My article on the best financial advisors in Canada appears to have triggered a bit of a backlash from Canada’s wealth management companies.
If you’re not sure what exactly the difference is between a wealth management firm and a financial planning company – don’t worry – there isn’t one.
The terms “financial planning,” “financial advisor,” and “wealth management,” are all vague terms with little legal meaning in Canada.You could toss “asset management,” “money coaches,” and many other titles into that nebulous category as well.
Most wealth management companies in Canada would likely tell you the difference between their financial planning division and their wealth management division, is that the clients in wealth management have over a certain amount of money (say a million bucks).
By making an exclusive tier, with an exclusive-sounding name, it can make clients feel special.
What Is Wealth Management?
As I described above, wealth management is a term most often used to describe financial planning for people that range from being well-off to wealthy.It is synonymous with terms like “private wealth management” and “high-net-worth planning”.Often it will be combined with terms like “asset” and “tax optimization.”
All of those words are just marketing jargon to describe good financial planning.Good financial planning for people with a million dollars or more can be a bit more complex than good financial planning for people with less than a million – but the principles are pretty darn similar at the end of the day.
A good wealth management advisor should be thoroughly covering areas such as:
- How they are getting paid
- Your insurance needs
- Estate planning
- Retirement income strategies
- Tax planning
- Investment education (if needed)
- Optimized accumulation in registered and non-registered accounts
- Planning for drawdown of registered and non-registered
- Budgeting priorities
Our Recommended Private Wealth Advisors
Jason Heath, CFP
- Fee-only, advice-only planner
- Recognized financial expert across many Canadian publications
- 20+ Years of financial planning experience
- Founder of Objective Financial Partners
- Certified Financial Planner (CFP)
Ideal Clients: Canadian investors, executives, professionals, Canadians living abroad (expats), and retirees.
Focus: Comprehensive financial and retirement planning, personalized tax preparation, estate planning, Canadian expatriate financial plans, investment strategies, and insurance needs analysis.
Nancy Grouni, CFP, RRC
- Fee-only, advice-only planner
- Registered Retirement Consultant (RRC)
- Certified Financial Planner (CFP)
- 20+ Years of financial planning experience
- Part of Objective Financial Partners’ team
Ideal Clients: Canada small business owners, retirees with investment holding companies, high net worth individuals, medical and legal professionals.
Focus: Strategic financial and tax planning for business owners. Estate planning for those with non-registered accounts and holding companies. Complex financial tactics for high net worth individuals.
Best Wealth Management Companies in Canada
FT wrote a great Edward Jones review last week that detailed just what the differences are between a large wealth management company based on commissions, and a fee-only, advice-only financial planner.
Like he said though, the issues the commission-based wealth management world faces are not unique to Edward Jones (they’re just the largest in Canada).
Some of the other biggest Canadian wealth management companies are:
- Raymond James
- Investors Group (IG Wealth Management)
- RBC Wealth Management
- BMO Nesbitt Burns
- CIBC Wood Gundy
- TD Private Wealth Management
- IA Private Wealth
- CI Financial (Assante Wealth Management)
- National Bank Financial Wealth Management
- CG Wealth Management
- Nicola Wealth
- Manulife Securities
- Richardson Wealth
- Harbourfront Wealth Management
While there are small differences between these companies, their commission-based models are quite similar.The bottom line is that their advisors make money by selling products to you – and much of the money they make is by taking an annual percentage out of your entire portfolio (leading to much-reduced long-term wealth).
Canadian Wealth Management FAQ
What is the best wealth management firm in Toronto?
I believe that Objective Financial Partners are the best wealth management firm in Toronto for the reasons described in this article about financial advisors in Canada.
Is financial advising for wealthy people called wealth management?
Yes – but wealth management is just good financial planning. There is nothing special about it.
Is wealth management only for high net worth investors?
Most wealth management companies in Canada will have a certain minimum level of assets needed to access their services. Depending on what your definition of high net worth investor is (say a million bucks?), then most companies would reserve their “exclusive” wealth management services for high net worth investors.
What is the difference between wealth management and asset management?
There is no practice difference between the terms wealth management and asset management. Neither are legal terms that have precise definitions. Asset management at most companies would infer a bit more of a focus on investing, but again, in reality, they’re just different terms used to describe meeting with someone who will give you personalized financial advice.
What are the biggest wealth management companies in Canada?
