Financial planning
and advice

Investment advice is far more limited, in that it only provides recommendations of the best investment options for your particular situation (which could be a portfolio of individual company shares, bonds, mutual funds, exchange-traded funds or a combination of them all).

Financial advice will include all of the above, plus advice that will cover every aspect of your finances, including creating a financial plan, budgeting, cash-flow management, reducing debt, and saving for major purchases and retirement. It also includes ways to share your wealth, having a financial safety net (in the shape of an emergency fund, life insurance, etc.), and, for business owners, to align your personal finances wth your business finances. And fundamental to all of this advice is making your plan as tax efficient as possible.

According to Canadian research on investors with and without a financial advisor, over a 15-year period, investors with an advisor were on average 2.3 times wealthier than comparable investors who had no advisor. Therefore, even if you might have to pay fees for financial advice, you will still come out way ahead in the long run.

The need for financial advice will, however, depend on your personal circumstances. It’s best suited to people who struggle to keep on top of their finances, have a considerable amount of investable money, have complicated tax or retirement planning needs, and/or don’t have the time, ability or inclination to make complex financial decisions. 

The ability to use the titles “financial planner” or “financial advisor” without a specific level of education, experience or membership of a governing body varies from province to province. Therefore, in theory, the standard of advice you’ll receive from a financial advisor could vary considerably.

It therefore makes sense to deal with financial advisors or planners who have the Certified Financial Planner (CFP), Registered Financial Planner (RFP) or, in Quebec, Financial Planner (F.Pl.)/planificateur financier (Pl. Fin.) designations. These are professionals who have successfully completed financial planning courses and have a regulatory body. In addition, financial advisors who sell investments must be licensed either with the Mutual Fund Dealers Association of Canada (MFDA) or the Investment Industry Regulatory Organization of Canada (IIROC).