Once is Never Enough

Fall 2009

Financial planning and the education that goes along with it are a lifelong affair.

The upheavals in the markets last year made a compelling case for financial re-planning – the process of revisiting your financial plan from time to time to make sure you are still on track. As many discovered, a downturn in the markets, no matter how temporary, can have substantial impact on your progress towards realizing your goals. But market conditions are not the only reason for reviewing your financial plan. Life events such as marriage, the birth of a child, a change in career, divorce, retirement and death of a partner are all circumstances when you would be wise to revisit your financial plan and make any necessary updates. As a result, many financial professionals view the process of financial planning as something you carry on throughout your life.

Have regular financial plan check-ups

It’s a view that Earl Kirchner subscribes to. As a Senior Consultant with T.E. Wealth’s Financial Education and Employer Services division in Calgary, Earl works with employee groups and executives, educating them on financial concepts and helping them develop effective financial plans. He has found that the market downturn was a wake up call for those who had become overly optimistic during the economic boom times. “Before the markets corrected, it was difficult to get people to contemplate what they would do if the market went down. Now, with the market downturn fresh in peoples’ memories, it’s much easier to get them to think realistically about what might happen and plan accordingly,” said Earl. When counselling employees and corporate executives, Earl encourages them to do a check up on their financial plan, and especially their provisions for retirement, to see where they stand today and what they need to do going forward.

Revisit your asset mix

As Kim Evans, Regional Vice President & General Manager at T.E. Wealth in Calgary, points out, “When markets are in a freefall as they were earlier this year, it’s easy to panic. People will often ignore their statements, hoping the downturn will go away or they pull their money out and put it in cash – neither of which is in their best interests.” Kim advocates that people sit down with a planner and do a reality check on their asset mix. She says that a market downturn brings with it some valuable lessons about how much risk you can tolerate.

How employers can help

“This is a particularly important issue for companies that offer a defined contribution pension plan,” remarks Kim. “If employees panic and shift their plan holdings into money market funds, they risk missing out on the growth potential they will need for retirement. Companies have a responsibility to provide the support and education employees need to make the most of these plans. And when they want to get back into the market, employees will need professional guidance on how to invest without going outside of their comfort zone for risk.”

According to Earl, companies that offer employees and executives stock options and employee stock purchase plans would also be wise to provide education about how to use these benefits to their best advantage. “During boom times, when company stock is rising, people are often reluctant to exercise their stock options, thinking the stock price will go higher. In the recent economic downturn, we were seeing people holding stock options that are now worth less than the exercise price. Financial education and prudent planning could have helped employees avoid this problem,” explains Earl.

Offer continuous opportunities to learn

Much like financial planning, financial education also needs to be continuous and relevant to current needs and interests. “To be effective, financial education needs to line up with the individual’s life stage and financial priorities. For someone just starting out in the workforce, retirement is often viewed as a distant goal but managing debt and cash flow are pressing concerns. Someone who is mid-career may be trying to balance retirement needs with children’s education. And for a person nearing the end of their career, transitioning to retirement is what’s on their mind,” explains Kim.

At T.E. Wealth, financial education is tailored to the needs and interests of the employee and their family. The innovative T.E. Learn program provides online access to a library of articles on all aspects of financial planning and includes interactive calculators that can be customized to incorporate a company’s pension plan particulars. Information on financial planning and investment topics is readily available for initial learning and ongoing review and can be easily shared with a spouse and other family members.

According to Earl, “The upheaval in the markets and slowdown in the economy has revealed how concerned people are about their financial future. Pertinent financial education and ongoing financial planning are key to alleviating these concerns. Companies that want to be seen as ‘best-in-class’ employers by their employees understand this and are putting the programs in place to help their executives and employees.”

This article was provided by T.E. Financial Education & Employer Services.

About T.E. Financial Education & Employer Services

We offer education solutions that benefit employees and employers alike. Financial education helps benefit and pension plan members build greater financial security, while also helping employers meet their obligations to employees. Our services include financial planning, web-based learning tools, and job site workshops and seminars.

For more information, contact the T.E. Wealth office nearest you.

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These articles are for general informational purposes only. Please obtain professional advice before taking any action based on this information. No endorsement or approval of any third parties or their advice, information, products or services should be implied by any references to third parties contained in any article. Trademarks cited in these articles are the respective properties of their owners.

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