When starting a career, is it worth consulting a personal financial advisor to guide us with our investments? The answer is not black or white. It all depends on our wallet and the person we trust.
For his part, Jean-Pierre Gueyie, professor in the School of Management Sciences at UQAM, is categorical: “I recommend that all people without financial qualifications seek the help of a counselor who specializes in personal finance.
Yes, such a professional’s fees can be high, for managing your assets, but you could lose more (or less out of pocket) without his or her valuable advice, according to the professor.
“There are pennies to be taken that are worth paying the costs.”
Never better served than self
Hubert Coté Lecoin, founder of the Freedom 45 personal finance podcast, doesn’t see things the same way. His response was equally firm: “No, it’s not worth it.”
For him, the management fees are too high.
“If we decide to invest, for example, $ 10,000 a year in an advisor, the costs after 20 to 30 years represent tens and tens of thousands of dollars lost.”
To anyone with an investment portfolio of less than $ 100,000, Hubert Côté Lecoin suggests stand-alone investments. “In any situation a counselor will give you a better return on investment than doing it yourself,” he believes.
Good to know: management rates are lower when you have more money. For example, those with a capital of $ 500,000 pay a lower percentage of management fees to holdings than those who invest less than $ 100,000.
To promote autonomous investments, Hubert made a culinary analogy. People who take care of their own investment are like people who want to learn to cook. It can be quite long and complicated before you really master the kitchen, but, ultimately, you are able to make delicious food without spending too much.
Requiring the services of a consultant is like doing business with a ready-to-eat delivery service. Everything is already done for the client, but it is expensive.
Instead, Hubert recommends passive investment in exchange-traded funds. “It’s the equivalent of a good old family dinner,” he explains. No need to know how to cook, no need to pay anything, you go to dinner, you sit down, you eat, you have fun.
This method of investing works, with no management fees, with just two or three clicks on any online brokerage platform, such as Questrade or Wealthsimple.
Continuing his gourmet analogy, Hubert explained that these platforms work like a grocery store where baskets are full. These are forecast baskets full of diversified stocks. Just in case get one and go home to enjoy.
For Hubert, self-directed investing has never been easier than in 2022; that is why he advises not to miss the opportunity.
“If you have someone else invest your first $ 1,000, it’s the equivalent of asking someone to learn to walk for you: you’re always on all fours,” he describes. -siya.
But in addition to financial advisors, a term that covers anyone who will help you manage your money (broker, insurance agent, employee of your financial institution), there are financial planners that go beyond portfolio management.
Their work is more focused on the long term by helping clients achieve their life goals. They evaluate its finances as a whole by considering, among other things, all the legal and fiscal dimensions relevant to its achievable goals.
Goals range from buying a home, funding children’s education, becoming self-employed, or moving in with a romantic partner. We usually consult a planner for important events in our lives.
“Yes, it can cost money, but it’s an investment that can bring us peace of mind,” said Chantal Lamoureux, president and CEO of the Quebec Institute of Financial Planning (IQPF).
In fact, any service has value. Depending on the complexity of the financial situation, the rate-usually per hour-will vary.
It is also possible to shop around for your planner by checking their profile on the website of the Autorité des marchés financiers to ensure their skills and thus build a bond of trust.
The golden rule according to the CEO of IQPF is to use it sooner rather than later.