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By Christine Van Cauwenberghe
Special to Financial Independence Hub
Over the last few years, discussions around personal finance have been louder – and more confusing – than ever.
Market volatility, rising interest rates, the high cost of living and global unrest have dominated headlines and made life increasingly complicated for most Canadians.
Today (October 9) is World Financial Planning Day, a time to dim the noise and focus on the basics: a financial plan, what it is and how it can help you feel financially prepared for your future. More importantly, it’s an occasion to recognize that working with a financial advisor on a personal plan has many benefits, including greater financial confidence and a higher quality of life.
A financial plan is not just an investment plan: in fact, it’s much more. An investment portfolio is certainly a component of a financial plan, but your investments don’t provide a clear direction for any life plans in the coming years. Your investments can indicate financial returns, but their value is not guaranteed at any point in time and investments alone cannot prepare you for the future.
A financial plan is a goals-based document that provides a road map for what you would like to achieve in the short- and long-term. The goals are not necessarily financial, but they need monetary support (like investment income) to be reached.
Goals within your financial plan may include:
- When you want to retire, and the lifestyle you want in your golden years.
- Affording major expenditures, including a home, vacations or post-secondary education for dependents.
- Preparedness for untimely events, such as premature death, disability or critical illness.
- Plans for your estate and the legacy you’d like to leave for your family and charities.
These goals are personal and involve answers to questions that address significant, and sometimes difficult, situations. It can be challenging to determine these responses on your own, so working with a financial planner can help you answer these questions, define your goals and create a strategy to achieve them. Your financial planner will get to know you on a personal level. Then, based on your aspirations, project what needs to happen and create a financial plan for your future.
Clients who have worked with financial planners report notable benefits, including improved financial wellbeing, saving time and effort organizing their finances and feeling that their advisor helped to simplify financial matters.
Beyond just finances, 79 per cent of people who work with a financial advisor say that their life dreams were fulfilled as a result of effective financial planning.
World Financial Planning Day is an excellent opportunity to get back to basics, think about your finances and relevant objectives, then evaluate how a financial plan and a financial planner can help you and your loved ones reach – and perhaps exceed – key life goals.
Christine Van Cauwenberghe is Head of Financial Planning at IG Wealth Management.
I am curious about the source of the findings in the CFP brochure? On the face of it, it seems very self-serving.