How a wealth advisor can help in the face of uncertainty

TD client Polly talks about the challenges of coming to Canada, being a single mother and how a financial planner helped.

If you have questions about what it’s like to work with a wealth advisor and how it can benefit you, this quick guide may help.

Let’s dive in.

What is a wealth advisor?

The term “wealth advisor” can be used informally to describe a variety of designations and titles that vary by province and from one financial institution to another. Other terms you might hear include financial planner, financial advisor and investment advisor. While individual titles and accreditation may differ, these financial specialists all provide a variety of services and advice beyond your usual banking needs. Planner and advisor services can include financial, retirement, Will and estate planning, business succession strategies, wealth transfers and investment portfolio management, among other services. Although these terms may sound like they are removed from your day-to-day money management, Inskip says they all refer to key moments you’re likely to experience in your lifetime — and they each deserve proper planning.

Let’s take a look at retirement planning as an example. If you’re still a decade or so away from retiring, you may not have spent a lot of time doing much about it — beyond saving money in your Registered Retirement Savings Plan (RRSP) every year. But are you saving enough? People are living longer than ever, prices are higher and every month (it seems) the media touts a new retirement savings figure for people to target ¹. With the understanding that retirement will look different for each of us, it’s a good idea to begin thinking about your own retirement as early as possible. A wealth advisor can help you create a comprehensive retirement plan that aligns your projected income, investment portfolio and cashflow for your retirement goals.

When should I consider working with a wealth advisor?

If you ask someone who already works with a wealth advisor, “When and why did you first seek help?”, you may be surprised by their answer. Inskip says that, in many cases, it’s a significant life event that inspires people to reach out: “Whether it’s the death of a spouse, an inheritance, the birth of a child or even a divorce — there’s frequently a trigger.”

Prior to the pandemic, that trigger was often someone’s imminent retirement. In the current “post-pandemic” era, however, he says there’s been a noticeable shift: “Now there seems to be more uncertainty and awareness around people’s lives in general. More Canadians are asking, ‘Am I going to be alright if…? Is my family going to be alright if…?’ People seem to be focused on this notion of long-term wellbeing and financial confidence, rather than just a singular event.”

That’s all to say that you don’t have to wait for a big life event to reach out to a wealth advisor or financial planner for help. Financial wellbeing, like physical and mental health, is something that should be evaluated early and often for best results.

How can a wealth advisor help me?

On a year-to-year basis, a wealth advisor’s help could mean different things depending on your situation. Early on, it might mean helping you set aside money for your children’s education or ensuring you have enough saved each summer for a fabulous family vacation. Later in life, it could mean helping you set up a trust for your beneficiaries or ensuring your Will and estate plans reflect your wishes.

A wealth advisor can run projections to determine if you are on track to meet your goals given your rate of saving and the growth of your investments. In order to make this type of financial projection, your advisor factors in all of your financial information, including your retirement goals, family situation, expected long-term cashflow, taxes, pension, government benefits and other income sources, as well as potential economic and market conditions. From there, they can project out over the decades what your situation may be should you choose one path or another. But that’s just the start.

Even if you’re not facing a difficult decision, a financial projection can shed light on various unknowns. For instance, if you dip into your RRSP early or if you’d like to give each of your kids $50,000 for a mortgage, how might that affect your retirement savings? What happens if the market tumbles right before you planned to retire? Not only can working with an advisor help you understand how your financial picture might change, it can also help you make adjustments now that will benefit you in the long run, should certain events occur.

Working with a wealth advisor can become more important as your wealth grows. While making your own financial plan (or not having one at all) may suffice when you’re younger and have fewer financial assets and responsibilities, making financial mistakes later in life can carry significant consequences when you have more at stake and less time to re-grow your wealth.

How do I pick a wealth advisor?

While criteria may vary depending on your situation, there are a few things to look out for. First, it’s important to make sure their credentials are in order. Specific types of financial planners and wealth advisors should have specific accreditation. If they do not, they may not be properly licensed to help you. By law, anyone who sells financial products (mutual funds, stocks or bonds) must be registered with a securities regulator and common certifications for planners and advisors include the CFP (Certified Financial Planner) and CFA (Chartered Financial Analyst). You can use this website to check if someone is registered.

Next, what are people saying about them? While Inskip says many people find wealth professionals through word of mouth (i.e., a friend or family member who can offer a recommendation), social media can also be a great tool if you’re not sure where to start. Third, he says, “Brand matters. The institution you’re dealing with matters. How long they’ve been around, their reputation… It’s important to take that into account as well.”

Finally, remember that at its heart, working with a wealth advisor is about building a relationship with someone you can trust. Many people rely on the same advisor or advisor group for decades (even multiple generations in some cases!). Start by sitting down and having an open and honest discussion about what your goals are, your challenges, what your life is like and where you’d like to be in the future. That’s when the work can really begin.

How much does it cost?

The cost for services will naturally vary depending on who you choose to work with and the service level they provide. Generally speaking, financial specialists use one of three options. They are either paid through a commission-based fee structure, a percentage charged to manage your overall portfolio or a flat fee often expressed as a management expense ratio (MER). Any advisor should be able to clearly tell you how they are paid during an initial meeting.

Using a wealth advisor is often a significant step toward achieving long-term financial confidence and wellbeing. As Inskip says: “If we can work together through a volatile market, and I earn your trust and keep your goals on track, guess what? You’re going to trust me for the next two decades, three decades,” Inskip says. “As a result, I’m going to have a deeper understanding of who you are, what inspires you, what your fears are and what your goals are. And that’s where we can really add value.”

If you have questions about your finances or are interested in speaking with a wealth advisor, visit Advisor match to learn more.