Financial Solutions

Jeff Macoun, president and chief operating officer of Canada Life, says, “Your life is different than anyone else’s – the way you plan for it should be different too.” supplied

In changing times, adapting and innovating to strengthen financial health

Three ways to build financial resilience  during COVID-19 and beyond

If you’ve been losing sleep over your financial situation during COVID-19, you are not alone. Pandemic or not, financial stress affects working Canadians of all income levels and age groups, and at any time. 

For example, the Canadian Payroll Association (CPA) recently reported that a growing number of working Canadians are saving more than 5 per cent of their pay during the pandemic – with 62 per cent doing so in 2020, up from 59 per cent in 2019). Yet respondents say they are feeling more financially stressed because of uncertainty around the future of our economy, citing worries about inflation or a potential recession. Much of their stress is being caused by a fear of the unknown – things that could happen in the future but are not happening now and their ability to plan, prepare and protect their financial goals.

How to reconcile the discrepancy between preparedness and financial stress? Perhaps gaps in our financial knowledge are partly to blame – the 2019 Canadian Financial Capability Survey found respondents only earned on average a score of 60.6 per cent.

Fortunately, says Jeff Macoun, president and chief operating officer of Canada Life, we each have the ability to increase our financial resilience.

“We know that increased financial literacy equips us with the knowledge and confidence to better manage our money, which in turn leads to financial well-being,” Mr. Macoun says. “But it’s not a one-size-fits-all. Your life is different than anyone else’s – the way you plan for it should be different too.”

Mr. Macoun says that’s why, as a leading insurance, wealth management and benefits provider committed to the financial, physical and mental well-being of Canadians, Canada Life engages with Canadians and organizations in ways that:

add to their financial literacy, whatever their starting point; 

equip them with advice through all products and services, in ways that resonate; and 

help them manage their personal finances so they can better weather the unexpected.

Following are just a few examples of how Canada Life is helping Canadians build their financial resilience beyond today’s challenges. 

Financial literacy

Canada Life is national development sponsor of the Chartered Professional Accountants of Canada (CPA Canada) Financial Literacy Program, which provides free, unbiased financial literacy information to the public through online tools, ongoing research surveys and financial literacy sessions delivered through their volunteer membership network of professional financial experts, including a number of Canada Life chartered accountants. 

CPA Canada is also hosting its first virtual Financial Literacy world tour conference. Canadians are invited to register for this free, half-day event on November 5, 2020, with speakers on the global stage discussing trends, issues and hot topics related to financial education.

Goals-based investing

Research has shown that advice is essential and accessible to all Canadians, whether the amount they have to invest is large or small. Those who access professional financial advice have better financial outcomes than those who do not. Mr. Macoun says Canada Life has introduced interactive, online tools like Constellation managed portfolios to help advisers and their clients work together to align their investment planning with goal-setting. Launched in 2019, the timing turned out to be fortuitous, as the tool has allowed advisers and their clients to monitor their plans and work together virtually during COVID-19.

“The Constellation program is based on the principles of goals-based investing, says Mr. Macoun. Your adviser virtually walks you through an investment process to help you set your savings goals, determine your risk tolerance, create an investment strategy with suitable asset mix for each goal, continuously monitor your portfolio to ensure the asset mix remains aligned to your goal, and track your progress online. No face-to-face meetings required.”

Managing personal finances

Organizations also need strategies, tools and resources based on best practices to develop an effective financial wellness program in the workplace that will help their employees develop healthy financial habits for both the short and long terms.

Canada Life provides organizations with access to a free, third-party money management platform, in the form of an employee benefit. Once the employer adds it to their workplace benefits plan, their employees get a no-fee spending account and a cash-back reloadable spending card that is connected to a money management app designed to simplify their personal finances. 

Users can track their spending, round up purchases, and transfer the extra amounts to either their Canada Life tax-free savings account or RRSP, or to a sub-account (a painless way to help build an emergency fund). They can even borrow up to $500 interest-free from themselves, with no additional charges, in the form of a three-day payday advance. 

“Nearly three-quarters of Canadians either have some type of outstanding debt or have borrowed a payday loan at some point over the past year,” Mr. Macoun says. “This is troubling, since payday loans have extremely high interest rates. Emergencies come up, so if you don’t have an emergency fund, be sure your short-term solution doesn’t create long-term problems down the road.”

For more stories from this feature, visit globeandmail.com