# Is it time to hire a financial advisor?



## Darisha (Feb 11, 2012)

We have about $70,000 in stocks and cash in qtrade, plus a home worth approximately $350,000 (with a 110,000 mortgage at 2.5% for 4 yrs) plus about $90000 in cash sitting in a savings account at 2% (it has to sit there until the summer because of circumstance).

My husband will have a decent pension (hopefully, if the feds don't screw it up any more) at age 55 which is in 15 years approximately. I have a small pension from working in municipal and provincial government for about 15 years (I am now unemployed and may or may not return to work). We have vague retirement goals, nothing set in stone.

We are both around 40 with young children. We have RESP's set up for all our children, which we max out as much as possible.

I am hoping to pay a Financial Advisor hourly, (online or via the telephone is fine) who is able to also give tax advise. We may hire a C.A. as well to handle the taxes. We really don't know if either professional will be able to help us at this point, but it would be nice to at least receive some guidance on where to go from here, especially since we won't have a lot of money beyond what we have now save for a few thousand in savings each year.

How much should I expect to pay on an hourly basis for each a FI and a CA? Are there good FI's who can assist me remotely (online or phone)?


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## Sasquatch (Jan 28, 2012)

That's a question that only you can answer. 

From the looks of things you've been doing pretty good so far so why do you feel you might need a financial advisor now ?
IMHO if you're a reasonably disciplined individual, can run a household reasonably well and manage to save some money every payday, you can certainly look after your finances yourself.
I have done so all my life, never spending more than we made and always managing to save some money and it has worked out very well for my wife and I.
We're retired now with no debt of any kind and with no financial worries.

I'll say it again, IMHO the most important rule to follow is to never, ever spend more than you make and you'll probably be OK and save yourself quite a bit of money that a good financial advisor would cost.

Always, always live BELOW your means


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## leoc2 (Dec 28, 2010)

This may interest you
http://canadiancouchpotato.com/2011/05/09/do-indexers-need-an-advisor/


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## b_foot (Dec 16, 2010)

Darisha said:


> How much should I expect to pay on an hourly basis for each a FI and a CA? Are there good FI's who can assist me remotely (online or phone)?


This may help you:
http://www.moneysense.ca/2009/11/01/where-to-find-a-fee-only-financial-planner/


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## dogleg (Feb 5, 2010)

Darisha: Seems to me you don't need any help. Anyway let me give you a couple of examples of the HELP I got from two fin. advisors. One was with Dominion Securities. It was during the period that Invesco Trimark was melting down and he didn't even bother to alert me about it or do anything .I lost a lot of money and filed a complaint with the firm but other than an apology it went nowhere- never got a cent back. Recently I dealt with an advisor (CFP) through a Toronto investment house . The understanding was he would consult on my investment picks which he did for a while but I never did find him very well informed. When I wouldn't agree to buy his mutual funds he told me I wasn't worth his time, which was minimal . The management apologised for what he did but with that attitude why would anyone ever trust him again. My advice is look after your own money- nobody cares more about it than you do- and anyway for the average family's investments how complicated is it anyway. Best of luck.


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## OhGreatGuru (May 24, 2009)

Darisha; the nature of subscribers to this forum is such that they will be statistically biased against financial advisors.

it sounds to me like you want an independent fee-for-service financial planner who will give you a fews hours worth of consultation, will help you map out a plan, and has no vested interest in selling particular products. These can be hard to find, as you will discover by looking for threads on this subject.


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## dogleg (Feb 5, 2010)

Darisha: I don't really disagree with OGG if you think you need the help but I doubt that you do, however , I would just correct one thing he said . I dont believe posters on this board are just 'statistically biased' against financial advisors but they are experiencially opposed to them. I could add many more examples to the two I gave. Anyway good luck.


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## the-royal-mail (Dec 11, 2009)

Great post upthread by dogleg. 100% agreed.


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## steve-nik (Jun 14, 2012)

I am curious is there much of a difference between financial advisor/financial planner?


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## kcowan (Jul 1, 2010)

Financial planner will build a plan for you. An advisor will help you select investments.


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## MoneyGal (Apr 24, 2009)

Meh. Neither term is regulated (except "financial planner" in Quebec); these are meaningless titles. Everyone wants to be called a "financial planner" but as most are providing "free" advice, how much are those plans actually worth?


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## Causalien (Apr 4, 2009)

I am statistically biased against FP or FA because I keep a portfolio with one to compare my own performance. Not against my trading or anything exotic, just my lazy investments.

One of the biggest gaff I observed he did was selling out WFC at the trough.


