Do you need a financial advisor?

Derek Notman |

Why a Financial Advisor is Just as Important your Doctor

It’s nearing that time of the year when we sit back and assess what was achieved.  Were the goals we set at the beginning of the year fulfilled?  If you are a founder, business owner or a seasoned entrepreneur, did you make the right choices regarding not only your business but your finances and investments?  Is it perhaps time to change tact and see what a financial advisor has to offer? 

As a Certified Financial Planner®, my passion is helping Entrepreneurs, Founders, Business Owners, Startup Companies, and their families realize their hopes, dreams and goals through the powerful leverage of our financial planning process

You see, not everyone needs a Certified Financial Planner – it would be impossible for me to assist every person who contacts me.  Millions of Americans are quite well equipped to manage their own finances and they’re good at it.  These are people who generally understand money and have the time and knowledge to keep track of their portfolios. Most importantly, they can keep their emotions in check when making investment decisions.

The world has changed, technology is cutting edge and keeps improving to make our lives easier.  We’re able to search for anything and everything on the internet.   We’re able to upgrade our skills and knowledge base by taking courses in the comfort of our homes.

The financial advice industry, sadly to say, has become so confusing for investors to navigate that many now require the likes of a degree of sorts on the subject just to figure out whether they should even consider working with an advisor.  This has resulted in many individuals who could actually benefit from seeing a financial planner, not seeking the correct counsel. 


Choosing A Financial Advisor

Deciding on a financial advisor or planner is a very personal decision – somewhat like choosing a new doctor.  You need to gel with the person and make sure they’re a good fit for you. 

As with most professions, there are a lot of professionals out there offering financial guidance. Stockbrokers, bankers, insurance agents — they all claim to know how best to steer you to a golden retirement! But it’s important to work with someone with a quantified depth and breadth of training and experience. That’s why you should consider retaining a Certified Financial Planner if and when you go looking for guidance.

Certified Financial Planners must complete a rigorous training and certification program that prepares them to address every aspect of your financial life.  They are all college graduates who have gone on to complete another college-level course of study in financial planning.  A would-be Certified Financial Planner must pass a demanding certification test — a sort of bar exam for financial planners and complete three years of work experience to earn the designation.

Certified Financial Planners are also required to abide by a stringent code of ethics that ensures they act as fiduciaries, i.e. they’re making decisions and recommendations that are in their client’s best interests, not their own.

What is a financial planner?

A financial planner is a qualified professional who advises on and manages the personal finances of their clients. A financial planner will help you to:

  • Budget
  • Save
  • Invest
  • Buy the right insurance products
  • Plan your retirement
  • Plan your estate
  • Make the right financial decisions

Is it important to have a financial advisor?

If you want the job done the right way, yes – take the time to hire a CFP to assist you.  When your vehicle is sent in for repairs, you send it to a reputable service centre and expect the repairs to be carried out correctly and professionally. The same can be said for managing your finances.  You may have some idea about what types of investments to own, but a Certified Financial Planner will offer you professional expertise and insight you may not have.

Evaluating investments and what may be right for you takes time with a level of understanding.  If you’re a new investor, a Certified Financial Planner can help you determine the appropriate asset allocation to fit your lifestyle. If you currently have an investment portfolio, a Certified Financial Planner can evaluate your existing investments and determine if they are still appropriate for meeting your short, medium and long-term goals.  Remember, a Certified Financial Planner has the time, knowledge, research tools, expertise and experience you may not have.

What should you consider when selecting a financial planner?

Choosing a Certified Financial Planner is a very personal decision. You are effectively partnering with someone to plan for your retirement and look after your family. We all have different requirements of an adviser and there is no “one adviser fits all” solution.

Once you start narrowing down your selection you should consider the following important factors:

  • Independence - You want access to the right product/solution for you and not limited to a single investment option.
  • Qualifications - A Certified Financial planner (CFP) is the highest qualification you can achieve – you wouldn’t go to a doctor who is not qualified; your financial plan is equally as important.
  • What about qualifications - Ask about credentials and try to determine if this person really has a passion for finance.
  • Experience and areas of expertise - Financial planning covers many different areas (retirement planning, investments, insurance, estate planning, etc.).  Make sure your adviser has experience in managing these, and/or strategic partnerships in place for specific functions like offshore tax planning.
  • Membership of industry bodies - Membership of such platforms is a great way to share ideas, plus there are minimum qualifications and experience requirements to join and remain a member, ensuring continuous professional development.

Finally, please find an advisor that truly cares!

What should you be paying a Certified Financial Planner?

Most financial and wealth advisors are compensated in one of two methods:

  • Fee-based relationship:

Fee-based advisors are usually paid in two different ways: by the client and by a third party. Clients will generally pay an advisor a percentage of their portfolio that the advisor manages, and at the same time, the advisor may also receive commissions from third parties for selling life insurance, annuities, by placing trades, and/or by selecting certain funds or securities for the investor's portfolio.

  • Fee-only relationship:

Unlike fee-based advisors who receive compensation from multiple sources, fee-only advisors are only paid by their clients, typically by charging a fee for a financial plan or an hourly rate for financial planning. Because the advisor does not sell products or have a financial stake in their recommendations, investors may feel more confident that the advice they're receiving is objective and in their best interest.

To determine which option is right for you, depends on your situation.  Because fee-only advisors are only paid by their clients, the advisory fees paid by the client may be higher than in some fee-based relationships. On the other hand, because this arrangement avoids many of the conflicts of interest associated with an advisor making recommendations where they also stand to receive a commission, investors may feel more comfortable taking advice from an advisor who doesn't have a financial stake in it. Due to the different compensation methods, many fee-only advisory firms tend to have investment minimums, which may preclude some investors from having access to fee-only advice.  Regardless of how your advisor is paid make sure it is transparent and that you understand it before committing to work with one.

If you are in need of sound financial advice and would like to learn more about how I can help you then I encourage you to get in touch via phone, email, or follow this link for a complimentary, no obligation conversation.

Thank you for reading!


Derek Notman