Questions to ask
Can I check your licences? In Québec, life insurance representatives are certified by the Autorité des marchés financiers and listed in its public register. In Ontario, life insurance agents are licensed by the Financial Services Regulatory Authority of Ontario. Mutual fund representatives are registered through their dealer and can be looked up in the CSA's National Registration Search. The register shows what the person is allowed to do.
How many fund companies and insurers can you work with? An advisor tied to one bank, one fund company or one insurer can only offer that company's products. Ask how many insurers they can place business with, and whether they can quote the market this week.
Who manages the money, and who checks on the managers? Some advisors pick individual stocks and bonds, some use ETFs, some select professional managers through funds. Ask who makes the day-to-day decisions, how often they are reviewed, and how the choice is compared after fees and after tax.
Who looks at my investments and my insurance together? Inside a corporation the two interact. Passive income can reduce the small business deduction, and money in a permanent policy grows differently from money in an investment account. When separate advisors handle each, their advice can pull in opposite directions.
Will you compare investing with insuring? Ask for investment only, insurance only and a combination, side by side, with the same capital and time horizon, costs and taxes shown, and guaranteed policy values kept apart from projected ones.
Have you set up corporate-owned policies before? Ask about holding company ownership, the capital dividend account, buy-sell funding and funding an estate freeze.
Will I get the analysis and the reasons in writing? You should receive a needs analysis and a written recommendation explaining why this product and this company.
Who checks the tax numbers? Your accountant should review the assumptions before anything is signed: the capital dividend account, the policy's adjusted cost basis, refundable taxes, passive income and how the money eventually comes out. Ask the advisor to send the summary to your accountant.
How are you paid, in dollars? Commissions and fund fees are normal. Ask what the advisor earns on each recommendation and what the total yearly cost of the investments will be, in dollars as well as percentages.
What happens to my file if you can't work? A one-person practice should have a written continuity arrangement, and your investment account should be held by a dealer, not by the advisor personally.
When will you ask me to sign? The answer you want to hear: not at the first meeting, and only after you have the options in writing.
Who does what
A corporate file involves several professionals. The plan works when each one's part is clear.
| Who | Their part |
|---|---|
| You | The goals, the priorities and every decision |
| Your accountant (CPA) | Tax returns, tax opinions, reviewing the numbers in any recommendation |
| Your notary or lawyer | Wills, shareholder agreements, estate freezes, corporate reorganizations |
| Your investment and insurance advisor | Choosing investments and policies, projecting their effect over time, the written comparison, coordinating so the pieces fit |
Warning signs
Pressure to sign at the first meeting. An illustration from only one insurer. A proposal to replace a policy without a written comparison and the notice of replacement. Tax promises your accountant hasn't seen. An investment cost you can't get in dollars.
How I answer these questions
My licences, background and continuity agreement are on the About page. How I compare funds and insurers, and who manages the money, is on how I compare. What I am paid, in percentages and in dollars, is on how advisor fees work and the compensation page. The steps, including when your accountant sees the numbers, are on what to expect.
For how bank and independent advisors differ, see banks versus independent advisors.
