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Inside the Market This is what scares people when choosing a financial adviser

What people fear most when choosing an adviser is selfishness - someone who puts their own interests ahead of the client.

Right on, investors. There are plenty of advisers who put clients first, but you can’t take that to the bank. Too many recommend products and actions that benefit them and their firms, primarily.

Investor fears in choosing an adviser were probed in a survey commissioned by a new online adviser rating and directory website called AdvisorSavvy. Twenty-three per cent of the 1,087 participants said selfishness was their biggest fear, followed by fraud at 21 per cent, fees at 18 per cent, lack of credentials at 14 per cent and a lack of experience at 7 per cent. Ten per cent said they had no fears - are they confident or oblivious?

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Most of these fears are easily addressed. For fraud and credentials, ensure your adviser is properly accredited to provide advice and registered to sell investments. Some other good anti-fraud suggestions can be found in this list published by the Canadian Foundation for Advancement of Investor Rights, or FAIR. Most importantly, avoid investments pitched with guaranteed or unrealistic returns, and always make your cheques payable to an investment firm and not an individual or other companies.

The reason so many investors are afraid of fees is that it’s hard to know if you’re getting a fair deal or not from an adviser. The Globe and Mail’s Investment Fee Disclosure Tool can help you see how an adviser or financial planner’s fees compare.

Selfishness is tougher to tackle because most advisers are not required to work to a fiduciary standard, which means putting client interests first. Suggestion: Ask an adviser to demonstrate how she or he puts your interests first when building investment portfolios and selecting securities.

If in-house investment products are recommended for your portfolio, ask for documentation on how they compare with competing products. Pay particular attention to the fees and commissions generated for advisers through the investments they recommend.

Try asking this question as well to find unselfish advice: What do you do as an adviser to help me succeed financially? Look for concrete actions that benefit you, not marketing blather.

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