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Managing your money

October 22, 2019

5 tips for finding an advisor you can trust

Working with an advisor you trust can make a real financial difference. Here are some signs to look for when seeking a reliable advisor.

The foundation of all good advice is trust.

The word “trust” comes from the Old Norse “traustr,” meaning strong. Regardless of the topic, you want a strong relationship with your advisor. The words that define trust also reveal the positive characteristics of a good advisor. Confidence. Truthfulness. Reliability. Dependability. Obligation. Responsibility.

Building a foundation of trust with an advisor

When it comes to finances, valuable advice starts with a trustworthy and credible source. This source is someone who:

  • can help you build for your future;
  • can provide you peace of mind, knowing that you’re making informed choices; and
  • wants to see you succeed and reach your goals.

According to a 2019 report from PMG Intelligence, research shows that compared to people who don’t see an advisor, people who do receive advice on specific financial topics:

  • are much more likely to consider themselves financially healthy;
  • had about 4 times more investable assets; and
  • were 3 times more likely to say they’re financially comfortable.

What’s more, according to the 2019 Sun Life Barometer, Canadians who do work with an advisor gain valuable advice. For example, 84% of employed Canadians – and 90% of retired ones – surveyed say the service they get from their advisor is good.

Clearly, it helps to work with an advisor. But how do you establish a sense of trust with them? These 5 tips can help.   

1. Know an advisor’s skills and areas of expertise.

You want your advisor to have the expertise, so that you can feel confident in your financial decisions. You’ll want someone who can fill in the gaps in your own knowledge or discipline. Check for the advisor’s experience and credentials. For instance, are they familiar with estate planning? Or maybe they specialize in retirement and insurance? Remember that the financial services area is broad. So it helps to have a clear understanding about what an advisor’s areas of specialty are.

2. Look for signs that an advisor will put your best interests first.

You want to work with someone who cares enough to take the time to get to know you and your situation. So see if your advisor seems genuinely interested in your life. Are they asking you about your personal and financial goals? Do they seem genuinely interested in helping you achieve those goals? This ensures your advisor will personalize their advice for you and not a group of people. Receiving customized solutions will give you the trust that your advisor is working for you.

3. Check to see if you’re benefiting from an advisor’s help.

Most people want to see some tangible, positive results over time. This may mean growth in savings, achievement of financial goals and a reduction of worry or anxiety. With the solid plan in place, it may happen. Having your expectations met over time is a key indicator of having received valuable, trustworthy advice.

4. Make sure your advisor speaks to you in a clear, understandable way.

The Barometer report also found that virtually everyone finds clear communication important when it comes to working with an advisor. For example:

  • 95% of employed Canadians surveyed say it’s important that financial institutions use plain, easy-to-understand language in their communication.
  • And 98% of retired Canadians want communications to be in plain language.

Remember, you want an advisor who will:

  • listen to you,
  • think carefully about what you want,
  • discuss financial topics with you in language you can understand and
  • advise you according to your needs and dreams.

5. See if an advisor is looking at your overall finances.

Sometimes a friend or family member you trust will suggest you work with their advisor. Although that might work, your needs and goals could be quite different from people you know. Look for an advisor who will analyze your overall financial situation.

Working with an advisor

After you choose an advisor, you’ll want to create a plan. Unfortunately, financial plans are rare, even among retirees. The Barometer found that:

  • Only 1 in 5 working Canadians (21%) has a written financial plan to manage their finances.
  • 28% of retired Canadians have a written financial plan. And only 26% of retirees had a plan before they retired.

A financial plan will include your current situation. You’ll write down reasonable targets – the goals you want to reach. Good advisors will check on your plan’s progress regularly, revising it at key life events. Your first job after graduatingBuying your first house. Getting married. Having your first child. Retiring.

It’s important for your advisor to deliver consistently on the promise to help you meet your financial and lifestyle goals. Before that can happen, it’s essential for you to trust your advisor and the advice you’ll receive.

For help finding an advisor, talk to an advisor near you.

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