Embrace your adviser

client facing

Getting to know a new planner can be an intimidating process. But remember that you’re there to achieve some life-changing goals—so don’t just hand your finances over to your adviser and forget about them. Like many things in life, the more you put in to the relationship, the more you’ll get out. Here’s how to make sure you get out as much as possible.

Get involved
“The people with the greatest success are those who get engaged with the process—who come prepared to meetings and are able to define their concerns,” explains Karen Diamond, partner at Diamond Retirement Planning in Winnipeg.

Getting engaged doesn’t mean you have to show up with all the answers—it just means taking the time to write down your concerns, list your goals, and stay up to date on any pertinent paperwork. “You want full disclosure right from the get-go,” says Lenore Davis, partner with Dixon, Davis & Company in Victoria. “You’ve decided to pay someone for advice, so holding back only means you’re handcuffing your own adviser and denying yourself honest, accurate advice.”

Set clear goals
If you don’t tell your planner where you want to go, you’ll never get there. But it’s amazing how many people forget this step. The goals you set should not only be clear and achievable, but inspiring too. Paying off your mortgage is great, but it’s goals like retiring at age 55 to travel the world that will get you excited enough to stick to your plan.

Once you’ve set your goals, write them down, including both the “destination” goals, like building an estate to leave to charity, and the “along the way” goals, like paying down your debt. It’s a big task, but Davis suggests breaking your plan up into manageable chunks. “It’s like planning a drive from Vancouver to Toronto,” she says. “Deciding on where to eat, sleep and stop each day on the trip can be daunting, but if you break it down into segments, it’s much easier.”

Setting clear goals allows you and your planner to develop an accurate and realistic financial plan that can be stress-tested. “Goal-setting and stress testing taught me to be realistic,” says Ron Caterine, an electrical engineer in Edmonton, Alta., who recently put together his own financial plan with the help of his adviser. “It helped me to avoid chasing returns—and planners who sell their services based on returns.”

Stay in touch
“At an absolute minimum you should expect once-per-year annual reviews,” says Davis, but don’t stop there. One of the benefits of hiring an adviser is that you can get access to his or her experience and advice throughout the year. Feel free to call or email whenever you have questions or concerns.

At your very first meeting, you should ask your adviser for a Letter of Engagement. This letter should not only outline what services the adviser will provide, it should also spell out the type and frequency of communication you should expect on an ongoing basis.

Express your values
Don’t assume that your planner has the same priorities as you. If leaving money to charity is more important than paying for your kids’ education, make sure to make that clear. Similarly, if you’re extremely risk averse—to the point where you want to stay out of the stock market altogether—let your adviser know. Regardless of how nice your planner is, he or she isn’t helping by pushing you towards goals you don’t feel comfortable with. “The only result is that you feel unheard and out of control,” says Lance Howard, founder of Lance Howard Group in London, Ont.

Measure your progress
After selecting a planner and constructing a plan, the next step is to measure your progress. The best way to do this is to compare your personal rate of return with an appropriate benchmark. The selection of the benchmark should be part of your initial discussion with your adviser, so that at least once a year you can track and monitor the progress of your own account. For more information on how to measure your progress, see the “Power of Advice” feature in the next issue of MoneySense.

The first meeting

5 ways to begin on the right foot

Confirm the service and fees
At the beginning of your first meeting, clarify exactly what services your adviser will be offering and how she will get paid. This should have been made clear before hiring your planner, but getting a confirmation is a good idea. “No one works for free, but it’s important you know what you are getting for what you are paying,” says Lance Howard, founder of Lance Howard Group.

Be clear about your goals
“Determining your goals is a process of deciding what you’re looking for and what is important to you,” says Karen Diamond, partner at Diamond Retirement Planning. Whether your goal is to retire at 55, buy the house of your dreams, or start your own business, write it down and bring it to the meeting.

Don’t hold back
You’ll need to reveal a lot of personal information about your finances to get the most out of your adviser’s services. The starting point is information: bring your last three years of tax records, a year of pay stubs, your investment statements, and legal documents such as your will and power of attorney. “You will need to be willing to disclose everything at this point,” says Diamond.

Communicate your values
Right from the start, express your personal values and how they affect your finances. If you want 10% of your income to go to charities, then make that clear.

If you don’t want to invest in alcohol or tobacco companies, or if you don’t think it’s a good idea to leave an estate for your children, let your planner know that too. And if you don’t feel your values are being respected, ask your adviser to explain. If you’re not satisfied, tell him. It could be a matter of miscommunication, or a signal that you need to find another planner.

Take notes
Bring a notebook, says Lenore Davis, founder of Dixon, Davis & Company. Write down any action steps from your meetings and don’t stop making notes after you leave. Keep a financial diary throughout the year to track your progress, and note any concerns that arise. That way you’ll be sure to address everything that’s important to you at your next meeting.

Originally published in MoneySense Magazine in December/January 2010