Thursday, January 10, 2019

How Fee-Only Financial Planners Make a Difference

Some of the top questions you may have when it comes to hiring a financial planner are:

Who can I trust?

How do I know this person is working in my best interest?

Do any third party's benefit from the engagement?

What if I just want to pay for pure advice, via flat fee or by the hour?

One way to ensure the financial advice you are receiving is completely unbiased is to work directly with a Fee-Only Certified Financial Planner.

Here are some of the benefits of working with a Fee-Only Financial Planner:

1. Objective Advice

A fee only financial planner can provide unbiased advice as they do not receive compensation from recommending financial products. Their true value lies in the fact that they work directly for you.

2. Professional Designation

Working with a fee only planner who has the CERTIFIED FINANCIAL PLANNER® designation will ensure you will be working with a professional who has the knowledge, experience and most importantly the obligation to follow a code of ethics.

3. Fee Transparency

Fee-only financial planners typically charge by the hour, on a flat fee basis or by annual retainer. These fees are established and agreed to at the beginning of the engagement. They do not sell financial products with embedded fees or hidden commissions.

4. Comprehensive Financial Planning

A fee only financial planner looks at your entire financial picture. They help you establish lifestyle goals and provide a plan with actionable recommendations on everything from retirement, investments, and taxation to insurance and budgeting.

5. Represents Your Best Interests

A fee only financial planner's fiduciary duty is to put your best interests first. There is no sales pressure when working with these professionals as they provide objective advice and you pay only for their unbiased advice and recommendations.

Click here for a complete list of Certified Financial Planners in your area.
For Fee Only Planners use this directory created by John Robertson

Tuesday, December 4, 2018

10 Essential Retirement Planning Tools and Calculators

The first 3 tools can be found on the main site of @: Canadian Retirement Income Calculator

1. Canadian Retirement Income Calculator: 

Use this handy and simple to understand online calculator to get a snapshot of your income in Retirement. A certified financial planner is available to help provide insight on your numbers.

2. Cashflow Worksheet: Retirement Budget Planner:

Use this excel spreadsheet to estimate and calculate your net monthly expenses and income.

3. Retirement Savings Calculator: Compound Interest:

This excel worksheet helps you calculate the future estimated value of your retirement savings. See in detail the positive effect compound interest can have on your savings.

4. Morningstar: Research your investment portfolio:

Want to see how your mutual fund investments perform against their benchmarks? Morningstar is the best site to research the mutual funds in your portfolio.  Take a moment to view the MERs (mutual fund fees) associated with them and then use the calculator below (tool #5) to see how much you could be saving annually by switching to ETFs.

5. Investment Fees Comparison Tool: How do the MER's compare

Once you have researched the average MERs in your portfolio examine if you are overpaying for underperformance. ETF investments consistently outperform Mutual Funds and they cost less in annual management fees.

6. CPP Break Even Calculator: 

Please note this is a basic calculator and there are many factors to consider to come to a true break-even analysis; namely taxes and how the excess is spent or saved. If you want a quick snapshot of the benefits of waiting to take CPP, give this tool a spin.

8. MyService Canada: 

Obtain your CPP estimate and your statement of contributions.

9. CRA my account: 

Obtain your RRSP and TFSA contribution room, access tax slips and file T1 Adjustments conveniently online.

10.  MoneySense: The Cost of Retirement Happiness 

A look at three different budgets of retired couples. Two are real Canadian families, and one is a fictional example based on average spending amounts reported by senior couples to Statscan.

Friday, November 30, 2018

How To Avoid the Most Common Retirement Planning Pitfalls

1. Not completing a thorough financial assessment prior to retirement

Just as a personal trainer would begin every engagement with an analysis of your current fitness level, a Certified Financial Planner can help point out any gaps in your current financial plan.  The areas that can make the biggest impact are tax planning, lowering investment management fees and obtaining professional advice. These are often quick fixes that can make an immediate impact on your overall wealth. A comprehensive financial audit should be priority number one as you approach retirement.

