Are you getting what you pay for in your financial advisory relationship? Today, I’m going to show you how often the answer is, unfortunately, no. Many investors are not getting their money’s worth out of the financial advice they receive.

As Nancy Graham covered in her recent post, she and I both believe the financial industry has underserved Canadian investors for a long, long time. In contrast, what we do here as independent financial advisors doesn’t correlate with what the financial services industry is often all about. In fact, we’re apples-to-oranges different in all kinds of ways.

So, what kind of value do you deserve if you decide to hire and work with an independent, fee-based financial advisor? Let’s cover a few of the essentials.

 

Considering the Big Picture

A typical investment experience involves turning to a bank or broker who helps you place some products inside your investment accounts, and then sends you on your way. They’re hoping you won’t notice the outsized commissions they’re receiving for the products they recommend.

An independent advisor should have an entirely different focus on your total wealth picture. Not only are we tending to your investment accounts over time, but we’re also looking at your other financial interests, such as your insurance coverage, your retirement plan, and your wills and other estate-planning documents.

In contrast, your average financial salesperson often centers on selling you their own in-house investment products, one transaction at a time, often based on internal company goals. There’s not much regard for how each product fits into your long-term financial planning.

 

Investing Toward Your Goals

What I’m telling you is, with a fee-based advisor, the aim is very different. The objective is to shift your attention away from simply chasing raw returns. Instead, we’re looking at ways to help you establish a more meaningful relationship with your money. Of course, investment returns matter. But fixating on them as your greatest goal is not only nerve-wracking, it can be counterproductive. Remember, financial goals include aspirations like paying off your home, sending your kids to college, and eventually retiring. Hoping to outperform a market index is NOT a financial goal. It’s a human emotion.

Deep down, I think you already suspect there must be a better way to earn respectable returns, and then get on with living the rest of your life. There is! It’s called evidence-based investing. Those of us who embrace the strategy have no need to SELL you investment products. Instead, we’re here to help you consider the factors that actually matter to your financial outcomes.

For example, what are your greatest financial goals to begin with? If you’ve started to accumulate capital, then what is its objective? Are the investment risks you’re taking on expected to generate improved returns? What is your unique need, ability, and willingness to take on investment risk?

 

Putting the Pieces Together

These are the sorts of preliminary planning conversations a fee-based advisor should have with you. Beyond that, the rest of the job involves tending to other details that contribute to your financial success, such as:

  • Ensuring you HAVE a financial plan that reflects your goals.
  • Helping you STICK to your financial plan and investment strategy through the years … even as financial and social media continues to tempt you with unhealthy clickbait during hot market runs and scary market declines.
  • Integrating everything else. There’s insurance coverage, estate planning, budgeting, retirement spending, tax management, university funding for your kids, stock options, business succession planning … and, well, you get my drift. All of it – integrated into your wealth strategy.

To cut to the chase, if you thought the only thing a financial advisor was good for was to help you hit home-runs in the stock market, we’d like to suggest you try a more productive game.

Have I encouraged you to reconsider whether there are better advisory relationships available out there for you? Or are you happy with your business as usual at the big banks? Either way, let me know by adding your comments to the YouTube version of today’s post.