You know, I have been in this industry for close to a decade and while I have always enjoyed what I do, I have always felt there has been a negative stigma towards being a financial planner, or even worse, an insurance agent!
It does make me wonder, with all the competition in the financial services industry with lower fee funds, meme stocks, etc. what is the purpose of a financial adviser today? Over the last decade, financial advisers have been identified as negative in the financial services industry. The people complaining the loudest are usually the same ones marketing and advertising for organizations selling a different type of strategy for growing your investments.
We're in a world now where all the information you need is at your fingertips. The issue is that there's so much of it and ultimately anything you decide is going to have a gimmie, a gotcha and a price tag. So, is there a benefit to a financial adviser? I think an even better question is, do we need to start looking at financial advisers in a different light?
What are some of the Pros of an adviser?
Looking Out for YOU: An adviser’s job is to take care of you. At the end of the day if you are making money, so are we. However, most advisers don’t create the portfolios they show. Usually, they are built by smarter, more capable people who spend every day, all day looking at portfolios. When you work with an advisor, you’re engaging their whole team. What an adviser is really doing is planning out your goals and looking at the best and most efficient way to achieve them. Goals are the game, and the value is having someone keep score.
Knowing the Answer to your Questions: What financial goals make sense for me? How can I achieve them? Should I be contributing to a TFSA or RRSP? Should I pay down my mortgage or should I invest that additional money? Should I be aggressive or balanced in the market (and what does that even mean)? When should I take CPP and OAS? What happens if… Advisers allow you to work through these questions with a person who can give guidance on both sides of the coin. Most advisers will have a certain way they lean in terms of these questions, but good ones will help give you the information to make an informed decision. Our favourite answer… it depends.
Perspective: Financial advisers get to live on the outside of your plan. While you have toiled your entire life to build for retirement, the adviser has people like you who they are working diligently to serve. If the market begins to fall or something has drastically changed in your planning, you can bet your financial adviser will be unfazed and even optimistic about the future. They are able to remain calm as they aren’t living the stresses of your life. They take an unbiased approach to what you need to do to achieve your goals. If someone loses a job, or an unknown debt has come into the household, that financial adviser will know how to pivot to make sure your plan stays strong.
Contact to Essential Financial Services: I have always been someone who wanted to “have a guy”. Need a plumber, I got a guy. Want to get the car checked out, I got a guy. I also took this idea into my practice. A decent financial adviser can be the center of all things financial. If you need a mortgage secured, your will prepared, or your books balanced, an adviser will have that covered for you. Financial advisers (if you let them) will let you into their entire circle of people and contacts. This is also part of the service they provide because the more value, the more likely you are willing to stay.
What are some of the Cons of financial advisers?
Not all advisers are created equal: While I have met some amazing financial advisers throughout my career, I have also met some equally terrible ones. The worst are advisers whose sole focus is to sell you something with zero regard for your planning needs, only to move on to the next person afterwards. These advisers are usually just starting out, trying to impress senior advisers in their organization. They are also trying to eat, clothe themselves and provide shelter for their family. Getting into financial advising is a tough gig, especially if you are meant to survive only on commission. Larger companies such as Sunlife Financial and Canada Life try to soften the financial burden of starting out, however, there is only so much they can do. There are also some senior advisers who just love the chase and are willing to do anything for the sale. These are the advisors who can really create damage to someone’s financial well-being and leave a bad taste in everyone’s mouth. Most people have heard of or been a victim of an advisor like this.
Fees: As much as I believe Financial Advisers are worth the price of admission, it is an incredibly hard pill to swallow that our fees can double and sometimes triple certain low-fee funds. Canada currently has one of the highest Management Expense Ratio averages in the world. There is certainly value to the idea of Index Funds or low MER fee funds. What doesn’t help the industry is that most Advisers avoid the subject for fear of losing you as a client.
Advisors are just the go-between: Advisers don’t own the insurance company or brokerage they work with. Often, they spend most of their days jumping through hoops trying to get something approved from a much larger company that has red tape that goes on for days. There will be times that an adviser will be unable to get you exactly what you need. This will be frustrating for you, but I promise you, it is far more frustrating for advisers.
Simple Plans don’t need complex solutions: If you are a 25-year-old starting out, do you REALLY need a financial adviser? No, of course not! You need a TFSA, an emergency fund and to understand your work package. At some point you may appreciate a second set of eyes, but when you are just beginning, low fees, dollar cost averaging and working your butt off is really all you need. Most people begin having questions at the age of 32. This is when mortgage conversations, marriage and children start becoming considerations in your life. 40 is usually when an adviser should start getting involved in your retirement planning.
Do you think the pros outweigh the cons? If you would like to learn more about working with a financial advisor, please Contact Us and we will introduce you to an expert in your area.
Comments