Welcome to the financial Second Opinion. Last week I shared with you why you should “Invest with Advice.” This week, keeping on this same theme, let’s explore “Seeking active Management.”
Like financial advisors, not all investment products are created equally. Many are passive in nature and track an index. Others purport to invest differently than their benchmarks, but actually closely mimic them. Managers that use a legitimately active philosophy invest in a manner that is truly different than the benchmark, with the goal of outperforming it. I firmly believe that active management pays off. Look for Portfolio Managers that actively monitor markets and manage your portfolios with the ultimate goal of delivering long term results.
We emphasize the importance of reliable financial advice when determining your investment strategy. An independent financial advisor can help you define and manage your financial goals by researching the most appropriate portfolios to meet your individual objectives.
Step 1: Determine your needs
There are thousands of financial advisors in Canada, each with their own unique process and way of operating. All financial advisors selling investment products must be registered with the provincial securities commissions. Most advisors are registered to sell either mutual funds only, or mutual funds and stocks and bonds. Many registered financial advisors will also provide comprehensive financial planning, sometimes for an extra fee. You should determine your needs before you decide what type of advisor you want to work with. For example, do you simply want someone to help you choose investments or do you want to work with someone who will develop a financial plan for you and then help you to execute that plan? Are you interested in looking at ways to reduce your taxes? Many advisors can provide you with guidance on all these issues.
Step 2: Prepare the right questions
There are lots of questions you can ask a potential advisor to help you find the right one for your circumstances. First and foremost, however, is to look for someone who is committed to the profession so you will want to know about credentials and experience.
Here are some questions you may consider asking during the advisor selection process:
• How are you registered?
• How are you paid?
• What products and services do you offer?
• What kinds of clients do you work with?
• What designations do you have?
• What level of service can I expect from you?
• What is your investment selection process?
• How will you help me reach my goals?
Step 3: Find an advisor
• Research an advisor that is registered in your area that has active management.
It pays to get a second opinion with Professional Investment Advice. Remember Life is good! Go out and be financially responsible for 2020 and enjoy a balance of choices.
For a Financial Second Opinion, Mike McLaren, CPCA, CEA, can be reach at firstname.lastname@example.org