Do you know what motivates your financial advisor?
THUNDER BAY – Money – Your financial or investment advisor will play a significant role in helping you make the financial decisions that will be apart of shaping your future. Knowing that, you might have interest in understanding what drives them. The good news is it isn’t very hard to find out, and it is all answered with a few questions. Having a better understanding of their motivation will allow you to have more trust in them, and can help make better decisions in the future.
What fees will I pay?
All investment products come with a fee, whether it is purchasing a mutual fund, an ETF, or even an individual stock. All of the fees are located in the prospectus that comes with the product, but most investors won’t read it. Ask your advisor what the fees are with that product and how they could affect the potential returns that investment will bring you. In most cases, having the right investment product will make it worth the fee.
How is my advisor paid?
Understanding how your financial advisor gets compensated can give you an idea of what type of service to expect. There are a few types of compensation models which most advisors are on.
An advisor who works on salary is going to be paid the same regardless of how much money you invest with them, or what the performance of your portfolio is. Commission based advisors are paid based on transactions, whether it be buying or selling a product or adding money to your account. Fee based advisors are paid a percentage of their managed assets, giving these types of advisors the same goals as you: to make you money.
What type of service can I expect?
That will depend on what you’re looking for in them. Some investors have higher expectations than others and will expect more. When it comes to your investments, you want to make sure you’re on the same page as your advisor. If that means a phone call to give you an update, or a newsletter to let you know what’s happening, having that contact with them will give you more trust and confidence. Let them know what you’re looking for.
The Bottom Line
Use this as a guideline in helping you choose and stay with the right financial advisor. Should you have any questions, please do not hesitate to contact me.
Please note that the deadline for RRSP contributions is March 3, 2014, and also additional TSFA contributions of $5,500 can also be made for this year. If you would like to sign up for my free monthly investment newsletter, feel free to email me at firstname.lastname@example.org with your name and email.
Anthony M. Talarico
Financial Security & Investment Representative
W: (807)343-4788 ext. 4248