Given that most financial advisors concentrate primarily on wealthy clients, who then provides support to the wider population?

Wealth Building thorugh Free Financial Advice

If you’ve built a million-dollar portfolio, the financial advisory landscape looks very different for you than it does for the average household.

People often ask me for advice on finding the right financial planner. The reality is that $1 million tends to be the tipping point: an asset level that makes finding a high-quality advisor simpler. Below that threshold, the search can get complicated, often requiring a deeper understanding of how financial advice models work in Canada and what key questions to ask potential advisors.

While there are excellent financial planners available to those with less than $1 million, the challenge lies in the sheer number of professionals working with the mass market who may not always have the client’s best interests in mind. A recent report from Ontario’s insurance regulator revealed troubling findings: out of 130 insurance agents investigated, enforcement actions were taken against 65, or 50%. The prevalence of bad actors in the industry makes choosing a trustworthy advisor even more critical.

Higher-net-worth individuals also tend to be more open to fee-for-service models, paying advisors on an hourly or flat-rate basis rather than through commissions or percentage-based fees. This model is particularly valuable for "HENRYs" (high earners, not rich yet), but fee-for-service advice still represents a small part of the Canadian market.

To better understand investment minimums, I spoke to financial planners about why they use them and how they handle clients who don’t meet their requirements.

Jason P, senior partner and financial planner at a Wealth management Firm, sets a $1 million minimum, with exceptions for clients who might soon reach that level. Children of existing clients are also served without a strict minimum, though their services are often scaled to their needs.

“Minimums are essentially about revenue,” Jason explains. “Our model is high-touch, with comprehensive planning and quarterly meetings. With only so many hours in a year, the math just doesn’t work to provide that level of service to an unlimited number of households.”

Jason also highlights a systemic issue in Canada: high operational costs for financial planners compared to the U.S. “Here, you can’t run a solo practice affordably. We need a conversation about reducing the cost of advice distribution in Canada,” he says.

When clients don’t meet his firm’s minimums, Jason refers them to advice-only financial planners who charge for planning services rather than asset management. “The planning is what’s most important,” he emphasizes.

Some Wealth Management Group, doesn’t have a strict minimum but works primarily with niche groups like midwives, sales professionals, and small business owners. While there isn’t a hard floor on asset size, new clients are expected to commit at least $1,000 monthly toward their financial goals.

A majority of the population fall below these thresholds. (Only 1.36% of the Canadian tax filers earned more than 250K$ CAD in 2022 - https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110000801&pickMembers%5B0%5D=1.1&cubeTimeFrame.startYear=2021&cubeTimeFrame.endYear=2022&referencePeriods=20210101%2C20220101).

That’s why we offer our Financial Literacy sessions at no cost. Our primary goal is to work with those who may not be able to afford traditionally expensive institutions, ensuring they receive the guidance they need. We are committed to educating and assisting individuals and families in planning for a stable financial future, irrespective of their current financial standing.

Our mission is to enable Canadian Residents in building wealth through free financial advice.