Latest / The Chiro Money Show / 024 | The Incentives Driving the Financial Professionals on Your Team
Transcript
- Chris: Welcome back to the Chiro Money Show, where we're helping chiropractors make better financial decisions so they can build stability in their finances and a lifestyle that they love. We're your hosts, Chris Scheele and Scott Campbell of Align Wealth. Welcome back. Scott: Good to be back. Another day, another week, another episode. Chris: Yeah. Yeah, we're cranking these out, like, I'm surprised that we're still going. Scott: Yeah, I think this might be number 25. Could be. It feels like we've been going for a while. Yes, it's great. We're having fun. Having some fun. Chris: Yeah, it's It's Yeah. Man, we're almost at the half a year point. If we say episode a week and 25 episodes, we're ⁓ good. Scott: Yeah. I remember first episode you're like, I don't think we'll ever get to 100 episodes. We're quarter way there. Chris: Yep. We're, we're making progress. Yeah. Scott: We're endurance folks, right? We're gonna go the distance. We'll hit the 100, no problem. Chris: That's that's ⁓ Yeah, there is lots to talk about. Scott: Yeah, that's never going change. There's always going to be a lot to talk about when it comes to money. And we're just getting rolling even more so with getting guests on the show. not only we have things to say, there's other people that need to come on the show and share what they have to say. ⁓ more of that to come for sure. ⁓ Chris: Yeah, for sure. Yep, that's great. Cool. Scott: So Chris, feeling fired up today? Chris: Yeah, I'm a little fired up right now, Yeah, we'll get into it. I'll share, yeah. First, yeah, before I share the story that got me fired up and my friend Matt showed up, Matt, friend of the show, we're gonna talk about how you become a friend of the show, because people need to know. Yeah. Scott: I'm fire it up. Set the stage for the topic today. How do you become a friend of the show? We haven't talked about this Chris, do you become a friend of the show? ⁓ Chris: I don't know. The bar is pretty low in my opinion. It's like, do you listen to the show and have you provided us some kind of feedback, criticism or something, encouragement? Then you're a friend of the show. So the door's open. We're looking for friends. Yeah, that's fine. We take that from like Anya, friend of the show, gave us some constructive criticism today. Scott: the Yeah. We'll take criticism, for sure. Yeah. That's right. My lovely wife Anya gave me some great criticism. out to her. Chris: Yeah. We also got like, feel like we got a few, few friends of the show, Brad and Monica always ask about write-offs. Yeah. Friend. Friend of the show. Yeah. Scott: Yeah, great friends of the show for sure. Yeah, on that on that note, we really, really want to do an episode on on questions, like, mail, like a mailbag episode, right? Like a q &a. go to the Chiro money show.ca, scroll down and submit a question. We'd love to answer it on the show. Chris: You name it. wonder what Anya's gonna submit. Scott: Time was out. Chris: I will tell maybe it'll just be criticism. That's fine. That's Yeah Okay, so let me tell you what happened here friend of the show my buddy Matt we got to talking ⁓ and somehow we on the topic of accountants CPAs and Matt this comment that kind of stuck with me ⁓ and got even more fired up. He was like Scott: Could be, it could be. Chris: There are a lot of accountants out there that are just yes men or yes people for that matter that are just saying yes you can write that off. Yes we can do that. Yes let's write that off. ⁓ He's like, it's no different than a financial advisor going out there and promoting a better investment return, which we know is bogus. Like it's, if, if you're working with an advisor based on them guaranteeing you some kind of higher expected return in your investment accounts, that's not a great place to be. on the flip side, ⁓ Matt compared that to, to CPAs that are out there trying to solicit a clients by, ⁓ yes, we can write everything off. Yes, that can be a deduction. Scott: Yep. Chris: No, that's not that's not cool. Like you can't write off your fancy private like club membership. That's just a social club. That's not an eligible expense Your golf club membership for the private course. No, that's not an eligible expense. We know this CRA hates golf memberships again, we're not accountants. This is not tax advice but Scott: Yeah. Mm-hmm. Chris: Go read the tax act, like it's in there. so if your accountant, ⁓ this all started is, if your accountant is just saying, yes, we can write that off, yes, give us more expenses, let's make more, we need more expenses, like you can afford to write more off, like be And then that kind of got me thinking anyway about like, man, what are the incentives and motivations for all the financial professionals that we work with? We know they exist and we're not there, we're not trying to throw shade on anyone or like, you know, point fingers or whatever, but I think it's and important for our clients and listeners to know that like there are motivations and incentives everywhere that exist with all the financial professionals that you will eventually work with in your lifetime. And it's important to know how those may... may play