Working with a financial planner

Couple talking with a financial plannerIf you have the possibility to make substantial investments, you may want to enlist the assistance of a certified financial planning professional. You may not be knowledgeable about the complicated world of modern finance or you may not have time to dedicate to research.

What can a financial planner do for you?

A financial planner will analyse your financial situation and create a tailor-made plan to manage your finances in a way that will maximize your returns according to your needs and goals. Then they will guide you in effecting the plan and will update it periodically according to your circumstances.

Financial planners have to have extensive knowledge of four major areas: investment planning, retirement planning, insurance planning and estate planning, and they may specialize in one or more of these areas.  There are also other areas that you may find of interest, like tax planning or education planning.

While financial planning can bring substantial returns, it is supposed to be a lifelong process and your expectations should be realistic. The planner will not make decisions in your place and then present you with massive returns; you are still the one in charge.

How to find a good financial planner

As with insurance brokers, a good way to find a competent financial planner is to ask for recommendations from their clients. The difference is that, while it can be hard to assess the effectiveness of a person’s insurance choices, the impact of a good financial plan on their life should be fairly visible and translate into stability and reaching their goals.

It is recommended to meet with at least three professionals before you make your pick. You should look for things like chemistry, availability (how often will the planner be willing to meet with you), certifications, a transparent attitude about what they charge and, most important, their performance track record.

One very important question you need to ask is whether the planner or the company he/she represents is selling certain financial products. While this is common, the planner should be transparent about it and reveal any possible conflicts of interest.  You need to ensure that your needs will be the main focus of the planner and not promoting one financial product or another.

Since financial planning services require a great deal of work and expertise, financial planners usually accept clients who meet a certain minimum of investible assets. The acceptable minimum can be as low as $25,000. Needless to say, a financial planner with a stellar track record is likely to expect more substantial portfolios.

Beware of scams

As with any profession, there is the risk of running into unscrupulous people and becoming the victim of a scam. Always, always ask for verifiable credentials and certifications. Your planner should be certified by the Financial Planning Standards Council of Canada (FPSC) and the certification should be up to date, as it has to be renewed every year.

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