The financial advisor industry is filled with practitioners of different stripes with varying levels of education. Under the umbrella of advisory services, financial advisors and planners are often both perceived as investment product providers in pursuit of your investable assets. A consequence of this misconception is that many people do not experience the benefits of holistic financial planning and unbiased advice, separate from any investment product they could receive, when they choose an advisor over a planner.
In Canada, advisors are subject to extensive regulation by the securities commission in their region, and are required to uphold fiduciary duty under the Investment Funds Institute of Canada (IFIC). Likewise, financial planners are governed by rigorous principles enforced by the Financial Planning Standards Council (FPSC) and the Institut québécois de planification financière (IQPF). The FPCS and IQPF seek to protect the personal finances of the public by training financial planners and establishing standards of professional practice. They provide consistency and specify unified standards within the financial planning profession.
So what’s the difference between the two? By definition, personal financial planning is a process of optimizing your financial situation and your assets. It helps you determine how to best meet your life goals through the proper management of your financial affairs. So, while an advisor will usually focus solely on your investment strategies, which represents just one aspect of the financial planning areas that need to be considered, a financial planner will look at your whole financial situation in addition to your investments. This includes estate and succession planning, education funding, finance, insurance and risk management, legal aspects, retirement and taxation.
What your financial planner should be doing
A financial planner should guide you through the planning process by helping you choose a strategic action plan that takes a holistic approach to your financial needs. This also takes your constraints and personal goals into account. Your planner will devise realistic strategies and suggest coherent measures to attain the financial goals you have set for yourself. With your input, they will set out valuable guidelines that allow you to track your financial progress and make the right decisions – at the right time. In other words, your planner will: evaluate and analyze your situation, recommend and implement strategies, and follow up with you on a regular basis to review a plan tailored to your needs, goals and measurable objectives.
How to get the most out of your planner
For you to get the most from the process of financial planning, you will have to get involved. This means reflecting on your goals and aspirations, tracking your financial habits, and becoming more conscious of your budget planning, savings (add ‘s’) strategies, and cash flow management. Let’s face it; who better than you to be fully invested in achieving your goals? Remember, this is your financial plan.
Why you need an annual check up
As you go through various life stages, your financial affairs will change in complexity and priority. A financial planner will help you navigate through the myriad of situations, processes, strategies and financial solutions that pertain to your needs. Reviews and adjustments will be made throughout various stages, career paths and personal situations as they arise. Your annual “Financial Fitness Check-up” should be no different than your annual visit to your doctor: financial health is a staple to your well-being.
As a wealth management specialist with knowledge of various aspects of personal finances, your financial planner will remain the constant bridge between you and other specialists such as your accountant, lawyer, banker and investment advisor. A planner who has a mutual understanding of – and engagement in – your goals will act as a lifetime resource of guidance to help you along the way.
T.E. Wealth, Montreal
This article was published in T.E. Wealth’s Strategies newsletter, February 2017 edition. Read the full edition here.
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.