Investing

How to find a financial investor/advisor

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  • Aug 9th, 2019 10:27 pm
[OP]
Deal Addict
Nov 8, 2005
2598 posts
1390 upvotes

How to find a financial investor/advisor

Hey guys,

I realize most of you do your own investing and thus will probably laugh at me for trying to hire someone but as my bank account grows, I've become a little uneasy investing my own money. Seems silly I know.

Was just wondering how I might go about finding an investment company/advisor? What do I look for? Do I just walk into a bank and ask for an investment rep (non-branch investor)? I think I've been told that many investment branches of the banks (e.g. Scotia McLeod) won't take you on unless you have a minimum balance like 100k.

Any tips or advice is appreciated.

Thanks!
18 replies
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Jul 1, 2007
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First off, DO NOT walk into a bank. Walk away from the bank if you're looking for real financial advice.

Seek a fee only advisor near you (literally just google it) or check out some advisor databases like HolyPotato or SeekAdvisor (google either of them).
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
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How about posting here? Post your situation here. Many of us have years of investing and planning our own financial plans and investments. One thing I recommend is even if you do go with an advisor, it is a good idea to understand all your options and investments that are out there before hand. By doing so when an advisor suggests a product, you understand the general fees and prices that go with that route and can make an informed decision.
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May 18, 2017
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I dont want to hijack OPs thread but how does someone go about buying into mutual funds / ETF's on their own without using an advisor? Can this be done with a regular brokerage account? Are Roboadvisors a good low fee option?
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Molsonbeer wrote: I dont want to hijack OPs thread but how does someone go about buying into mutual funds / ETF's on their own without using an advisor? Can this be done with a regular brokerage account? Are Roboadvisors a good low fee option?
-You can buy mutual funds or ETFs on any discount brokerage
-Roboadvisors can be an OK option, however if you are OK with processing your own ETF purchases, it probably is better to forgo them and open a discount brokerage with free ETF purchases/transcations.
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[OP]
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Nov 8, 2005
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xgbsSS wrote: How about posting here? Post your situation here. Many of us have years of investing and planning our own financial plans and investments. One thing I recommend is even if you do go with an advisor, it is a good idea to understand all your options and investments that are out there before hand. By doing so when an advisor suggests a product, you understand the general fees and prices that go with that route and can make an informed decision.
Yeah I don't mind posting a bit if anyone would like to offer their opinion. I'm sure we wouldn't qualify for most fee-based advisor (minimum 100k?) but I just wanted to inquire as our income and savings are going to be increasing.

Dual Income Family of approximately 140k combined (increasing by 8k per year for the next 6 years). Both in Mid-30s. Only debt is mortgage ($190k on a home valued at $400k). Two school-aged dependents. Defined Benefit Pension Plan for both incomes.

Approximately:
-$20k in equities (TFSA) in index ETFs (VUN, XAW etc.)
-$45k in LIRA in index ETFs (same as above)
-$30k in cash

Could likely pay off the mortgage in the next 5 years to increase our ability to invest. So our ability to invest more money in the near future (5 years) will increase every year, both due to rising incomes, and reduction in living expenses.

LIRA tolerance is high due to it being a LIRA
TFSA is moderate due to the idea that we might want to utilize funds in the future for things like vacations, home renovations etc.
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tim-x wrote: Yeah I don't mind posting a bit if anyone would like to offer their opinion. I'm sure we wouldn't qualify for most fee-based advisor (minimum 100k?) but I just wanted to inquire as our income and savings are going to be increasing.

Dual Income Family of approximately 140k combined (increasing by 8k per year for the next 6 years). Both in Mid-30s. Only debt is mortgage ($190k on a home valued at $400k). Two school-aged dependents. Defined Benefit Pension Plan for both incomes.

Approximately:
-$20k in equities (TFSA) in index ETFs (VUN, XAW etc.)
-$45k in LIRA in index ETFs (same as above)
-$30k in cash

Could likely pay off the mortgage in the next 5 years to increase our ability to invest. So our ability to invest more money in the near future (5 years) will increase every year, both due to rising incomes, and reduction in living expenses.

