7 types of advisors

1. Customer service representative

You can often find this type of advisor at the financial institution where you have an accountAccount An agreement you make with a financial institution to handle your money. You can set up an account for depositing and withdrawing, earning interest, borrowing, investing, etc.+ read full definition or loanLoan An agreement to borrow money for a set period of time. You agree to pay back the full amount, plus interest, by a set date.+ read full definition. They usually help with one-time decisions, such as choosing a bank account or credit card. They can also help you compare loan or mortgageMortgage A loan that you get to pay for a home or other property. Often the loan is for 20 years or more. You make a set number of payments for a set amount each year.+ read full definition optionsOptions An investment that gives you the right to buy or sell it at a set price by a set date. The buy right is termed a “call” option, and the sell right is termed a “put” option. You buy options on a stock exchange.+ read full definition. And they may provide advice on short-termTerm The period of time that a contract covers. Also, the period of time that an investment pays a set rate of interest.+ read full definition investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition products such as savings bonds and GICs.

Customer service representatives usually get a salary from the financial institution where they work, so there’s no direct cost to you for their advice. But the cost of this advice is built into your service fees or the cost of your investment. And these types of advisors can only recommend products sold by the financial institution they work for.

2. Personal banker

Personal bankers work at banks and trustTrust An account set up to hold assets for a beneficiary. A trustee manages the assets until the beneficiary reaches legal age.+ read full definition companies. They’re trained to sell investments such as GICs and savings bonds. They may also be registered to sell mutual funds.

Personal bankers get a salary from the bank or trust companyTrust company A company that offers the same services as a bank, but can also manage estates, trusts and pension plans, which banks cannot do.+ read full definition where they work, so there’s no direct cost to you for their services. But the cost is built into your service fees or the cost of your investment.

3. Mutual fund representative

Mutual fundMutual fund An investment that pools money from many people and invests it in a mix of investments such as stocks and bonds. A professional manager chooses investments that match the fund’s goals for risk and return. You can redeem your fund units at any time.+ read full definition representatives are registered to buy and sell mutual funds on your behalf. The companies they work for are registered as mutual fund dealers. Mutual fund representatives are usually paid by the companies whose products they sell. They make money every time they sell a fund. If you decide to buy, the cost is built into the cost of your funds.

4. Investment representative

Investment representatives (commonly known as stockbrokers) are registered to buy and sell a variety of investments on your behalf, such as stocks, bonds, mutual funds, ETFs and closed-end funds. The investment firms they work for (commonly known as brokerage firms) are registered as investment dealers.

They make a commission when they buy and sell investments.

5. Investment advisor

This is an advisor who manages your investments for you and can provide investment advice on any type of security. They work for investment firms that are registered as portfolioPortfolio All the different investments that an individual or organization holds. May include stocks, bonds and mutual funds.+ read full definition managers. These firms can be independent or owned by banks. They may deal only with wealthy clients with at least $250,000 to investInvest To use money for the purpose of making more money by making an investment. Often involves risk.+ read full definition.

They may charge a flat fee for their services. Or, they may charge an annual feeAnnual fee A fee that is charged on an annual basis. One common occurrence of an annual fee is the fee charged by credit cards.+ read full definition based on the size of your portfolio.

6. Financial planner

A financial planner looks works with you to create a financial planFinancial plan Your financial plan should cover every aspect of your finances: saving and investing, paying down debt, insurance, taxes, retirement planning and estate planning.+ read full definition to help you reach your goals. They may advise you on financial planning, risk management, investment planning, taxTax A fee the government charges on income, property, and sales. The money goes to finance government programs and other costs.+ read full definition planning, retirement planning and estate planningEstate planning The plans you make to build and manage wealth for your lifetime and thereafter. Goals may include leaving the most money possible to your loved ones, with the least amount of taxes. Other goals may include caring for children, paying off debt or passing on a business.+ read full definition.

Financial planners can be paid in different ways. Be sure to ask your planner how they’re paid.

7. Insurance advisor

Insurance advisors are trained and licensedLicensed An advisor or firm that has met the standards set by the insurance industry. Regulated by the Financial Services Commission of Ontario (FSCO).+ read full definition to give advice about and sell insurance. Some specialize in certain products, such as property or life insuranceLife Insurance Insurance that pays cash to your family or other beneficiary after your death. This can give them income and help pay your funeral and other final costs.+ read full definition. Others sell a range of insurance products. Some insurance advisors may also be registered to sell investments.

Insurance advisors are usually paid by the companies whose products they sell. They make money every time they sell a policy. If you decide to buy, the cost is built into your insurance payments.

Key point

Anyone selling securities or offering investment advice must be registered with a securities regulatorSecurities regulator A government agency that enforces the securities act in jurisdiction it has authority over. This act is made up of laws that establish rules for issuing and trading securities. The Ontario Securities Commission is the securities regulator for Ontario.+ read full definition, unless they have an exemption. Check registrationRegistration A requirement for any person or company trading investments or providing advice in Canada. Securities industry professionals are required to register with the securities regulator in each province or territory where they do business.+ read full definition through the Ontario Securities Commission or Canadian Securities Administrators.

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