Important questions to ask an advisor you’re just meeting

Great things can happen from great advice. It can help improve your health, your career and even your finances.

You're likely to seek out a qualified medical professional for help with your physical and mental health. Just as you may get professional career advice from a mentor or colleague. So it stands to reason, you may turn to an advisor who's qualified to help you build your financial plan.

According to the 2019 Sun Life Barometer, 87% of Canadians who work with a financial advisor feel like they gain valuable advice. This is compared with 32% of those without an advisor.

But, how do you know if the advisor you're speaking with is the right fit for you? And how do you know if the advice you're getting will help you in the long run? It may take a little time to build a trusting relationship with an advisor. That's okay. Before you commit to one, you'll want to have a solid understanding of who they are, why they do what they do and what to expect from the experience working with them. They're going to want to know the same of you as well.

Why is it so important to know more about your advisor? Because it improves your chances of having a successful and trusting relationship with them. This can lead to you achieving your short- and long-term financial goals.

Here are some questions to get the conversation started.

1. Why do you do what you do?

This question looks at what motivates an advisor. An advisor's “why” reveals their purpose and beliefs that drive what they do and how they do it. This will help you identify with an advisor on a personal level. The answer to this question will also help you decide if you have any common values.   Being able to relate to your advisor can be a big step in building a trusting relationship with them.

Simon Sinek, an organizational consultant and author of the book Start with Why, says people are inspired by a sense of purpose (their "Why"). When it comes to communicating with others, it's a person's “Why” that must come before the “How” and “What.” According to Sinek, a person's “why” represents their motives and purposes. Their “how” represents their methods. And their “what” represents results and outcomes.

Top advisors can easily express why they do what they do in a way that's meaningful to you.

2. What financial services do you provide and with what qualifications?

An advisor can tell you about things related to financial needs that you may not know about. For example, they could tell you more about savings vehicles like registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs). Or about insurance and what type is best in which situation. They can also answer any questions you may have about investment or insurance options.

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There are different types of advisors and qualifications. One of the top standards for the financial planning profession is the CERTIFIED FINANCIAL PLANNER® (CFP) designation. This means they've completed coursework and a certification exam. If an advisor has a CFP^® designation, it shows they must have the knowledge, skills, experience and ethics to help with all your financial needs. (Please note that all advisors are required to follow ethical values that mean they must put your interests ahead of their own.)

And, it's not just about investment or money management. A qualified advisor with a CFP designation can help you with a range of planning areas, including:

• investments,
• debt management,
• education planning,
• retirement planning,
• estate planning,
• insurance and
• household budgeting.

When you speak to an advisor for the first time, ask about their area of specialty and qualifications. For example, ask them:

• How long have you worked as an advisor?
• Are you also a CFP?
• How long have you worked with your current company? Or, how long have you worked independently?
• What areas do you specialize in? (For example, retirement savings, insurance, estate planning, business insurance, etc.)

Many advisors specialize in certain areas. They'll have specific certifications and qualifications based on their area of specialty and the services they provide. They may refer you to other advisors if you need advice about things they don't provide. Or, they'll refer you to an advisor who has the expertise required to properly service your needs.

3. Who do you work with? Are your Clients like me?

Most Clients like to work with someone who understands their situation. Knowing the type of Clients an advisor works with is another way to understand if they're right for you. Ask them:

• Who are your typical Clients?
• How many Clients do you have?
• Who's your average Client in terms of net-worth, life stage or situation?
• Do you have any Client testimonials I can review?

Perhaps you're just starting to grow your nest egg. Or maybe you're trying to save up as you expand your family. Or maybe you have a large estate that includes a blended family or a family business. Whatever your personal situation, you may find yourself more comfortable with an advisor who has experience with Clients like you. It also helps to have referrals and recommendations from people who use an advisor's services. Top advisors can easily describe the type of Clients they work with.

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4. How will we work together?

Trusting someone about financial advice may seem intimidating at first. If you don't know what to expect in your experience with an advisor, you may be skeptical that they have your best interests at heart. Leading advisors can tell you the process or journey they follow as you work with them. They may have a picture or document that shows this process in a step-by-step manner.  It will show what you can expect from the first meeting through a lifelong relationship. It can also give you a general idea of how you'll stay in touch and how often they'll contact you. An advisor may want to communicate with you face-to-face or through technology every few months. Or, you may just meet up once a year to look over your plan and see how you're doing.

Typically, advisors will look at various factors in your life as they help you build your plan. They'll look at your age, health, lifestyle, work, business and regular expenses. They'll ask you about your short- and long-term goals like starting a family or buying a first home, when you want to retire. They can then advise you on how different scenarios can impact your plan in a positive or negative way.

Remember, great advisors customize their advice to suit your unique needs and goals.

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5. How do you get paid? What are your fees?

Advisors can receive different forms of payment. They may receive a commission or a fee for their services. Or, they may get a combination of both.

You can also ask an advisor about any fees involved with their services or the products they're selling. For instance, some investments, like mutual funds, include management fees. The advisor or representative selling the investment receives a portion of these fees. Or, if you're looking at insurance, advisors typically receive commission for those products. 

Here are some additional compensation questions to ask an advisor:

• Do your fees vary depending on what type of insurance or investment product I buy? How does that work? 
• What happens to your fees if the markets go down?

Advisors can explain how they're paid in a way that you understand. They'll also tell you what's in it for you and how they can support you in achieving your goals. 

Leading advisors build their businesses by creating long-term relationships with Clients. They  become a trusted source of advice for the many life decisions Clients make beyond the products or solutions they pay for. 

6. What commitments are you making to me?

An advisor must show the value they provide and then consistently deliver on what they say they will do. Ask them: How will you help me meet my goals?

The advisor's answer must reassure you that they'll build their advice based on what's important to you before they consider or propose solutions. Essentially, the solutions you'll buy from them will be a result of the trust you have in their advice.

Recent research shows the type of activities Clients value in how they work with advisors.

According to a recent Ipsos client survey,* most people value the following activities and behaviours from their advisors:

• 67% prefer an advisor who responds to their requests or questions the same day,
• 64% prefer an advisor who uses technology to make the best use of their time,
• 63% prefer an advisor who informs them promptly when they can't fulfil a promise on time, and
• 66% prefer an advisor who shows and explains different scenarios for how a financial plan could unfold.

Questions an advisor may ask you

Getting ready for your first meeting with an advisor? You're not the only one with questions. Think of your first meeting as a discovery session. At this point, you haven't hired them or purchased products and services through them. It's simply a conversation. They'll learn more about you and your personal goals. And you'll find out more about them to see if they can help you achieve those goals.

Here are examples of some questions an advisor may ask you on your first meeting:

• What are your short-term goals?
• What are your long-term goals?
• What's important to you? Is it your job? Your family? Both?
• Tell me about the most important people in your life.
• What does success, peace of mind mean to you?
• What financial assets (e.g. a home, a car, investments) do you want to protect?
• Do you currently have a financial plan?
• Have you ever worked with an advisor before?

You may have to interview different advisors to find one that's compatible with you. But it's important to take the time to ensure you're getting advice from someone you find trustworthy and dependable.

• Ready to meet with an advisor? Here's how you can prepare for the first meeting.