Thanks for stopping by to answer the question: do you need a financial advisor?

Today’s post is motivated by a newsletter I received from Coast Capital Savings. The newsletter starts off claiming that we’ll feel more confident about out money with the help of a financial advisor.

Then they throw in things people might be worried about that will affect their finances like rising interest rates and Christmas shopping.

The rising interest rates are for people who have variable mortgages or personal loans, or about to apply for them, and the interest rates have steadily increased all year.

The flip side for people who don’t have debt, is that rising interest rates also means our high interest savings accounts are earning us a little more money every month.

Besides interest rates on borrowed money and Christmas on plastic, people are also worried about a possible recession and job loss negatively affecting their finances.

If you’re really interested in what Coast Capital has to say, click to read How regular advice sessions keep you on track, even in irregular circumstances.

Financial advisors connected to financial institutions

In previous posts I’ve discussed financial advisors who work for banks and credit unions. Food for thought. Who do the financial advisors work for? You? The bank/credit union?

Generally speaking, financial advisors who work for banks and credit unions provide free appointments and advice to their clients. And sure, go in and have a chat. They might give you some great advice on digging yourself out of debt or saving for a specific goal. Let’s not discount that. We can all use free financial advice.

Beware if you have money to invest. The financial advisors who work for banks and credit unions will push mutual funds on you. Mutual funds typically have high MERs attached to them. Part of that high MER is commission for the financial advisor and/or their employer.

The big question is – are these “financial advisors” worth what you’re paying them when they get their cut of the MER? Are these “financial advisors” actually giving you advice? Or did they ghost you after your one time lump sum purchase that was probably monkey chow to them but a whole lot of money to you.

Why pay these advisors when they’re really not offering any investing advice?

Mutual funds?

Mutual funds with their high annual MERs are bad news for people trying to grow their investments.

I make comparisons between mutual funds and exchange traded funds in my post Dealing with Worldsource Financial is an Exercise in Frustration. After two years, the amount of my investment had increased by $1,100 and that was about the same amount in MER I paid over the two years.

Did that make me more confident in having a financial advisor or more confident in my ability to become a DIY investor?

Did you know that financial advisors are supposed to check in annually to see if circumstances have changed for their clients?

It’s been a few years since a Coast Capital financial advisor contacted me.


Tangerine Bank, formerly ING Direct, is an online bank in Canada. It has the world’s worst log in.

Read more about that in my review of Tangerine Bank.

I have some mutual funds with Tangerine. I wrote about them in the post about whether or not it’s a good idea to take out an RSP loan.

On the rare occasions that Tangerine Bank allows me to log in without problems, there is a pop up box about my investments. A questionnaire to fill out. And that’s fine too. This is an online bank. They don’t meet clients in person or make phone calls.

There is a problem though.

Of course there is! It is Tangerine Bank after all. How could there NOT be a problem?

About 10 years ago, someone at Tangerine Bank screwed up. Shocker! NOT! They opened me a LIRA – Locked In Retirement Account. Oops. There has never been any money in this account. Despite several phone calls reminding them that they screwed up and opened this LIRA account that is not needed, Tangerine refuses to close the account.

They still hound me to fill in the questionnaire. Except I don’t. Now they want me to phone. Because according to Tangerine my time is worthless to them so I can spend an hour on hold waiting to talk to a rep about an account they shouldn’t have opened in the first place.

Incompetence reigns with bank financial advisors

Most banks and credit unions want their clients to buy mutual funds with their high money management fees because they make the most commission off them.

We’re getting bad advice that’s not in our best interests.

Oh sure, they might have some good advice on eliminating debt and improving our finances without selling us mutual funds. It doesn’t hurt to get a free session and see what they have to say.

It’s hard finding money advice geared towards lower-income single women, because financial advisors know we don’t have a lot of money to invest and focus instead on bigger fish. Many financial planners work on some kind of commission, and like most businesses, they focus on finding clients with more money to spend, which means a bigger paycheck for them.

Don’t need no stinkin’ financial advisor!

A financial advisor might help you create a financial plan.

But do you need a financial advisor to do that for you? There is a lot of advice online on how to put together a financial plan.

Here are some things to consider having on your financial plan:

  1. Paying off debt.
  2. Saving up for a down payment on a house (or a car, or a trip….)
  3. Save for your financial future. This could be through a company sponsored plan or investments you choose
  4. The age you want to retire
  5. How you plan to manage risk (insurance)
  6. Get an emergency fund in place

Once you have started your financial plan, you begin mapping a course to achieve these goals. Let’s start with #1 – pay off debt. The first thing you do is incur no further debt. Then you decide how you will pay down the debt as fast as possible.

Many people use the snowball method.

A financial advisor might give you suggestion on how to invest your money. Again, with a little research online you can do this yourself. There are countless blogs and YouTube videos with all kinds of advice.

In some of my blogs I’ve talked a little about stocks I’ve invested in. This is not meant as financial advice, just examples of what I’m doing. I’ve also written about stocks I wish I hadn’t bought. Again, not advice, but I don’t invest in Bitcoin. It’s just not for me. Also I stay away from fads and restaurants. What’s popular today might be closing shop before the end of the year. Generally I stick with more established stocks that pay dividends. I’m looking for income and growth in my investments.

Start investing without a financial investor

It’s time to bite the bullet and start investing. We can do it without a stinkin’ financial investor! We can buy stocks and don’t need a middleman to do it for us! Yay!

Open an online trading account and buy a stock or two.

Sure, it’s a little risky, but if you do your research, you can find some stocks that match your level of comfort.

I use Questrade for online trading. If you’re interested in setting up an account, you can sign up using my referral code 415632012426909 and get $50 worth of free trades. You will have to transfer $1,000 into your new Questrade account before you can start buying stocks. Disclosure: Questrade will also put $50 into my trading account too for the referral! Win, win for both of us. Free money to buy stocks!

Do you need a financial advisor?

So, friends, what do you think? Do you need a financial advisor?

Spend time researching the benefits of a financial advisor or DIY. Find a couple of stocks that interest you and look into what people are saying about them on blogs or money forums like the Canadian Money Forum. Ask questions. These are experienced DIY investors who do a lot of research.

A lot of investing comes down to your confidence level. Stocks go up and down. Are you a set it and forget it person? Or do you check how many pennies your stock is dropping every few minutes. If investing in the stock market makes you anxious and stressed, then it won’t be for you. Term deposits might be more your thing.

Always remember the one piece of advice that we’ve heard most of our lives: don’t put all your eggs in one basket.

Happy investing without a financial advisor!

Published by Cheryl @ The Lifestyle Digs on April 24, 2023.

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