It’s good to take a look at your financial big picture once in a while. Experts recommend you do this every year or when your money situation changes. Many people find that it’s worth getting expert help with this task. An expert can look at your whole financial situation and help you think about whether you’re getting the most out of your money. But there’s also a host of bad advice out there, and many people who give it have their own best interests at heart.
So where should you turn? Easy Money asked Ontario’s consumer-protection authority and a financial planner for advice.
You can start with someone you know
Many people get financial advice from friends and family. That’s not a bad thing, says Stuart Wilkinson, chief consumer officer of the Financial Services Regulatory Authority of Ontario — but you may not want to stop there.
Stuart Wilkinson is chief consumer officer of the FSRAO. (Courtesy of Stuart Wilkinson)
“What we found in a recent survey … is that word of mouth, including friends and family, is actually the most common source of financial advice for consumers in Ontario,” he says. The survey, which was conducted online in January 2023, interviewed 1,007 adult Ontarians about their financial awareness and decision-making
Wilkinson doesn’t see talking with friends and family as a problem — but he points out the difference between their information and the kinds of financial advice a professional who looks at your whole money picture might give. If you choose not to seek out professional help, he says, make sure that’s because you’re making a deliberate choice rather than taking the path of least resistance.
The same thing goes for doing your own financial planning and investing, something that’s become increasingly common. “I think doing it yourself is fine, but it’s not for everybody,” says Wilkinson, adding that if you’re going to take that approach, you should “be comfortable with the risks that you’re taking and your understanding of the financial environment.”
If you do want to go it alone or just need somewhere to start, you can begin by working on a personal net-worth worksheet to get a sense of what you have and what you owe. CPA Canada offers a simple template here.
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Figure out what your needs actually are
Before you start looking for the right expert, it’s important to get a clear vision of the kind of financial advice you need. The first step is understanding your own circumstances, says Thuy Lam, a certified financial planner at Objective Financial Partners: “What is it in [your] financial life that keeps you up at night?”
Asking yourself that question and reflecting on where you don’t feel confident in your money knowledge will help you figure out what kind of advice you need. Once you’ve determined that, Lam says, “it’s choosing the type of financial expert that can support you.”
Thuy Lam is a certified financial planner at Objective Financial Partners. (Courtesy of Thuy Lam)
This area can get quite technical, so it’s important to understand the credentials held by whomever you’re getting help from. In Ontario, a financial planner is able to take a holistic look at personal finance and provide planning help on everything from basic cashflow questions to retirement, tax, and investments. A financial advisor, on the other hand, only needs to know about the technical ins and outs of at least one kind of investment product, like stocks or mutual funds.
“A financial advisor is really somebody that can have technical knowledge about one investment product like mutual funds or stocks — things like that,” says Wilkinson. A financial planner, on the other hand, “has a lot more breadth and depth to their understanding, and they can talk to you about taxes and estate planning and retirement planning and insurance.”
If you’re finding it hard to make ends meet, you might benefit from starting to work on your budget and seeking out free credit-counselling help from trustworthy sources. These free or low-cost options will help you learn what kind of professional assistance you may want when you’re ready to start working on a bigger financial plan.
Ask the right questions
When it comes to your money, spend some time finding a trustworthy ally. According to last fall’s FSRA survey, fully half the people who did seek professional help spent more time on research about the last cellphone they bought than they did on looking into the financial professional they went with.
“It’s not the worst thing to think about what cellphone you’re going to buy,” says Wilkinson. “But carving out some time for yourself to make an informed choice about who you’re going to work with is very important.”
Use of the “financial planner” and “financial advisor” titles is regulated in Ontario by FSRA. If someone’s used those titles, Wilkinson says, “they have to have an approved credential.” FSRA maintains an online lookup tool where you can check out the planner or advisor you want to work with. He also recommends paying attention to whether they’ve ever been subject to disciplinary action by the body that issued their credit.
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Beyond understanding whether your finance pro is credentialled, it’s important to understand what kinds of services different financial professionals can offer — and how they’re making their money. Lam’s company provides fee-only financial services, which means that they don’t receive money from anyone but their clients and that they have a fiduciary duty to put their client’s needs first.
If you go with someone your bank might offer, for instance, you might be working with someone who’s a licensed mutual-fund advisor or even a certified financial planner, but their incentive is different and they may even have sales targets to meet.
“The way that banks make money is through the sale of financial products, whether it’s banking credit cards, mortgages, GICs, or mutual funds,” says Lam.
That’s a key question to ask anyone you want to work with: How do you make your money? FSRA maintains a list of this and other must-ask questions. “You should expect to get direct responses from the professional that you’re working with,” says Wilkinson.
Find someone who fits your needs — and don’t be afraid to change it up
It’s important to find someone who works well with you. You don’t want to be stressing out about dealing with this person or avoiding conversations altogether — especially for a service you’re buying.
When you’re thinking about working with someone, you should ask questions about fit, because “money can be a very sensitive topic and an emotional topic,” Lam says. It’s important to “feel comfortable discussing your concerns and sharing your dreams and your challenges.”
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She suggests looking for someone who makes you feel comfortable and safe discussing these very personal topics and whose workflow is going to be compatible with yours. You may need to learn and grow to go on this financial journey, but you don’t need to change who you are or what you value. Many financial planners specialize in working with specific groups, such as new Canadians, women, or LGBTQ+ people.
This search tool from FP Canada, the professional body for financial planners, lets you filter for different specializations and see the compensation model each planner relies on. It can also help you find planners who can work in a specific language other than English.
If you find yourself considering or working with someone whom you don’t really mesh with, it’s important to put yourself and your own needs first, says Lam: “You don’t need to say why, other than ‘it’s not the best fit for me.’”
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