Dale Jackson

Personal Finance Columnist, Payback Time

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It’s no wonder that a recent report from Finder.com revealed one-in-three Canadian millennials are prepared to dump their investment advisors and go it alone.

Only 21 per cent of Generation X investors and 11 per cent of Baby Boomers feel the same way. That’s still a lot of skepticism but it suggests age brings the wisdom to know the chance of success for a long-term financial plan is much greater when a professional advisor is involved.

To help battle that skepticism, the B.C. Securities Commission lists four steps to determine if advisors are registered, in good standing with regulators, and the right fit for individual investors.

Any individual or firm selling any investment product including stocks, bonds, mutual funds or exchange-traded funds (ETFs) must be registered with regulators in the provinces and territories where they do business. In addition to keeping track of whoever calls themselves advisors (which can be just about anyone), regulators try to keep tabs on them to ensure they are qualified according to certain standards, and report on any shady dealings.

Step 1: Visit the Canadian Securities Administrators’ (CSA) national registration database. Advisors not included in the database are probably a huge red flag but there’s always the possibility of error. If the “advisor” says they are registered, inform them they are not included in the database -- but don’t commit until they are listed.

There are different categories of advisors depending on the investment products they sell. Mutual fund dealers, for example, can only sell mutual funds.

While “advisor” is a broad term (and also spelled “adviser”), there is a long list of designations and titles. Common ones are Fellow of the Canadian Securities Institute (FCSI) or Chartered Strategic Wealth Professional (CSWP) for advisors with leadership or training roles.

Investment and portfolio managers who work with individual clients will often have Chartered Financial Analyst (CFA) or Chartered Investment Management (CIM) designation.

Step 2: Find out if the investment advisor or firm has ever been disciplined for bad practices by going to the CSA’s disciplined list.

If they are on the list you can find a record of the violation and the discipline they received no matter how serious. The list, however, does not include advisors who are currently under investigation or involved in a hearing or settlement process.

Step 3: Take matters into your own hands with a simple internet search. It’s amazing how much you can learn about a person by putting their name in a search engine.

Individual advisors and firms often include backgrounds and qualifications on their websites, and will go to great lengths to highlight their specialities and accomplishments.

Credible media sources don’t just report negative news on investment advisors. You might find articles on how well they managed client portfolios through turbulent times or unique strategies that have paid off.

Step 4: Set up a formal meeting with an advisor, whether in person, by phone or video chat. 

Ask about credentials, investment strategies, and - most important - fees. Investment fee structures can be more complicated than titles and designations, so be sure you understand what you are paying for.

Also, ask how many clients they advise and how much money they manage in total. It says a lot about the advisor’s experience and success.

A good advisor will also need to know about you; how much money you have to invest, your retirement goals, and how much risk you are prepared to take.

A good client/advisor relationship is a two-way street and you need to be comfortable with each other.