Conduct a formal interview
Now that you have a short list of currently registered investment advisors (we suggest not less than three) with no disciplinary history, it’s time to get ready to meet them. Consider this meeting a formal interview. Your agenda is to get answers to all the questions on your list. You’ll find those questions in this section, and a form for recording the answers in the Worksheet for choosing an advisor 
. The interview will help you and the advisor establish an informed basis for deciding whether to work together.
Expect to have a two-way conversation. Both of you will ask and answer questions. Even in a preliminary interview, advisors may ask you about your net worth, income and expenses, and goals. This is information you have already collected on the Worksheet for planning your investments . It isn’t prying. Whoever you select will need to know a great deal about you and your financial situation to fulfill their Know your client obligation, which is critical to their ability to recommend suitable investments.
Your side of the interview
Use the Worksheet for choosing an advisor to record each advisor’s answers to the questions below. Make sure you take the time to discuss these questions and understand the answers. Does the advisor appear knowledgeable and straight-forward? Are the answers easy to understand and do they prompt you to ask follow-up questions? Does the advisor ask and answer questions in a respectful manner?
What investment business are you registered to conduct?
Make sure that the person you are talking to is able to provide the services you have decided you need. Some registered advisors can only sell and provide advice on mutual funds. Others can sell and provide advice on any type of investment product. Advisors at discount brokerages don’t give advice at all and only carry out instructions. Note that any discount brokerage interview you conduct is likely to be with a client services representative, not an individual advisor.
What professional qualifications do you have and what do they mean? What other qualifications do you have? How do they relate to the investment services you provide? There are many titles and designations. Knowing which ones are relevant to providing quality investment services is important. Find out what the initials on your investment advisor’s or financial planner’s business card mean. Make sure the advisor explains what each qualification means and how it adds to their ability to serve you. An executive title doesn’t automatically mean that someone has the education, skills, and experience to best serve you and your investment goals. Always check.
Can you tell me about clients with similar financial circumstances to my own and how you have worked with them to achieve their financial goals?
The advisor you choose should have the experience, skill, and willingness to work with clients like you. The way to find out if someone is a good fit for you is to discuss it directly.
What opportunities do you see for my portfolio? What steps do you suggest to build a portfolio that will achieve my investment goals? The advisor should ask for your investment goals, which you collected in the Worksheet for planning your investments . Understanding the steps the advisor proposes is one clue that they might be a good match for you. Be cautious if the advisor doesn’t ask about your investment goals, financial situation and life circumstances. How can someone who doesn’t understand your situation help you achieve your goals? Remember: they have the know your client 
obligation required by Canadian securities laws.
How do you invest your money and why?
Is the advisor using the same strategy that he or she recommends to you? If not, why not? It could be because the advisor has a larger portfolio and/or more experience. Just make sure the answer makes sense.
How are you compensated? What fees do you charge? How will those fees impact the value of my investments?
You can’t expect something for nothing. Since fees are a fact of investing life, and because the fees you pay will take away from your returns, you need to know what you get for the fees you pay, and not pay more than you have to. Understand at the outset how much, and how you will pay for the advisor’s services.
- If they earn a salary, like a bank employee, then the cost of their advice is built into the products you buy.
- If they charge a fee for each trade, find out what the fee will be for each transaction.
- If they sell mutual funds, they may receive a commission from the mutual fund company for each year you hold the fund. Sales commissions and some other mutual fund fees are in addition to the front-end load or back-end load investors pay at the time of purchase or sale. These are built into the cost of the product, but they do not appear on your statement as they are indirect fees not charged against your account. Be sure to ask about these indirect fees and take the time to understand them before you invest.
- Portfolio managers, and many advisors at full-service firms who work with higher net worth investors, charge a fee based on a percentage of the portfolio’s value. The time to negotiate this fee is at the beginning of the advisor-client relationship.
- Advisors who charge an hourly rate, like fee-for-service financial planners, may or may not be licensed to sell investment products. Be sure to ask.
Whatever the case, it’s your right to know the fees you will be charged, and your job to find out. Ask about fees at the outset, and never hesitate to ask about them as part of any account transaction later in the relationship. Then remember to factor all fees into your calculation of return. Ask your advisor for an annual report of all transactions in your account. Not just purchases and sales, but all fees.
Can you meet my service expectations?
Discuss the list of service expectations you wrote down on the Worksheet for choosing an advisor . Ask each advisor if they can meet each one. Compare the answers from all of your advisor meetings to help you decide on the best match overall.
What sorts of conflicts can arise and how does your firm address conflicts?
Conflicts between an advisor and a client can arise in a number of ways. For example:
- Firm has underwritten share issues they offer for sale to investors
- Firm's institutional and retail clients have competing interests for best price and access to securities
- Advisors trade in or recommend securities of a company in which they or their firm has an ownership interest
- Advisors serve as directors on boards of companies whose securities they sell
- Advisors receive compensation from outside business activities that could colour their advice to investors
- Firm’s compensation structure is inconsistent with its obligations to clients
Your advisor must be able to explain the firm’s conflict policies, what steps the firm takes to prevent conflicts, and how the firm discloses conflicts that cannot be prevented.
What if we have a disagreement? What is the firm’s dispute resolution policy?
If a registered firm receives a complaint about any of its trading or advising activities, it must inform the person making the complaint about the dispute resolution or mediation services that are available to them, and that the firm would pay for the services if the issue cannot be resolved without mediation.
Are you are a good match for me? If you’re not, who would you recommend? It's helpful to hear straight from the advisor why they think you should hire them. This answer, combined with the others, will help you assess your comfort level in working with the advisor on a professional and personal level. If the advisor doesn’t think that they’re a good match for you, find out why not.