I usually defer things like financial planning to my husband. He’s always been the “finance guy.” I tend to avoid anything to do with numbers because I’ve always found it intimidating. I scored a very sad 33% in high school math. And, although I take charge in all other aspects of my life, when it comes to numbers and money I tend to squirm away.
But when I met with an advisor, I left thinking, “I can’t believe I waited so long to do this!” I found it incredibly empowering. Plus, the professional insight, information and clarity I came away with boosted my confidence level when it comes to managing my money.
What do you need to bring to your first meeting with a financial advisor?
1. Sort out your goals
I met up with advisor Stephanie Vaarsi1, Sun Life Financial advisor in Toronto. “You should have your goals sorted out,” she says. “What are your short-term, mid-term and long-term goals? Do you know if you’re having kids? Do you need to buy a house? Do you want an emergency fund? What’s important to you?”
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2. Organize your financial documents
The next things to prepare are your financial statements. Vaarsi suggests you look for:
- group benefits,
- mutual funds,
- TFSA or RRSP statements,
- insurance policies,
- mortgage payments and
- any other financial assets.
You should also know how much debt you owe and what your monthly payments are. “The more information you can bring to a meeting, the better,” she says.
What to expect from your first meeting with an advisor
The first meeting is usually a discovery session, so your advisor can learn about your personal goals. It takes about an hour. After that, you may be asked to find any additional financial documents for your follow-up meeting, usually about a month out. This will help your advisor make the best, customized suggestions for you.
What to expect from your second meeting with an advisor
The second meeting is normally where your advisor will present a report to you with recommendations. Vaarsi shares her method: “My philosophy is to enlighten and educate clients so they understand where they are and where they want to be and if they have the information and the solutions they need to get there.”
What happens next?
After their second meeting, some people are ready to start picking out their products, Vaarsi says. Others need to digest all the information presented to them and will want to set up a third meeting to discuss implementing her suggestions.
What can people in their late 20s or early 30s do to take control of their finances?
For someone like me who doesn’t know where to start, Vaarsi suggests making a financial plan. You don’t need to wait to have money to start this plan, she explains. “You need a financial plan before you have money or even when your income is low,” she says. “Or even when you think you can’t take action. Where you start really depends on what your financial goals are.”
What’s the cost of having an advisor?
Vaarsi often sells no-load mutual funds. This means there’s generally no commission or sales charge paid by you when you buy or sell the mutual funds. But there is a management expense ratio (MER) fee that’s paid to the company managing the mutual fund.
The MER may also include a trailing commission. This is paid to the dealer and is meant to cover the cost of advice to the client. A portion of the trailing commission is paid by the dealer to the financial advisor.
An advisor like Vaarsi generally earns 1% of the value of your portfolio per year, paid monthly for her services.
Meet with multiple advisors before picking one that’s right for you
Vaarsi also points out that people must not be afraid to interview different advisors to find one that jibes with them. It’s important to find an advisor that you feel has a clear understanding of your goals and needs. So feel free to chat with a few before buying any products.
1 Stephanie Vaarsi*, CLU®, Sun Life Financial advisor
* Mutual funds distributed by Sun Life Financial Investment Services (Canada) Inc.
Sun Life Assurance Company of Canada is a member of the Sun Life Financial group of companies.