Working with a Financial Professional
Like many New Brunswickers, you may not have the time, interest, or knowledge to build an investment portfolio or financial plan yourself. In this case, getting advice from a professional may be a good idea. An investment professional can help you set goals, build a long-term plan, choose suitable investments, track your progress, and make adjustments to your plan when needed.
Financial and investment professionals offer a broad range of products and services. Before deciding who to work with, be sure they are qualified to provide you with the services and products you need. Do not rely on the title on a business card. Do your homework to make sure they are properly licensed or registered to provide you with the products or services that meet your needs.
Download our Five Steps to Choosing a Financial Advisor workbook for important questions to ask, sources of information, and a place to record the information you gather when researching who you will work with.
How Registration Protects Investors
Generally, anyone selling securities, offering investment advice or acting as an investment fund manager in New Brunswick must be registered with FCNB. Securities industry professionals are required to register with the securities regulator in each province or territory where they do business. The registration category tells you the type of products or services someone is qualified to sell or provide advice on.
There are many different titles and designations used by financial professionals but they do not mean a person is registered or licensed to sell or give advice on specific investments or insurance products. They indicate what kind of education or experience a person has.
Read "Understanding Registration" to learn about categories of registration, common financial titles and designations associated with them in the Canadian financial services sector and what they mean.
Registration also protects investors because:
- FCNB will only register firms and individuals if they are properly qualified and meet proficiency requirements for their category of registration.
- Any restrictions (known as “terms and conditions”) imposed on a firm or individual by FCNB or other regulators will be listed.
- Individuals must undergo a background and police check as part of the registration process.
- Registered advisers and dealers are obligated to recommend investments that are suitable for you based on information that they gather from.
Registration is an important layer of protection for investors, but being registered is not a guarantee that the person will always give you good advice or act ethically.
How to Check Registration and Background
These tools can help you research who you want to work with:
- The National Registration Search tool – This search tool contains the names of all individuals and firms who are registered in Canada.
- The CSA Disciplined Persons List - The Canadian Securities Administrators (CSA) disciplined persons list includes disciplinary action taken by a provincial or territorial securities regulator,
- the Mutual Fund Dealers Association of Canada (MFDA), and the Investment Industry Regulatory Organization of Canada (IIROC)
- AdvisorReport - AdvisorReport lets you research the background, qualifications and disciplinary history of advisors with IIROC-regulated firms.
- FCNB Securities Caution List – FCNB maintains a list of individuals and firms that are not registered to trade in securities or to provide investment advice in New Brunswick.
Also check for Recent Orders or Decisions from Regulatory Bodies:
- Recent Decisions of the Financial and Consumer Services Tribunal - Administrative tribunal hearing decisions and settlement agreements are public records.
- Previous Decisions of the New Brunswick Securities Commission - On 2 July 2013, the New Brunswick Securities Commission became part of the Financial and Consumer Services Commission. Previous decisions made by a New Brunswick Securities Commission administrative tribunal panel are available here.
- Canadian Securities Administrators' Cease Trade Order Database - Canadian securities regulatory authorities and tribunals who oversee securities regulation in their respective provinces or territories update the Cease Trade Order Database
You can also find helpful information about a company or individual in the news. The news can also tell you about court cases and be a source for hearing rumours that you should investigate further. Check that the company is incorporated or registered to do business in your province. Make sure that the people you are speaking with really represent the company, and find out where their head office is located.
The cost of working with an investment professional
Fees vary depending on what type of products you are buying and what kinds of services the investment professional is providing. If the investment professional is paid by salary, the cost of their advice is built into the products you buy. They may be paid a commission for every product they sell. Others charge a flat fee based on an hourly rate or a percentage of the value of your account. Commissions and other incentives may influence them to recommend one investment over another. Make sure you understand how your investment professional is paid and consider how this may impact the advice they give you.
It is also important to understand what fees you have to pay to buy, hold and sell the investment, and how this affects your returns. Fees impact how much the investment has to increase in value for you to break even or make money, and still have to be paid if the investment decreases in value.
What to expect of your investment professional
Their role is to give you helpful, informed information and advice as you build and carry out your investment plan. To do this, they will gather information from you into a form known as a Know Your Client (KYC) form. This helps them get to know you and determine what investments are best suited for you in your portfolio. Bring your Investment Planning Workbook with you to make answering these questions easier!