into the advice and decisions that you're making. Scott: For sure. What I hear you're saying is that, yeah, like you said, we're not gonna throw shade on anyone, but we wanna talk about the financial team that you're inevitably gonna build over the course of your career. Financial planner, accountant, bookkeeper, maybe a business coach, lawyer. We're gonna touch on all those on what we kinda see as common incentives. Maybe red flags, questions you should be asking. around. just creating distrust, but more so literacy around like, here's what you should know and make sure that here's the things that you should be aware of with these relationships that you have with various professionals to make sure you are getting the best advice that you can. you're making clear decisions because you've asked the right questions to your professional. ⁓ Chris: Yeah, yeah, for sure. Yeah, so we're gonna go through them all, of that falls into your list of your wellness team as our recent guest coined it and let's dive So accountants, we've already of started there, painted that picture a little bit. I think the first kind of red flag or thing to be aware of is like, is your accountant just saying yes to everything and saying, yeah, we can write that off and, and are they, are they walking that fine line again? We're not here to point fingers or judgments, but they're The Income Tax Act is pretty clear and for the most part, sure there's some grey areas and there's a few things we can kind of do that are creative maybe, but ultimately it's pretty black and white. Business expenses are business expenses, personal are personal. ⁓ Scott: I it's ⁓ asking right questions to your accountant. There's varying degrees ⁓ of accountants there that want to, ⁓ I'll call play with fire and tread that line of what you can and cannot do based on what the CRA tax act says you or cannot do. So I think it's important to be asking the questions to your account. what, like what's my current call it audit risk, based on what we're doing and how we're, you know, running expenses through the business and whatnot, like ⁓ how, much I at risk of there being a red flag be put up and the CRA says, Hey, we want to do an audit ⁓ on maybe certain line item on your expenses or we want to do a full kid and caboodle audit on, on everything. And they can sometimes go back, I think up to three years in terms of doing a full audit on your, on your books. Right? I think that's, from my opinion, maybe there's a bit of disconnect in terms of what that truly means. in you can put through a lot of things as an expense. And it's, I kind of say it's not a problem until it becomes a problem, in the sense that you do potentially get audited. And then it's like, well, this opens up the whole bag of worms in the sense of having to provide receipts ⁓ and all the documentation to verify that everything you put through your business is an expense is a verifiable and proper like legal business expense and if you can't provide that you're opening yourself up to back taxes and penalties and stress like the whole nine yards there and then when you really think about it it's like was it was it worth it for the for the bit of tax that I saved by taking some of my maybe personal expenses and trying them and trying to shove it through the business. Chris: So at the end of the day, you're good accountant is going to ⁓ say and they're going to question some of the things that you might want them to do. ⁓ And they're, if you're not getting that, if you're just getting yeses, that's probably a bit of a flag. next, I think we should jump to like fees and structure and ⁓ the services that offered from your accounting firm. again, this is probably going to apply to every professional. ⁓ You know without it goes without saying your fee should be should be clear it should you should know exactly what you're getting for that and bottom line like that's it Scott: Mm-hmm. Chris: When it comes to accounting firms, you know, some of them offer just tax filing. Some have more, forward looking tax advice, tax engagements that they can offer. Some of them also offer bookkeeping services ⁓ combined with tax filing. So like, that can be really good to have these kind of bundled services through your CPA firm. But I think it's just very clear. Like you have to have clear expectations, clear fees around that and know that you know. If you're hiring a CPA, but you already have a great bookkeeper, but you know, they also have an in-house bookkeeper, for sure there's a bit of incentive there for them to bring your bookkeeping services over to them. It might make their life easier, but ultimately it is also going to drive up the revenue that they're billing you. Scott: for sure. One of our recent guests that her episodes coming out next week, Stroynk, she kind of mentioned the kind of the point around, I think it's more ideal to have that bookkeeping service separated from your CPA. Then you have two different parties ⁓ your books, ⁓ a financial planner and a bookkeeper who can explain your books. ⁓ they do is really good, thorough bookkeeping ⁓ prepare that financial year and hand it off to the accountant for them to do their then own assessment. and review of your books and your financials. Chris: Yeah, great point. Yeah. I