5 key questions for choosing an online investment advisor

by Invisor Last updated on June 30, 2015 Tags: Save Well

An online investment advisor is a person who is qualified to give financial investment advice and leverages technology to create a great client experience, making investing simple and convenient.

You may have heard the term “robo-advisor” in the news lately and this is another name for an online investment advisor. There is no actual robot involved – the term was coined to refer to the fact that portfolio management services are provided online with little human interaction.

But portfolio management and financial advice are as much an art as a science, and it is important to combine human knowledge and judgement with the benefits of technology. When setting up an investment portfolio, you will want to think about your goals, do your homework – and get started.

Think about your goals

When creating an investment plan, start by identifying your needs and goals. These can be straightforward such as saving for a down payment, funding your children’s education or planning for retirement. You may also have more complex needs, for example, tax management or estate planning.

Your online investment advisor can create an investment plan for you based on your goals, personal situation and risk tolerance and recommend an asset allocation, which means selecting the areas of the markets you want exposure to. It is a good idea to hold a diversified portfolio that aligns with each of your goals. Working with an online investment advisor makes it easy to monitor your portfolio, and your advisor can help you rebalance your investments as necessary so you remain on track to realizing your goals.

Do your homework

When choosing an online financial advisor there are a five key questions you will want to have answered:

  • What category are they registered under? Advisors registered as “Portfolio Managers” have a duty to act in the best interest of their clients. Investment advisors registered under other categories don’t have this duty. Be sure to choose an advisor who will truly act on your behalf so you have access to the best investment products available in Canada.
  • Who are the principals in the firm? It’s your hard-earned savings you are giving them to manage, so be sure they are well-qualified and experienced.
  • Are they aligned with a particular fund company? If so, there may be a greater push to sell just one family of funds rather than recommend other products that may be more suitable for you.
  • Do you understand the plan presented? A well compiled plan should serve as a road map towards realizing your financial goals. Look for what funds are included – does it include funds belonging to a “related” party?
  • Do you understand the total cost of investing? Online investment advisors typically help you significantly lower your costs of investing. However, ask to see the fund management expense ratio (MER), trading fees and investment management fees so you know your total cost of investing. Beware of services provided for free, especially the costs of trading. A known cost is better than a “free” service.

Get started

The most important part of any investment plan is to start one! Even if you only have a small amount to get started with investing, you will be amazed at how quickly it will grow – remember, your savings as well as the money you save on fees, compound over time. Check out our savings calculator to find out how much you can save.

If you want to get started with an investment plan, why not take our short questionnaire? Take the questionnaire now.

Invisor offers Canadian investors personalized investment management solutions at a fraction of the cost of traditional advisor models, without requiring any minimum investment amounts. Get started now to tell us a little about yourself and your goals, and we’ll find an investment solution just right for you.

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