With Canadians facing more financial challenges than ever before, good financial advice that goes beyond investing has become critical.
Issues such as tax and estate planning, transferring wealth to the next generation, and having the right insurance in place have become key priorities for the boomer demographic as it continues to age and retire.
Financial advisors have had to embrace new skills, alternative ways of doing business and charging for the advice they provide to demonstrate their true value to clients.
Here are 10 articles on how the evolution toward holistic wealth management and financial planning continues to affect the financial advice industry:
Advisors are good at reminding clients when it’s time to top up their tax-free-saving accounts or contribute to a child’s registered education savings plan. Yet, advisors are also particularly well positioned to pick up on changes that should be made to an estate plan – or the potential gaps within one – given their financial oversight role.
Most Canadians understand how term life insurance protects their families. However, advisors can find themselves with much explaining to do around using permanent life insurance as a financial and estate planning tool. Permanent insurance addresses concerns around taxes, which is often a more suitable topic of discussion for freshly retired clients or those approaching retirement.
Tax planning is an important component of financial advice for both advisors and investors, but that focus tends to sharpen when there are signs of slower economic growth that could lead to lower or even negative investment returns. Advisors can demonstrate their value by discussing the tax strategies investors can take advantage of to improve their long-term financial well-being.
Parents should be having “the talk” with their kids. This discussion has nothing to do with the birds and the bees. Rather, it’s about dollars and sense – financial sense, that is. The need for that conversation is becoming even more urgent given the massive intergenerational wealth transfer that has begun to take place. But while it can be difficult for many families to have full and frank discussions about money-related matters, advisors can help spur and steer these conversations.
A couple walks into an advisor’s office hand-in-hand, the sounds of wedding bells or packing tape still ringing in their ears. They look expectantly at the advisor for advice. They’ve taken their relationship to the next level and now want to bring their finances together. Where should they start?
Tough discussions and decisions about wills, insurance and spousal support are the last things on the minds of happy late-in-life brides and grooms heading down the aisle for the second or third time. Many of them are oblivious to the many rules and risks that could drastically affect their own and their families’ futures. Advisors need to stay on top of the details of how a “grey marriage” can affect clients’ long-term plans for themselves and their adult children.
More advisors are moving to a practice focused on fees not only because of the erosion of commissions on financial products that’s squeezing profit margins, but by an increasing demand from investors seeking advice on increasingly complex portfolios and do-it-yourselfers who want a second opinion. And as fee-based arrangements become increasingly popular, advisors must choose what type of fee-based practice to provide. Options range from a flat fee for advice to charging a percentage based on assets – or a mix of both.
For advisors, telling their clients that they “add value” is one thing, but providing them a number that actually demonstrates it makes the argument more compelling. Russell Investments Canada Ltd.’s 2019 Value of an Advisor Study, published in May, suggests that the value a trusted advisor adds to an investor’s portfolio – apart from investment gains – is 2.79 per cent this year, which “materially exceeds the 1 [per cent] fee [advisors] typically charge for their services.”
Given the rise of robo-advisors and the overall increasingly competitive marketplace for financial advice, more and more advisors are looking to enhance the services they provide to their clients by becoming full-fledged financial planners. That’s evident by the record number of candidates across Canada who wrote the final examination on the path to earning the certified financial planner designation.
Long-term care (LTC) insurance has been called one of the most misunderstood of the living benefits products, but advocates for the coverage stress its diversity and importance – especially as the country ages and LTC becomes more costly.