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An expert panel set up by the Ontario government has made several recommendations to deal with major concerns, including the myriad of confusing titles and credentials and the lack of an explicit obligation to act in a client’s best interest.
Marian Passmore, director of policy for investor advocacy group FAIR Canada, says securities regulators will only register firms and individuals if they are properly qualified. So check an adviser’s registrations.
A good place to start, says Passmore, is the CSA’s AreTheyRegistered.ca site, which allows you to search for any licensed investment adviser. Keep in mind, however, that insurance and financial planners won’t be on that site unless they’re also licensed investment advisers.
The CSA website also allows you to see if your licensed adviser has ever been disciplined for misconduct.
Ask about products and services offered
For instance, most investment advisers are licensed by either the Mutual Fund Dealers Association or the Investment Industry Regulatory Organization of Canada. But while most MFDA-licensed advisers deal only in mutual funds, IIROC advisers can also offer other products including stocks and exchange-traded funds.
In the case of financial planning services — whether that’s to reduce taxes, save for a big purchase or to retire in comfort — there are dozens of designations and investors will likely have a hard time distinguishing between them.
The certified planner certification is a reputable designation for those who want a combination of sound investment advice and financial planning know-how, says Ken Kivenko, an investor advocate who is also chairman of the Small Investor Protection Association’s advisory committee.
Assess the cost of advice
Because advisers can be paid by salary, commission, a flat fee or a combination of methods, it’s important to make sure you understand how your adviser is paid, how much their services will cost, and how this may affect the advice you’re given.
A fund with low fees, such as indexed mutual funds and exchange-traded funds, has an automatic head start over higher-cost rivals for returns — and compounded over years the advantage can grow even more powerful.