Should I Get a Financial Advisor or Do It Myself?
So… Let's Dissect! Should I Get a Financial Advisor or Do ‘It’ Myself?
Also, what is ‘it’?
Like many of us, before I went into finance, I found myself sitting at my laptop, Googling whether or not I needed a financial advisor and if I could do ‘it’ myself—whatever ‘it’ meant.
However, the irony is that I grew up with a highly involved mother who was a financial planner by trade.
I didn’t ever learn, though. I gave her my money and moved on with my life without knowing the science behind finances. I let money control me - and my freedom.
So, when I became a financial advisor and joined CC&Associates, I learned how to make my money work for me and the idea of diversifying my investments for long-term growth.
So, I am here to answer your questions:
If we haven’t answered your questions, you can submit one here or contact us directly!
In this article, we will discuss:
What are a financial advisor's top duties/job descriptions?
What does a financial advisor cost?
How do financial advisors get paid?
What is the difference between investment and financial advisors?
What is the difference between a bank and an independent financial advisor?
How much money do I need to hire a financial advisor?
Let’s get into it - the top 6 most common questions:
1. What are a financial advisor's top duties/job descriptions?
Financial Advisors teach you about money, support you in developing a budget, give advice and steer you in the right direction to achieve your long-term goals.
Financial Advisors develop personal financial plans for clients that cover cash management, finances, insurance coverage, investments, retirement and estate planning, taxes, and legal matters.
They analyze clients' financial records, set goals, develop a financial strategy, and advise clients on implementing the financial plan.
Depending on the license held, they will offer insurance solutions and investments, such as segregated funds and/or mutual funds, and monitor the portfolio to ensure its quality and profitability.
Financial Advisors are employed by banks, trust companies, and investment firms, or they may be self-employed—CC&Associates is an independent firm—self-employed.
2. What does a financial advisor cost?
You pay financial advisors in different ways, depending on their service type.
For example, you may pay:
an hourly fee if they help you create a financial plan
a commission or a trading fee if they buy a stock for you
a percentage based on the value of the assets they manage for you also called a management expense ratio
If you plan on working with an advisor, it's essential to know:
what kind of services do they provide
the cost of the services
how do you pay for the service
3. How do financial advisors get paid?
Salary
Typically, advisors who work for financial institutions, such as banks, credit unions, or trust companies, are paid an annual salary.
They may also qualify for a bonus if they meet or exceed their sales targets.
Commission-based
Advisors who are compensated in a commission-based structure are remunerated when their clients buy or sell an investment.
For example, a mutual fund's commission is typically a percentage of the money invested. In addition, mutual fund companies can continue to pay advisors an ongoing amount if their clients continue to hold the mutual fund. This is known as a trailer fee.
Commission-based compensation is the most common structure for financial advisors working for dealers and brokerages.
Fee-based
Fee-only advisors do not always hold a securities registration. They usually focus on financial planning services, such as creating a financial plan, preparing for a career transition, minimizing tax liability, succession planning for a business, or organizing a charitable gift or bequest.
Fee-based advisors charge clients directly for their services.
The fee can be based on the value of the assets the advisor manages (asset-based), a flat fee, or an hourly rate (fee-only).
Clients usually pay a percentage of the assets under management as their fee.
4. What is the difference between an investment advisor and a financial advisor
Under securities law, there are two main categories for registration: dealers and advisors.
Dealer: engages in the business of trading securities for its own account or on behalf of its customers.
Advisor: Advisors may advise people about investing and investments
For example, at CC&Associates, we are mutual fund dealing representative so we can sell and provide product advice on mutual funds, but we are not qualified to sell or provide advice on individual stocks or bonds.
A person’s registration is more informative than their title because it tells you the type of products or services they can offer.
Registration granted by the OSC is not an endorsement but is a minimum requirement for companies or persons advising or trading in securities with Ontario residents.
Before using the services of a financial advisor, always check their registration.
5. What is the difference between a bank and an independent financial advisor?
A Bank
Having your bank’s financial advisor answer your investment questions is usually free.
Service charges may be attached when you open an investment portfolio with them.
However, the investment recommendations you receive may be based on the bank’s in-house investment products rather than what is best for you.
Royal Canada Bank, is an example of a bank
Independent Financial Advisor
Choosing a financial advisor isn’t something to be done on a whim.
You need to do your research, which includes determining your investment needs, goals, risk tolerance, and financial circumstances.
There are many financial advisors; some only give advice, some are accountants, some only sell mutual funds, and others sell insurance, and some do all of it.
CC&Associates is an example of a independent financial services firm.
6. How much money do I need to have to hire a financial advisor?
Some advisors have a minimum amount invested to work with you - CC&Associates does not.
For instance, you could come in with $0 and we would still work with you - if the relationship is a good fit.
If you need advice, insurance, or investment advice, contact an advisor and find out their fee structure.