Choosing and trusting someone to manage your money

Over the years I have met many people looking for ­investment advice, ­solutions and planning services.

These initial meetings involve an interview process for both the adviser and the ­investor.

This two-sided operation — where each party does not want to provide too much detail without a commitment from the other — can be challenging.

Some of the most ­common questions I get asked are:

What is the difference between an investment ­adviser and a financial ­planner?

Most financial planners are investment advisers but not all investment advisers are financial planners.

Most financial planners assess almost every aspect of your financial life — ­including savings, investments, insurance, taxes, ­retirement and estate planning.

They help you develop a detailed strategy or financial plan for meeting your financial goals.

But an investment adviser is just that — they only provide you with investment advice and investment products.

How do you get paid?

When you use the services of a financial professional — whether it is a stockbroker, financial planner or an investment adviser — you need to find out how this person is being ­compensated.

Generally (depending on the service) it is by a ­percentage of the value of the assets they manage for you; an hourly fee for the time they spend working for you; a flat fixed fee; ­commission on the securities they sell or a combination of all of these.

What is your background?

Experience is the obvious answer but so is ­education. These two points are essential.

If you want someone to buy/sell and advise on ­investments they should have the necessary security licences regardless of which current jurisdiction they are working in.

They may have years ­under their belt but if they do not have the foundation, how do you know their ­advice is even correct?

Alternatively, experience is equally important.

How long have they been working in this field? Do they have the experience to endorse their ­education?

Veterans to the industry can also be an issue. Are they stuck in their ways and not prepared to look outside the box? Working with the right person ­important but so is having your money ­handled by the right investment firm.

Evaluate the investment firm by examining its ­people, philosophy, process and performance. 

How many employees does it have? Who are their clients? Is the company ­private or publically ­traded? Who regulates the firm and have they had any ­previous regulatory issues?

What is the company’s philosophy or mission statement and does that match the business they are providing?

What is their business process and practice? Are your expectations ­going to be met? Is your account manager accessible and information available online? How have the company’s investments performed and do they show complete trans­parency?

The key is not choosing an investment firm based on a term, a type, or a title — it is choosing the type of relationship right for you.

Deciding who manages your money comes down to who you can trust to do the best job for you based on your parameters.

Carla Seeley is a senior wealth manager at AFL ­Investments Ltd. Call her on 294-5712 or e-mail [email protected].