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Nancy Graham CPA, CA, CIM, CFP, TEP

Portfolio Manager
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  • 1.800.230.5544
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  • 265 Carling Avenue,
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  • Ottawa, Ontario K1S 2E1

Identifying an Advisor Advocate

October 10, 2014 - 0 comments

Welcome to our next installment in Nancy Graham’s “Minding Your Money Matters,” thoughtful financial advocacy vignettes that you can readily apply. In our last post, we discussed the differences between financial vendors and financial advocates, and how we’d like to see far more of the latter in our industry. In this installment, we’ll take a closer look at what qualities to seek in a financial advocate who has your best interests at heart.

How to Identify a Financial Advocate

As the law of the land stands today, there’s not much difference between the rules of engagement for selling a lawnmower versus an investment product – which means investors are in a buyer-beware environment. How do you avoid the many product peddlers out there and identify the financial advocate and advisor who is dedicated to serving your highest financial interests?

Character

Is your advisor more than an order-taker? Is she willing to tell you not only what you want to hear, but what you need to hear to make well-reasoned decisions about your wealth? Will he dispense advice even when it runs counter to his own best interests (such as eliminating an opportunity for additional compensation)? Is your advisor there for you when you call, and sometimes even when you don’t?

Quality

Is your advisor’s investment advice changeable in reaction to hot and cold market trends and forecasts? Or is it a patient, disciplined approach to capturing long-term market returns according to your goals and risk tolerances? When markets are plummeting or soaring, does your advisor help you stick to your plans? To further understand sensible, market-based investment strategy, consider this article by Dimensional Fund Advisors’ Director of Canadian Financial Services Brad Steinman, “The Paradox of Skill.”

Context

Does your advisor help you coordinate your personal, professional and family wealth into a unified whole? Are your investment decisions seamlessly integrated with your tax, business, retirement, risk, estate and similar planning needs?

Cost

Perhaps most critically, what are your investments really costing you? The financial industry is burdened by hidden expenses that can weigh heavily against best-intended returns. And when they’re well-hidden, it’s hard to know how much damage they may be causing. As reported in this CBC news report, this is one area where strengthened regulations may be on the way … none too soon! But new disclosure requirements are to be phased in slowly; time will tell how effective they may be. In the meantime, investors are advised to arm themselves with insights from blogs by financial advocates such as the Canadian Couch Potato, U.S. News & World Report’s Daniel Solin … and yours truly.

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