Recently, the article “Seven questions bad advisors don’t want you to ask”, by Kira Vermond, was pointed out to me and it got me thinking... I wonder if any of my clients are thinking about any of things? So, rather than having readers asking these questions and wondering them about us, I thought it would be a great to provide a proactive response. These are all important questions and many people may not know to ask them. Here is the link, followed by my answers to each question below.

"Seven questions bad advisors don't want you to ask"

“What credential, licenses or certifications do you have?”

First, before credentials, the most important thing for clients to check, in my opinion, is whether the advisor you are dealing with (or are considering dealing with) is licensed. This can help you avoid the individuals that may set up shop for the purposes of fraud, as they have tended to avoid licensing and regulation altogether (though licensing doesn’t automatically rule out the potential for fraud). With the web today, this is as easy as doing a couple of searches; I would recommend the following sites:

Ontario Securities Commission Registration Search

Canadian Securities Administrators - National Registration Search

Google – There isn’t much you can’t find on the web these days. Often the best way to find background information on someone is to simply “Google” them.

As for credentials, there are many designations that can be earned by financial professionals, including CFP (Certified Financial Planner), CIM (Chartered Investment Manager) and CFA (Certified Financial Analyst). For myself, I have chosen the CIM, which is of a high quality and recognized by Canadian Securities Regulators. For more information, I have included a link to the designation site.

CIM Designation Investor Site

It is also important to make sure you advisor actually has the designation they are professing to have and not just using the letters and misrepresenting their credentials. To search for CIM Charter holders, follow this link.

CIM Search

“What do you specialize in?”

For the most part, we work with business owners and professionals either of the past, are currently established, or in the start up phase. Given that we are business owners ourselves, as opposed to employed brokers, branch representatives or similar types of other advisors, we have a unique understanding of the needs of the entrepreneurial client. That said, we also recognize that our skill set can be transposed to non-business owner clients and, where we feel that added value can be provided, we will look to bring in clients we feel we can help, whether they are a business owner or not.

“How did you get the money to pay for that flashy car and Rolex?”

This is definitely a question that has received tremendous media attention and is now the subject of significant change in the investment industry, which will become more visible to clients starting in 2014 through 2015. We, as a firm, have attempted to be as open and transparent as possible when it comes to the conversation on fees and how we get paid, basically since our inception. To this point, we wrote two blogs on this topic back in 2011 which, for convenience, I have included links to below. You can also expect an update to these blogs over the coming months, given their popularity, as they have driven over 20% on our website traffic.

Everything You Wanted to Know About Investment Fees But Were too Afraid to Ask – Part 2

Everything You Wanted to Know About Investment Fees But Were too Afraid to Ask – Part 1, The MER

“Why are you investing everything in one product line?”

This is definitely a red flag and your advisor should have a good answer to this question; otherwise, it might be best to head for the doors as it is very likely that your advisor, or advisor’s firm, is being better served than you. In our case, we are affiliated with a non-bank owned (independent) dealer, which is currently FundEX Investments Inc. In our opinion, this is an ideal relationship between licensing body and advisory practice as we are able to leverage off their compliance and platform, while at the same time maintaining our independence in selecting the investments we feel are most appropriate for our clients.

In most cases, if you are simply getting one product line, it is likely because the advisor you are working is what is called a “captive advisor”, meaning they can only sell the products of the firm they are affiliated with (or they are compensated higher for selling the products of their firm), like Investors Group or Sun Life. This is also common practice now through bank branches, where representatives are offering bank-owned investment products exclusively, regardless of alternative options.

“Can you explain it for me one more time?”

I must say, I love what I do for a living. I have intended to do this since my Grade 8 year, when I learned about what Warren Buffett does through Berkshire Hathaway during a stock contest I participated in. At that time, I began investing on my own by saving funds for school, prior to the existence of RESPs, with money earned on my paper route and then at my first part-time job with IGA.

My passion for investing is paralleled with my passion for educating and informing others (mostly my clients) about investing as well. This can be equally a good thing and a bad thing, as I can end up taking a considerable amount of time answering questions.  At the same time, I never tire answering the same questions, provided the clients are satisfied with the answer in the end. In short, ask away!

“Do you work full time?”

Of course! Our office hours are 8:30am to 4:30pm, Monday to Friday, and we’re always reachable (and often meet with clients) in off-hours as well. Between Brett and I, we have invested a considerable amount of time and money into our practice and we are here to stay, to serve our clients for the coming decades.

“Will you still love me tomorrow?”

Of course we do. As all of our clients know, we like to meet with all of our clients on a regular basis. We also understand that many of our clients are busy people, so we try to tailor our meeting schedules such that we do not overburden them. We also seek out other methods of communication if a face to face meeting will not work out.

Aside from this, since our compensation model is one where we continually receive a fee for managing investments as opposed to a larger upfront fee that many advisors charge, we have an ongoing incentive to ensure our clients are taken care of and making money.

At this point, I’ve covered the 7 questions. We would definitely appreciate any feedback, or additional questions you might have, so feel free to use the comment section on the blog or email me directly. I also encourage you to forward this blog to friends and family, so they can use it as an outline for questions they may consider asking potential or existing advisors.