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## Beaver101 (Nov 14, 2011)

MoneyGal said:


> Meh. Neither term is regulated (except "financial planner" in Quebec); these are meaningless titles. Everyone wants to be called a "financial planner" but as most are providing "*free*" advice, *how much are those plans actually worth*?


 ... my banker says the plan is worth "hundreds" of dollars that's "free" to me but says nothing about the ludicrously high MERs being charged to their mutual funds. :rolleyes2:


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## lonewolf (Jun 12, 2012)

Hi, Darisha

I think your retirement should be the primary focus & I would drop the RESP for your kids. By you helping to pay their way does it really help to make them strong & take responsibility? 

So many parents have worked hard to get where they are financialy then blow it to send thier kids to school. The parents pay so the kids can eat out, drink, dress in lattest fashion, have a cell phone, go on spring vacation, not get a part time job while spending less then 40hrs a week @ school. Let them be creative & learn how to streatch a dollar, earn a dollar & have them gain more respect for that dollar because they worked for it.

As well it will give them more confidence when they support themselfs. Paying thier way sets them up for living beyond thier means when you stop the handouts & puts them into a cycle of debt.


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## Spidey (May 11, 2009)

Darisha said:


> We have about $70,000 in stocks and cash in qtrade, plus a home worth approximately $350,000 (with a 110,000 mortgage at 2.5% for 4 yrs) plus about $90000 in cash sitting in a savings account at 2% (it has to sit there until the summer because of circumstance).
> 
> My husband will have a decent pension (hopefully, if the feds don't screw it up any more) at age 55 which is in 15 years approximately. I have a small pension from working in municipal and provincial government for about 15 years (I am now unemployed and may or may not return to work). We have vague retirement goals, nothing set in stone.
> 
> ...


RESPs grants offer the closest thing to free money out there, so I strongly disagree with the advice against them. In fact, it is not always known that you can access most of the funds and only the grant and growth must go to the student. 

I would be careful with financial advisers, even fee-based ones. I somehow see your family being ripe for plucking and sold expensive insurance plans that may not fully take into account your husbands coverage with the feds.

I can see some fairly simple things that you could consider immediately (or after the summer) that will put thousands in your pockets over the years. You may want to talk this over with an accountant and possibly a very highly recommended fee-based adviser (although like I said I have a fear of financial advisers):
- Take your $90,000 in cash (that 2% is a negative return after taxes and inflation) and sell another $20,000 from Qtrade to pay off your mortgage.
- Then immediately borrow back the $110,000 (or a lesser amount if you prefer) and put it into investments. See if you can convince your bank to waive the penalty for paying off your mortgage and setup fees, since you will be keeping the same loan obligations. If they refuse, mention that you may have to shop around for the next mortgage. 

So now even though you haven't changed anything from a debt/asset perspective, you've made the interest on your $110,000 mortgage fully tax deductible. I would invest the borrowed money in a blue-chip dividend paying stock and REIT portfolio. This will probably spin off 4-5% in dividends. If you are not comfortable picking individual securities you could use ETFs. I would put the remaining $50,000 from your existing qtrade stock portfolio into something secure - perhaps laddered GICs.

Any additional insurance should take full consideration of your husband's existing coverage with the Federal government. Term life insurance is the best bet for the vast majority of people. 

Of course, I'm not an adviser. That's just what I would do.


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## MoneyGal (Apr 24, 2009)

One (long) proviso about the advice reiterated frequently on this forum to find a fee-based advisor (highly-recommended or not) -- _there are very few advisors in general in Canada operating on the fee model_. 

There are fee-based advisors, who typically *manage assets for a fee * (this is not what the OP is being advised to find), and there are fee-for-service advisors, who typically *provide financial advice without managing assets or (usually) in addition to managing assets*. Typically the advice here is to "find a financial advisor who does not sell products / manage assets / make any money from placing or managing assets." 

Here's the proviso: virtually no one in Canada provides this service and of those who do, you are looking at $350-$450/hour for a competent person and a (usually) 10- or 20-hour minimum (and many people will have an investable asset minimum as well, as in the service is being provided in the hopes the client will move their business over).

There are (lower-level) people who provide financial advice (usually these people bill themselves as "financial coaches" or whatever) and they charge a lower hourly rate. These people will focus on budgeting, cashflow management, and basic (very basic) household financial management. Typically they do not have any financial licenses and very little experience in the financial services industry...because they aren't actually part of it. Think Gail Vaz Oxlade or Ellen Roseman, but with no public profile. They can't and won't advise on financial products (because they are not licensed to do so) and they can't and won't advise on risk management or tax planning beyond an extremely basic level. You can get better (and free) advice here if you look carefully. 

