Canadians are increasingly becoming aware of how financial advice and the sale of investment products are intertwined, and they're rebelling.
I see the rebellion in action in my e-mail in basket all the time from people asking me where to find a fee for service financial planner. That's someone who charges a flat or hourly fee for advice and doesn't sell products.
A fee for service planner will answer questions like whether TFSAs or RRSPs should be your primary retirement savings vehicle, whether your current pace of saving will give you sufficient retirement income and whether there are opportunities for you to minimize taxes. Traditional investment advisers can provide similar guidance, of course. But one way or another, they're also going to sell you investments. This can lead to conflicts where advice is more about generating optimum fee and commission revenue for the adviser and his or her firm rather than what's in the client's best interest.
A growing number of people want to avoid these potential conflicts by purchasing advice straight, with no products sold. Their biggest hurdle: Finding a fee for service planner. Finally, there's help. A personal finance blogger named John Robertson has created an online directory of fee for service advisers that you can download here. The term "fee-only planner" is used here – it can mean a planner who charges a flat or hourly fee, or who charges a percentage of your account assets and manages your portfolio for you. But the planners on Mr. Robertson's list charge hourly or flat rates that are clearly disclosed. Fees range widely from $150 to $300 per hour, but there many other models. Some will charge a flat rate for a financial plan, others a monthly fee. Overall, there's a lot of customer-friendly flexibility shown in the fee descriptions for the planners on the list.
Be sure to check the designations for the planners on the list. They vary quite a bit, but most have the industry standards CFP, for certified financial planner, or RFP, for registered financial planner. A few have accounting designations as well.
A growing number of traditional investment advisers are separating the cost of advice and products through what's known as the fee-based model. That's where you pay a set fee, generally 1 to as much as nearly 2 per cent of your account assets, to cover the advice and services provided by your adviser. On top of that, you pay the cost of owning investment products like funds. The costs are separate – advice and products. But a growing number of people want straight advice, no products.
Try Mr. Robertson's list if you're in this group, and also try a Google search that includes your town and the phrase "fee for service financial planner." You can also try searching for fee only planners, but remember that they may charge a flat fee or a percentage of your assets.