Assessing the value of your finances is about more than just money. It’s about professional advice that can help build a plan
to achieve financial goals.

Making major personal financial decisions can be daunting. And, as each individual situation is unique, seeking professional advice to assess the best options can make budgeting for the future feel less tenuous.

Beyond simply depositing funds into a bank account, investing in the future generally requires a plan with a delicate balance of risk and reward. Managing that can be tricky in a complex market where a myriad of financial products aimed at consumers may prove difficult to understand.

Navigating these proverbial waters is old hat for financial advisors, whose credentials are largely driven by how well they can tailor sound advice to any one particular client. While guidance is purely elective for any investor, the tools and options to get it are getting easier to find.

Finding good advice

Robb Engen is a financial advisor who helps run a personal finance blog called Boomer and Echo. He suggests that it is wrong for the financial industry to assume individuals are not willing to pay a fee for financial advice.

“With the relatively new arrival of fee-only financial planners — advisors who don’t sell products but offer unbiased and objective financial advice for a set fee — there is an opportunity for Canadians to access a better form of financial advice that costs less than the traditional bank advisor-mutual fund model,” says Engen. “Embedded commissions and trailer fees might make sense for investors who are just starting out, but over the long term this conflict of interest will be expensive and lead to poorer outcomes for investors.”

The caveat is that there are some people who present themselves as financial advisors and planners but in reality have not been regulated.  Engen suggests that seeking a competent advisor for advice should be an interview process. One involving three or more candidates with questions over their specialized education and credentials. It could mark the difference between meeting a good advisor instead of a good salesman.

Good financial advice is also about creating and fostering good habits, particularly for those with more modest funds to invest. “Numerous studies show that individual investors vastly underperform investment benchmarks due to poor behaviour and cognitive bias,” he says. “It’s time for a different approach to the way we look for financial advice.”

Better long-term results

The financial services industry is working to raise advisor standards. However, choosing the right advisor is still largely a free-for-all for now. There are plenty of resources online when seeking out basic information, and no shortage of advisors or experts offering their services.

“The traditional model is rife with conflict, so while government and securities regulators continue to dither over reform, new options for investors have started to shift the landscape,” says Engen. “The industry claims that investors prefer to pay for financial advice through fees that are part of their mutual funds.”

He believes an unbiased financial planner that is paid a fee will be both cost-effective and lead to better outcomes for investors.

This approach is arguably more contextual today in light of a weakening loonie, rising unemployment and housing costs in some major cities. Finding ways to invest and grow funds for the future becomes even more important under those circumstances. “Forget all the nonsense about investors not wanting to pay upfront for advice,” he says. “Consumers want to save money and make smarter decisions with their finances.”