You'll also minimize the chances of making a bad choice, which can mean an adviser who does anything from providing bad advice that costs you money to simply ignoring you as a client.

Here's one more reason for putting in the effort to find the right adviser. If you take a flyer on someone, you may just find yourself having to conduct another job search in a year or two. Really, aren't you too busy for that?

The first task in your search is to find candidates for the job of providing you with financial advice.

Ask for referrals from friends and family who are happy with their advisers, or check the Yellow pages under both financial planning consultants and investment advisory services.

You can also ask your banker for a referral to an investment adviser at the bank's affiliated full-service brokerage. Many banks also employ in-house financial planners these days.

Another option for finding the names of planners is to consult the Web sites of the Canadian Association of Financial Planners (http://www.cafp.org) or the Financial Planners Standards Council (http://www.cfp-ca.org).ok

If possible, get a feel for an adviser by looking at his or her Web site. Then, make a telephone call to see about setting up a face-to-face meeting.

Ask a couple of preliminary questions to make sure the meeting won't be waste of time. What you're doing here is the equivalent of scanning a candidate's résumé to see if an interview is warranted.

Most importantly, you'll want a quick run-down on the adviser's background, the kinds of advice provided, and whether he or she typically handles clients with accounts that are the same size as yours.

As for your interview, you'll need a list of questions. Here are seven that will help uncover what you need to know.
1. What are your professional qualifications?

Legitimate advisers have successfully completed a training course of one sort or another and then passed an exam that entitles them to a professional designation. Two standard designations you might well encounter are Certified Financial Planner (CFP) and Registered Financial Planner (RFP). Examples of other designations are the banking industry's Personal Financial Planner (PFP), the insurance industry's Chartered Financial Consultant (ChFC) and the securities industry's Registered Representative (RR) and Certified Investment Manager (CIM).

Ask the adviser to describe what her designation means to you, the client.

For example, the CFP means an adviser is bound by a code of ethics and is required to take 30 hours a year of continuing education courses, while RR generally refers to an investment adviser at a full-service brokerage who has passed several industry training courses.

Believe it or not, anyone outside Quebec can call themselves a financial adviser. If you're talking to someone who doesn't have any professional designation, end the interview.
2. What is your professional experience?

Hey, everyone has to start his or her career somewhere. The question is, do you want advice from a novice?

This isn't meant flippantly. If you're young and have relatively uncomplicated needs, an eager rookie might be a perfect match. But if you're a high net worth client in need of help with retirement planning, tax help and investment advice, then you'll want someone with a solid track record.

Remember, experience is not just the number of years in the business. It's also the level of exposure an adviser has had to issues relevant to you.
3. What services do you provide?

On the most basic level, an adviser might provide an investment plan and suggest investments such as mutual funds, guaranteed investment certificates and stocks. Advisers may also provide a more complex financial plan that addresses tax, insurance and retirement issues.

Don't assume an adviser can do it all for you. Some advisers make a living mainly from commissions from selling mutual funds.
4. How are you paid?

There are three main ways that advisers are paid, the most common being through commissions on the sale of investments. Some advisers work on a fee-based model, where they charge you a set percentage of your assets each year, maybe 1 to 2 per cent. Other advisers work on a fee-for-service basis, where they charge a flat rate for a detailed financial plan tailored to your needs.

If you're talking to a commission-based adviser, you need to have an in-depth chat about exactly where the commissions will come from. For example, a broker would charge commissions on trading in stocks, mutual funds and bonds (brokers sometimes say there's no commission on bonds, but the fact is the commission is folded into the price you're quoted).

Where mutual funds are involved, ask whether funds are sold on a no-load basis (no commissions to buy or sell), with an up-front sales charge or with a deferred sales charge (DSC). If there's an up-front commission, ask how much and whether the amount is negotiable. A typical front-load would be in the 1- to 3-per-cent range.

DSC funds are sold with no up-front commission, but you'll pay redemption fees on a declining scale if you cash out of the fund company in the first seven years after you buy. It's a matter of personal preference, but it's probably worth paying a small front-load to avoid being a prisoner to a DSC fund.

Put a big, fat check mark in your notes if the adviser mentions that he receives a 5-per-cent commission from the fund company for selling a DSC fund.

Also, watch to see if an adviser raises the issue of trailer fees at some point in your discussion of compensation. Trailer fees flow from the fund company to your adviser and her firm to pay for continuing customer service. For a typical equity fund sold on a front-load basis, the adviser and her firm would share in an annual payment of 1 per cent of your invested assets; for a DSC fund, it would be 0.5 per cent.

Trailer fees are invisible to investors, but they're a key part of an adviser's compensation.
5. What's your investment philosophy?

Here, you're looking for an idea of what kind of investments an adviser typically suggests, and what investing style he favours.

Try mentioning your risk tolerance, your age and your life goals, and then ask the adviser for a rough idea of what type of portfolio he'd suggest for you. Does it sound too risky -- i.e., too much in stocks? Does it sound too wimpy -- i.e., too little in stocks? Also, is the adviser hot to trot on gimmicky stuff like emerging market funds for your registered retirement savings plan?

If you have any of your own investing preferences, make sure the adviser is in tune. For example, you may want to add stocks or exchange-traded funds, but your adviser thinks mutual funds are the way to go. Note that many financial planners are licensed to sell only funds.
6. What are your other clients like?

There's a saying in real estate that you don't want to buy either the biggest or smallest house on a street. Likewise, you don't want to be an adviser's largest or smallest client. Ask the adviser for her average client portfolio size, or average annual income. If you're way beyond this league, you might want to look for an adviser with a higher-end clientele. Conversely, you'd be right to worry about getting your fair share of attention if most of an adviser's clients are lot richer than you are.
7. What should I expect from you?

Find out how often you'll hear from the adviser by phone and by mail, whether you'll be fobbed off on an assistant or associate after the first meeting and whether you'll have annual reviews of your account or financial situation.

Answers will depend in large part on what kind of advice you seek. If it's strictly investment help, then a written investment plan and annual reviews might be sufficient. If you want a complete financial plan with special attention to retirement planning and tax minimization, you'll require a lot more time and commitment.

What you're trying to avoid here is an absentee adviser whose only contact with you is your monthly or quarterly account statements.

Another issue you can touch on at your discretion is whether the adviser has ever been the subject of disciplinary action. You can check on this by calling the adviser's professional association.

You may have to conduct a few interviews to find the right candidate. If you sweat the details, though, you'll never have to fill the position of financial adviser again.
rcarrick@globeandmail.ca
The heart of the matter

Three well-established financial advisers were asked for the top questions they would ask a prospective adviser. The unanimous answer: How do you get paid, and what services to you provide?

Warren Baldwin, regional vice-president of T.E. Financial Consultants Ltd. in Toronto: "The old saws that have been so often reported about clients hearing that the adviser is 'paid by the mutual fund company, you don't pay anything' or 'all the details are in the prospectus' are completely unacceptable and a prospective client should avoid this type of misleading person. Also, all advisers should list the services to be provided/included for the fee or commissions involved."

John Nicola, Nicola Financial Group in Vancouver: "These questions cut to the heart of the matter. Other issues are interesting, but less critical."

John De Goey, financial adviser with Assante Capital Management Ltd. in Toronto: "The point I would seek to clarify is that full disclosure is provided in writing before transacting any business. The Canadian Association of Financial Planners has made it mandatory for all members to have both a compensation letter and a letter of engagement to use for all clients. Non-CAFP members should not use their non-membership as an excuse."