LIRA tolerance is high due to it being a LIRA
TFSA is moderate due to the idea that we might want to utilize funds in the future for things like vacations, home renovations etc.
That's great, but additionally, can you tell us what you want to see. For example, do you plan to retire early? When? Any large future purchases you want to do? How about RESPs for the kids? If so, how old are they both?

TIA
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[OP]
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xgbsSS wrote: That's great, but additionally, can you tell us what you want to see. For example, do you plan to retire early? When? Any large future purchases you want to do? How about RESPs for the kids? If so, how old are they both?

TIA
Thanks for your response.

We'll be retiring in approximately 20 years with full pensions. RESP contributions are being filled. Kids are 4 and 7 years old.

Will inherit a family cottage in the future and there will be costs associated with that. Estate will pay the taxes.

No large purchases planned but we'd obviously like to be able to help our kids pursue their dreams - likely help them pay for a home, go as far in their education as they would like to / are able to.

Saving approximately 25k a year in savings for future investment purposes.
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tim-x wrote: Thanks for your response.

We'll be retiring in approximately 20 years with full pensions. RESP contributions are being filled. Kids are 4 and 7 years old.

Will inherit a family cottage in the future and there will be costs associated with that. Estate will pay the taxes.

No large purchases planned but we'd obviously like to be able to help our kids pursue their dreams - likely help them pay for a home, go as far in their education as they would like to / are able to.

Saving approximately 25k a year in savings for future investment purposes.

First things first, congratulations as it seems like you are doing very well and in a very comfortable position! I am going to be making a few suggestions, with some assumptions in mind.

Because you and your spouse having DB pensions, I am assuming there is very to little RRSP room. That is fine as that makes sense and at this junction, TFSA would make sense. I would recommend changing your strategy with the TFSA. While TFSAs give good flexibility in that money can be withdrawn, in the case where you both plan to accumulate assets, essentially have a maxed RRSP/Pension, you do have some future tax risks. Assuming you both make 70k and will max out at 96k in today's dollars, your estimated pension income maxed is 70% of 96k which is 67.2K (we are excluding inflation and any potential raises as this is just a demonstration) plus bridge-benefit until 65. This isn't a super high income, but if you do accumulate assets, withdraw from the LIRA etc. you could knock yourself into much higher tax brackets because of this. And unlike RRSP contributions where your annual income makes a difference as to when and how you should make your deductions, it makes sense to max out the TFSAs first and foremost and concentrate on growth. You will see some advise saying to place more income-producing investments in TFSAs, but honestly at your young age, and pension benefit, this would be a waste of tax free growth

With 20K, I am assuming both you and your spouse have approximately $53.5K in room. If you both contribute 12.5k to each of your TFSA each year, re-orientate the portfolio to a growth/aggressive structure, (assuming 6k per year room increase), you will maximize your TFSAs in approx. 8 years. Assuming 6% growth (calculating conservatively) , in 8 years, this portfolio will grow to approximately $289k. From here, adding $7.5k into each TFSA on the 9th year, and then depositing 6k into each for another 11 years (when you max your pension) this will grow the two TFSAs to a total of around $700k of tax-free cash. Placing this into a conservative 2.5% yield will give you $15k of tax-free income, or you could let this TFSA asset grow and provide a huge tax-free cash source later in retirement.

But because with this plan you orientate your TFSA toward long-term investing, you now don't have a large expense account to use for vacations etc. that you planned with the TFSA so keep in mind you should save non-registered for these things.

Any other savings, place non-registered investments. Keep in mind you do need to track non-registered ACB a bit more when doing DIY, but it should be straightforward. Any of this remaining cash, if you do plan to invest in a split equity/fixed income, consider applying the fixed income portion of this investment on your mortgage. Your mortgage and a bond portion of an investment are on paper similar risk assets, except mortgages are fixed, don't go down in price and you don't pay taxes on it. A bond investment non-registered requires you to pay interest income. If rates were to go up, you risk your bond portfolio to go down in price. So prepaying your mortgage is almost like making tax-free investment. Therefore for less risk, you would do better to pay down the mortgage with the fixed income portion of a non-registered investment. If you say pay 3.5% on your mortgage and pay 35% in income tax, you would need an investment to grow approximately 5.4% to be effectively the same. With fixed rates as low as they are, it is very unlikely you can find interest producing investments to yield this without taking significant risk.