think that's really the main things with regards to like the normal tax preparation style, accounting work that most of our listeners are gonna need for their PC and their personal tax filing. Before we move on to the next professional, the other thing ⁓ to maybe on ⁓ CPAs and kind of came up ⁓ recently. in our world is restructuring, corporate restructuring, stuff like that. This is more kind of nuanced and maybe they would consider it like one-off like type of work that ⁓ might have some professional in their firm that does that type of work. But getting clear understanding of what the fee is for that type of work ahead of time, understanding, yeah, is it an hourly rate? Are you paying based on, know, what is it based on? That can be super challenging and a lot of the time not very clear at all between the CPAs and also the lawyers that might be involved to do that type of corporate restructuring type work. Scott: Two things that I'll add here over on the notice CPAs and one of those being that to your original point there on, on write offs and being a yes account and I, can put that through. I think the primary reason like we step back and think about why that might be the case is that the accountant doesn't want to lose you as a client. So if they're going to push back too much and say, you know, I know you want to optimize and pay as little in taxes possible and the accountant pushes too back and they're maybe too conservative, then that clients say, well, you're not saving me as much in taxes as I hope you would, or I think you could based on my assumptions. I'm going to try to find another accountant who like I said, might be willing to play with fire, but again, you only get burned until once you get audited, right? That's where the problem occurs. the last thing wanted to share too ⁓ on the top accountants and around, even around fees and all this is communication. I think an accountant with exceptional communication skills is probably the biggest thing that I would look for. I know we're talking about incentives here, but from an accountant standpoint and working with a professional like that, someone you're, you should be in like fairly regular communication with throughout the year. They need to be able to explain things you in a way that you understand. It's clear, you understand it. You could relay it back to, you know, a spouse. Like it's not just going over your head, which ⁓ sometimes we see all too often where accountants speak in like accounting kind of lingo and terminology. ⁓ it's like, whoop, right over the head and not quite clear on what that all meant. How does that impact me? are the pros and cons? What does this all mean? big picture. Chris: Yeah, kind of bring it down to my level type stuff, right? Yeah, yeah, yeah, for sure. points. Okay, move on to our profession. Financial advisors general. I think similar to CPAs, there's a wide spectrum here. And like, there's so different types of advisors out there, just like different types of accountants and areas of focus and whatever. Scott: Exactly. Yeah, can't be understated. Yep. Chris: But it's probably most most seen on the financial advisory space, It's like ⁓ ⁓ spectrum of how they're compensated the type of work that they do You that type of thing. So I guess to start with here You know Red flags, I think that's probably the place to go. Let's let's just look at red flags First of all, if your advisor can clearly explain how they're compensated or they deflect or refuse to answer that question, that is a huge red flag. Any financial advisor, doesn't matter how they're compensated, they should be able to clearly explain it to you and show it to you without financial lingo. ⁓ Just up. Here's the fee schedule, here's how I get paid, here's when I get paid, et cetera. Scott: Yep. And here are the services that you get for said fee. Chris: Right, exactly. they have any, yeah, clearly written services? Have you signed an engagement letter that identifies what those services and deliverables are? ⁓ Red number two might be ⁓ making without going and doing what we call the real financial planning work. Scott: Yeah. Chris: If you're starting with an advisor and they jump right to you need this insurance product or you need this investment product, that's a product led relationship. You haven't done the depth of financial planning that likely needs to be done to determine if that's an appropriate product that is connected to your overall financial plan. That's a big red flag. And yeah, there's... Unfortunately, some of the time, the reason that that is happening is because of those incentives. an advisor is primarily paid based on the insurance or investment business that they place, they're likely to put an emphasis on starting with those types of services. Scott: there's still a large portion of financial advisors that are purely commission based. or if they're selling investment products, they receive what's referred to as a trailer or like a percentage of your portfolio, but it's kind of embedded into the overall fee that you're paying. And it's not very clear of like what portion of it is the cost of the actual fund that I'm in versus what's actually going to the advisor. again, if the advisor is not being very clear on how they're getting