Ever notice how many of life’s biggest goals have some financial component? Have you tried to master a foreign language or run a marathon without making a significant financial commitment? Try buying a home, starting a family or helping your kids go to university. Same goes for retiring early or leaving a legacy. Without disciplined planning and saving, these goals can just slip away.
Having an advisor can bring you closer to reaching your financial goals.
Like many other Canadians who are juggling a job and a busy family life, you probably don’t have time to figure it all out for yourself. Then again, you may feel you don’t have the expertise to tackle the complexities of your financial affairs alone.
Not just about retirement
Some Canadians start thinking about talking to an advisor in their 40s or 50s, when retirement first peeks over the horizon. Life-changing events such as buying a house or having a child can also trigger a financial reckoning and the need for advice. But your goals don’t have to be that large and you don’t have to be wealthy. In fact, 64 per cent of advised households in Canada started working with an advisor when they had less than $50,000 in investable assets.
Working with an expert has plenty of benefits
Turning to a professional for advice offers a huge advantage and can be the decisive factor in helping you meet your goals. Good advice might even help you surpass them. Surprised? According to a recent study, of those surveyed, Canadians with advisors financially outperformed those without.
While different advisors bring different professional and personal skill sets to the table, a solid advisor will do three things:
1. Learn about you. This includes assessing not just your finances, but also your family situation, short- and long-term goals – even your hopes and dreams. Just as important, your advisor will establish your risk profile. Are you the buttoned-down type of investor who avoids risks? Or do you relish the thrill ride of stock markets, with their potential big payoffs? An advisor may also be able to provide access to a network of professional resources such as accounting and legal services.
2. Build your plan. This is the all-important “advice” part. Your advisor will work with you to create a comprehensive plan that balances today’s needs with your goals for the future, easily adaptable to changes in circumstance. It should also have milestones along the way, so you can gauge your progress. A complete plan will most likely include:
- Disciplined savings: amounts to put aside on a regular basis
- A customized investment strategy: based on your risk profile and time horizon
- Debt management and cash flow planning: this should be part of every financial plan
- Tax strategy: to help minimize taxes, of course
- Risk management: life, disability and critical illness insurance, to help protect your family
- Retirement plan: depending on your age and goals, the plan may include projections of when you can expect to retire, and with how much money
- Will and estate plan: to protect your legacy
3. Adjust your plan. Life is all about change – often unexpected change. This means your plan should be flexible and subject to a regular review, generally once a year. That’s when you’ll sit down with your advisor to check your progress, revisit your goals and, if necessary, reset your course.
A prescription for long-term success
As you develop your plan, it’s important to be realistic about your expectations. An advisor won’t magically make your debt disappear or guarantee double-digit returns on your investments. He or she will, however, provide ongoing support and guidance so you can remain focused on your goals through the ups and downs life throws your way.
Be prepared, as well, to hold up your end of the relationship with some basic knowledge about the financial world. Start by reading the business section in your paper or following financial experts on social media. You don’t have to be an authority. But the more you know, the more you can be involved in some of the most important decisions in your life.
Regular checkups: your financial well-being depends on them
Getting started early on with an advisor and scheduling routine reviews can provide a considerable financial advantage in the long run. Be sure to ask questions and get the information you need to feel a high level of trust and comfort. After all, the healthiest and most rewarding relationship is one that will benefit you not just today, but well into your future.
Elaine Kelly MBA CFP FCSI
Senior Investment Advisor, Manulife Securities Incorporated
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