There is still a lot of confusion around what a Financial Planner – never mind a Money Coach! – does, what kind of people work with a planner, and how might those clients benefit from the ongoing relationship and advice received.
Years ago, shortly after I started working as a Financial Planner, a neighbour asked me what I did for a living. When he learned I was a Financial Planner, his immediate response was “I wish I had money to invest. When I do, I’ll give you a call.”
Oh dear…
Even today, over a decade later, many people still assume that professional financial advice is only for the wealthy, or those with very complex personal or business circumstances.
In truth, everyone can benefit from comprehensive, unbiased financial advice, whether you have a seven-figure plus net worth or far, FAR less. It’s about connecting with a planner who offers you the services you need to meet your current challenges and can evolve those services as your situation changes.
At Money Coaches Canada, we frequently highlight our 7-Stages of Financial Well-Being, and for good reason. Not everyone is at the same point in their financial journey, and different people have different financial advisory needs.
Whether you are living in Financial Chaos (Stage 1), have achieved Financial Stability (Stage 4) and are looking to build for the future, are on the verge of retirement and Financial Freedom (Stage 6), or anywhere in between, a Financial Planner/Money Coach can help.
To illustrate this, we thought it would be useful to highlight some real Money Coaches Canada clients, their initial challenges, how we were able to assist them, and the outcome of our work together. In each case, the client names and some details have been changed for privacy.
Barbara’s Clients – Susan and Bill
In 2015, Barbara began working with Susan and Bill, a couple in their 40s in Edmonton. At that time, they had a sizeable mortgage and two school-aged children, with Bill working full-time while Susan balanced a part-time career with raising the kids.
As with most families at this stage of life, Susan and Bill had a lot to juggle: advancing in their careers, raising their children, paying their mortgage, line of credit and other debts, and dealing with unexpected health issues in the family.
The cyclical boom and bust nature of Alberta’s energy economy was very stressful for the couple but also afforded opportunities. Barbara helped Susan and Bill evaluate a unique investment opportunity available to Bill by virtue of his employment, created a cash-flow plan to allow them to sensibly pursue this option, and over time adapted their financial plan as circumstances changed, to keep them on-track for their important life and financial goals.
Now, ten years later, the couple has made impressive progress in paying down their mortgage, is on-track to a comfortable retirement, and their kids are young adults pursuing post-secondary education.
Susan and Bill are *thrilled* with the progress they’ve made and how they now feel about their financial situation and their future, so much so they have referred four other couples who have since become Barbara’s clients.
Daniel’s Clients – Wade and Joan
Wade and Joan are small business owners who are about to have a baby. Their financial life is complex, with an operating company, holding companies, and trusts. They want to be prepared for the major life change that comes with a new addition to the family, while at the same time ensuring that they set themselves up for continued success and stay on course to fulfil their own retirement dreams.
Most of their net worth is concentrated in their business, but Wade and Joan recognize the need to manage their risk and diversify into other investments. With the imminent arrival of their baby, they also need to adjust their spending as their income and expenses will change substantially when one of them takes time off to raise their child. They approached Daniel primarily because they wanted guidance to make the most of their changing income and ensure they had a tax-efficient investment strategy, however Daniel also helped them see other opportunities and challenges in a new way.
Daniel reviewed their current income and expenses and developed a detailed Spending and Savings Plan taking into account their anticipated future income and expenses when their child arrives. This included tax-efficiently balancing savings within their business with personal savings in RRSPs, TFSAs, and non-registered accounts.
Daniel also explored the implications of a business sale with Wade and Joan, and co-ordinated his recommendations with their accounting team so everyone was on the same page.
Based on the combined financial strategies Daniel recommended, it is projected that this couple will save close to $1 million in tax over the course of their lives, resulting in higher spending during retirement or a greater legacy passed on to their child and the important causes that Wade and Joan support.
I’ll end with a story about my former clients, though it is a common situation amongst our retirement planning clients.
During the 2010s I worked with a couple, Fred and Lydia, with two kids in university. At the peak of their careers, Fred was an executive who earned over $200K per year, while Lydia was a consultant who worked from home with a similarly impressive income.
They were anticipating retirement in a few years and wanted to know what they needed to do now to ensure they would be ok when they gave up their high-paying careers. Neither of them would be receiving a pension from their employers, so it was up to them to provide the bulk of their retirement income to support the lifestyle they wanted to live.
Their fundamental and very common questions: When can we retire? Will we be ok?
Fred and Lydia also wanted to leave a modest inheritance for their kids and donate to important causes they support.
With different types of investment assets (stocks, mutual funds, real estate) in different locations and with different managers, I worked with Fred and Lydia to create a single clear view of all their assets and liabilities, map out their current cash flow, and clarify their important priorities and life goals so we could create a picture of their desired future retirement.
With this as a starting point, we could create a Spending and Savings Plan to quantify their future cash flow needs and run retirement projections to explore various investment and tax strategies that would meet their retirement and legacy goals – with a healthy safety margin!
Fred and Lydia were thrilled to hear that they could retire in two years if they really wanted to, but that working an additional year would give them an extra margin of safety that was worth the peace of mind to them. The tax planning strategies I recommended could also increase their after-tax estate value by over $200K, allowing more to go to their kids and charity, as was their goal.
When Fred and Lydia first came to me, they had already nearly achieved Financial Freedom (Stage 6 of 7), but they were anxious about making a mistake this late in the game and jeopardizing their retirement. Not only were they reassured that the plan presented would get them to the Financial Freedom they desired while minimizing risk, but we also had some fantastic discussions about moving to Financial Fulfillment (Stage 7), making this couple genuinely EXCITED about their impending retirement.
Regardless of the financial stage in which you find yourself, your net worth or investment portfolio size, or how complex or simple your life seems to be, a Money Coach can make a tremendous impact on your financial and mental well-being.
Take our quick 7-Stages of Financial Well-Being Money Quiz, and then contact us to see how we can take you to the next level with a personalized plan of action.