If you have money problems and want financial advice, it doesn’t really matter who you talk to, right?
While credit counsellors, debt consultants, mortgage brokers, accountants, lawyers, bankers and bankruptcy trustees all have some basic knowledge, all financial advisors are not created equal.
A chartered accountant or chartered professional accountant has a university degree and many years of practical experience. They have extensive knowledge of many money topics, such as taxes and building a financial plan, so if you have a problem with Canada Revenue Agency consulting with an accountant is a good place to start.
However, if you have debt problems, an accountant may not have the in depth knowledge of all options. They might be able to help you prepare your taxes, but they are not generally trained in debt relief options unless they have other credentials.
Lawyers are great for legal advice, so if you are being sued a lawyer can advise you on your legal options. If you are being sued for a past debt, a lawyer can explain how to defend yourself in court. Need in-depth tax advice, a tax lawyer may be able to help. However if the underlying issue is that you have too much debt, even tax debt, dealing with each creditor through a lawyer can be costly and won’t be highly productive.
Mortgage brokers and bankers are experts at lending, so they are the best professionals to explain the products they sell. A mortgage broker understands mortgages, and a banker understands loans, so they can tell you what loans you will qualify for based on your credit. However, if you have too much debt and don’t qualify for a reasonably priced loan or mortgage they may not have the expertise, and certainly don’t have the services, to help you improve your debt situation.
Bankruptcy trustees, credit counsellors and debt consultants are experts in debt management. Many may be accountants as well or come from other areas in the financial industry but they have expertise specifically geared towards helping you get out of debt.
However, here again not all advisors are created equal. It is also important to understand “what they are selling”, so you can determine the value of their advice.
A debt consultant makes money by charging you a fee and then referring you to a mortgage broker, banker, or bankruptcy trustee. If all they are doing is referring you to someone else, it may not be worth it for you to pay their referral fee.
A credit counsellor makes money doing a debt management plan, where you repay your debts in full, but at a reduced rate of interest. Along the way they can help you develop better budgeting and money management skills. This may be a good option for you, or it may be too costly. Make sure you understand what you will be paying and how this compares with other options. It’s also important to make sure the credit counsellor your are dealing with is accredited so that if you do choose that route you have a higher chance of success.
A bankruptcy trustee has a high level of debt expertise. Most bankruptcy trustees have a university degree, many are professional accountants, and all have passed an extensive training program that takes many years to complete. It is true that a bankruptcy trustee “sells” two solutions: consumer proposals and bankruptcy, but they are also required by law to give you a full assessment of all options, so they are a good source for information.
Ultimately it is up to you to meet with a financial advisor and ask questions. Satisfy yourself that you are getting informed, unbiased advice, because all financial advisors are not created equal.