“Free advice is seldom cheap.”– Proverbs
Over the past few years there have been several studies conducted on the value of financial advice and the roll of a financial planner. What all these studies have in common is that there is significant evidence of the value of advice and the positive role a financial planner plays in helping individuals reach their long-term financial goals. To underscore this, the 2020 CIRANO report More on the Value of Financial Advisors demonstrates that:
- Advised households have substantially higher investible assets than non-advised households.
- Advisors help individuals choose the right vehicles and plans to optimize outcomes for their own unique circumstances.
- Advisors help investors choose the right asset mix for their specific circumstances, objectives, and risk tolerance.
In addition to the many studies on the value of advice, the survey conducted by FP Canada on The Value of Financial Planning revealed that Canadians who have a financial plan feel:
- More on track with their financial goals and retirement plans.
- That they have improved their ability to save in the past five years.
- More confident that they can deal with financial challenges in life.
- Better able to indulge in their discretionary spending goals.
Working with a Financial Planner
Financial planning is a multi-step process that helps you gain an understanding of your current situation and the options available that can help you achieve your financial goals. Fundamentally all financial planning consists of three basic steps:
- Collection of personal and financial information and the goals you have.
- Analysis of the information provided using projections and financial forecasting.
- Strategies and recommendations to help you establish objectives to meet your goals.
Your financial planner will generally start with a financial analysis to determine your overall financial situation, and then provide various recommendations covering the six elements of financial planning:
- Financial Management
- Risk Management (Insurance)
- Investment Management
- Retirement Planning
- Tax Planning
- Estate Planning
You should always request a Letter of Engagement when working with a financial planner that outlines in clear terms the business relationship between you and your advisor. In addition to setting out what is expected of all parties, the Letter of Engagement should provide a summary of the services to be provided and how the advisor will be compensated.
The Financial Planning Process
A comprehensive financial planning approach will take all aspects of your finances into consideration utilizing the following steps:
- Establishing and defining the client-advisor relationship and the services to be provided.
- Collecting personal and financial information and determining your goals and objectives.
- Analyzing your financial situation and evaluating any problems and/or opportunities.
- Developing recommendations and presenting a financial plan that meets your needs.
- Implementation of the financial planning recommendations that you have agreed to.
- Monitoring and review of your financial plan to ensure it continues to meet your needs.
Regardless of your situation, it is your financial advisor’s ability to understand the Big Picture in relation to your values, intentions and goals for your wealth, which provides you with the greatest value. In addition to being knowledgeable and having a thorough understanding of the financial planning process, your financial planner should also be…
- Someone that you trust.
- Open and transparent with your best interests in mind.
- Willing to work with your other advisors in an open and professional manner.
- Available to you on your terms.
MyWealth Records will enhance the value of advice and provide you with understanding and control over your finances by:
- Providing a single location for documents and contact information for all your advisors.
- Serving as a record of your interactions with your advisors and the decisions you make.
- Creating the framework for all your financial planning efforts, utilizing industry standard processes to coordinate the advice provided by all your advisors.
RECORD TYPE: Your Financial Planner
Your financial planner should be the one person or firm that is familiar with all your financial goals and plans and be able to assist your family should you be unable to manage your affairs. It is important to keep copies of your financial planner’s business card, letter of engagement and other disclosure documents provided.
Suggested Action: Complete the Your Financial Planner worksheet included with this record. Use the SideDrawer app to scan your financial planner’s Engagement Letter, Business Card and Value Proposition to this record for safe keeping.
RECORD TYPE: Your Other Advisors
Your other financial advisor’s contact information should be recorded so your family will know who to contact for assistance should you be unable to manage your affairs due to sickness, injury or death.
Advisor contacts should include your Investment Advisor, Insurance Advisor, Bank Manager, Accountant, Lawyer, and any other professional you work with.
Suggested Action: Complete the Your Other Advisors worksheet included with this record. Use the SideDrawer app to scan your other advisor’s Engagement Letter and Business Card to this record for safe keeping.
- Download Resources
Click the Resources link to download and print the various worksheets and templates applicable to your needs. Set aside some time over the next few days to complete each one. Remember to involve your partner/spouse should you have one.
- Gather Documents
Request an Engagement Letter from each of your advisors. If they do not have one, download and print the generic Engagement Letter from the MyWealth Records Resources link.
- Upload Documents
Using a scanner or the Sidedrawer Mobile App, upload all statements and documents to the appropriate Record for secure storage and collaboration with your family and trusted advisors.
- Add Collaborators
From the Sidedrawer home screen, click on the Collaborator icon to add someone you wish to give access to one or more of your Records. Enter their email, name and relationship to you, then select the Record and permissions to be granted.
Click here to print the Advisor Contacts Document Checklist.