How About That Financial Planning Stuff?

If someone approaches you with a financial plan idea, be cautious. It doesn’t matter what it is — an insurance plan , an investment plan, a succession, or estate plan. None of these things are unimportant . Almost none of them are things the average person, busy with their own life, understands, or even wants to.

A recent survey conducted for IG Wealth Management found that just one third of people felt they knew a lot about financial planning. While 61% claimed to have a financial plan, most felt it was too focussed on investments. In depth financial planning is not on the table for most.

Holistic planning

We can estimate why comprehensive planning is not available. It is difficult, time consuming, and costly. It requires the active participation of the client. Most clients want planning, such as it is, done for them, not by them.

That makes it easier for the “planners. Since the client doesn’t want to be involved, keep it simple. “Everyone wants to invest. Let’s go there.”

Life does not get simpler by ignoring the parts you don’t like, or don’t understand.

If you do care and someone presents a plan, ask some questions.

Clarifying questions

What’s it for?

You will be surprised how often you get an inscrutable answer. Likely how you will go about it and little about what’s it for. Most advisors are tactical. All clients should be strategic. The trick is to manage the interface between the two.

You will almost never get the right answer. I don’t know how it affects you because I don’t know what you are trying to do or what you have to do it with. We should begin there.

Knowing those clarifies the relationship. What is to happen, what with, and when, provides a framework to fit methods into. The client should be the planner and the advisor should present solutions related to their priorities, problems, opportunities, and resources. The advisor may help the client avoid gaps in their strategic plan, but have no business creating it.

Clients should emphasize effective. Planners emphasize efficient.

What alternatives are there and why are they avoided?

There is no tactical plan that is the only one that can accomplish what it appears to do. There are dozens, more likely hundreds of life insurance plans. There are at least three times as many ETFs, and investment funds as there are stocks to put into them. On any given day, one of them is the best. A month later it could be something else. The perfect long-term answer today might not exist at all. a year from now.

Look for a sound fit and flexibility.

What about tax? Be careful with tax things. The key to sound tax planning is to achieve higher after tax income or wealth. Tax reducing strategies often reduce both the tax payable and the capital retained. Manage your share for optimal after tax performance. Let the government look after theirs.

When should I start? Now!¬† Counting¬† your doubles is a sound planning technique. The rule of 72 says money will double in 72 divided by the rate of return, years. So at 8% it takes 9 years to double. That’s 8% is after taxes so be cautious of accumulations on a pretax basis. The point here is at 9 years per double, in 45 years you get 5 doubles. At 36 years you get 4. The last double adds more value than all the doubles before it. You could check that out, most people don’t know it.¬† Start earlier.

How does it affect the other aspects of my life? The question that matters. Financial planning is supposed to get you more of what you want. There are many plans whose apparent goal is to make you the richest person in the cemetery. Small advantage to that. Be sure any plan supports your life goals. Know what you can trade off and what you cannot.

The takeaway

Holistic planning is a Utopian goal. Perfect is a poor planning choice.

Tactical planning, the accumulation of small steps, doesn’t work very often either. It is very difficult to be both strategic and efficient, if you start without strategic purpose. You will end up doing stops and starts and that costs too much time.

You can do better by answering a few strategic questions and paying attention to your resulting plan once or twice a year. The best plans evolve.

Understand who you are and what you are trying to accomplish with your life. Be realistic about resources.The financial plan will become a guide, among others.

Never give up the strategy to anyone else. Look to them to find conflicts and voids in what you have. No more.

Professional helpers can make implementing easier.

The very best advisors can provide follow-up and help with motivation and managing fear.

I build strategy and fact-based estate and income plans. The plans identify alternate ways and alternate timing to achieve both spending and estate distribution goals. In the past I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning, have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email to

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