Managing debt: What an advisor can do for you

Rising interest rates and inflation have many Canadians feeling the pressure when it comes to finances.

The cost of goods and services has been on the rise. And during the last year, it’s been spiking. “This is putting pressure on families and their budget,” shares Sun Life advisor, James Bilcox. “As a result, we’re seeing that a higher percentage of Canadians need to borrow to fund basic necessities like groceries.”*

If debt is an issue for you, Bilcox says it’s important to speak to an advisor. “They can help you make a plan to manage your debt and get you back on track.”

*Source: StatsCan, Rising prices are affecting the ability to meet day-to-day expenses for most Canadians, 2022.

How can an advisor help with debt?

To start, an advisor will work with a client to put together a clear picture of the debt. “If there are several debts, it can be confusing. Putting them on one page makes it easier to see what’s happening. From there, an advisor can help create a cohesive debt repayment strategy,” shares Bilcox.

Next, they’ll help you understand your cash flow and debt reduction objectives. “Your advisor can work with you to see what is sustainable and achievable,” says Bilcox. “It’s also a great opportunity to find unconscious spending. And if debt is becoming an issue, steering cashflow to high interest debt is a priority.”

In addition to the debt repayment strategy, a licensed financial advisor* can help put together a comprehensive and written financial plan. “This puts the debt strategy in context to other priorities you have. This will build awareness and confidence, and ultimately empower the Client,” shares Bilcox.

Bilcox says an advisor may also:

• Help find ways to unify debts into a more cost effective and simple structure (through a lender). This can help you focus and reduce borrowing costs. 
• Be able to provide guidance on the best way to systematize cash flow. Integrating technology will help you monitor progress.

“A Client and advisor relationship is an accountability partnership. Your advisor is a champion in your corner who has your best interests at heart.”

* NOTE: An accredited advisor holding a CFP, PFP, CLU or CFA designation can put together a comprehensive financial plan. The license allows the advisor to offer insurance and insurance-based investment products.

Should you pay down debt before saving money?

“There’s usually a way to create a balanced approach between debt management and short and long-term savings if we can redirect or prioritize cashflow,” says Bilcox. “However, if there’s significant debt pressure and debt stress, you may have to prioritize debt repayment. Perhaps you have several different debts and high interest rates. Or maybe a job loss, a health event or other pressures.” 

What information do you bring to the meeting with an advisor?

Watch: How to prepare for your first meeting with an advisor

Can an advisor help you avoid future debt?

Bilcox says yes, working with an advisor can help avoid debt. “This is because guidance with your holistic plan and its strategy can help improve decision-making. The collaboration between Client and advisor creates accountability and teamwork. In the end, a client’s financial literacy should improve, enabling them to manage money effectively.”