Is Your Financial Advisor Up For The Job?

Here are three basic questions to consider:

1 – Does your advisor actually advise you?

Every investor receives a quarterly report on their portfolio, but that’s just an automatically cranked out computer-generated document. Financial advisors are supposed to advise, not just mail out graphs that aren’t being read. Is your advisor doing everything to keep you in the loop?

Did you get an email in January warning you about COVID and its possible effects on the market – and your portfolio? Did your advisor call you in February to recommend lightening your exposure to stocks as COVID began to take hold globally? If your advisor treated the last three months as “business as usual,” and didn’t protect you from the dramatic losses of late, what are you paying them for?

2 – Is your advisor up-to-date on new legislation?

It seems as though every day there is some new stimulus measure on the books, whether it’s a federal tax break or a provincial wage subsidy. Unless you’re a serious policy wonk, you’re probably not sure exactly what this means for you, especially if you own your own business. As we get through the next few months of COVID-related financial turbulence, whoever is managing your portfolio needs to really understand how to help you take advantage of these new stimulus measures. If your advisor isn’t fully updated on these rapid-fire changes, you should have reason for concern and you may want to look elsewhere.

3 – How does your investment advisor make money?

Understanding how your advisor is compensated, their investment selection process, as well as their ethics, integrity, and qualifications, should be absolutely top-of-mind for any investor. At the end of the day, while legislation will help, it is no substitution for knowing exactly who you are retaining as your advisor.

People tend to act according to the manner in which they are incented, so make sure your advisor’s interests are fully aligned with yours and that it is your best interest that is at the core of everything they do. The perfect place to start is with The Statement of Investor Rights, and this list of Questions to Ask Your Financial Advisor, both created by the CFA institute. These are your rights, and you should do everything in your power to exercise them.