The Bank or the Financial Advisor?

Investing for retirement or other future events is always a good move. With the deadline for filing income tax returns nearing, a lot of people are considering RRSPs, GICs and other such investments. But should you use your bank, or should you use a financial advisor? There are good reasons for using either depending on what your current financial situation is and what your investment goals are. With a little help from Riley Klassen, local financial advisor with Raymond James, Ltd., here’s some general information to keep in mind when thinking of investing.

Investing With Your Bank

If you’re new to investing, you may feel intimidated by going to a financial advisor, which is why going to your bank—a place you know fairly well and trust—might be a comfortable choice. Having your bank’s financial advisor answer your investment questions is usually free of charge. When you open and investment portfolio with them, there may be services charges attached. However, as Riley Klassen says, “The investment recommendations you receive may be the bank’s own in-house investment products rather than what may be best for you.” Investing in mutual funds, guaranteed investment certificates (GICs) and RRSPs aren’t the only ways to make your savings grow, especially if you’re concerned about risking your investment; think about high-interest savings accounts or a tax-free savings account (TFSA). You can choose how much you want to put into the account and how often, and you might be able to have your bank set up automatic transfers into your savings or TFSA so that you don’t have to worry about it.

Investing With a Financial Advisor

Choosing a financial advisor isn’t something to be done on a whim. You need to do your research, which includes figuring out your investment needs, goals, risk tolerance and financial circumstances. There are many different types of financial advisors, and not all of them do the same thing: some only give advice, some are accountants, some only sell mutual funds and others only sell insurance. If you plan to use a financial advisor, consider these guidelines:

• interview at least three;
• check their qualifications;
• match your investing needs with the right advisor;
• ask for references;
• compare fees;
• check if they belong to any regulatory organizations and with whom;
• and make sure you feel comfortable discussing your financial situation with them.

Inquire if the advisor and/or the firm is a member with the Canadian Investor Protection Fund (CIPF), which provides limited protection to clients in case the firm goes insolvent; members of CIPF are also members of the Investment Industry Regulatory Organization of Canada (IIROC), which is non-profit regulatory organization that oversees investment advisors and firms. Klassen says that the right financial advisor will be able to give “independent advice of investment products that are best suited to your risk profile, rather than what the institution wants to sell.”

Final Advice

No matter with whom you choose to invest your money, ask questions and plenty of them. It’s appropriate to ask how the advisor—whether he or she are with a bank or a firm—will be paid and how much the advisor’s fees are. Make sure you get a written letter outlining the terms of the agreement, and if you’re unclear of any of the terms, ask the advisor to explain them more clearly before you sign. If your advisor is thinking about investing your money in stocks, ask about the companies to see if they match your personal values. It’s never too late to start investing, and you don’t need a lot of money to get saving.

Note: This article is provided as a general source of information.