In part 1, we looked at what are the characteristics of different type of advisors. Now, we answer that burning question.
Banks (in Canada) are usually backed by a great amount of law and regulations, which can help unhappy or befouled clients. If a banking advisor sold you a bad product, you can escalate your problem until it is solved.
Fee based advisors slows it down. The out of the pocket cost is greater, but the advice is usually solid and worthy. The fact that they are independent from any company will help you select the best ETF or funds, manage your debt load, track your expenses and live prosperously. They do not have to sell anything, which unburdens the pressure off the client.
Insurance companies are highly specialized in the products they sell. They will sometime venture out of the insurance subject, but keep playing in their specialized fields and you should feel comfortable.
Mutual funds advisors have the advantage of having a high array of mutual funds available. You can pick the one that suits your needs. [We strongly suggest putting money into an ETF versus a mutual fund. ETF’s are not perfect, but are vastly superior to fee-loaded funds.]
Decision: From my professional experience, you will learn more with a fee-based advisor than with the other types of financial providers. Make sure that your advisor has the right credentials, title and experience. Like buying a car, ALWAYS run a background check to see any complaints or investigation is being held against him. He should make you feel comfortable and be knowledgeable. A good way to know if he is a good advisor is to ask him a very specific question. A great advisor will either answer in a concise, precise manner or will ask for time so he can research the right answer. A less deserving one will shower you with words or simply lie.