Before recommending one of our investment portfolios to a client, we must first understand their financial circumstances, return objectives, time horizon, and risk tolerance. Rather than completing this assessment using a basic questionnaire, we work with each client to develop a comprehensive financial plan to gain a deeper understanding of their unique situation. Financial planning is an iterative process, and each client’s plan is updated over time as assumptions and circumstances change.
The financial planning process includes four phases:
The planning process begins with us learning about your financial situation and a discussion about your goals for the future.
You’ll be given secure access to our Client Portal, which provides a structure around the financial planning process and will guide you through each step with tasks, instructions, and documents. Think of it as project management software for your financial life.
The information gathering step includes a number of straightforward tasks that you’ll need to complete, such as providing basic information about yourself and your family, bank and investment account statements, income tax returns, and notices of assessment.
None of us save money just to be able to say we have a lot of money. We save money because we want to do things that require money: paying for food, taking vacations, buying a house, raising children, making donations to charity, and eventually retiring. To determine how much money you should be saving, we need to get an idea of what your financial objectives are and then quantify them into trackable goals.
We start by brainstorming and identifying your goals at a high level and categorizing them into time categories (short-term, medium-term, and long-term). For example, a young couple might have a short-term objective of paying off their student loans and saving for a down payment on a house, medium-term objectives of raising children and paying for their education, and a long-term objective of being able to retire comfortably.
Once these broad objectives are established, we work together to convert the idea of “paying off student loans and saving for a down payment on a house” into specific financial goals. A financial goal specifies a dollar amount, a time horizon, and a priority which can easily be measured and tracked over time. For our example couple, this might mean a goal of paying off $25,000 of student loan debt over the next three years and another goal of accumulating $40,000 within 5 years for a down payment on a house.
Your goals are the core of your financial plan, but it can be daunting to just sit down and think of everything you want to achieve between today and the end of your life. That’s why we think of financial planning as an ongoing process. You don’t have to incorporate everything on the first attempt, and as life changes we can change your goals or add new ones.
The second phase involves the creation of your financial plan and discussion of alternative planning scenarios.
When you boil it down, financial planning is the analysis and forecasting of cash flows through time. To be successful, the money you bring in plus the income earned on any savings and investments must match or exceed the money that goes out.
The easiest way to get a sense of your current cash flows is by completing a household budget. We can help you create a budget that is relatively simple (a breakdown of total income, total living expenses, and total savings) or very detailed (with breakdowns by income and spending categories) depending on your preference. Your budget will then provide a starting point for your financial plan and assist in forecasting your future cash flows.
In assessing your current financial situation, we can review your current banking services and the fees you are paying. By making simple changes related to your banking, there may be potential for lower fees, higher interest rates on savings, or both. We can also assess any of your current debts to evaluate if you would benefit from restructuring or refinancing.
For most of us, saving for retirement is a top financial priority but questions like “When can I retire?” or “How much do I need to save for retirement?” can be daunting. Our planning process will help you determine your expected needs in retirement, potential sources of income to meet those needs, and recommendations for how much to save as you work toward retirement. With our flexible planning software, we can model different scenarios to show you the impact of different strategies. At regular review meetings we can incorporate new information or life changes into your plan so that it evolves with you.
Once retired, we can help you determine the best order to liquidate assets from your registered, TFSA, and non-registered accounts in order to minimize tax. We can also help you assess the benefits and drawbacks of starting Canada Pension Plan (CPP) and Old Age Security (OAS) benefits at different ages.
If you have children, how much should you be saving for their post-secondary education? We can help you estimate the future costs of tuition and housing. We can also discuss the benefits of a Registered Education Savings Plan (RESP).
Perhaps you don’t have any children but are thinking of returning to school yourself. We can help you assess the financial implications of such a decision and discuss government programs like the Lifelong Learning Plan (LLP) which allows you to finance your education using assets accumulated in your Registered Retirement Savings Plan (RRSP).
Taxes are an inevitable part of life and they certainly complicate financial decision making. For example, would you be better off contributing savings to a taxable investment account, Tax-Free Savings Account (TFSA), or Registered Retirement Savings Plan (RRSP)? The answer will depend on your specific circumstances and we can help you assess your options to identify tax-efficient strategies.