So going back with the TFSA example, say you go for 60% equity and 40% fixed income for your non-registered investments, you can start contributing in the 8th year $10K and $19k on any subsequent years following toward this goal. This would mean a mortgage extra payment of $4k in the 8th year and $7.6K in years following. Since I don't know your current mortgage prepayment, I am going to just guess you will be done your mortgage at Year 13 for this illustration. Assuming this portfolio grows 6% during the mortgage prepayment and 4% once fixed income is introduced, in 20 years from now the non-registered portfolio is worth approximately $250k.

So at age 55, you could see total assets of $700k in the TFSA and $250k non-registered. Assuming the LIRA grows at 6% annual, i 20 years this is approximately $140k. This give you and your spouse over $1 million in assets. Keep in mind this is a very conservative estimate as I didn't account for any increases in your contributing power. This is just 25k in contributions and no further increases. With your increasing salary, mortgage being paid down, you can anticipate further funds to invest with. TFSA contribution room could also increase further which will be an added bonus.

One thing I would suggest though is do look at your risk needs. Life insurance at least you are covered. Your DB pension I will guess pays 2x your annual salary, effectively giving you and your spouse approximately a $140k policy each. If you do want to buy property or secondary assets though, tax-free cash access may be necessary. This would be one reason to look at permanent life insurance, but in general, I don't recommend it during the accumulation phase. Especially if you have enough liquid,non-registered assets, it wouldn't be necessary, but do keep this in mind with property and illiquid assets you may want to keep. For example, that cottage is an example of this. The estate is paying the taxes in this case, but in the future if you would want to do the same and hand it down to your children, property taxes and capital gains taxes may become a factor. Life insurance in this case can provide the tax-free cash source to cover such expenses.

While going to an advisor might be OK, I don't think it is advisable at this juncture. Additionally, while this is a broad judgement, a bank-based advisor is likely not your best option. You have many years still to accumulate assets and without getting a better idea of what you want to do, it is hard to suggest things. I would say, change the purpose of your TFSA to give you better flexibility tax-wise later on and save cash and non-registered for upcoming investments, but other than that, looks like you guys will be doing great. Once you accumulate assets over 5-10 years, consider the fee-only advisor. I think once you accumulate some assets first, you will have a better grasp of what you can do and what you want to do
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[OP]
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Nov 8, 2005
2598 posts
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xgbsSS wrote:
xgbsSS
Can't thank you enough for lending your expertise in our situation. First off, I'd like to say that while I appreciate your congratulations, I can't say that we've done anything in particular to have earned our financial situation. We are very fortunate to have great jobs with a DB pension and the cost of living in our area is very low.

That said, you were right to assume that our income that we could invest will grow as our income increases and our costs decrease. However, big ticket items that we will likely contribute significantly to are:

Our childrens' education, marriage, and hopefully first home, future vehicles (we have two brand new ones currently so hopefully that isn't for a while), and some luxuries like perhaps an inexpensive boat. While our family cottage will become part of our net worth, it will also drain our cash. We also hope to send it down to our children and have the capital gains paid for by our estate, but in the meantime property taxes, maintenance and repairs (things like a septic tank, roof, old tree removal, shoreline landscaping) can be very expensive.

In general, I've had our money in broad index funds (like VUN and XAW as I mentioned in a previous post), and can't help but feel as though I'm not getting a good return (e.g. 5% per year approximately). I'm obviously very hesitant to go to a bank to purchase mutual funds (for many reasons discussed on these forums), but do not feel like I have the time or the expertise to manage our small but growing portfolio. Currently I have everything in equities (high risk) but in very broad ETFs. I'm wondering if there's a better way to invest our money while also keeping the management side of it low.

