Margaret Johnson

Credit Solutions

A column by Margaret H. Johnson. As featured on MyTelus.com and Shaw: Finance.

Margaret H. Johnson ACE, RQIC, has over 35 years of financial industry experience in both lending and collecting. She is an Accredited Insolvency Counsellor, Registered by Industry Canada.

 

Financial Advisors E-mail
How Professional are they?

Professional advice on matters of personal finance has been available to the public for sometime now. The wealthy pay investment counsellors(advisors) and tax planners for their advice and the “not so wealthy”, pay credit or debt counsellors for their advice.

So where does everyone else go for advice?

Commission Sales People

There are many people that want financial advice but are unsure as to who they can trust. At Solutions we often get calls asking us how to hire a financial advisor. Here are some tips.

Some financial advisors have a special interest in promoting their ways to invest our spare dollars. While some are very knowledgeable in their own areas of finance many of these “advisors” are commission sales people - their income is derived directly from their sales – so their advice may not be unbiased – just as some debt collectors are paid on commission. – The sooner you buy or pay the more they get paid.
So “buyers beware” – Always read the fine print before you sign anything.

Types of Advisors
  1. Investment counsellors –(advisors)
  2. Credit/Debt Counsellors
  3. Financial officers – sales representatives of – the banks, trust companies, life insurance agents, brokers or mutual fund agents
  4. Financial planners – types of salary structure
    • fee only planners
    • commission only planners – this may also apply to # 3
    • mixture of commission and fees
Investment Counsellors (Advisors)

For years professional investment counsellors have advised the wealthy on how to take care of their money – these counsellors usually have a vast knowledge of income tax laws and investment returns. Many investment counsellors will invest funds and handle all the day-to-day decisions for their wealthy clients. Some of these counsellors are Personal Bankers - if you are wealthy enough your bank may assign someone to work directly with you. The management fee is usually based on a percentage of the assets.

Most of us will never have to worry about how to find one of these people.

Credit/Debt Counsellors

People that are facing financial challenges or others that wish to learn more about money may seek the help of a credit counsellor. Credit counselling is a relatively new industry and therefore I strongly suggest that you be careful when choosing your counsellor. Ask to see the Government issued license, are they bonded, are they insured – ask for proof. What makes them qualified to give you advice. Ask your counsellor who is paying for their time – nothing in this life is free! Someone is paying them to give you advice, ask whom – and then ask why. Why would this person or company pay for you to get “free” advice?
Conflict of interest - you be the judge.

Financial Officers

Most of us are not wealthy or deeply in debt - so the officers at our financial institutions are our resource for much of our financial information – these positions may also be paid on commission sales or salary plus commission basis. So do your homework before accepting any advice – you can read books, or take courses before you speak with an advisor that way you will be sure you are getting the best advice possible for your situation. There are also some very useful computer programs to help you learn about investments and money management skills.

Financial Planners

Planners usually sell financial products, mutual funds, guaranteed investment certificates, life insurance, bonds, and stocks, they make their income from sales commissions. Some smaller firms are fee-only planners, whose income depends solely on client fees and who sell no financial products. Planners that combine the two, charge fees for the planning and receive commission on the products they sell.

One of the big concerns here is the potential for a conflict of interest that could arise when the financial advisor does not charge for the advice but gains his or her income from the sale of a product. Seeing as the planners’ income is derived from the sale, it is possible for such a planner to find that clients’ financial solutions are somehow directly linked to the products they sell.

So be careful. Ask to see their license and ask what their educational requirements are.

I recommend you do your homework before you enlist the assistance of any “financial” person.

Some Questions
  1. How do they get paid? Who is paying for the service and why.
  2. What are their qualifications? Educational background, experience, licences.
  3. What area of finance do they specialize in? Debt, credit, investment.
  4. What sort of report will you receive – will the report be written – can you see a sample plan before you begin?
  5. What are the costs – get it in writing.
  6. Has the advisor or the company ever been sued?
  7. How does the advisor keep his or her skills updated?
  8. What associations is the advisor currently partnered with?
These are just a few questions to ask any financial person –before you give them your money.

Financial “advising “is an emerging profession – advice is offered sometimes for a fee – those who do not charge a fee are depending on someone else to pay for their time. The question to ask is what are they getting out of it.

Investigate before you invest - your time or your money. Nothing in life is free!

Remember, if you are experiencing financial difficulties do not wait. Speak to a professional today.

Do you have a story that you would like to share about your experience with a debt collector? Email me – This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Margaret H. Johnson ACE. RQIC is president of Solutions Credit Counselling Service Inc. and Women and Money Inc. She can be reached by e-mail at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it  
Or call toll-free in Canada – 1-877-588-9491 
Phone: (604) 588-9491 Fax: (604) 588-9007 

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