I'm sorry to hijack this thread and this comment is meant in NO way as a criticism of Spidey's post. It's just that periodically people will say, here, "find a fee-for-service financial advisor, and you will get your questions answered!" when they might as well be saying, "find a unicorn!"

I understand that if you look on some directory somewhere or you do a google search you will find people who bill themselves as providing financial advice for a fee. I'm not saying they are all bad. I am saying finding a good one who is actually worth the money foregone (in terms of opportunity cost) is a little like finding a unicorn. It could happen, but it'd be very rare.


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## Sampson (Apr 3, 2009)

MoneyGal said:


> when they might as well be saying, "find a unicorn!"


priceless


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## Four Pillars (Apr 5, 2009)

MoneyGal said:


> they might as well be saying, "find a unicorn!"


Haha - excellent.

I wrote an article pretty much saying the same thing, except I didn't mention unicorns.

http://www.moneysmartsblog.com/how-to-find-a-fee-only-financial-advisor/

There are other drawbacks of fee only advisors too.


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## MoneyGal (Apr 24, 2009)

I just read CC's posts linked in your blog post, FP. It reinforces my point: the "fee-only" advisor that he most liked was going to provide advice based on a fee of 2% of assets, starting at a minimum of $200K. SO in order to get the advice, you'd need to move at least $200K of assets over to the planner, pay a 2% fee, and then pay (in that article) an additional $100/hr for 10-15 hours of advice to get a basic plan. 

That totals 2%*$200,000 = $4000 [per year] + $1000-$1500 to get a plan = $5000 at a minimum. 

(OR *possibly,* but this isn't clear from the article, you could pay $1000-$1500 to get a plan without moving assets over, but ... I don't think so.)


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## lonewolf (Jun 12, 2012)

The best advice I ever got regarding taxes was free from an individual that made money from playing the market & not from the person I paid to do my taxes. The person I paid to do my taxes looked for all the deductions I could claim. The individual that made money in the market told me not to claim expenses for playing the market i.e., news letters etc or else I could be taxed as a buissness @ some point. So I toke his advice & for several years I never got back as much money as I could because I had losses. The person doing my taxes now has changed thier point of view in regards to claiming expenses for playing the market & told me not to touch them with a 100 ft pole because I could be looking @ owing the goverment 100s of thousands of dollars because instead of paying taxes as capital gains I could be paying taxes as running a bussiness. 

Those that have done thier own research & make money work for them & not those that work for money is a source I would try to tape into for infoe if your lucky enough to have access to.


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## kcowan (Jul 1, 2010)

I agree with the concerns expressed by MG. But I would replace unicorn with spirit bear. Because they do exist, although rare. And one that I know lives in the Gulf Islands.


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## Four Pillars (Apr 5, 2009)

MoneyGal said:


> I just read CC's posts linked in your blog post, FP.


His posts were quite interesting.

Yeah, the whole advisor fee thing is really misunderstood. If you want advice, you have to pay for it.

It's hard for low cost diyers (like myself) to understand at first glance why anyone would willingly pay 2%+ MER on a mutual fund, but you have to look at what service and advice that person is getting as well as the size of the portfolio (which determines the actual fee amount) and figure out what kind of deal they are getting.

Someone with a small portfolio ie $20,000 and paying 2%/year, but is getting decent financial advice and service is probably getting a really good deal. The problem is that a lot of people pay the 2% and don't get the advice. Or their portfolio is $200,000 and they are still paying 2% (now $4,000/year) for that same advice.

DSC fees are another misunderstood item. Like them or not, they are a really good way for smaller investors to get an account started with an advisor who otherwise would not take them as a client.

http://www.moneysmartsblog.com/defense-mutual-fund-dsc-fees-investors/

This doesn't mean they are good for everyone, but banning them won't solve every problem.


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## Four Pillars (Apr 5, 2009)

This podcast contains an interesting interview that Preet did with someone who hired two fee only planners. He paid a lot of money and only got a decent plan with the 2nd one.

I would argue that since the guy wasn't that old, he probably should have just bought a book or two. Intensive financial plans are more worthwhile if you are close to or in retirement.

http://wheredoesallmymoneygo.com/po...-kids-and-crappy-fee-only-financial-planning/


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## MoneyGal (Apr 24, 2009)

ARE YOU TELLING ME UNICORNS DO NOT EXIST? 

Yeah, spirit bear is probably better. I should probably further qualify: for "small" investors, who do not have complicated situations, there is probably no fee-for-service advisor situation that makes sense (although that doesn't mean that "small" investors cannot get themselves in lots of trouble without good financial advice). And there is a role for fee-for-service advice, especially if your situation is complex for any one of many reasons. 

