I received a large severance from my employer that recently eliminated my job after 38 years. I plan to find an advisor, but because I have never had one before I am wondering what I should agree to pay for their services?
Ed
How to pick a good investment advisor
Ed, you are not the only one looking around for a new investment advisor. With the volatile stock market environment, many people have sent me comments and questions about how to move their portfolios to a new advisor. I would caution those investors on making any quick changes and selling stock at this time. Remember, the key is to maintain a well-diversified portfolio which includes bonds, cash, and high-quality stocks.
When you are looking for an investment “partner,” try to pick an advisor who really has your best interests at heart; something you will definitely need when weathering future market uncertainties. Please make sure to do your homework and find out what the firm and the new advisor’s value proposition is. It goes without saying that you should interview more than one and make sure you find a good fit with not only the advisor but the brokerage firm.
Now, let’s talk about fees. What should you pay? There are two types of fee structures – transactional or fee-based.
Many people use direct investing options these days to avoid high advisor’s fees and we are seeing an increased shift with millennials who simply don’t see the value in having an investment advisor. The young simply don’t want to pay the thousands of dollars just to sit down with an advisor and have a relationship with a banker. As more funds transfer into the hands of these new investors, advisors and brokerage firms may need to shift their thinking about their future fee structures.
Many bank financial planners typically are paid a base salary with a commission matrix based on how they grow their book of business and bring on new clients. Typically, fees are preset based on the mutual fund you choose for your portfolio ranging from one to 2.5 per cent.
Investment advisors are generally paid differently and on straight commission, making them highly motivated to ensure you make a profit, of which they, in turn, are compensated on. I have seen advisor fee-based services range from .75 per cent all the way up to three per cent. Some advisors act as personal bankers for ultra-rich clients, doing everything for them, hence I can see the higher fee structure. But, for most of us, we do not need someone to pay our bills and handle are budgets, so if you are paying more than 1.5 per cent for a fee-based portfolio, you may be paying too much. If you have different SMA products (Separately Managed Accounts), your advisor may increase their fee up to 1.8 per cent.
Bottom line, fees are all over the map and vary from one advisor to another and really should be based on your comfort zone. Do you feel that you are getting your money’s worth on your fee-based portfolio or would you prefer a transaction-based portfolio? Is your advisor a valued partner that you are willing to pay for, and most importantly, are you satisfied with their services?
It is always a good idea to periodically check out the competition, talk to your friends and see what they pay. Only you will know what feels comfortable to pay for investment advice.
Good luck and best wishes,
Money Lady
Written by Christine Ibbotson, Author of the best-selling book, How to Retire Debt Free & Wealthy, and a new book Don’t Panic – How to Manage your Finances and Financial Anxieties During and After the Coronavirus, available at all bookstores across Canada. If you have a money question, please email on website
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
