Plan First

Frequently Asked Questions

Why should I work with a professional Financial Planner rather than a Broker?

A Financial Planner will help you create a personal financial plan which will allow you to set goals and objectives for the future.  There are many considerations when developing a financial plan over and above wealth accumulation.  Other questions that need addressing are:  how much and what kind of insurance do I need, how will I best manage my tax position, what will happen in my estate and how will it be distributed.  All of these questions need to be congruent with your objectives, goals and dreams and your financial plan needs to address these questions and financial disciplines.

How much money do I need to retire on?

At retirement, there could be many sources of income, i.e. pension plan, CPP, OAS, RRIF, TFSA, etc.  Everyone is unique, hence the reason for a comprehensive financial plan.  Ultimately, your lifestyle will determine how much income will be required at retirement.  By planning as early as possible, you can design your income so that it matches your lifestyle requirement.

What is the cost of your service?

Cost is dependent on the relationship we agree to.  It could be a fee for service.  You would be charged for the time it takes to develop your plan 6 – 12 hours ($1,000 – $2,500).  After completing a plan and, if you like our service and decide to make us your personal financial planner, our income is derived from the products we provide for you so the fee is zero.  98% of the people we plan with choose to use our planning and management service.

How can I reduce my taxes?

In Canada we are highly taxed so it makes complete sense to analyze how you receive your taxable income.  Having this information allows you to design personal strategies that can and will reduce the amount of tax you pay now and in the future.  A personal financial plan will provide these answers.

Markets go up and down.  How can I reduce market risk?

As investment advisors we cannot control the markets but we can control the amount of risk you have.  If you have a plan which includes several financial and time line targets you are better prepared to assess the amount of risk that is acceptable to you.  This is personal and needs to be identified, which a financial plan will do.  There are investment products that will serve your risk tolerance and guarantee a plan completion.

Why do I need insurance?

In the beginning when you are young and just starting out you may need to create a way to pay for your liabilities should you die prematurely.  Insurance is the perfect vehicle to do this at a reasonable expense.

For people who have created mid-size to large estates and deferred taxes on their investments (deferred capital gains), life insurance is a less expensive alternative for paying these taxes.  This way you can leave a full legacy to the ones and organizations you love the most without a reduction of up to 44% on these assets.

Who practices Financial Planning and what are the qualifications required to be call a financial planner?

There are industry designations over and above licensing that can be acquired by advisors through courses and extensive training that allow some advisors to call themselves financial planners; (CLU – Chartered Life Underwriter, ChFC – Chartered Financial Consultant, CFP – Chartered Financial Planner to name the most important ones.) Experience is another attribute that your advisors should have so that he/she has developed expertise when giving you advice.

However, many advisors call themselves financial planners but do not practice financial planning.  You need to interview potential planners to find out the truth.  Also you are best to work with an independent advisor when choosing a planner as there will be less bias and a larger commitment to your success as they typically own their business.

How can I protect my estate for my heirs?

In British Columbia it is important to distribute your assets upon your death outside of your estate if possible because of the high distribution fees (probate, legal, accounting, etc.)  You can’t do this with all assets but a Plan will slowly transfer assets to the best location for an efficient distribution at death according to your desires. With many assets there are ways to get around distribution expenses in your estate. Three ways to do this are:

  1. Joint ownership;
  2. Set up a trust;
  3. Named beneficiaries.

Each of these strategies has their positive and negative attributes that need to be discussed with your financial planner as well as your lawyer or notary.

How can I preserve the value of my investments?

  1. By creating a balanced portfolio which includes the three main types of investments (equities, fixed income and cash) in proper proportions based on risk tolerance and personal plan objectives.
  2. Select investments with diverse attributes (pays dividends, commodities, small cap) in your registered and non-registered investments for diversification, safety and tax efficiencies.
  3. You can wrap them in protective guarantees, which insulate these assets form market downturns but earn enough to retain your purchasing power from erosion caused by taxation and inflation.

Most people need a personal plan because every person’s situation is different.

What is the benefit to me of charitable donations?

Charitable donations not only help the charities you wish to provide assistance to but also your donations will help you save tax while you are alive and in your estate.  Everybody wins but the government.

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