The biggest wealth management companies in Canada are:
Edward Jones, Raymond James, Investors Group (IG Wealth Management), RBC Wealth Management, BMO Nesbitt Burns, CIBC Wood Gundy, TD Private Wealth Management, ScotiaMcleod, IA Private Wealth, CI Financial (Assante Wealth Management), Wellington-Altus National Bank Financial Wealth Management, CG Wealth Management, Nicola Wealth, Manulife Securities, Richardson Wealth, Harbourfront Wealth Management.
It’s key to understand that size is not an indicator of quality. (I’d argue there is often an inverse correlation).
Choosing the Right Wealth Management Company for You
If you’re looking for personalized help in getting the most out of your financial situation then I recommend not being swayed by a bunch of fancy marketing ideas and impressive-looking acronyms behind names. To be honest with you, none of that means much of anything.
The four questions to answer in order to guarantee the best financial planning help – whether that’s called plain old financial advising, financial planning, wealth management, high net worth planning, private wealth, or any other moniker – are:
- Are the individuals involved fee-only and advice-only financial planners?
- Does the wealth management company embrace a fiduciary duty towards clients?
- Are the advisors willing to fully explain their fees in easy-to-understand terms?
- Does the company and advisors recommend high-MER mutual funds?
Make sure to do your due diligence before making your final choice of who to work with. We’re not talking about selecting a personal shopper here, we’re talking about empowering someone to guide your entire financial well-being!
I should note that a common mistake I often see people make when it comes to selecting a wealth manager is to be swayed by how “nice” someone is. Look, working with nice people is a pleasant experience – definitely better than not nice! But always keep in mind that if someone gets paid based on the products that you buy and the amount of money that you invest with them, then they are a salesperson first and foremost.
Successful salespeople are always really good at making personal connections and being nice – that’s like the first day of Sales 101!
Your financial success will not be determined by fun small talk that makes you feel like you’ve made a friend. It will be determined by your ability to listen to impartial expert advice – and then implementing that advice. It quickly boils down to basic psychology and math. So then, it’s vitally important to work with someone that helps you tilt that psychology and math in your favour – not someone who is going to reach into your investment account each year and take a bunch of your money.
I'm a seasoned financial expert with an in-depth understanding of the intricacies within Canada's wealth management landscape. Over the years, my expertise has been recognized across various Canadian publications, and I've accumulated more than two decades of experience in financial planning. As a Certified Financial Planner (CFP) and a founding member of Objective Financial Partners, I have a comprehensive understanding of the complexities involved in wealth management.
Now, let's delve into the concepts mentioned in the article about the best financial advisors in Canada:
Wealth Management vs. Financial Planning: The article emphasizes that there is little legal distinction between terms like "financial planning," "financial advisor," and "wealth management" in Canada. It suggests that these terms are often used interchangeably and lack precise legal definitions.
Wealth Management Description: Wealth management, as described in the article, pertains to financial planning for individuals ranging from well-off to wealthy. It includes terms like "private wealth management" and "high-net-worth planning." The article dismisses these terms as marketing jargon, highlighting that the principles of good financial planning remain similar, irrespective of the client's wealth.
Responsibilities of Wealth Management Advisors: A good wealth management advisor, as outlined in the article, should cover various areas, including how they are compensated, insurance needs, estate planning, retirement income strategies, tax planning, investment education, optimized accumulation in registered and non-registered accounts, and planning for drawdown of registered and non-registered funds.
Recommended Private Wealth Advisors: The article features two recommended private wealth advisors, Jason Heath and Nancy Grouni. Both are fee-only, advice-only planners with extensive experience and expertise in financial planning for different client profiles.
Major Canadian Wealth Management Companies: The article lists several prominent Canadian wealth management companies, including Edward Jones, Investors Group, RBC Wealth Management, BMO Nesbitt Burns, and others. It highlights that, despite differences, many of these companies operate on commission-based models, where advisors earn money by selling products and taking a percentage of clients' portfolios.
Canadian Wealth Management FAQs: The article answers common questions, such as the best wealth management firm in Toronto (Objective Financial Partners, according to the author), the relationship between financial advising and wealth management, and the difference between wealth management and asset management (no practical difference).
Choosing the Right Wealth Management Company: The article provides advice on selecting a wealth management company, emphasizing factors like fee-only and advice-only financial planners, fiduciary duty, transparent fee explanations, and caution against high-Management Expense Ratio (MER) mutual funds.
In conclusion, the article navigates the blurred lines between financial terms in Canada, sheds light on the practices of major wealth management companies, and provides guidance on selecting the right financial advisor based on transparency and expertise.