With Canadian debt levels at depressing heights and the prospect of reduced government pensions, there's a gloom descending across the country this RRSP season.
For Cary List, CEO of the non-profit Financial Planning Standards Council, it underlines the need for people to seek the advice of properly qualified advisers to ensure they'll have enough money for a comfortable retirement.
Mr. List has fought tirelessly to get financial planning recognized as a profession, and to raise Canadians' awareness of the value of planning.
What should be top of mind for Canadians during RRSP season?
I wish it wasn't where they will put their RRSP [funds] This time of year should be no different from any other, because financial planning is not a one-time event. You [should]put a plan together and monitor it on an ongoing basis, and you shouldn't be changing your approach on the basis of what season it is.
Part of the problem is that people wake up at RRSP season because they realize they haven't done anything all year. All of a sudden they have two weeks to make an investment decision, and they don't have a context in which to make it. So they scramble and rush and perhaps invest in the wrong things for the wrong reasons.
What you need to do is figure what you want out of your life, [then]plan. Map it out, and every so often revisit it. It is the people who don't have plans who think about their money every day and worry about it.
Are you concerned that Ottawa might reduce OAS payments?
I do worry about it. [It is less of a concern]for those who have a plan in place, because they have lots of time to prepare once we know actually what it is the government is talking about. Certainly the rumblings are that the OAS will come later, at age 67. For many [people that]will mean retiring two years later.
What concerns me more is the [general]lack of readiness for retirement, the lack of understanding of what one's retirement needs are, the lack of uptake on retirement vehicles that are currently available, and the expectation by many that they will be able to rely on the state.
Why are people reluctant to pay for financial planning?
Frankly, a lot of people don't even go and get their annual physical, and they don't have to pay for that. People fear planning the same way they fear going for a physical, because they have something that doesn't feel quite right and they just hope that it is nothing.
Are people's attitudes changing?
The message is beginning to sink in. We commissioned a huge study exploring the well-being of Canadians who are engaged in financial planning versus those who are not. The findings were dramatic. They told us that Canadians who are engaged in financial planning, at all net worth levels, felt better about their financial future and felt more prepared for their retirement. They felt better and were more prepared in times of emergency, had better peace of mind, and slept better at night.
The financial crisis of 2008 was a wake-up call. [People said]'I was blind to this. I just thought my investments would take care of me.' People are starting to realize, maybe this isn't enough.
Is it still a problem that anyone can call him- or herself a financial planner?
It is a bigger issue than ever before. We continue to push for financial planning as a self-regulating profession. At the same time we are [trying to make]consumers understand that [currently]it is not a regulated profession, and they need to do their due diligence. They need to look at the qualifications of their so-called planner. What are the services they are going to provide? Have they been certified by FPSC? What are they going to do for you? What are their fees?
What is the simplest way to find a qualified financial planner?
We have two search engines on our website. One is to find out if your planner or adviser is certified. We know there are people out there that say they have a CFP that don't. The second one is for people [to]search on line and get a list of planners. It says how they are compensated, what their areas of specialty are, etc.
Are you worried about the overheated real estate market?
I watch the real estate market and I just shake my head. A lot of young people are flocking to buying condos. Young families are flocking to buy single family houses because it is so-called affordable. But have they put a plan in place that says what happens if interest rates double?
How big an issue is personal debt?
It is huge. Canadian have exceeded the debt levels of Americans for the first time in history, and that is frightening. There may be some small signs that this is starting to change, but it definitely concerns us. That is part of why planning is so important, but it is [also]part of why people are resisting. They like getting their toys.
How close are you to getting financial planning made a regulated profession?
I hope it happens in my lifetime. Midwifery, massage therapy, and physiotherapy have been around for many, many decades, [but]only in the last decade have they been recognized as professions. It is a long, slow tedious process, and you do have to build a case for why Canadians are being hurt by the fact that it is not.
Were you always interested in financial planning?
When I was a kid, my dream was that I was going to be the team statistician for the Toronto Blue Jays.
CARY LIST, 50, President and CEO, Financial Planning Standards Council
Born in Toronto
Bachelor of mathematics, University of Waterloo;
Certified financial planner
Dunwoody & Co chartered accountants from 1985-1990
Retirement Counsel of Canada from 1992-1997
Headed financial advisory services at Metro Credit Union from 1998-2000
Joined the FPSC as vice-president in 2002, later serving as chief operating officer
Named CEO of FPSC in 2006