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Financial planning is often misunderstood by many to be a sales-driven process, but it’s gaining more recognition in recent years as more people need assistance making sense of complex money-related dilemmas.

Client concerns include issues such as how to withdraw income tax-efficiently from retirement portfolios to deciding whether to open a business or how best to manage their cash flow.

Globe Advisor reporter Deanne Gage spoke recently with Julia Chung, incoming chair of the Financial Planning Association of Canada and advice-only planner at Spring Planning Inc. in Vancouver, for a LinkedIn Live event about what it means to be a financial planner today.

How has financial planning changed in the past five years?

Over the past five years, we’ve seen all kinds of tax changes. We’ve also seen changes to interest rates and inflation, which have been really new for a lot of people after 10-plus years of low interest rates and pretty steady low inflation.

We’re also experiencing all this demographic change as people are getting older and having more things to deal with. … Financial planning has had to shift to become more comprehensive and more thorough because clients are looking for deeper answers.

Why do people think of a financial plan as just a document?

That’s the world that has been presented to them in Canada. You go through your financial planning exercise with somebody, you get a document that says now you need to buy these products, and you’re good to go. That’s not really a financial plan. That’s a sales pitch. People are looking for guidance, they’re looking for tools to make great decisions.

A true financial planning engagement and relationship is about helping people navigate all the different complexities. It’s not just an investment mandate, but it’s also about how your finances affect these other decisions you’re making about where you want to live, what jobs you want to have and whether you can open your own business? How do you tackle retirement? What if you died or became disabled? There are so many questions.

True financial planning means you can definitely start with an initial document because we have to start from somewhere, but it has to be tweaked constantly because life changes all the time.

I’m struck by how we have so much information available at our fingertips to help us with our finances. But the actual finances are just way more complex today.

All the things that I know as a financial planner are available [to everyone]. I don’t have secret information that somebody else can’t somehow find or study. What I do have is the ability to really focus on those things.

A lot of people say they’re going to do their own financial planning. To those people, I would say, “I’ve been doing this for about 26 years. This is all I do every day. It’s that complicated. It’s not because the information itself is hard to find. But, it’s complicated to apply.”

– Deanne Gage, Globe Advisor reporter

This interview has been edited and condensed. The entire interview can be viewed here.

Must-reads from Globe Advisor this week

Six stocks to benefit from the aging baby boomer trend

Baby boomers represent about 25 per cent of Canada’s population, and baby boomer households hold an average of $1.2-million in net worth, accounting for about 50 per cent of the country’s wealth, according to Statistics Canada. So, while millennial spending habits often make headlines, investors might be better off paying attention to the needs and wants of the aging boomer population. What baby boomer-based investing ideas do money managers recommend? Brenda Bouw has more.

This money manager thinks the traditional 60-40 portfolio is too risky – here’s his alternative solution

Money manager Julian Klymochko believes it’s time to change the definition of a balanced portfolio once and for all. “We believe the notion of a 60-40 balanced portfolio is dead. What happened to stocks and bonds in 2022 was the nail in the coffin,” says Mr. Klymochko, chief executive officer and chief investment officer at Accelerate Financial Technologies Inc. in Calgary, referring to the huge losses in global stocks and bonds last year. Brenda Bouw asks what he has been buying and selling.

Seven ways to avoid the spending hangover ahead of the holidays

Now that the holiday shopping season is upon us, some clients may be turning to their advisors to ask for tips on how best to stay in the black. Ideally, clients already have a spending plan geared toward the holidays set up in advance using their automated monthly contributions to a savings account. But many people are likely experiencing financial difficulties this year due to rising household expenses. Deanne Gage reports.

Why using donor-advised funds in estate planning can have the greatest impact for charitable giving

Many people desire to leave money to charity upon their death through donations in their wills. Sometimes, this giving is through the creation of an endowment fund, but it’s often through a single, one-time donation of cash or securities to one or more charities. Charitable giving on death has the benefit of leaving a legacy, but it also has a significant tax benefit. A donor-advised fund (DAF) is a great way to blend the objectives of leaving a lasting legacy and offsetting the tax burden. It’s a formally structured vehicle for charitable giving administered by a foundation or a registered charity. Jessica Feldman Chittley provides more details.

Also see:

‘Let go of your work identity’: A former nurse of 40 years on achieving a happy retirement

Higher interest rates have investors rethinking REITs’ role as a portfolio staple

Is now the right time to add cryptocurrenices to investment portfolios?

Geopolitical tensions, seasonal buying push gold demand higher – but is now the right time to invest?

Cost of living data to show easing price pressures in this week’s Advisor Lookahead

What you and your clients need to know

Working from home could mean deductible vehicle expenses

It’s been the long-standing position of the Canada Revenue Agency (CRA) that travelling between your home and a regular place of employment is generally considered to be personal travel, so you can’t claim vehicle costs related to your drive to work. But now that work arrangements for many folks changed when the pandemic arrived – some working from home full-time or part-time – there’s a growing number of employees who believe they should be entitled to a deduction for their vehicle costs when they drive to their employer’s office or workplace. Tim Cestnick explains.

Could investing apps that allow you to start small encourage you to stay small?

Stock trading apps that encourage novice investors to start with as little as $1 could actually be limiting the amount of wealth the next generation accumulates. An academic study published in May looking at investor behaviour showed that the size of the first stock trades greatly predicted the size of future purchases. If an investor started with a $5 trade, they were more likely to make the same size of trade subsequently – a phenomenon called “anchoring.” Preet Banerjee has more.

Bank of Canada’s Macklem says interest rates may be high enough to tame inflation

Bank of Canada Governor Tiff Macklem said borrowing costs may now be “restrictive enough” to get inflation under control, his most explicit comments to date suggesting that interest rates have peaked. Speaking to the Saint John Region Chamber of Commerce earlier this week, Mr. Macklem said that tight monetary policy is working to cool demand in the economy and that the central bank expects economic activity in Canada to be weak for the next few quarters. Mark Rendell reports.

Millennials whose parents owned a home twice as likely to be homeowners: Statistics Canada

Millennials are about twice as likely to own a home if their parents are homeowners and three times more likely if their parents own multiple properties, according to new research from Statistics Canada. With the price of a home across the country more than $700,000 and borrowing costs the highest in a decade, it has become increasingly difficult for Canadians to buy their first property. In Toronto and Vancouver, where the typical home sells for more than $1-million, it is even more difficult because buyers must have a down payment of at least $200,000 or 20 per cent of the property’s purchase price. Rachelle Younglai provides more details.

– Globe Advisor Staff


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