Advertisement
Whether you’re a newlywed or looking forward to retirement, a financial advisor can help you plan for a healthy financial future.
When it comes to figuring out your finances and planning for the future, working with a pro can make this process easier. Canadians who feel hopeful about their financial future are more likely to be working with a financial professional, according to research by FP Canada.
Depending on your situation, you may find that receiving advice from a pro can help you get your financial affairs in order—and get ahead financially.
Financial advisors provide some or all of these services:
Whether you’re looking to buy property, grow your business or save for retirement, you can find an advisor who fits your needs. (Learn about different types of advisors.)
Based on what you need, you can work with an advisor as often as you’d like, from a single service to an ongoing basis. Here we break down the life stages and situations when an advisor can be helpful for your financial goals.
If you’re coupling up and/or having kids, an advisor can help you navigate evolving financial situations and plan for the future.
Natasha Knox, a Certified Financial Planner (CFP) and Trust and Estate Practitioner (TEP) at Alaphia Financial Wellness in New Westminster, B.C., helps couples divvy up their resources based on family income. “It’s about helping them come to a consensus on what is the most important thing right now and how are we going to make everything else fit,” Knox says.
For families, common financial demands include saving for a down payment on a home, paying off a mortgage, saving for a child’s post-secondary education and, eventually, building a retirement nest egg. Knox also offers financial therapy and coaching, so clients seek her help for challenges in family dynamics, such as conflicts over money, financial infidelity, power imbalances due to different income levels, and disagreements over supporting adult children or in-laws.
Buying a home is the largest financial decision many Canadians will ever make. Whether you’re a first-time home buyer or you want to upgrade to your dream home, a financial advisor can help you create a plan to reach that goal.
Advisors work with clients to determine how much they can afford to borrow, the size of their down payment, what type of mortgage is the best fit (fixed rate or variable rate, term length, amortization) and how to meet mortgage payments without sacrificing their lifestyle.
Knox cautions home buyers against investing their money in stocks if they will soon need it for a down payment. It’s tempting to try to earn returns rather than have your money sit in cash, but short-term market volatility could diminish your nest egg just when you need it. Instead, consider opening a high-interest savings account (HISA) or buying a guaranteed investment certificate (GIC).
Many Canadians turn to financial advisors for help with their investment portfolios. These advisors have different payment models; some charge only for advice, and others manage clients’ assets for a fee.
Knox is a fee-only advisor—clients pay for her time and expertise, and she receives no income from third parties. She helps clients assess the suitability of their portfolios based on their goals, risk tolerance and time horizon. Knox also provides general asset allocations and helps clients think through the tax implications of various asset allocations if they use non-registered investment accounts.
Knox also works with investors to improve their behavioural tendencies. For example, she says, “If a person has a desire to have risky investments, but they have a high propensity to sell in the face of market volatility, that is something we would talk about.”
If you want to become a real estate investor, an advisor can help determine how an investment property fits into your overall financial plan. Will it be used for capital appreciation? Are you planning to live off the rental income during retirement?
By running the numbers for such scenarios, an advisor can help you figure out if purchasing property is a wise investment—and how to manage the ongoing costs of owning income real estate.
Debt happens to most of us, and it can happen more than once in our lives. Managing debt can feel like a burden. Whether you have credit card debt, a student loan, a mortgage or car payments, a financial advisor can create a debt repayment strategy. From generating a budget to cutting spending, they’ll find ways to save money.
Advisors also help clients take control of their finances by recommending which type of debt to tackle first, second and so on. A common strategy is to tackle high-interest debt such as credit cards and personal loans first, while giving lower priority to mortgages, which typically have lower interest rates and are paid off over the long term.
Running out of money in retirement is a common worry. A 2021 RBC survey of Canadians aged 50-plus found that one in five respondents with more than $100,000 in investable assets expected to outlive their savings by 10 years.
With professional expertise, you can design a plan to make your money last. For example, a financial advisor can provide guidance on workplace pensions, splitting pension income with a spouse, and making withdrawals from your registered retirement savings plan (RRSP), registered retirement income fund (RRIF) or locked-in retirement account (LIRA).
Did you know that you can convert an RRSP to an RRIF at any age? Your advisor can help you determine when—or whether buying an annuity would be better. An advisor can also recommend when to start Canada Pension Plan (CPP) and Old Age Security (OAS) payments. You can begin at age 60 and 65, respectively, but should you?
Your advisor can also discuss factors to consider if you’re planning on aging in place, or if you’re downsizing your home and hoping to invest or live off the profits. Advisors can also provide estate planning, including how best to pass on your wealth to loved ones (with minimal taxes) and have your end-of-life wishes fulfilled.
Business owners face many money-related decisions and challenges, such as cash flow management, tax reporting, managing debt and succession planning. Consulting a financial expert can help entrepreneurs avoid costly mistakes and stay on track to achieve their business goals.
For her entrepreneurial clients, Knox provides advice on cash flow management, which is integral to the survival of a business. She also offers succession planning: Is the plan to sell or close the business? Or will the children take it over?
Here are a few tips on choosing an advisor:
Once you’ve found an advisor who suits your needs, they can work with you to ensure that your financial well-being and your loved ones are looked after—and that means greater peace of mind for you.
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
Which ETFs should you invest in? Which ones best suit your risk tolerance? What about personal ethics? Check out...
The Trump effect and Trumponomics, Shopify’s huge earnings beat, it’s sunny days for Suncor shareholders and more.
Here’s how to get your free ticket to attend two MoneyShow virtual expos.
Should you be paid as a power of attorney? Learn about the compensation rules in Ontario and how to...
The oilsands giant will return all excess cash to shareholders after hitting debt target early.
You started investing in your 20s, and you feel pretty good about doing it. But now what? Consider impact...
Shopify reports third-quarter net income of USD$828 million, and its executives aren’t concerned about how Trump’s election win will...
Here are the best accounts to hold your savings and investments.
Want an idea of how much tax you paid—or will be paying—for 2024? Here are the federal and provincial...
