How to Find the Best Certified Financial Planner (CFP) or Financial Advisor for Help with Managing Money, Retirement Planning or Wealth Management | Personal Finances

Financial advisors and Certified Financial Planners (CFP) are professionals who work with their clients to help them meet their personal financial objectives. They provide specific and unique advice for retirement planning, investing and wealth management so that someone can find the best way to save and grow their money.

Financial advisers and planners can be used for life-long advice, or as a tool to meet a specific goal, like saving for a house. There are many different types of financial advisors, with different specializations - some are mortgage experts, while others focus on retirement or self-employed entrepreneurs. Though financial advisors make managing money simpler, finding the right financial advisor or CFP can be very difficult.

To help you choose the right one and get the best personal finance advice, we’ve created a list of things to consider in your search:

Know Which Designations and Credentials Matter When Looking for a Financial Planner or Advisor

Ask what their credentials mean and verify the status of their registration, licensing or designation. Understand the difference between financial planning and financial advising.

Although financial advisors are certified professionals, anyone can call themselves a “financial adviser” or “financial planner”. When searching for a financial advisor, beware of people who advertise PFP or PFPC “designations” after their name. The PFP credential stands for “Personal Finance Planner”, and while it is a recognized designation, it was originally created for bankers and is not particularly relevant for independent financial advisors or planners. Similarly, the PFPC is the Professional Financial Planning Course that many financial planners used to take, but it is not a standalone designation and the course itself has been discontinued.

When searching for a planner or wealth management expert, look for someone with a CFP (Certified Financial Planner) or an RFP (Registered Financial Planner) designation. In Canada, there are about 18,000 active CFP holders. These designations are internationally recognized and regulated by the FP Canada. CFP professionals adhere to strict regulations and ethical standards that are designed to protect you. Unlike other accreditations, RFP and CFP holders must have a minimum level of work experience, and take part in continued education and testing to maintain their designation.

How to Verify the Status of a Certified Financial Planner or Financial Advisor’s Designation or Registration

You can verify the status of individual financial advisors and planners on the FP Canada website. The site hosts a directory and registration of all Certified Financial Planners (CFP), and for each professional, it provides records on disciplinary history and the status of their designation. Before you choose your financial advisor, make sure that their designation is held in “good standing”, and that they have no history of disciplinary action.

Compensation, Fees and Commissions for Personal Finance Planners & Advisors

Most financial advisors and Certified Financial Planners (CFP) operate independently, so they are paid in different ways.

The way a financial advisor or CFP is compensated may affect the quality of service that you receive. Generally, advisors are paid through commission, flat-fees, or a combination of both.

Commission Based

Commission-based advisors earn their money by charging a percentage every time they sell a product. For example, a commission-based financial adviser may earn 2% when you buy a certain mutual fund. This can be problematic.

Advisors who earn their money this way may have an incentive to sell you particular products, instead of helping you save. Since their success is dependent on how much you buy, your goals, and the goals of your advisor, may not be in line.

While commission-based compensation has an associated risk, it can be helpful for people with fewer assets. If you are looking for infrequent advice, commission-based advisors offer a great way for people with less disposable income to save.

Flat Fee

Other advisors are not compensated through the products that they sell. These people will often earn income by charging an annual, flat fee. Generally, this guarantees a more objective service. Under this pay structure, advisors have no ulterior motivation but to keep your best interests in mind.

Fee-based advisors are good for clients with more complex and established assets. For people who require more comprehensive management, a fee-based advisor will provide objective and personal advice in a cost efficient manner.

Should I Use a Financial Advisor Through My Bank or Find an Independent Financial Planner?

Some people opt to choose a financial advisor through their financial institution. Though they provide similar services, independent financial planners, and those who are part of a bank, may offer a different experience.

Financial Advisors at Banks, Credit Unions & Financial Institutions

Advisors who work at a bank or credit union are tied to their company’s products. If you are interested in investing in a mutual fund, your advisor will only be able to recommend the products that his or her financial institution offers.

