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Telling a good financial advisor from a bad one is probably one of the most important skills you can learn in regards to your financial future. A good counselor will help you make good choices because they have taken the time to learn about you and your situation.
Although bankruptcies have fallen in Canada over the past few years, a tough global economy affects everyone. Because of this, many Canadians have taken to relying on financial advisors to help them navigate the very rock waters of the global financial crisis. Unfortunately for some, though, not all financial counselors are the same and, thus, there are some that might not provide you with the best advice for your particular situation.
With household debt in Canada recorded at $1.41 trillion in a recent report from Certified General Accountants Association of Canada (which translates to $41,740 per Canadian), the right advice could be the difference between financial stability and financial ruin.
While it may seem obvious, many people forget to ask questions. As a consumer you have a right to know everything about the industries in which you invest your money and time. When you shop for a car or a house or even for groceries, you do the research and you ask the questions to make sure that you are getting the best possible price for the best possible product. The same should go for hiring a financial advisor. Thus, be sure to ask all kinds of questions when you are considering and comparing potential financial advisors.
When it comes to your financial future, every question is important so do not be afraid to ask anything from simple advice to planning out an entire strategy. Similarly, do not be afraid to question the integrity, credentials, and certification of your potential advisor. A good financial advisor will know that there are many people in the industry who are less qualified and also that there are people out there perpetrating scams on innocent consumers. Again, do not be afraid to ask questions. Consider:
- Are they licensed or part of a licensed organization?
- Is this a registered charity?
- Are they certified?
- What are the costs? (most operate on a fee)
- What options are available to me as a consumer?
Of course, there are always risks when you choose to bring in another person to help you with your money. This is why it is extremely important to ask the right questions and to ask as many questions as you possibly can. One thing you should know, though, is that legitimate companies keep things simple.
If you have to sign a complicated contract and they won't or can't explain it to you, then you should probably walk away, particularly if they are asking for fees up front. In summary, here are few tell-tale signs of when you should consider walking away:
- Complicated contract
- Pressure for immediate sign-up
- Upfront fees
- Excessive fees
Of course, these are only a few of the signs but this will give you an idea of what to look for.
There many benefits to working with a qualified and reputable credit counseling agency. One of these is that they not only present you with options but they can also help to get you more time. Having more time removes the stress of immediacy and allows you to think more clearly about what you need to do and to make a decision based on information and not fear.
Another benefit is that legitimate companies do not typically charge excessive fees and nor do they change their prices as the process goes along. As a matter of fact, they might even be willing to overlook or waive some of the processing fees if it is something you truly cannot afford. This is a positive trait that is true of many businesses and it helps to legitimize companies.
During tough financial times you need to know how to tell the difference between a good credit counselor and a bad financial counselor. This is important because one will lead you down the path of success because they understand you. The other will lead you into more confusion and possibly even financial failure.