Tax implications also come into play when deciding on the best approach to fund your retirement income needs. Does it make sense to draw down your RRSP or TFSA first? Are there potential benefits to delaying Canada Pension Plan (CPP) or Old Age Security (OAS) benefits for a few years? How will your estate pay for the deferred capital gains on your investment property if you die? We can help you address these and other common questions. For more complex situations, we can work with you and your tax specialist to come up with appropriate strategies.
For clients that have accumulated significant wealth the question of whether they will have enough money to fund their retirement often transforms into a question of how best to transfer wealth to one’s heirs in an efficient manner. While many parts of estate planning will require the services of an accountant or lawyer, we can work with you and these professionals to develop strategies to ensure that your estate’s value is transferred to your beneficiaries in an efficient manner when the time comes.
Estate planning often incorporates the use of life insurance products to defer additional taxes once all of your RRSP and TFSA contribution room has been depleted. Life insurance can also be used to transfer wealth outside of your estate, ensuring your beneficiaries receive timely death benefit payments and avoid probate. While we are not licensed to sell insurance products, we can help you determine the potential financial impact that various insurance products could have on your estate.
In addition to planning for retirement and ensuring you won’t run out of money if you live longer than expected, consideration should also be given to the possibility that you might become critically ill, disabled, or die prematurely. As part of your financial plan, we can develop a high-level insurance needs analysis that outlines the impact on your family’s finances in the event of a tragedy.
In a perfect world, financial planning would be relatively simple: we would know how much you will earn over your lifetime, how much your investments will return each year, the exact date you will retire, how much you will spend in retirement, and your life expectancy. In reality, these and many other factors are both unknown and difficult to predict.
Given the uncertainty around key financial planning assumptions, we believe that scenario analysis – calculating how your financial plan is impacted by changes to key assumptions – better illustrates the range of potential outcomes and highlights the risks to your financial plan. While focusing on average outcomes is appropriate for large groups, you only get to live your life once, making it important to consider the range of potential outcomes.
Examples of scenarios we might consider for a client include:
- the impact on the plan to a change in retirement date (retire earlier or later in life)
- the impact on the plan to a reduction of investment return
- the impact on the plan to a change in your life expectancy (living longer or a premature death)
- the impact on the plan to a change in your savings or change to your lifestyle in retirement
With our flexible financial planning software we can model these and many other scenarios. If you have specific “what-if” questions we can work together to answer them.
The third phase involves implementing the recommendations outlined in your financial plan.
If, during the planning phase, we identify potential savings opportunities related to your banking or debts, we will work with you to implement any recommended changes. This could include changing your banking plan, changing your bank or credit card provider, or refinancing your debt.
High Level Wealth Management Inc. is registered as a portfolio manager in Alberta enabling us to provide integrated investment management services alongside our financial planning service. As your portfolio manager, we work with you to determine the investment portfolio that is best suited to meet your needs, balancing your return objectives with your risk tolerance. We then take care of the day-to-day investment management on your behalf – buying and selling securities, managing cash flows, and keeping your portfolio invested according to your guidelines.
For additional details, we encourage you to read about our investment management service.
The final phase of the planning process involves periodically meeting to review your progress and making adjustments to your plan.
Our clients have ongoing access to their advisor. For less complicated questions, feel free to contact us at any time by phone or email. For more complicated questions, we recommend booking an appointment.
We hold regular review meetings at least once a year (or sooner if your life circumstances change). At each review meeting we will compare expected vs. actual outcomes, update your financial plan for any necessary changes, discuss your investment performance, and track your progress toward achieving your financial goals.
A financial plan is more useful when used to establish specific milestones that can be used to track your progress along the path to achieving your financial goals. From our client portal clients can access a tool that summarizes their financial goals and tracks their progress toward achieving them. Over time, new goals can be added and existing goals can be modified.
Life is complicated and we realize even the best plans can sometimes be disrupted by the unexpected. That’s why we believe in building long-term relationships with our clients instead of focusing on one-time engagements. Whether life changes for the better or worse, clients can contact us at any time to arrange an appointment to adjust their financial plan.
If you are contemplating a major life change such as starting a family, purchasing a home, or changing careers, we can help you analyze the financial impact of the proposed change before it happens.