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adviser secrets

Feng Yu

Last week we highlighted five key factors that help to make up a good financial adviser.

Understanding what makes someone good is one challenge. The next step is finding that type of person or team.

One key thing to remember is that your needs will be different from others for many reasons. Think about your personal needs and goals. These will shape the type of financial planner you look for. Some factors might include:

• Your personal level of expertise

• Your desired level of involvement

• Your goals - building personal wealth vs. supporting others vs. simply ensuring that you will never run out of money

• Your nagging questions - "How can I save taxes?" "How can I make things simple for me today, and for my spouse or family after I am gone?" "How do I get some of those great investments that I keep hearing about?" "Am I going to be OK if I have health problems?" "Will I be OK if I live to 100?"

• Do you want peace of mind or do you want to take some financial risks?

Once you have a handle on what you want from a financial planner, a good next step would be to think about people you know who might have similar goals. Ask them if they have a financial planner and, if so, are they happy with them. Ask them the areas where the planner adds the most value. If they are happy, and the value-added areas match some of your key personal needs and goals, then it makes sense to set up a meeting.

Other good sources to find potential names might be:

• The Financial Planning Standard Council's site - on finding a financial planner. It contains tips on finding the right person and a search function for Certified Financial Planners in Canada. The site is found at

• The Internet. Search some of the key words that match your nagging questions. You can simply type in "financial planner (and the name of your city)." If you find a couple of potential names, search their websites - does it feel like a sound philosophy and good fit for you?

Once you have a couple of names, you will want to have a meeting. In the meeting, you will want to cover a number of issues, including:

• Chemistry: Do you feel comfortable with the adviser or advisers?

• Fit with clients like yourself: Is what you are looking for something they do every day?

• Expertise: Do they know their stuff? While it is sometimes hard to measure, you should be able to get a sense of their expertise and professionalism. Designations help, but nothing matches their ability to speak intelligently to your situation and questions.

• Philosophy about money: It is important that a financial planner is supportive of your goals and is not "possessive" of your money.

• Product availability: If they can only offer limited options, such as only mutual funds or only products from their own firm, this is a weakness that you should be wary of.

• Clear understanding of fees: There should be an easy and clear answer to the question, "What do I pay for your services and products?"

• Investment track record: How have actual client investments performed?

After the first meeting, you should have a good sense of which financial planner is a better fit. However, this is still an early stage. Before signing on the dotted line, you should expect a couple of meetings in which the planner asks many questions in return.

At that point, you should have a clear direction that includes an investment plan, tax minimization plan, retirement/estate plan - and a clear implementation plan. The level of detail would depend on your wealth, your priorities and the level of complication in your financial life.

When you are close to moving forward, it is often a good idea to ask for client referrals from people who are at a financial stage similar to yours. If the references are positive, you are now ready to sign on the dotted line.

If this all sounds like a lot of work, it is.

The payback is that if you do a good job up front, you will have a key part of your life well taken care of for years to come.

Ted Rechtshaffen is president and CEO of TriDelta Financial Partners, a firm that provides independent financial planning advice. He was vice-president of business strategy at a major Canadian brokerage firm and found that the interests of the client were often not aligned with the interests of the adviser or the interests of the company.

This is part 12 in a series that looks inside the financial services industry at what advisers tell their clients and - more importantly - what they don't.

Other articles in Ted Rechtshaffen's Adviser Secrets series:

  • Part 6: Do you want to protect your lender or your family?
  • Part 7: You can be too rich
  • Part 8: Your company pension plan: Demand a great deal
  • Part 9: How taxes affect your financial health
  • Part 10: How much can you afford to give?
  • Part 11: Is your adviser a good one?

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