When it comes to your finances, it helps to have great advice.
Let’s say you’re buying a home, starting a family or trying to save for the future. Whatever your situation, getting solid advice can make it easier for you to build a plan to make your goals a reality.
But where do you find this great advice? Is it through a human advisor or an online tool like a robo-advisor? Is it both? Before you decide, it helps to know what they each have to offer.
What can a human advisor do for you?
A human advisor can help you make well-informed choices for growing and protecting your money. Qualified advisors customize their advice based on your specific needs and goals. They work with you to build a fully personalized plan to help you achieve those goals. In a recent client survey, 80% of Canadians who work with an advisor say their advisor provides great value.*
What are the benefits to working with a human advisor?
Along with offering money management tips and building a plan, here are some additional ways an advisor can help.
They can tell you things you may not know about. 78% of Canadians who have an advisor say that working with one has helped them feel financially secure.* This is partly because an advisor can inform you about financial products or services that you may not know about. For example, an advisor can tell you about how a registered retirement savings plan (RRSP) works. They can explain how you can use a tax-free savings account (TFSA) to grow your money. Or, they can talk to you about insurance and what type is best in various situations. An advisor can help you take advantage of savings opportunities like RRSPs and TFSAs. They can also help you prepare for risks that may affect your financial plan, such as an unexpected loss of income or an unforeseen health incident. In the process, you’ll learn more about your finances and feel confident in your decisions.
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They can answer questions you may have about certain financial topics and products. Whether you’re looking at investment or insurance options, financial products aren’t always easy to understand. The same survey found that only 51% of Canadians believed they were “somewhat knowledgeable” about financial products and services. And, 13% of Canadians surveyed said they were “not knowledgeable” about these topics.*
Unless you have enough expertise, making financial decisions on your own can seem intimidating. This is where an advisor can be of great help. They can answer your questions and clear up misconceptions or confusion you may have. Remember, great advisors can explain things in plain, easy-to-understand language.
They can help you revise your plan as your needs change. You may have a growing family, a career change or an unexpected health issue. Most events in your life – good or bad – will affect your finances in some way. Working with an advisor means you have someone who understands your situation and can help you alter your plan as you go through various life moments. They know you’re on a lifelong financial journey. Planning, saving, protecting your wealth and moving to retirement is a process – not a one-time event.
What’s more, the numbers support these benefits to working with an advisor. The survey also found that among Canadians who have an advisor:*
- 77% rated their advisor as “excellent” or “good” when it came to explaining complex financial topics;
- 78% rated their advisor as “excellent” or “good” at listening and understanding their unique situation and goals; and
- 77% rated their advisor as “excellent” or “good” at developing a financial plan that’s suited to their needs.
What about financial tech or robo-advisors?
There’s so much you can do online. Banking, buying groceries, booking vacations. You can even get advice online. Robo-advisors and financial tech tools can provide automated services with little to no human interaction. These digital services may first ask you to complete a survey about your financial situation and goals. They’ll then use the data they’ve collected to help you make decisions about your investment portfolio or specific products like life insurance.
Digital financial tools like robo-advisors can help manage your investments. They can use their software to buy and sell assets and rebalance your portfolio over time. These digital services can also provide fact-based answers to common questions people have about their finances. But how do Canadians feel about them? The same survey noted that 3% of Canadians use a robo-advisor, while 40% use services like direct investing or an online discount brokerage.*
Robo-advice and online financial services can be helpful and very easy to use. However, for very specific questions about your financial situation, you may also have to consult a real-life advisor for a personal opinion. For instance, you may have questions about how starting a family will affect your finances in the next five years. Perhaps you’re starting a business and need to know what this means for you in terms of taxes. Maybe you’ll need help with estate planning or retirement planning. Or maybe you’re getting a divorce and need to make changes to your life insurance policy. Human advisors are likely to provide more personalized advice for your financial needs.
How do you choose between an advisor and a robo-advisor?
Everyone’s financial situation is different. So choosing to work with an advisor or a digital tool like a robo-advisor depends on what you need.
Do you consider yourself financially savvy? Are you only looking for investment management? Then a robo-advisor may be right for you. Among people who use a robo-advisor, 43% rated themselves as extremely or very knowledgeable about financial products.
Do you want more customized advice catered to your evolving personal goals? Perhaps your financial situation is particularly complex. Then you may want to talk to a human advisor. Not only will you get more individualized advice, you may also feel more at ease after talking to someone who can empathize with you while understanding your situation.
You can also choose a mix of the two. Some people rely on financial tech to help them with their investments. But they’ll consult real-life advisors for other aspects of their finances, such as life insurance, retirement savings and estate planning.
Getting the advice you need
Thinking of meeting with an advisor? Remember, there are many different types of advisors. Some are qualified to help only with managing your money. Others can help you build a broader financial plan to meet your goals.
Many advisors specialize in certain areas, like:
- debt management,
- retirement planning,
- estate planning,
- insurance and
An advisor may also refer you to another professional who can help you with specific financial needs.
If you’re meeting an advisor for the first time, here are some important questions to ask them. Their answers will help you determine if they’re the right advisor for you.
* Value of Advice study conducted by Ipsos, August 2019.