Financial planners offer advice on a wide range of financial topics. Some planners may charge either a flat fee or an hourly fee. Still others charge yearly fees equal to a certain portion of your total investments.
Planners who are registered to sell financial products may help you with financial planning without any extra charge. Instead, they receive commissions on any investments you make. In these cases, make sure your planner is putting your interests first - not buying and selling investments that will help them earn more.
How can a financial planner help me?
A financial planner can show you how to:
- Set realistic goals and take steps to achieve them
- Save for your children's education and training
- Plan and save for retirement
- Decide what type of insurance you need
- Build an estate to leave to your family or for other worthy causes
- Save and invest in smart ways that reduce your taxes.
What should my financial planner tell me?
If you use a financial planner, he or she should explain how they plan to work with you and how decisions will be made. Your planner should explain:
- the issues and steps related to financial planning that will be most important for you
- the services he or she will provide and how the process of planning will work
- the documents he or she will provide to you
- your responsibilities as a client
- his or her responsibilities as your planner. This should include a discussion about how and by whom he or she will be compensated.
Tip: You need to know who your financial planner is working for. They are supposed to work for you - and have your best interests at heart. But if your planner is registered to buy and sell investments, they may have an conflict of interest. For instance, can they only recommend products that their firm sells? Will they make more money if they recommend one investment over another? Do they make money only if you make money on your investments, or do they only make money from sales fees?
Make sure you find out before you choose a financial planner. You want to be sure your planner will help you make the best choices for your financial future - including your investments.
What will I need to tell my financial planner?
Be ready to discuss a broad range of topics, including:
- Your personal situation (including your job, where you live, whether you are married, and whether you have children or other dependents)
- Your goals (and when you want to reach them)
- Your current investments (how much money you already have saved or invested)
- Your tolerance for risk (how much risk you are willing to take investing)
- Your debts (including any mortgage, car loan, student loan, credit cards, business loans)
- Your insurance (including life, auto, or health insurance, and whether you have paid for this personally or through work)
- Your taxes (including income tax, property tax, and tax on your investments)
- Your will (if you have one, the planner will want to review it)
- Your estate (how much money and property you will leave behind after your death and what you would like to do with it).
Remember: Financial planners take a broad view of your situation. They will look at who you are, where you are now, and where you want to be. They will construct a plan to get you there. Be sure any financial planner you consult has the proper training to create a solid financial plan.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.