was a 90-day waiting period to withdraw the funds under the Home Buyers Plan, or the RRSP contribution would not be deductible. An option not mentioned in the article was that, if an individual makes an RRSP contribution in error, he or she can submit form T3012A to the Canada Revenue Agency requesting approval to withdraw the funds without tax being withheld. The individual would then not lose any RRSP contribution room, the CRA says.



Follow on Twitter: @johnheinzl

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