The Importance Of Partnering With A Financial Advisor
Finance Tips Investors are often more successful when they are working with an advisor. Mackenzie has been working with financial advisors to help Canadians reach their financial goals.
rian Gooding is well versed in the importance of working with a financial advisor. He has more than 25 years of successful leadership experience in the financial services industry, including the last two as Executive Vice President, Head of Distribution, at Mackenzie Investments. Gooding has worked with advisors across the country.
“We make a point of talking to – and listening to – as many advisors as possible in Canada,” says Gooding. “Mackenzie is steadfast in its support for advisors and we believe that investors are more successful when they work with a professional advisor.”
The increased success brought about by working with an advisor manifests itself in several ways, according to Gooding. “Most importantly,” he says, “professional advice has a positive and significant impact on financial assets, while also playing an important role in people acquiring greater savings discipline and preparing for retirement.”
Gooding says working with a professional advisor has been shown to be “an important contributor to increased levels of investor satisfaction and trust”.
Working in tandem to achieve your financial objectives
As a professional in the financial services industry, Gooding knows that achieving your financial objectives is a complicated task that requires the effective management of a number of critical factors, including goal setting, rationality, and discipline.
Perhaps more significantly, says Gooding, “achieving your financial goals is also dependent on investors avoiding personal biases that have important consequences, such as panic, loss aversion, framing, hyperbolic discounting, and status quo and home biases.”
Because of these factors, multiple studies have demonstrated that investors who work with financial advisors enjoy a raft of positive behavioral benefits, including greater use of tax-advantaged savings vehicles, improved asset allocation, more portfolio diversification, and less speculative trading.
“The increased financial knowledge that comes from working with an advisor increases the likelihood of strategic planning, which is a strong predictor for wealth,” says Gooding, “while the accompanying pre-commitment to rational behaviour reduces the likelihood of deviating from the plan.”
Why doesn't every investor use an advisor?
When asked why some investors choose not to work with a professional advisor, Gooding points to a recent survey of more than 3,600 Canadian households conducted by the Centre for Interuniversity Research and Analysis on Organizations (CIRANO) in Montréal. The study uncovered common misconceptions that make investors believe they do not need, or cannot benefit from, an advisor.
“Many investors believe they do not have enough money to need advice, while others mistakenly believe that professional advice is too expensive,” says Gooding, referencing the survey results. “Most interestingly, approximately one in 10 households surveyed claimed to not need a financial advisor because they are not capable of saving for retirement!”
Gooding feels nothing could be further from the truth. “Everyone is capable of putting something away for retirement and everyone, no matter the size of his or her nest egg, can benefit from professional financial advice,” he states with passion. “A financial advisor is capable of maximizing the returns on your investment, no matter how small.”
Financial advice has a positive impact on financial assets
The CIRANO survey also made clear the multitude of benefits accrued by working with a financial advisor, something that Gooding has witnessed first-hand throughout his career.
“Financially literate households have more financial assets, while households who make use of an advisor are more likely to save and are more likely to be confident about retirement than those who don’t,” he says. “Most importantly, the longer the advice tenure, the greater the financial assets, with households that have been actively advised for at least four years having considerably more financial assets than non-advised households.”
“The study also determined that people in advised households not only feel more confident that they will have enough money to retire comfortably,” Gooding continues, “but they perceive financial advisors more positively and have a
higher level of trust towards them, while also being satisfied with the services and advice rendered.”
Tips for selecting an advisor
Having worked with many of the country’s leading financial advisors, Brian Gooding is well positioned to offer guidance on selecting an advisor.
“You should always begin by asking about your advisor’s experience and qualifications, but of equal importance is finding out about your advisor’s investment dealer, to ensure he or she can provide the right financial products to help you meet your goals.”
Also of great importance is discussing compensation with your advisor before signing an agreement. A key element of
this is understanding the composition of the fees an advisor charges.
“Investors pay fees for services provided by their fund manager and their dealer,” says Gooding. “While your advisor is the one responsible for setting your goals and strategy, he relies on the services and products provided by the dealer to meet those goawwls.”
After gathering all the necessary information, Gooding recommends an investor review how the advisor fits with his or her investment goals.
“Aside from compensation and qualifications, other important factors include your level of comfort with the advisor and whether or not they were able to answer all of your questions clearly and completely,” says Gooding.
Commissions, trailing commissions, management fees, brokerage fees and expenses all may be associated with investment funds. Please read the prospectus before investing. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.