Both planners and advisors can enable you and your loved ones with quite a lot of money matters, including financial planning, estate planning, investments, insurance and mortgages. Looking at consultants’ credentials or designations can enable you work out what they deal with.
“The terms someone might look for vary depending on the situation,” says Aaron Hector, CFP and personal wealth advisor at CWB Wealth in Calgary. For example, Registered Financial Planners (RFPs) have a high level of experience in financial planning and their primary job is financial planning. A CFP also has extensive financial planning expertise and comprehensive knowledge and skills. (More on credentials below.)
“Many financial planners are generalists – they have extensive knowledge of all aspects of personal finance, but may lack niche financial expertise to deal with unique and/or very complex situations,” says Hector. “In such cases, you may want to look for someone who has these unique skills or, alternatively, work with a financial planner who enjoys working with other professionals.”
Many financial planners have experience working with specific kinds of clients. “For example, some planners may specialize in working with clients who are entrepreneurs, while others may specialize in estate, tax or cross-border financial planning skills,” says Hector. He adds that planners often have a network of experts they work with as needed for a client’s situation.
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How do financial advisors and planners receives a commission?
Both advisors and planners may offer one-time and ongoing services with different fee structures. One-off services may include making a financial statement or providing advice on a particular situation. Ongoing services may include ongoing reviews of your financial statement or management of your investment portfolio.
“A do-it-yourself individual would likely want someone who can create a plan that they can then implement themselves, while someone else might want to work with an advisor to manage their investment portfolio for them, and that advisor might.” The fee relies on the assets under management or on the idea of commissions,” explains Hector. “If you need insurance, you have to work with an insurance advisor who receives a commission.”
Regardless of the service, the fee structure must be transparent and you must understand the various ways your advisor will probably be paid to be certain that your and your advisor’s interests are aligned. “If your advisor is paid more to recommend one product than another, then there is a clear conflict of interest,” explains Hector. “I would ask them to explain to you very clearly why it is in your best interest too.”
What qualifications do financial advisors and financial planners have?
Before selecting a planner or consultant, it’s helpful to grasp the different sorts of qualifications or designations.
