This blog was developed in partnership with CIBC.
Moving to Canada requires attention to detail. You’re learning a new banking system, figuring out unfamiliar tax rules, and trying to make smart choices in a place where everything feels different. If you’re someone who wants every dollar to count and you’re thinking about your long-term future, working with a financial advisor might help you build the foundation you’re looking for.
This guide walks through what financial advisors do, how they can help you, and how to find one who fits your needs.
What Is a Financial Advisor and What Can They Do?
A financial advisor helps you make decisions about your money. They look at your situation, understand what you’re trying to achieve, and suggest ways to get there with expert knowledge of the playing field. From personal investments to investment properties and even your business’s cash flow management, they have the answers and strategies that will have you feel more confident making big and small financial decisions.
Explore the different financial advisors available to you at CIBC.
Who Regulates Financial Advisors?
Financial advisors have to act within certain best practices. In Canada, advisors are regulated by different organizations depending on what they do. For example, the Canadian Investment Regulatory Organization (CIRO) oversees investment dealers and mutual fund dealers across Canada, with some provincial bodies also having oversight in this field of financial planning.
Understanding Fiduciary Duty
Within the constraints of these regulatory bodies, some financial advisors have what’s called a “fiduciary duty” to you. This means they’re legally required to put your interests first, ahead of their own financial gain. While others work under a “suitability” standard instead, which means they need to recommend investments that are suitable for you, but not necessarily the absolute best option available.
When you’re talking to an advisor, ask directly: “Do you have a fiduciary duty to me?” and you’ll receive a clear yes or no response.
Core Services Financial Advisors Provide
Saving Techniques
Even putting aside $50 or $100 each month adds up over time — think of it as your future self sending you thank-you notes. A financial advisor can help you figure out what’s realistic for your budget and set up automatic transfers, so saving happens without you having to think about it.
Building Equity and Investment Management
Once you have some savings beyond an emergency fund, investing helps your money grow faster than it would sitting in a regular savings account gathering dust.
A financial advisor builds a portfolio suited to your situation, choosing a mix of investments, like stocks, bonds, and other assets, based on when you’ll need the money and how comfortable you are with the way that the market changes. Every investment carries some risk, so advisors assess how much makes sense for you based on your timeline, your financial obligations, and how you feel about seeing your account value fluctuate.
Account Optimization
Canada also has specific registered accounts that offer tax advantages, and knowing which one to use is like having a secret weapon when investing:
- Tax-Free Savings Account (TFSA): Your investments grow tax-free, and you can withdraw money anytime without paying tax on the growth.
- Registered Retirement Savings Plan (RRSP): Gives you a tax deduction now and lets your money grow tax-deferred until you withdraw from the account in retirement.
- Registered Education Savings Plan (RESP): Helps you save for a child’s education with government grants added to your contributions. Yes, free money from the government.
An advisor helps you decide which accounts to use, how much to contribute to each, and what to invest in within them.
Where Is Your Money Being Drained?
Many people don’t realize they’re paying more than necessary through monthly bank account fees, high-fee mutual funds, transaction fees for trades, and advisor compensation built into investment products.
An advisor can review where your money is going and suggest alternatives. Kind of like finding out you’ve been buying bottled water when there’s a perfectly good fountain right there.
Buying A Home in Canada
In pursuit of your larger goals in Canada, financial advisors can also help there. One secret: Buying a home in Canada usually requires a down payment, with the minimum being 5% of the purchase price for homes under $500,000. Though you’ll pay mortgage default insurance if you put down less than 20%.
Let’s say you want to buy a home in five years and you’ll need $40,000 for a down payment. That’s about $650 per month if you save in a regular account with no growth. But if you invest that money and earn an average 5% annual return, you’d only need to save about $590 per month to reach the same goal.
It’s tips like these that a financial advisor can walk you through — ways to make your money work for you in pursuit of your larger goals.
Tax Planning: Pay What You Owe, Not a Penny More
Canadian taxes can feel complicated when you’re new to the system. Tax planning isn’t about avoiding taxes you owe. It’s about organizing your finances so you’re not paying more than necessary.
Financial advisors consider taxes when deciding what investments to hold where. For example, investments that generate interest income are taxed at your full rate, so they’re often better held in registered accounts like RRSPs or TFSAs.
Retirement Planning
Most people who work in Canada contribute to the Canada Pension Plan (CPP). You become eligible to receive CPP retirement benefits as early as age 60 or as late as age 70, with the amount changing based on when you start.
Beyond the CPP, your retirement income might come from your RRSP, TFSA withdrawals, non-registered investments, or other sources. An advisor helps you build these savings and eventually create a plan for withdrawing from them efficiently.
How to Find the Right Financial Advisor
Top 3 Interview Questions to Ask
- Fee Transparency: “How are you compensated?” and “What will I pay in total, including all fees?” Advisors might charge flat fees, hourly rates, a percentage of assets they manage, commissions on products they sell, or a combination. Get a clear breakdown.
- Investment Philosophy: “What’s your approach to investing?” Their philosophy should align with your preferences. You don’t want someone who thinks cryptocurrency is the answer to everything if you’re looking for stability.
- Client Communication style: “How often will we meet or communicate?” You want someone who can explain things clearly without talking down to you.
Top 3 Red Flags to Avoid
- Pressure Tactics: Be cautious if an advisor pushes you to make quick decisions. Good advice doesn’t come with a countdown timer.
- Unrealistic Promises: No one can guarantee specific investment returns. If it sounds too good to be true, it probably involves a time machine or fraud.
- Poor Communication: If an advisor doesn’t answer your questions clearly or makes you feel uncomfortable asking questions, keep looking.
Your Financial Foundation Matters
Finding the right financial advisor as a newcomer to Canada can help you make the most of every dollar you earn and build toward your future goals. The key is understanding what advisors do, knowing what questions to ask, and finding someone who takes the time to understand your situation.
Taking the time to find the right advisor now can make a meaningful difference in what you’re able to achieve in the years ahead.
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