paid, ⁓ the total is that they're getting paid over the course of a year and for what services, like you said, Chris, it's a bit of a red flag in our opinion, one thing that's interesting about financial advisors in Canada right now is that it's not a regulated term. Like anyone can hang a shingle and call themselves a financial advisor. There are really great designations out there like the Certified Financial Planner. Like there are designations out there that you should, that's a good question to be asking. Like how are you designated? What have you gone through to say that you can provide professional financial planning advice? You know, it's quite easy to get through a weekend course Chris: Mm-hmm. Scott: to learn how to sell an insurance or investment product and then call yourself a senior financial advisor. You could do that if you wish to do so, right? So it's asking those clear questions like what are your credentials? How do you get paid? What are your services? What can I expect from you? How often will I hear from you? Those should be, like if you're working with a legit, you know, what we call like a real financial planner, doing good solid work, all those questions should be very easy and straightforward to answer. Chris: Yeah. Yeah, you should know those questions, Or the answers to those questions, pardon me. Scott: Yep, exactly. Yep. final thing that I think is important to bring up that I think is well known, but every time I share with someone, say, ⁓ that's really interesting. And that's around ⁓ the of what's referred to as ⁓ the standard ⁓ and fiduciary standard. what I mean by that, right now in Canada, you might've heard the term fiduciary. ⁓ And basically what a fiduciary means is that you have to do what's in the best interest of the client at all times, right? From a suitability standard, if not to pick on the but they kind of operate in what's referred to as the suitability standards. So ⁓ when you're getting advice from say a bank advisor, they have their product shelf of select investment products, like they might only be able to sell like RBC funds or Scotiabank funds or whatever the case is. funds or those products might be suitable, but ⁓ not necessarily be the best thing for you, right? They pass to some level of like, all right, this is okay. This could work, but doesn't necessarily mean it's the best thing for you. Canada, we don't have a true fiduciary standard for financial advisors. The only thing that we do have that I think is an on that. If you are a member of the Financial Planning Association of Canada right now, you have to essentially pledge that you are working under a fiduciary standard and always doing what's in the best interest of clients, both in terms of you know, recommending insurance products, recommending financial advice and recommendations, the investment products that you're suggesting to clients, for example, you're, doing what you feel is in the best interest of that client. Chris: Another last point to add there is like, there's not like the fee disclosure on what we would call like more of the like standard or old school like service model that advisors offer. there wasn't even the full disclosure required in the investments accounts until 2026. So they've gone through all these different changes in how fees need to be communicated, the embedded fees on your funds, ⁓ then there's trailing fees that you pay your advisor, things like that. ⁓ Those have legally have been on an annual basis until now. Scott: Yep. Yeah, so that's referred to as CRM3 came live in January 2026. ⁓ So now if you're with a registered advisor and receiving your investment, your annual statement, there now will be a clear breakdown ⁓ of how you're what paying is a total fee and where that fee is like broken up So there's going to be a lot of folks out there who like, wow, I didn't realize I was paying my advisor this much. it goes back to, it's like, a good fee is worth it if you're getting a corresponding service that represents what you're paying in that fee. Is there a good exchange of value there? Chris: valuable. Scott: if you open up your and you're paying your advisor, you know, a five figure fee, right? And you're only seeing that advisor say once a year for a quick portfolio review. Is there a good exchange of value there? Likely not. Chris: Probably not, yeah. But we're gonna dive into this further ⁓ in a future episode, right? We're gonna go into you should be asking ⁓ financial or when you're considering hiring a financial advisor and just kind of do a deep dive on that topic in general, Yeah. ⁓ right. Scott: Yeah, for sure. soon. ⁓ Next one we'll touch on real quick is advisors out there that are only doing insurance and we're going to classify those as insurance agents. Full disclosure, at Align Wealth, Chris and I are both insurance licensed and we sell insurance products to our clients, but we feel strongly that the insurance products that we're recommending to clients are tied to the financial plan. And there's good reason for recommending products that we're suggesting. There's also advisors out there who just do insurance planning. And I know some great insurance agents out there, but there's also a lot of bad apples that we need to be aware of. Why don't you tell