But for the "average" person, it just doesn't make sense to say "go to a fee-for-service financial planner!" (1) there isn't anyone serving this market adequately and (2) the amount you'd spend isn't worth it.


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## Sampson (Apr 3, 2009)

MoneyGal said:


> ARE YOU TELLING ME UNICORNS DO NOT EXIST?


Google "Center of Natural Sciences in Prato". They have one in captivity.

It is common place to advise - get a fee-only financial adviser, but I'm not convinced there is really a market for that. People seeking them are surely wanna-be DIY'ers, and once the adviser teaches the individual the ropes, what additional value do they add? They could pitch investment strategies, but how is that different from a traditional commission-based adviser?


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## MoneyGal (Apr 24, 2009)

But they _can't_ pitch investment strategies. They can't comment on your investments really, beyond asset allocation (which is a lot, admittedly). Unless they are registered with the relevant securities commission, they can't provide ANY form of investment advice....and if they are registered, generally, they are not providing fee-for-service advice which is not coupled with investment management (because, duh, that's where the money is).

I haven't listened to Preet's podcast but I'm thrilled to note that the second "good" advisor that his podcastee used is someone I know and routinely recommend to others.


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## Sampson (Apr 3, 2009)

Oh MG, I would assume they would be licensed, otherwise they couldn't make money. My point is that the adviser would probably want to do both - since they income from the 'fee-only' part wouldn't be very good, no market, I think it is a tough sell to charge the amounts you guys list above, without providing some advise on the actual investments (which I think ultimately, is what people want.


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## Four Pillars (Apr 5, 2009)

MoneyGal said:


> I'm thrilled to note that the second "good" advisor that his podcastee used is someone I know and routinely recommend to others.


Yes, I thought you might like that.


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## Four Pillars (Apr 5, 2009)

Sampson said:


> Oh MG, I would assume they would be licensed, otherwise they couldn't make money. My point is that the adviser would probably want to do both - since they income from the 'fee-only' part wouldn't be very good, no market, I think it is a tough sell to charge the amounts you guys list above, without providing some advise on the actual investments (which I think ultimately, is what people want.


I believe there are a number of advisors who do both. 

I'm not sure what exactly constitutes investment advice. If I tell someone they should have 15% Canadian equities - that is not investment advice because I'm not recommending a specific product. What if I then suggest that XIC or XIU are commonly held Canadian equity etfs and that's what I own? Am I recommending a specific security at that point?


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## MoneyGal (Apr 24, 2009)

Probably. The OSC (for example) specifically limits registrants to acting "in futherance of a trade." That is, any act, which promotes, either indirectly or directly, a trade (defined very broadly), is prohibited unless you are registered with the appropriate regulator. There are tons and tons of cases to read; here is one: http://www.osc.gov.on.ca/en/Proceedings_rad_20110121_goldbridge2.htm 

See s.24 onwards.


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## Four Pillars (Apr 5, 2009)

MoneyGal said:


> Probably. The OSC (for example) specifically limits registrants to acting "in futherance of a trade." That is, any act, which promotes, either indirectly or directly, a trade (defined very broadly), is prohibited unless you are registered with the appropriate regulator. There are tons and tons of cases to read; here is one: http://www.osc.gov.on.ca/en/Proceedings_rad_20110121_goldbridge2.htm
> 
> See s.24 onwards.


Interesting - that Weber guy was using the George Costanza defence 



> Was that wrong? Should I not have done that? I tell you, I gotta plead ignorence on this thing, because if anyone had said anything to me at all when I first started here that that sort of thing is frowned upon...


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## lonewolf (Jun 12, 2012)

*grammer fix up*

Could this be a problem with a financial adviser ?


If they are worth thier salt is anyone going to really listen to them?
@ important market tops & bottoms anyone that goes against the herd is often looked upon as crazy & noone will listen to them. The financial advisor is stuck between a rock & a hard place. Go along with the herd to get clients or go against the herd which will often be the best way to play but will not be what the clients wants to hear. The messanger is shot but in this case of a financial advisor is simply not hired


I always want to take responsibility for my decisions regarding money & will never let someone pitch hit for me. I will tread carefully in my own path but will examine paths of others both positively & negitively & taking full responsibility for my foot steps as I proceed on my journy of financial independence.


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## dogcom (May 23, 2009)

Good point lonewolf, I remember I think it was Trimark funds took a lot of heat and faced heavy redemptions for resisting investing in the dot com frenzy in the late 90's.


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