Canada's Condominium Magazine

Canadians worried about money, need help with financial planning, say planners

Fear, like sex, sells. That truth evidently lies behind the strategy adopted by the financial planning industry in Ontario, which seems to be designed to frighten people into seeking their services. The CEO of the standards-setting body for the industry, the Financial Planning Standards Council (FPSC,) said at an industry dinner earlier this week that “the vast majority of Canadians don’t feel confident about their financial futures,” and are “confused and anxious.” They “don’t understand what help they really need and don’t know where to turn to get it,” said Cary List.

There’s plenty more gloom to go around. The FPSC released the results of research carried out in the summer of 2015, and it is full of language and numbers guaranteed to scare anyone but Warren Buffet or Bill Gates. Canadians are “worried about money,” it says, especially women and especially the middle-aged. Canadians “struggle with conflicting financial priorities,” those priorities being saving up enough money to deal with an emergency and getting out of debt. Most Canadians haven’t a clue about financial matters, as just 18 per cent say they are knowledgeable on the subject. More than one-third are doing nothing at all about financial planning. Canadians “lack strong confidence in achieving financial goals” and “worry a lot” about their finances.

Even the minister of finance for Ontario, Charles Sousa, got into the spirit of it. He was the keynote speaker at the Celebration (?) of the Profession Dinner and talked about a person whose bank loans officer and real estate agent had caused the person to “lose their life savings.” Another person he’d heard from said that the lack of financial knowledge made them “a sitting duck to unscrupulous, untrained, inexperienced individuals peddling themselves as financial planners to unsuspecting clients.”

The minister’s woeful anecdotes were meant to bolster the government’s position that the financial planning industry needs more regulation, a position the industry itself is in favour of. List said that Canada was ahead of most other countries in accepting financial planning as a valuable service, and in accepting that the “standards, competencies and qualification processes for financial planners” should be consistent and uniform across the country. For his part, Sousa promised that the government is looking into regulating the industry, with an expert committee report coming next year.
Source: FPSC

In Canada, ahead of most other countries around the world I might add, we’re no longer debating what financial planning means. We’re no longer debating whether financial planning is necessary or whether there’s value in having advisors step up to become Certified Financial Planner® professionals. And most stakeholders now agree that the standards, competencies and qualification processes for financial planners should be consistent and uniform across the country and across all licensure jurisdictions.

It’s better with an advisor

All of this anxiety, confusion and worry that Canadians apparently feel about their financial situations could be cleared up easily, of course, if they simply found themselves a good, trustworthy financial advisor. That’s the real point of all of this. Canadians who engage in “comprehensive financial planning” report “significantly higher levels of financial and emotional well-being” than those who don’t.

For example, people who use the services of a trusted financial advisor won’t make the all-too-common mistake of using debt to fund “exotic vacations, bigger homes and weddings for the kids,” because that would be just foolish. Nor would older Canadians fall into the common trap of accumulating more debt as they age: according to a HomEquity Bank and Equifax Canada report, debt levels among people over the age of seventy went up 12 per cent over the last two years. What are they thinking?

Certainly no one with a good financial advisor and plan would ever dream of getting into the situation one couple did. At a time in their lives when they should be concentrating on their “modest” retirement goal of $45,000 a year, and increasing their present nest egg of $300,000, they are instead paying off a $300,000 mortgage that costs them $14,000 a year, all for the sake of “keeping up appearances.” At that rate, they’ll be broke before retirement, and that’s assuming there is no increase in interest rates.

Instead, wise Canadians, like the “single professional woman” who went to a financial planner to talk about buying a home, are able to achieve their goals easily. The woman in question found the home, got the mortgage, and paid it off four years early, thanks to setting a plan and sticking to it.

The FPSC dinner fell within Financial Planning Week (November 15–21), the aim of which is to raise awareness of the importance and benefits of financial planning. It also falls within Financial Literacy Month, whose aims are more or less the same. Pity their messages are so negative.

Auberge on the Park-Tridel


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