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Fund Library Q&A
Your questions about financial planning, investments, and portfolio management answered by an industry expert

By Robyn K. Thompson  | Friday, August 03, 2018

Q – I’m a professional in the medical field with my own practice, which has now started to grow. I’ve saved diligently, and I’ve built up a sizeable nest-egg in RRSPs and TFSAs, but I suspect I’m not making the most of my investments, largely because I don’t have the time to monitor them. I need a money manager or advisor to look after my financial affairs, but with all the various choices available, I’m not sure where to start or whom to ask. Do you have any suggestions? – Melinda L., Markham, Ontario

A – There seem to be so many people offering advice, and you often read of people losing their investments through fraud or incompetence. So where to start? Begin by asking yourself what you think you might need a financial advisor to do: organizing your financial affairs; managing your investments; cutting your taxes. Very likely, you’ll need experts in each of these areas a some point. Here’s a look at what they all do.

Financial planner. To accomplish anything worthwhile, you need a plan. Often, people don’t seek the help of a planner until they’ve accumulated a fair amount of assets. But in fact, you’ll accumulate assets faster with a plan than without one. I’ve often heard people ask, “What about the fees? Don’t financial planners and advisors charge for their services?” Of course they do. But so do mechanics who look after your car (which these days resemble sophisticated computers). When was the last time you popped the hood of your engine compartment to, say, service your fuel injector? Probably never. I always tell my clients that good advice (whether keeping your car or your financial life in good repair) doesn’t cost, it pays. When you determine that a planner should be a key part of your team be sure he or she holds the Chartered Financial Planner (CFP) designation.

To find a planner, your best bet is to get a referral from family, friends, or colleagues who have used one for several years and are happy with the service they’ve received. Another option is to use the search tool on the CFP Financial Planning Standards Council website to look for a planner in your area, with the skillset you need.

Investment advisor. Once you’ve accumulated a substantial pool of investable capital, you’ll probably need someone to help you select and manage your investments. It’s crucial that the investment advisor understands asset allocation in relation to your financial objectives and risk tolerance. Research has shown that up to 95% of the return you get is a result of proper asset allocation, not just picking the right individual stock, bond, or investment fund. It’s important to find an advisor who can provide documentation that clearly outlines an asset allocation strategy that’s right for you.

Your advisor should not be restricted to using the products of only one company. That’s because no one company always has the best product in all categories. Doesn’t it make more sense to use an advisor who has no axe to grind in their product selection? Your advisor must have access to a wide range of portfolio strategies and investment choices, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs), and not be limited to the offerings of only one company.

In order to achieve this goal of investment diversity, the best financial advisors no longer attempt full portfolio management for their clients. They “outsource” the job to professional portfolio managers who have large research teams, better access to markets, and cost-effective trading platforms. This does not mean that you will pay more to have assets managed in an arrangement like this. In fact, in most cases, you will pay less than if a more traditional investment advisor did the whole job. The fees you pay are simply shared between the portfolio manager and the advisor.

As for fees in general, most financial planners have moved to a fee structure that represents a percentage of assets under management. Here’s a basic checklist of what to look for in an investment advisor:

* Manages your assets in accordance with a clear process that is written down and agreed to by both of you.

* Accesses the whole marketplace for investment products, and not only the products offered by a company the advisor may represent.

* Uses low-cost exchange-traded funds.

* Compensated by fees instead of commissions and trailers.

Insurance advisor. Because the range of products offered by insurance companies grows larger every year, having a good insurance advisor is important. While someone may not require life insurance per se, the “living benefit” contracts that insurance companies now offer may enhance your financial well-being in one way or another. Insurance companies not only offer critical illness policies and long-term care policies, but also various investment products with features that cannot be obtained anywhere else. For example, they offer a product that pays a guaranteed minimum monthly income, which is often a good choice for retirees who are living on a fixed income.

While some insurance advisors do nothing more than underwrite various insurance needs, it is more common today for a financial planner or investment advisor to be licensed in the insurance business. Some insurance advisors also hold a securities license.

Accountant. If you’re a business owner, have a professional practice, or have a substantial net worth, an accountant will be a key member of your financial advisory team. Most individuals and smaller businesses are typically served by local or regional accounting or bookkeeping firms, who tend to outsource when they require something more sophisticated.

Lawyers. You’ll definitely need a lawyer from time to time as part of your team. For instance, it’s essential to have a lawyer draft wills, establish trusts, and incorporate companies, as well as give advice on various corporate, tax, and business matters.

Often the best way to find an accountant or a lawyer for specific personal financial work is to get a referral from a financial planner. Sometimes, lawyers who specialize in wills and estates will have a relationship with an insurance advisor. Often, individual financial planners, insurance advisors, lawyers, and accountants will have a long-standing informal network-type working relationship formed over many years. This is the best way for you to tap into precisely the kind of expert advice you need.

Robyn Thompson, CFP, CIM, FCSI, is the founder of Castlemark Wealth Management, a boutique financial advisory firm specializing in wealth management for high net worth individuals and families. Contact her directly by phone at 416-828-7159, or by email at for a confidential planning consultation.

Notes and Disclaimer

© 2018 by the Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned are illustrative only and carry risk of loss. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. Please contact the author to discuss your particular circumstances.

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