Getting the best service from financial advisors: lessons from the Mystery Shopping for Investment Advice report

Mystery Shop Report CoverAccording to a 2012 CSA Investor Index survey, nearly half of Canadians use the services of a financial advisor. With so many people relying on advisors, it is crucial that the advice given to investors meets their needs.

What does the average Ontarian experience when he or she meets with a financial advisor to set up an investment plan? That’s what the Ontario Securities Commission (OSC), the Investment Industry Regulatory Organization of Canada (IIROC) and Mutual Fund Dealers Association (MFDA) set to find out through a joint initiative, Mystery Shopping for Investment Advice. Members of the public were recruited and trained to engage investment dealers, mutual fund dealers, exempt market dealers, and portfolio managers to get advice on how to invest a lump sum of money. The report revealed specific areas where investors have difficulty working with advisors.

 

How investors can get better services from advisors

Helping Canadians invest wisely and confidently is something we’ve continually aimed to do at GetSmarterAboutMoney.ca. If you’d like to invest through a financial advisor or want to know how to get the best possible service from an advisor, consider using these tips and resources:

 

  1. Learn how to find the advisor who is right for you

Many people find their advisors through personal recommendations of friends and family. While we agree that this is a good step, there are other ways to find an advisor and to determine if they’re the best fit for you. We suggest speaking with more than one person or company to get an understanding of the different services you can expect. For tips on choosing an advisor, take a look at these resources:

 

  1. Know how to best prepare for a meeting with an advisor

You’re not expected to know all the answers about your finances, but you’ll likely find your meeting is more efficient if you can help the advisor get a good idea of your financial circumstances and goals. Great advisors take a look at the full picture and provide recommendations that address issues beyond basic investing – like helping you see the benefit of paying off debt. If you have this information ready when you a meet an advisor, he or she will be better equipped to provide suitable advice. Consider these resources:

 

  1. Get a better understanding of the requirements of an advisor

Some of our mystery shoppers ranked their experience as satisfactory even though the advisors they spoke to didn’t meet the minimum requirements when it came to issues like disclosure of fees or detailed information about the products being recommended. Having a better understanding of what you should expect – or even what the very best practices are – can help you get the most from an advisor:

 

  1. Ask questions. Then ask more questions.

If you’re new to investing, you likely “don’t know what you don’t know”. Therefore, asking the right questions can be tough. Great advisors step you through the process and ensure that you get an understanding of their services and what you may be agreeing to. But advisors aren’t mind readers – you have a responsibility to ask questions and get clarification if you don’t understand something – be that about the investment being recommended or how your investor is paid. We’ve put together some resources to help you ask the right questions and understand the important issues around investing:

 

For more information about the Mystery Shopping for Investment Advice report and to learn more about the Ontario Securities Commission, visit www.osc.gov.on.ca.

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