Again, can't thank you enough for analyzing our situation. That obviously took a tremendous amount of time and thought to prepare. One of the things that make RFD so great!
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tim-x wrote: Can't thank you enough for lending your expertise in our situation. First off, I'd like to say that while I appreciate your congratulations, I can't say that we've done anything in particular to have earned our financial situation. We are very fortunate to have great jobs with a DB pension and the cost of living in our area is very low.

That said, you were right to assume that our income that we could invest will grow as our income increases and our costs decrease. However, big ticket items that we will likely contribute significantly to are:

Our childrens' education, marriage, and hopefully first home, future vehicles (we have two brand new ones currently so hopefully that isn't for a while), and some luxuries like perhaps an inexpensive boat. While our family cottage will become part of our net worth, it will also drain our cash. We also hope to send it down to our children and have the capital gains paid for by our estate, but in the meantime property taxes, maintenance and repairs (things like a septic tank, roof, old tree removal, shoreline landscaping) can be very expensive.

In general, I've had our money in broad index funds (like VUN and XAW as I mentioned in a previous post), and can't help but feel as though I'm not getting a good return (e.g. 5% per year approximately). I'm obviously very hesitant to go to a bank to purchase mutual funds (for many reasons discussed on these forums), but do not feel like I have the time or the expertise to manage our small but growing portfolio. Currently I have everything in equities (high risk) but in very broad ETFs. I'm wondering if there's a better way to invest our money while also keeping the management side of it low.

Again, can't thank you enough for analyzing our situation. That obviously took a tremendous amount of time and thought to prepare. One of the things that make RFD so great!
No worries! RFD is a hobby of mine and I take this as a way to improve my own situation as well.

For future expenses, just take a few minutes with your spouse to consider what is important and what it isn't. Prioritize accordingly. For instance, I would assume your children's education would likely be higher up. Take a few minutes to consider how much each child will need and how much you are willing to put up. RESPs have a max $50k contribution limit per child and a lifetime $7400 federal grant limit (which will be reached at $37000 in contributions, max 2500 a year). While maximizing these accounts and grants can give your children a head start, remember that you are under no obligation to fully do that. Consider the costs the child will bear come university/college time and plan accordingly. And there is nothing wrong with children covering for some of their own costs ;) . As for the cottage where you anticipate huge costs and improvement needs, consider what needs to be done, get estimates and plan to budget this as well.

For your investments, there are ways to get better returns such as investing in individual equities. Personally speaking, I believe though in order to actually have a great return doing this, you need to invest time and effort into buying stock otherwise it becomes speculation or prone to larger losses, so I can't suggest anything without low management other than what you are currently doing. While an advisor could suggest strategies, it is very difficult to ascertain whether they actually will be successful in doing so. Additionally, with fees, any possible outperformance can quickly eaten away. Based on the fact that you did say that you got mediocre returns suggests to me that you just started recently. 2018 was a negative year and markets have been a little over the place. Don't focus too much on the short term. As long as you are in fairly low cost, with good exposure to equity, there isn't much more you can do.

With the mortgage gone later, you could consider leveraging by borrowing and investing the money. Keep in mind this is riskier, but you can claim the interest on your taxes as carrying costs (when holding dividend/interest yielding investments) and you can increase your growth by doing so (read up on Smith Maneuver). I would recommend doing this during big down turns. Assuming your job is safe and stable, this can be very lucrative. Buying real estate as a income property is also an option. This is probably considered less risky, but all in all, the concept is the same. Most famous successful investors have used leverage in some form or another. I don't recommend it for beginners, but do keep this in mind once your debts are clear and you have built up some capital.
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Jun 29, 2019
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Toronto
HI
I have the same question about finding a financial advisor. I will share my situation here every month i am planning to contribute 2000 from my pay to save for downpayment for my house which i am planning to buy in 2021. Would like my money to grow but with not too much of risk.
Thanks
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SagarG56784 wrote: HI
I have the same question about finding a financial advisor. I will share my situation here every month i am planning to contribute 2000 from my pay to save for downpayment for my house which i am planning to buy in 2021. Would like my money to grow but with not too much of risk.
Thanks
Savings account.
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Jun 29, 2019
96 posts
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Toronto
Which one i have a Scotiabank which gives 2%.
Do i have better option?
[OP]
Deal Addict
Nov 8, 2005
2598 posts
1390 upvotes
xgbsSS wrote: No worries! RFD is a hobby of mine and I take this as a way to improve my own situation as well.

