Financial Advisor or not?

Financial advisor, or financial planner, or financial consultant, is referring to anyone working in the financial industry. The term is somewhat abused because nowadays a number of people claim themselves as financial advisors, regardless they are just selling mortgage, insurance, or mutual funds. .

A qualified financial advisor, however, is someone who completed several specific courses and exams, monitored and regulated by a financial body, and maintains certain ethical standards of conduct. They could be the holder one or several of following Financial Planning Designations.

To use or not use a personal financial advisor is largely determined by investor's personal profile:

• Personal well-being
• Level of financial knowledge
• Desire to manage your own money
• Time and energy dedication
  

Checklist if you want to choose a financial advisor:

• Your advisor has appropriate education background
• You feel comfortable work with your advisor
• Your advisor works for an established financial institution
• Your advisor will meet to review your financial situation, at least twice a year.

Types of Financial Advisors

1. Free or low-cost financial advisor
   You can always find a financial advisor from your own bank at little or no cost. They are always referred to as your personal banking officer (PBO) offering free advise on your banking needs and essential investment decisions, such as buying mutual funds. Personal banking officers are not working under commission, so high-pressure selling is not a issue here. However, personal banking offices are limited to promote the products belong to their own bank, such as GICs, or mutual funds. (Nothing wrong with the bank's mutual, they always come with no load and lower MER. However, remember the diversification rule?) And since they are working on both your banking needs and investment decision, they may not have too much attention on your portfolio build, or the big picture, financial goals.
   
   Internet is becoming an increasingly popular place for financial planning DIYer to seek investment and financial advices. In fact, the amount of financial planning topics on Internet is so huge that you can literally find anything you need to know about financial planning. The rest of the job is up to you to decide which one is the good advice, and which one is the bad. It is therefore recommended to listen to the advice from those respected online resources for your serious investment decisions.
   
   
2. Commissioned financial advisor
   The source of income for commissioned financial advisor is commissions whenever they make a sale, either it's mutual funds, bonds, insurance, or mortgage. Because of this, there is an inherent bias for commissioned financial advisor to sell you the products with high commission charges. The good thing about having a commissioned financial advisor is that you don't have to pay him/her until you buy something from him/her.
   
   Most of the financial advisors for small investors are commissioned financial advisors.
   
   
3. Fee-for-service financial advisor
   Like lawyers or accountants, fee-for-service financial advisor is paid by hours. Unlike commissioned financial advisor, the potential for conflict of interest is minimized here. Some strictly speaking fee-for-service financial advisor only provide their advice without selling any direct products to you. The disadvantage of a fee-for-service advisor is that you have to pay for her advice, just like you did with your lawyers.
   
   This type of financial advisors are usually the expert in their fields, and serve for investors with high personal networth.
   
   
4. Online discount broker
   Thanks to the fast-growing of service and technology, individual investors are now have access to far more information than they were ever dreamed for. A discount broker can now provide a broad base of financial service from trading securities to providing investment advise and economy forecast etc.
   
   Click here to see a list of Canadian Discount Brokers.
   
   
5. Be your own financial advisor
   Investors today are much educated and informed. Growing number of investors choose to become a financial planning DIYer t manage their own money.