However, there are advantages to working with an advisor at your bank:

• Advisors at financial institutions are convenient and consistent
• They are trained and governed by the company’s policies and guidelines
• The brand name provides peace of mind

All advisors who work for a financial institution will be paid in the same way, which often includes a salary plus bonus. This consistency can make things less complicated when selecting your planner.

As an additional benefit, you may also receive discounts on other products or services for having your investments with the company. These can include free chequing accounts, extra discretionary pricing on loans or lines of credit, or discounts on annual service fees.

Independent Financial Planners & Advisors – Online Resources, Information, Referrals, Reviews

Use an online resource to find the best Certified Financial Planner (CFP) or Financial Advisor for your money management, retirement planning or wealth management needs.

The services offered by independent financial advisors and planners can vary considerably. These professionals often run their business personally, and as a result, have unique operations to meet various client needs. When working for a stand-alone investment firm, independent advisors may also be able to offer the most unbiased information.

Some advisors operate as a franchise and license their brand name from a larger company. Beyond this, independent planners have different specialties and interests – some cater to a specific niche, like doctors, or specialize in a certain function, like estate planning or wealth management above or below a certain income and/or asset threshold.

This is where an online resource with information, referrals or reviews can help you find and learn more about the best Certified Financial Planner (CFP) or financial advisor for your money management, retirement planning or wealth management needs:

• Advocis – The Financial Advisors Association of Canada has a database of Canadian Certified Financial Planners (CFP) and financial advisors
• I.A.F.P – The Institute of Advanced Financial Planners hosts a database for all Registered Financial Planners (RFP)

6 Key Questions You Need to Ask a Financial Advisor – FAQ

People frequently forget to ask enough questions. So, once you’ve chosen an advisor, to determine if they are the best financial advisor for you, here are 6 key questions you need to ask:

1.  Can I see a sample financial plan?

Looking at a sample financial plan is a good way to preview the service that an advisor offers. Make sure the information presented is helpful and organized. A financial planner will not be useful if you do not understand their advice.

2.  Do you charge for your services?

It is important to understand how an advisor is compensated. This will help you identify any potential conflicts of interest or biases.

3.  What licenses, credentials and designations do you have?

Licenses, credentials and designations tell you about the kind of education and technical knowledge an advisor has, as well as the code of ethics and governance to which they are held.

4.  How long have you been a financial planner?

Experience is a virtue. To keep your money safe, it is important to choose an advisor with experience. If an advisor has less than 2 years experience, ask them if someone else will be reviewing their advice.

5.  What are your specialties?

If possible, find an advisor who specializes in people like you. It is always beneficial to consult someone who has experience working with situations like your own. If you have a smaller asset pool, and you work with an advisor who specializes in high net worth clients, you may not get the advice you need, and the advisor may not spend as much time with you as you deserve.

6.  How closely do you work with your clients? How often would we be in contact?

It is important to be on the same page as your future financial planner. If you are busy and cannot put much time into your finances, an advisor who wants to meet every week might be a bad choice.

3 Final Tips to Help You Find the Best Certified Financial Planner (CFP) or Financial Advisor for Your Personal Finances

The best Certified Financial Planner or financial advisor for you will understand your money management, retirement planning and wealth management needs so that you can achieve your goals.

1. Past performance does not indicate future results. This is especially true in the world of finance. Don’t choose a financial advisor or CFP strictly based on their historic returns: this could prove very costly.
2. If someone promises you something that sounds too good to be true, it probably is. Educate yourself to recognize investment fraud when you see it. ​
3. Relationships with advisors can last a lifetime, so choose someone you can trust. 

Remember that no one is more interested in your money than you are. Creating wealth doesn't just happen, so doing the prep work to find the right financial advisor for you might just be your best financial decision ever!

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Thomas H. writes for wealthprep.ca – an online resource helping people make better financial decisions through educational tools, guides, and a network of Canadian financial advisors.

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