us, Chris, what are the red flags that we should be looking out for when it comes to, say, working with an insurance agent that all they do is insurance plotting for clients? What should you be aware of when you're engaging with that type of professional? Chris: This is probably not like top of mind, but it just comes up for me is like, if they're trying to recruit you to join their team they've made a recommendation to you, i.e. an MLM type company, ⁓ you run like ⁓ said, Like, unfortunately that ⁓ is still thing in Canada and yeah, Scott: That's a quick one. That's a quick one to cross off your list. Yeah. Chris: ⁓ and just overall discussion and understanding the policy. clear communication. the purpose and reason that you are getting an insurance policy in place be clearly defined? Okay, we need this policy to fill this need or address this risk. This is the policy, here's how the policy works, here's the terms and conditions, here's when it might kick into place. Like it's gotta be that simple that we can clearly define it in a couple of sentences or paragraphs maximum. If it's more complicated than that this is an insurance only agent and they haven't been consulting with your CPA or your financial planner and it's corporate structure stuff, like if it's that level of detail and you haven't done that, that's another big red flag. Scott: Mm-hmm. Mm-hmm. think one of the biggest incentives for insurance-only agents ⁓ that they get paid a higher commission if the product they're selling comes with a higher premium. So you're working with an agent like this ⁓ and concern that you're only presented with say one option and if the first reaction is, that premium is really high. I would guess that they're probably a product in front of you that is really more their incentive to make that commission cheque as large as possible. Where I think what, what I think important if you're working with an insurance agent is that that insurance agent is giving you options and explaining those options thoroughly. You know, ⁓ you know, I'm going be recommending life insurance for example. We can look at term insurance, can look at permanent insurance, there's different term lengths, here are the pros and cons to permanent versus term and getting into a 10-year term versus a 30-year term. If they're explaining all that in good detail and giving you options of like here's the cheapest option but here's why it's cheap, here's the most expensive option and here's why it's expensive, then they're doing their due diligence of saying I'm laying it all on the table giving you the pros and cons, then you can make a really informed decision. But if they're coming to the table saying, got one option for you and it's the most expensive option and I'm going to take everything off the table, that's the red flag that we want to be aware of. Especially if it's like, I'm going to put a whole life permanent life insurance policy in front of you and it's going to cost you a thousand dollars a month. There's room for concern there. Yeah. Chris: Should we move to business coaches? Scott: Sure. Chris: Okay, not so much here. We don't have a whole bunch of context, but just want to point out a couple of things. First of all, anybody can call themselves a coach. No credentials required, no necessary. So take that with a grain of salt. It is what it is, right? There are great coaches out there that have clearly defined... Systems and structures and they help you implement that and set goals and achieve those goals and that is all great It can you know can be very impactful for for any chiropractic business to to work with an awesome coach red flags to aware of that, ⁓ know from our limited experience is be aware of the pressure tactics ⁓ this a limited spot opportunity like This is just right? people are doing their best to sign up today and you get a discount or there's, you know, we only have one spot left creating urgency. If they're really pressure, high pressure, just be aware. also if they're. Yeah, exactly. Right. You know, take your time, ⁓ sleep it, get other, get other opinions from other ⁓ chiropractors, at other business coaches and what they're doing. Scott: You get a discount if you act today. Versus waiting. Yeah, for sure. Chris: you can have a good honest conversation about it without it being a sales ⁓ then it's probably not the best coach because that's not what you want. ⁓ Scott: Yep. Yeah, for me looking for a coach, if I was a chiropractor looking for a coach, there's a few things like I would want to know like, how does that coach define success for me? What's the outcome that we're looking for? If it's not going well, what are the terms and conditions for exiting exiting out of a coaching engagement? What are your credentials at a coach? What makes you a specialist in terms of what it is that you do and for whom you do it for? Some simple questions really at the end of the day, but you know, again, for chiropractors specifically, I want to talk to some other chiropractors who have worked with you ⁓ to hear their experience to make sure that this could potentially be a good fit. Chris: Yeah, for sure. Yep, enough said. Pretty straightforward. lastly, ⁓ wanted to touch on something that kind of is or can be common across all of these