A financial plan is not a single-purpose, one-time task. In fact, when you embark on this crucial strategy, it’s important you think of it as a multi-step, multi-purpose, long-term project that can take you from goal-setting when you’re starting out, through your working years as an employee, a business owner or a professional, and on into retirement – while minimizing taxes as you go.
One component of a financial plan is wealth management – taking the value you’ve built up over time and investing it strategically, says Chris Poole,1 a Toronto-based Sun Life Financial advisor. “We often use wealth in financial planning to create opportunities over the course of time.”
An experienced financial planner can help guide you through the course of your total plan, working with you when you are just starting out then helping you get the special expertise you require as you accumulate possessions that build your wealth, such as real estate, investments and business assets.
“An overall financial plan will truly deliver a more comprehensive and higher level of service for you versus a well-tailored but strictly wealth management plan,” says Patrick Fitzgerald,2 an Ottawa-based Sun Life Financial advisor. “When you take wealth management into consideration as part of an overall financial plan, you will have a better understanding of your total financial picture.”
You should consider financial planning if you:
- Want a systematic way to lay out your goals and aspirations, as well as strategies and tactics for achieving them
- Want a regular system of checks and balances to ensure you are meeting those goals
- Want someone to help you navigate the world of personal finance, whether you’re saving money through registered – RRSPs, TFSAs, RESPs† – and non-registered vehicles, or turning your savings into retirement income through RRIFs and annuities.
- Want a plan that will help you deal not only with savings, but also with spending on major purchases such as a house, and managing a mortgage and other debts
- Want to put protection in place for yourself and your family if you should become sick or disabled, lose someone you love or are concerned about paying for long-term care
You should consider paying closer attention to wealth management if you:
- Want to ensure you’re saving enough for your retirement and making the most of your RRSP and TFSA contribution room
- Are saving for a specific goal, which may be a large purchase such as a vacation home, or saving for a child’s education
- Need to set aside money in an emergency fund
Poole says it’s important for investors to think of financial planning as a pyramid: The base is a written list of your goals and hopes, and the sides are constructed by ensuring you have insurance protection against non-controllable risks like disability, critical illness and long-term care needs, plus putting succession plans in place. But without that over-arching financial plan, the pyramid can easily fall apart.
“If we start building wealth too soon and we haven’t built a base or controlled some of these uncontrollable areas and haven’t managed those risks, the pyramid could come tumbling down early,” says Poole.
1 Chris Poole, † B.Mgmt., CLU®, CWP Financial Services Inc., Sun Life Financial advisor
2 Patrick Fitzgerald,† BA, CFP®, RHU, Lifelong Financial Solutions, Inc., Sun Life Financial advisor
† Mutual funds offered by Sun Life Financial Investment Services (Canada) Inc.
Sun Life Assurance Company of Canada is a member of the Sun Life Financial group of companies.