Investing

Do I need a Financial advisor?

  • Last Updated:
  • Oct 16th, 2019 3:16 pm
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[OP]
Member
User avatar
Sep 8, 2008
202 posts
35 upvotes
Vancouver, Canada

Do I need a Financial advisor?

I have been closely following the financial news and know about 75% of the investment products that is there in Canadian investment market. I have infact even did my CSC at one point of time to understand how the canadian investment industry works. Now, I am at the point of my life where I need to make some serious decisions to do some financial investments and budgeting and also to achieve some financial goals like bigger house and also to plan for family finances and retirement.

Since last 5 years I've met bank financial advisors, (IMO they are salesman), insurance based financial advisor who sell something called as Seg funds. I haven't come across any financial advisor who can work on my interest, I am kind a lost. I don't have million dollar to invest but may be around 50K to start.
Any idea how to go on this route and at this point I have 2 questions
  1. Do I need a financial advisor who will work on my interest? If yes how much fee shall I expect to pay him / her?
  2. How much trust I need to have on Financial advisor so that I am correctly guided. Any retirees or someone who experienced FA can comment here.
If I don't go with a FA what are the options available for me?
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11 replies
Sr. Member
Aug 23, 2019
644 posts
300 upvotes
1.2%-1.5% are going to be your wealth management services..... they won't touch you with $50,000 though. You need to put the whole amount in.

Otherwise, $50,000 throw it into a mutual fund any any of the big 5.
Deal Fanatic
Jul 1, 2007
8220 posts
1154 upvotes
With $50,000 you will get nothing but salespeople, unless you seek out a fee-only (also known as "advice-only" or "fee for service") financial planner who will charge you either hourly or annually. Usually you're looking at a few hundred per hour or a few thousand per year. Such a person doesn't sell investment products and is working in your best interest (so that you build trust and keep paying them year after year of course!).

Cheaper alternative, but still far better than dealing with a salesperson at a bank or an insurance broker, is go with a robo advisor.

For the most part investing is simple. Just save as much as you can and invest it at the appropriate risk level for yourself.
Money Smarts Blog wrote:
Nov 29th, 2010 11:18 am
I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Deal Addict
Dec 27, 2007
3254 posts
901 upvotes
Edmonton
As said above, you only have pennies. Invest yourself
warming up the earth 1 gas fill-up at a time...
You only live once, get a v8
Deal Addict
Oct 23, 2017
1021 posts
673 upvotes
GTA West
perfectcritic wrote:
Oct 7th, 2019 9:40 pm
I have been closely following the financial news and know about 75% of the investment products that is there in Canadian investment market. I have infact even did my CSC at one point of time to understand how the canadian investment industry works. Now, I am at the point of my life where I need to make some serious decisions to do some financial investments and budgeting and also to achieve some financial goals like bigger house and also to plan for family finances and retirement.

Since last 5 years I've met bank financial advisors, (IMO they are salesman), insurance based financial advisor who sell something called as Seg funds. I haven't come across any financial advisor who can work on my interest, I am kind a lost. I don't have million dollar to invest but may be around 50K to start.
Any idea how to go on this route and at this point I have 2 questions
  1. Do I need a financial advisor who will work on my interest? If yes how much fee shall I expect to pay him / her?
  2. How much trust I need to have on Financial advisor so that I am correctly guided. Any retirees or someone who experienced FA can comment here.
If I don't go with a FA what are the options available for me?
Going back 35 years, when I was at your stage in life and had the equivalent of $50,000 here is what I should have done to max out my investment performance for the long term. This assumes that these are long term funds that will remain invested until you approach retirement:

- get a couch potato portfolio comprised of low cost ETF's like Vanguard, widely diversified by geography and sector etc. with a heavy weighting to equities. Don't buy a lot of individual ones, look into some of the all-in-one options they have now. (These were not around 35 years ago).

- If you add more funds, max out your TFSA's first and then your RRSP allowances depending on your marginal tax rate.

