What is a Fee-Only Financial Advisor (and are there any in Canada)

Many Canadians are seeking for financial advice. While many young Canadians, including many of our readers, make their own financial research and use investment apps or approach more “modern” solutions such as robo advisors, there are still many financial advisory fans out there.

If I were to guesstimate who might be the target audience it would be people who have a lot of assets to an extent it’s worthwhile to have a professional have a look, people who are too busy to manage their assets and have limitations preventing them from just letting it all sit passively, or people who simply don’t feel confident enough managing their own funds like that.

In other words, those looking for a financial planner in Canada are predominantly people who want to plan ahead for the future in a definite way with a seasoned professional guiding them through the multitude of aspects – not only what to invest in but how. In other words, how to save up on tax year on year and accumulate more money.

Customers search for reliable, friendly and cost-effective financial planning

Whichever be the reason, when Canadians are in search of a reliable and safe financial advisor, they should also look into the fee structure and make sure that they are opting to use Fee-Only Financial Advisors.

These are financial advisors which are charging a flat fee for their services regardless of portfolio size or performance and are able to provide a more objective overview of one’s financial situation than financial advisors who are incentivized by recommending certain products and earning commissions to do so and/or earn money relative to the turnover of money they are handling.

In this article we will explain the reason for choosing fee-based financial planners (whether those who charge hourly, or a fix annual cost, or a combination of the two).

Why Opt for a Fee-Based Financial Advisory?

Fee-only financial advisors are compensated solely through a flat fee, which is agreed upon in advance. This is different from fee-based financial advisors, who may charge both fees and commissions, creating a potential conflict of interest. The fee-only model ensures that the advisor’s recommendations are objective and aligned with your financial goals, rather than being influenced by the potential for earning a commission. This makes them a strong contender for the title of best financial advisor in Canada for those who value unbiased advice.

The fee-only model also offers greater transparency when it comes to financial advisor costs. You know exactly what you’re paying for, making it easier to budget for financial advice. This is particularly beneficial for those with complex financial situations, where hidden fees can quickly add up.

Services Offered by Fee-Based Advisors

Fee-only financial advisors offer a comprehensive range of services, from retirement planning to tax strategies. Unlike fee-based planners, who may be incentivized to sell you specific financial products, fee-only advisors focus solely on providing advice. This can include budgeting, investment strategy, estate planning, and even advice on insurance products. Some advisors also offer “advise-only” services, where they provide financial advice but leave the implementation up to you.

This comprehensive approach makes fee-only advisors particularly valuable for those with complex financial situations or those who are looking for highly personalized advice. Whether you’re looking for a fee-only financial advisor near you or considering virtual consultations, the range of services offered can be tailored to meet your specific needs.

Understanding the Costs

Financial advisor costs can vary widely, but fee-only advisors are generally more transparent about their fees. Costs can range from a flat fee for a one-time consultation to ongoing fees for continuous advisory services. Some fee-only advisors also offer a sliding scale based on income or assets, making their services accessible to a broader range of clients.

While the upfront costs may seem high, the long-term benefits of unbiased, expert advice often outweigh the initial expense. When considering the costs, it’s also worth noting that some fee-only advisors offer a free initial consultation, allowing you to assess their services before committing.

Based on our sampling, we figured out most fixed-fee advisors in Canada costs would be in between $1,500 and $3,000 a year.

Are Financial Advisor Fees Tax Deductible in Canada?

One common question is whether financial advisor fees are tax deductible in Canada. The answer is generally no, but there are exceptions. For example, if you earn income from investments and use the advisory fees to earn that income, you may be able to deduct the fees. However, the rules are complex, and it’s advisable to consult a tax professional for advice specific to your situation.

In summary, fee-only financial advisors offer a transparent and objective approach to financial planning. Their fee structure eliminates many of the conflicts of interest that can arise with commission-based models, making them an excellent choice for those seeking unbiased advice. Whether you’re just starting your financial planning journey or looking to make a change, a fee-only financial advisor offers a range of benefits that can help you achieve your financial goals.

How to find a good fee-based financial advisor near me?

With a country as vast as Canada is spanning across 4,700 miles, one of the major concerns in finding the best fee-based financial advisor is to find an advisor near where you’re located. Geography can be highly limiting in that sense. The major consideration is finding someone reliable, experienced, capable and fair (in terms of pricing but also someone who doesn’t try to push other products down your throat and is focused on absolutely giving you the best advice based on your circumstances).

Technology – which was propelled by the pandemic – has a solution in store for this issue. You no longer necessarily have to meet your financial planner face to face. It can be done on the phone, through email or through Zoom / Skype / any other software.

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One firm that meets all of our criteria would absolutely be Jason Heath’s Objective Financial Partners which offer a diverse array of services including financial planning, tax accounting, estate planning and so forth and it’s all 100% fee-based with costs per hour / session / year which are not relative to your portfolio’s size. They also operate heavily as an online financial planning service through Zoom, so you have that. Jason is very well known in Canada writing for the Financial Post and Canadian Money Saver on retirement related topics for the most part.

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