Fee Only Financial Planner

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor.

Fee Only Financial Planner

Postby Sijo Abraham » Fri Dec 07, 2012 3:39 am

Hi, - A close relative is looking for a fee only financial planner in Toronto. Can any one recommend one? Or how does one look for a fee only financial planner in Toronto?

Thanks.
Sijo Abraham
 
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Joined: Fri Dec 07, 2012 3:37 am

Re: Fee Only Financial Planner

Postby Jane Wamutonga » Sat Jul 06, 2013 2:52 am

TM, there is not standardization of labels so here is how I categorize the compensation models.

1. Commission = commission (transaction & asset based %)
2. Fee-based = % of asset fee but embedded in MER because it's paid by product provider (so technically a form of commission)
3. Fee-only = % of asset fee (like fee-based) but paid only by clients (no third party payments)
4. Fee-for-service = flat dollar or hourly fee for time spent doing financial planning; a subset of fee-only because this fee is paid only by clients (not third parties)

Your "fee-only" sounds equivalent to my "fee-for-service". And I can tell you that this doesn't exist as far as I know in this country. And I've heard of only one example in the U.S. (though there must be more than one over there). I offered the only service of this type for 6 years and while it was a profitable offering new regulations (and costs thereof) and a renewed vigilence of regulatory enforcement staff effectively raised the cost of doing business to the point where it's almost impossible to offer a fee-for-service investment advice model.

When I did this kind of work (2004-10) I tried to find others elsewhere in Canada to refer people to that called me from outside of Ontario. Despite my best effort, I couldn't find one firm that was licensed to give investment advice based on individual circumstances and charged for this advice via an hourly or flat $ fee. It didn't exit then so it's unlikely to exist today (though I haven't looked very hard in recent years).

All to say that your choices are 1, 2, or 3 from above. The only exception is to find one of the handful of people who operate on a fee-for-service who are willing to dance on the line between what we call registrable activities (i.e. services that require a license) and non-registrable activities (activities/services that resemble registrable activities but technically don't fall into that bucket).

And you may find a couple of those firms in the lists I provided earlier.

Good luck!
Jane Wamutonga
 
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