- With a heavy weighting to stocks (say 80%) you will be on a roller coaster of highs and lows, including several recessions and market crashes. Take a Gravol. Don't be tempted to time the market to buy and sell, and don't follow fads. Stay invested at all times.

- Do not be distracted by smart friendly guys with schemes and investment philosophies to beat the market. They do not exist in the long term. Your job is to attain the gains that the broad market does provide, but at the lowest possible cost. Markets are endlessly fascinating but you will find out that you never know enough. And no, those investment professionals cannot predict the future and time markets successfully. They are aware of broad trends and developments, but never with the precision needed to trade stocks accordingly. Always remember how those advisors make their money, it is FROM YOU, not from their own investments. A really successful investor doesn't need to live on commissions.

- Wake up in 25 years or so and you will see that your investment performance has been well above average. Start to scale back the stock portion and add fixed income to stabilize your portfolio as you prepare to retire.

- When you assets reach $500,000 start talking to a fee-based advisor who can assess your finances and give you holistic advice, not just one who wants to invest your assets for a fee or commission. We are now talking tax, retirement, and estate planning.

If I had followed this advice, I would have been able to retire 5 - 10 years earlier.
Last edited by Dealmaker1945 on Oct 10th, 2019 1:42 pm, edited 1 time in total.
Deal Fanatic
Mar 24, 2008
5714 posts
1823 upvotes
Toronto
^ thanks, words of wisdom there.
Illegitimi non carborundum
[OP]
Member
User avatar
Sep 8, 2008
202 posts
35 upvotes
Vancouver, Canada
Appreciate @Dealmaker1945 for sharing your view on this. I am going to look into these options. One more new type of investing which I am not sure might be there 35 years ago is dividend paying funds. I am thinking to park some of my funds in those dividend paying ETFs or Preferred shares, what is your view on that and how much % allocation of portfolio is a good number on this?
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Deal Addict
Oct 23, 2017
1021 posts
673 upvotes
GTA West
perfectcritic wrote:
Oct 10th, 2019 2:44 pm
Appreciate @Dealmaker1945 for sharing your view on this. I am going to look into these options. One more new type of investing which I am not sure might be there 35 years ago is dividend paying funds. I am thinking to park some of my funds in those dividend paying ETFs or Preferred shares, what is your view on that and how much % allocation of portfolio is a good number on this?
I will not attempt specific advice here. But if you hold a TSX index fund, remember that you already have a lot of dividend stocks, since financials like banks make up a very large slice of the TSX.

To my understanding, preferred shares are bought for non-registered income portfolios because of the favourable tax treatment on the dividends. I would say that they have no place in a younger person's growth portfolio or an RRSP.

Be careful with parking funds in preferred shares. They are like bonds in that the share value will decrease if interest rates go up. A GIC is a good way to park funds without any capital risk.
Member
Oct 31, 2014
215 posts
87 upvotes
Edmonton, AB
Like dealmaker said, open a free ETF brokerage account like Questrade

Buy something like $300 every month of XGRO.to or XBAL.to

Re-assess later
Member
Feb 28, 2015
457 posts
240 upvotes
Toronto, ON
Do people need a Real estate agent? No, but people are willing to give away tens of thousands of dollars for someone to unlock a door for them!
Jr. Member
User avatar
Dec 25, 2008
152 posts
32 upvotes
Toronto
It depends what you want to get out of it. If you you are simply looking for some basic investment then the above couch potato profile is probably your best bet.
I believe a fee based planner is good at making sure you have a plan when things go wrong (ie what happens if you lose your job tomorrow, accident/illness, etc) and what you need to do now to make sure your future retirement goals are achievable.
I don't believe it's ever too early to make decisions about tax, retirement, and estate planning even if you don't have that much money now.

You could also do this all by yourself through research but sometimes it just easier to have some one guide you through it.

Below is a directory of fee only planners (please note this is simply a list, the site is not making recommendations) Many have an initial free consultation so you can speak to them first before deciding to give them your money.

https://www.valueofsimple.ca/links/dire ... -planners/

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