Once your plan is in place, your investment professional should tell you about investment opportunities and any changes that could affect your investments. They should be available to answer your questions, especially during market lows or life changes when you may be tempted to act on your emotions.
You can expect your investment professional to:
Your investment professional cannot:
Your responsibilities as a client
It is your responsibility to update your investment professional if your personal or financial situations change. Major life events like marriage, divorce, the birth of a child, an employment change, or receiving unexpected income can have a significant impact on your finances and the recommendations you receive.
Be honest about your risk tolerance and your comfort level. Don’t be embarrassed or shy about asking questions until you completely understand any investments being recommended and how they will fit into your overall plan.
Review your account statements and jot down anything you want to discuss. Read any documents you receive about investments you’re considering. And remember, never sign anything you have not read or do not understand fully.
If you have a complaint
Although most investment professionals and the firms they work for are fair, efficient and follow the rules, you may have a complaint if the individual or firm:
- is not registered to sell the investments being recommended,
- takes money out of your account, or buys or sells securities with your money, without first getting your permission (This does not apply if you have set up a discretionary account, which allows your financial adviser to make trades at their discretion without getting your permission.),
- switches you from one mutual fund to another when there is no legitimate reason,
- does not take reasonable care to see that your investment request is executed at the best possible price, given the market conditions at the time, or
- recommends you buy or sell a security that is unsuitable based on the information gathered from you in the Know Your Client form (KYC).
Other common titles and designations
The list below provides some common job titles found in the Canadian financial services sector and some commonly held designations associated with them. These designations—or the use of “advisor” in a person’s title—do not mean a person is registered or licensed to sell or give advice on specific investments or insurance products. They indicate what kind of education or experience a person has.
FCNB does not endorse any designation or profession. You should always verify the person’s qualifications before seeking advice.
Investment & Wealth Advisors (FCSI, CSWP)
You will find these people working at investment firms managing individual client portfolios. The designation Fellow of the Canadian Securities Institute (FCSI) means the individual has advanced education and experience in financial services. The Chartered Strategic Wealth Professional (CSWP) program trains people to manage the portfolios of high net worth individuals.
Investment & Portfolio Managers (CFA, CIM)
People in these positions may hold a Chartered Financial Analyst (CFA) or Chartered Investment Management (CIM) designation. The CFA and CIM programs focus on portfolio management (making the investment decisions for clients) and investment analysis. People holding these designations may manage the portfolios of individual clients, investment funds, or businesses.
Financial Planners (ChFC, CFP, PFP, RFP)
Financial planners help you create a financial plan, give advice on things like tax, estate, and retirement planning. Chartered Financial Consultants (ChFC), Certified Financial Planners (CFP), Personal Financial Planners (PFP), and Registered Financial Planners (RFP) take courses and write exams to get their designation. Financial Planners need to be registered if they sell or give advice on specific investments.
Insurance, Health, & Estate Advisors (CIP, FCIP, CLU, CAIB)
Individuals working in the insurance industry may use specific designations. Some examples are, a Chartered Insurance Professional (CIP), Fellow Chartered Insurance Professional (FCIP), and a Canadian Accredited Insurance Broker (CAIB) and Chartered Life Underwriter (CLU).
CIPs, FCIPs and CAIBs all work in property and casualty insurance (such as home or automobile insurance). A CLU works in the life insurance industry.
Accountants (CPA; CPA, CA; CPA, CGA; and CPA, CMA)
Accountants provide a variety of services to clients and business owners, including tax advice, financial management, and business planning to name a few. The current accounting designation in Canada for new graduates is Chartered Professional Accountant (CPA). Accountants who have a legacy designation of Chartered Accountant (CA), Certified General Accountant (CGA), or Certified Management Accountant (CMA) must combine it with CPA (e.g. CPA, CA).
You will find lawyers specializing in corporate finance or securities working for firms, public companies, or regulators. Lawyers working with individual clients help with estate planning, taxes, and business law among other things.
University Finance & Business Degrees (BCom/BComm, BBA, MBA)
Individuals whose university education focused on finance and business often work in the financial industry in a variety of roles. They may hold a Bachelor of Commerce (BCom/BComm), Bachelor of Business Administration (BBA), or Masters of Business Administration (MBA). Often, these degree holders will hold other finance-specific or accounting designations.