Millions of Canadians who want help managing their money seek out the services of a financial adviser. But the
term itself refers to a wide variety of professionals with different specialties. And, depending on where you live in Canada, it can be used without specific qualifications, expertise or certifications. Here, Financial Post breaks down what a financial adviser can do, what credentials you can check for and how to find the right fit for you.

Who is a financial adviser and what do they do?

A financial adviser (or financial professional) is a general term for someone who helps you manage your money, such a wealth adviser at your local bank, an investment broker or an insurance agent.

The title is often used broadly, though some provinces regulate the term more strictly and mandate that those calling themselves financial advisers meet certain requirements.

For instance, Ontario regulates the financial adviser and financial planner titles, meaning only those who hold approved credentials and meet certain criteria can use these titles in the province. Saskatchewan and New Brunswick have introduced similar legislation, which has not yet come into effect.

In Quebec, financial planners are regulated, while certain titles, including financial adviser, are prohibited.

“A financial adviser, and any financial professional for that matter, should be able to provide competent advice on several different aspects related to wealth and money,” said Josh Sheluk, portfolio manager at Verecan Capital Management Inc., based in Toronto.

Who needs a financial adviser?

You may seek a financial adviser if you lack time, interest or expertise in managing your finances. An adviser can help you develop a plan related to investing, retirement, tax efficiency or general money management.

While there is no specific age at which people should consult a financial professional, Sheluk has typically seen people seek financial advice once they have begun to build a solid savings cushion. The financial adviser industry tends to attract older and wealthier clients, he said, especially when some companies require a minimum portfolio size before agreeing to work with a client.

Jason Heath, an advice-only certified financial planner (CFP) at Objective Financial Partners Inc. based in Toronto, said clients at his firm have ranged from people in their 20s to those in their 80s, but he often sees clients in the middle of their careers, in their 40s to 50s.

What type of financial adviser are you looking for?

There are many different types of financial advisers and designations, and it can be difficult to determine the difference. Complicating matters further is what separates a financial adviser from a

financial planner

, as the terms are often used interchangeably.

The Financial Services Regulatory Authority of Ontario (FSRA), for example, separates the two designations. FSRA categorizes financial advisers as professionals who specialize in investment products, such as

mutual funds

, stocks,

bonds

and

exchange-traded funds

. In comparison, FSRA describes financial planners as those who develop integrated financial plans for clients, which can include investment planning along with tax, estate and

retirement planning

.

The lines can get easily blurred, as many financial advisers may also be certified as financial planners, Sheluk said.

Alexandra Williams, senior vice-president, strategy, innovation and stakeholder protection at the Canadian Investment Regulatory Organization (CIRO), said its regulation categories for financial advisers include mutual fund advisers, investment dealer advisers and portfolio managers.

Financial planners are considered a different proficiency under CIRO regulations, Williams said. “However, if the financial planner gives specific financial advice on securities or mutual funds, they would also have to be proficient and registered with CIRO or the Canadian Securities Administrators (CSA).”

Some financial advisers are licensed through a life insurance channel, so they can provide advice on insurance-related products, such as segregated funds and annuities, Sheluk said.

There are also discretionary advisers, who require confirmation from their clients before they execute individual trades, and non-discretionary advisers, such as portfolio managers, who can execute trades without requiring express consent for each trade.

What qualifications should you look for?

The financial adviser title is not technically a regulatory term or title throughout Canada, but there are ways to confirm a professional’s competency.

By law, those who sell mutual funds, stocks and bonds must complete training and register with a provincial or territorial securities regulator.

Those who offer investment advice in Canada require registration with a member firm with CIRO or with the CSA. “This provides certain protections to Canadian investors and means that the adviser has met proficiency requirements … and that the dealer they work for is supervising their employees to ensure they comply with the rules,” CIRO’s Williams said.

Investors can search to confirm their adviser is registered on the CIRO or CSA sites. CIRO regulates more than 110,000 individual advisers across Canada who sell investment products and mutual funds, Williams said.

Both organizations also issue investor alerts to warn the public of fraudulent or scam entities that appear as though they are real businesses. “If you don’t check that these people or organizations are registered, you are opening yourself up to risk,” Williams said.

The FRSA offers an online tool on its website to verify if a financial professional has the credentials to use the financial planner or financial adviser (or similar) titles in Ontario.

For certified financial planners, the CFP designation offered through FP Canada indicates help with more complex financial planning, such as estate planning or small business income, while a qualified associate financial planner (QAFP) can help tackle money management concerns such as budgeting and credit card debt. The personal financial planner (PFP) credential is offered through the Canadian Securities Institute.

When it comes to specializing in investment advice, a portfolio manager typically has a higher level of fiduciary responsibility compared with a mutual fund salesperson or an insurance adviser, Heath said.

Credentials such as chartered financial analyst (CFA) and chartered investment manager (CIM) can indicate competency in investing as well, Sheluk said.

Where can I find a financial adviser?

Besides online search or word of mouth, organizations can help you find a financial professional, depending on what kind of advice you are looking for.

For example, at a bank or credit union, you can get advice on purchasing products such as term deposits or guaranteed investment certificates (

GICs

), or setting up a registered retirement savings plan (

RRSP

) or a tax-free savings account (

TFSA

).

At an insurance company, employees are licensed to sell insurance-related products such as segregated funds and annuities.

Stockbrokers and mutual fund dealers can help you buy or sell stocks, bonds or mutual funds, and can also help you open a registered savings plan.

Cindy Marques, a Toronto-based, advice-only CFP at Open Access Limited, said a financial adviser who works at a financial institution, such as a bank, is more likely to recommend in-house products or be incentivized to offer certain products, compared with professionals at independent firms. But if your assets are already housed under one financial institution and you have had a good experience with its investment products, a bank adviser may be a good choice, she said.

The FP Canada website features a directory where you can search for financial planners by name, organization or location and provides additional information about what each professional specializes in, along with their other credentials.

What questions should you ask when choosing an adviser?

One of the most important questions to ask a financial adviser is whether they can support your specific needs, whether that involves managing cash flow, paying off debt or building your wealth through investments. Ask if they are qualified to provide advice that covers all aspects of your financial life or if they specialize in specific areas.

Experts suggest you should also ask financial advisers or planners about their backgrounds and how long they have been providing these services, said FSRA chief consumer officer Stuart Wilkinson.

Beyond inquiring about a professional’s credentials, ask them what each credential means and what specific services or advice it allows them to provide, Marques said.

Ask about the prospective adviser’s cost structure, as this can vary widely. Some professionals operate on commissions through products they sell you, while others offer a fee-based model, where they receive a percentage of assets managed. Sheluk said fee-based advisers can charge as high as 2.5 to three per cent for smaller portfolios, whereas this can drop to about half a per cent for larger portfolios.

Heath emphasized the importance of requesting full transparency, especially with a financial adviser who works on commission. For example, if a financial adviser encourages investing in proprietary mutual funds from a specific bank, you should be fully aware of what is incentivizing them to make these recommendations and only get on board if it’s the right financial decision for you, he said.

Marques also suggested asking whether the adviser receives any referral fees from other financial professionals, in case they need to refer you to someone else for specific advice they cannot provide themselves.

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It is key to get a sense of the financial adviser’s personality and how they respond to you, Sheluk said. You should be “looking for somebody that is interested and prioritizes learning a lot about you as the individual, and your goals and objectives.”

• Email: slouis@postmedia.com