2. Not exploring different scenarios that apply to your personal situation

Knowing if you have saved enough for early retirement is one of the most popular goals we help our clients with. By making financial projections over time and comparing them, we can determine if an earlier retirement date makes sense for you. We explore the opportunity cost of taking your defined benefit pension early and help provide insight into the different options available to you.

3. Not factoring in the increasing costs of medical care

While for most Canadians provincial health care plans cover medically necessary physician and hospital services, there is limited coverage for anything above and beyond basic care. Long term care nursing homes are partially funded by the government, with typical prices ranging from $1,800 to $2,600 a month for room and board. Wait times at these facilities can range from a few months to years in some cases.  Privately operated retirement homes come with a price tag of $2500 to $10,000 per month depending on your location, amenities and quality level of accommodations. Long term retirement projections are necessary to ensure you have a back up plan in case you need extended medical care in the future.

4. Ignoring the benefits of delaying Government benefits such as CPP and OAS

The majority of Canadians are entitled to two retirement pensions administered by the Federal Government: Canada Pension Plan (CPP) and Old Age Security (OAS). While everyone’s situation is different, if you don’t need the money or if you are still working, it often makes sense to delay taking CPP as your will benefits increase the longer you wait.  There is more to consider than just the financial numbers and it is important to consider other factors, such as your current health, projected incomes sources, and future cash flow needs.

5. Reactive Tax Planning

It is crucial that you take a proactive approach to tax planning in order the reap the full benefits of tax sheltering and income splitting in retirement. A comprehensive retirement plan will address these significant aspects of financial planning. Without a doubt, tax planning is the #1 area I feel my clients value guidance from me the most.

6.  Not Having a Plan for Your Downtime

Planning for the non-financial aspects of retirement are just as important as optimizing your financial health.
Entering retirement means having more time and freedom to enjoy the activities you love. Take the time to journal what you’d like to accomplish in retirement. Setting “Lifestyle-Priority Goals” can ensure when you do enter retirement it will be the best years of your life.

Saturday, November 24, 2018

5 Things Every Retirement Plan Should Include

1. Establish assumptions:

  • Inflation: will erode your purchasing power over time so it is important that you factor an estimate for inflation into your projections
  • Rate of Return on your investments: Depending on your asset allocation you will also need to estimate how much you expect your investments to return
  • Your Target Retirement Date: Select a point in the future when you would like to leave the rat race and enjoy the freedom that comes with retirement
  • Your expected Life expectancy: Projections as designed to ensure your money doesn't run out. You can use your statistical life expectancy based on your current age or choose 90 or above.

2. Determine how much will you spend:

How will your expenses change in retirement? Some expenses will increase; like travel and entertainment, while others will decrease; such as income taxes and payroll deductions.
Use our Retirement Budget Worksheet to start anticipating your expenses.

3. A Proactive Approach To Decumulation of Your Retirement Savings:

Knowing how and when to start withdrawing from your investment savings is crucial for both tax planning and cash flow analysis. Working with a Certified Financial Planner can pay dividends in this area as they provide professional guidance as well as insight into your own personal situation. Deferring your registered savings into the future is a great way to increase your wealth over the long run.

4. An Audit of your overall Financial Health:

A second opinion from a Fee-Only Financial Planner is a great starting point for any retirement plan. The trouble is often in finding someone you can trust. Here is what to look for:

  • Fee Transparency: How is the advisor or planner paid to provide you with advice?
  • Conflict Free Advice: Does the advisor have to recommend products in order to be paid?
  • Fiduciary Responsibility: Are they required to work in your best interest?

5. Don't Ignore Estate Planning and Preservation:

What type of legacy are you hoping to leave behind to your heirs? What charities would you like donate to? How can you avoid a large tax burden on your estate? How do you want your assets distributed?  Having a proper Will in place can help you address these concerns and avoid the negative consequences of intestacy.