For future expenses, just take a few minutes with your spouse to consider what is important and what it isn't. Prioritize accordingly. For instance, I would assume your children's education would likely be higher up. Take a few minutes to consider how much each child will need and how much you are willing to put up. RESPs have a max $50k contribution limit per child and a lifetime $7400 federal grant limit (which will be reached at $37000 in contributions, max 2500 a year). While maximizing these accounts and grants can give your children a head start, remember that you are under no obligation to fully do that. Consider the costs the child will bear come university/college time and plan accordingly. And there is nothing wrong with children covering for some of their own costs ;) . As for the cottage where you anticipate huge costs and improvement needs, consider what needs to be done, get estimates and plan to budget this as well.

For your investments, there are ways to get better returns such as investing in individual equities. Personally speaking, I believe though in order to actually have a great return doing this, you need to invest time and effort into buying stock otherwise it becomes speculation or prone to larger losses, so I can't suggest anything without low management other than what you are currently doing. While an advisor could suggest strategies, it is very difficult to ascertain whether they actually will be successful in doing so. Additionally, with fees, any possible outperformance can quickly eaten away. Based on the fact that you did say that you got mediocre returns suggests to me that you just started recently. 2018 was a negative year and markets have been a little over the place. Don't focus too much on the short term. As long as you are in fairly low cost, with good exposure to equity, there isn't much more you can do.

With the mortgage gone later, you could consider leveraging by borrowing and investing the money. Keep in mind this is riskier, but you can claim the interest on your taxes as carrying costs (when holding dividend/interest yielding investments) and you can increase your growth by doing so (read up on Smith Maneuver). I would recommend doing this during big down turns. Assuming your job is safe and stable, this can be very lucrative. Buying real estate as a income property is also an option. This is probably considered less risky, but all in all, the concept is the same. Most famous successful investors have used leverage in some form or another. I don't recommend it for beginners, but do keep this in mind once your debts are clear and you have built up some capital.
Yeah I've actually been in VUN and XAW for a while now. VUN has done fairly well, XAW not bad either. I used to invest in individual stocks. Made a decent amount off Concordia Health, Acadian Timber, and some Canadian blue chips. But I found the losses to be stressing me too much so I just went to passive index ETFs. I don't know enough about investing to do anymore than that. And even that I find I'm not sure when I should be rebalancing or looking at other ETFs that are tracking the same thing (US total stock market, world stock market). It just makes me nervous once I have all of our nest egg in something that I frankly know too little about.

I know it's probably not smart to pay down my mortgage at 2.6% when I could be investing that capital, but leveraging myself to invest is a little beyond my risk threshold. I'm very fortunate to have our situation, but I want to make sure I do everything I can to ensure it doesn't come down around me Haha.
[OP]
Deal Addict
Nov 8, 2005
2598 posts
1390 upvotes
SagarG56784 wrote: Which one i have a Scotiabank which gives 2%.
Do i have better option?
Tangerine sometimes has high interest savings promotions. I'm thinking you wouldn't want to invest anything since you plan to use it so soon to purchase a house.
Newbie
Jun 29, 2019
96 posts
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Toronto
What would you suggest should i look for any investment options for 2 years?
tim-x wrote: Tangerine sometimes has high interest savings promotions. I'm thinking you wouldn't want to invest anything since you plan to use it so soon to purchase a house.
[OP]
Deal Addict
Nov 8, 2005
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SagarG56784 wrote: What would you suggest should i look for any investment options for 2 years?
What I just said. Not investing for 2 years because you plan to use that money for a big important purchase.
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SagarG56784 wrote: What would you suggest should i look for any investment options for 2 years?
Exactly what @tim-x has said. There is no appropriate investment in a 5 year period let alone 2 years that would be appropriate without being OK with losing money.

A quick search on this post should help. note rates are not fully updated.

official-rfd-thread-savings-accounts-up ... 19-698055/
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