Back to our Monday series about how to start investing by yourself and what you need to know before dealing with a third party. As DIY investing becomes more and more popular, a financial planner can be very helpful for several people. Since financial planners are much more than only investment specialist, I personally think that you should get one even if you plan on becoming a DIY investor.
However, while a broker can help you giving specific information on stocks and help you becoming a DIY investor, this is not the job of a financial planner to do so.
First things first, you have to make the difference between a financial advisor and a financial planner. In regards to investment, they have most likely the same mandate: determining your investor profile and offer you an asset allocation according to it. However, the financial planner will also be able to provide advices on:
– Retirement planning
– Estate planning
– Tax planning
– Personal finance
Depending on where you live, becoming a financial planner can require a lot of studies or not. In Quebec for example, you need a certificate in financial planning (university degree) along with passing a final exam in order to get your title.
Financial planners will be of great help if you are looking for someone to take care of your investment and give you general information about the field mentioned above. He can do an investing plan and show you how much money you will get at retirement.
However, he will not be the guy to tell you what to buy or to sell. His mandate is to offer mutual funds with the correct asset allocation corresponding to your investor profile. He should not give you trading advices.
With this kind of investment strategy, you will not have to make researches or read financial newspaper. If you want to get a general feel of the economy, call your financial planner and he will be able to explain what is going on on the markets.
Another important note is that he won’t be able to make any trades if you don’t sign paperwork (or give a verbal confirmation over a taped phone line). The broker can make trades on a verbal confirmation or even without your acknowledgment if you have signed for it (some people really trust their brokers 😉 ).
If you are looking for a global strategy that will not only cover your investments but all the aspect of your personal finance, the financial planner will be able to meet your needs.
The financial planner is the right person if:
– You don’t want to trade stocks and look for an “all inclusive” offer
– You want to get the global picture
– You are looking to get a financial plan or a retirement plan
– You want someone you can call when you have questions about credit, insurance, estate planning, etc.
– You are basically looking for a one stop shop.
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