professions, and that is referrals. Okay, so. Yeah, it's great that your professional, whether that's your CPA, your advisor, your lawyer has other financial professionals in their or it is that we use these days. ⁓ I have one on my desk here, Scott, so that's what made me think of it. ⁓ In their LinkedIn. ⁓ in their LinkedIn following, have other professionals that they can recommend that they have worked with other clients and they've engaged with before. Like that's great. You want that from the financial professionals you work with. You want to make sure they have a network that they can you to the other professionals you need on your team, if and when you need them. But the nature of those referral relationships can introduce some incentives and motivations, right? So. If we're a CPA that has a referral to an insurance advisor to place insurance business, that CPA firm could be getting a kickback from that insurance advisor when policies are placed. Right. And that same thing can be said probably across multiple of these professions. Right. So, yes, that's good to have referrals, but we have to understand like, is this a referral? Is this the right person for me because the professional that's making the recommendation understands my situation, my position, and they're picking the best person for me? Or is this a referral because this is who they work with and it's easy for them to say go talk to that guy because that's who I do my insurance with and it doesn't matter if he has any expertise in your area or not. Or if you guys align philosophically or in a values from on your values or whatever like it's got to be the right referral not just the easy one. Scott: For sure. So don't ever be afraid to ask, does this referral with any kickback or incentives if I go work with ⁓ professional that you're recommending that I go work with? In an ideal situation there might be, say looking to refer someone to an accountant, here's two different accountants or three different accountants that you could go interview and connect with. See what one, these the pros and cons of each and ⁓ this might be the best fit for you but go talk to them all and see what the best fit is for you. ⁓ Chris: Yeah, I think a lot of professions have that kind of thing that where they are supposed to give multiple options. ⁓ you that as ⁓ the Like I would want that if somebody's saying, hey, ⁓ go to this accountant. here's three options that I think could be good for you. ⁓ But it's said than done. It's hard to find three awesome people could be good for every unique situation that exists there. So. Scott: Mm-hmm. you. Chris: I think all professionals are trying to do their best, know, the well-meaning ones are trying to do their best to connect the clients ⁓ the right people and there's ⁓ very limited incentives involved in that. Whereas the bad apples, can be doing, making these or introductions to other professionals based on the incentives that they're getting, the kickbacks, the financial rewards that they're getting and very limited on. on is it suitable or is it in the client's best interest more importantly. Scott: closing, ⁓ else should be thinking about when it comes, overall, when it comes to building out your professional team, what are the key things we need to always keep in mind? Chris: Yeah. how everyone is getting paid. Have expectations. Know when going to hear from your professionals, what the expectation is around communication, ⁓ how and you pay them, what exactly you're paying them for. You should want... an advisor or professional that welcomes your questions, that encourages you to ask questions, that get the hard questions even, yeah. That doesn't get defensive or vague when the ⁓ hard are asked. Yeah. Scott: The hard questions. Yep. sometimes it's important to have those answers in writing versus just verbal answers in some cases. Chris: Yeah, for sure. Get it in writing whenever possible. ⁓ You know, even if it's estimates or if a unique situation where ⁓ a has not gone through it before or financial planner for that matter, like it depends how. Scott: Yeah. Chris: The more complicated it is, the more unique it is, the harder it is to get an accurate price for the work that's probably going to be done on your behalf. So in that case, you might just need to get an estimate of the scope and try to get that in writing if you can. But yeah, just be aware. Anything else that needs to be said here? Scott: I don't think so. I think we covered it. Again, just to kind of reiterate, we're not trying to build distrust in the professionals that you work with. We just say it all too often where there's sometimes concern that some better questions should be asked, more transparency should be... made clear of what you're paying for, what the services are, and the potential risks of say, you know, working with an accountant that says yes to everything, there should be some, you know, pushback by some of your professionals, whether that be a financial planner or an accountant that pushes you, the client back and points out these blind spots and the risks of making certain financial decisions. Chris: right, let's leave it there for today. Scott: Sounds good, Chris. Thanks for the conversation. Chris: Yeah, once again. Scott: See you next week.