Support from a financial planner helps boost confidence in times of economic challenge
The recent TD survey contained another finding that highlights the importance of having a knowledgeable and experienced planner to help instill confidence when the individual may have none. prostock-studio via getty images
Financial worries fuelled by high inflation and increased interest rates
Planning for financial security tomorrow can feel like a daunting task when you are worried about paying your bills today.
At a time of high inflation and increased interest rates, managing your expenses in the here and now can feel so urgent that your long-term financial goals get pushed to the background. That dynamic showed up in a TD survey released in February 2023.1
“The survey found that the state of the economy has intensified Canadians’ anxieties when it comes to their finances and investments,” says Franceen Bernstein, vice president and head of Financial Planning at TD Wealth. “Many are struggling to balance competing spending priorities, and their financial goals may have changed as a result.”
Nearly six in 10 (56 per cent) Canadians responding to the survey said they’re worried about getting through the next year and haven’t started thinking about their future financial security. While 56 per cent of respondents agreed it’s important to contribute to investments, 62 per cent said the investment market is too risky for them to invest in now.
The survey findings are consistent with what TD Wealth Financial Planners (planners) are hearing in meetings with their clients these days. When clients are asked to discuss their big financial stressors, four topics are top of mind, Ms. Bernstein explains.
“They worry about the increased cost of living and the impact of inflation. They are concerned about their ability to provide financial support to their children and whether they have the resources to ensure good care for their aging parents. And they are anxious about whether they have adequate savings for their retirement or for reaching other milestone goals.”
Ms. Bernstein notes that numerous studies have shown that when people are receiving advice from a financial planner and have a written financial plan, they feel more positive about their outlook for the future.
“In these times of stress, having a detailed plan and a trusted adviser is even more critical,” she says. “Our experienced planners are well-equipped to help their clients manage all their priorities – for their children, parents, retirement dreams and other important areas of life – and to give them financial confidence about what lies ahead.”
“Our planners talk their clients through anticipated life events (for example, retirement) and unanticipated developments (for example, a divorce), and then we offer tailored advice based on their expressed priorities. Doing this work day in and day out, our experienced planners have offered clients comfort in a variety of life situations.”
The strength of personalized planning that considers all potential developments
TD Wealth Financial Planners begin the relationship with their clients with what Ms. Bernstein calls “deep discovery.” Before a plan can be built, planners ask questions to learn all they can about an individual’s current financial picture, their priorities, their tolerance for financial risk and their aspirations for the future. Planning is centred on four pillars: building net worth, protecting what matters, tax-efficient strategies and leaving a legacy.
“Our planners talk their clients through anticipated life events (for example, retirement) and unanticipated developments (for example, a divorce), and then we offer tailored advice based on their expressed priorities,” she says. “Doing this work day in and day out, our experienced planners have offered clients comfort in a variety of life situations.
“And our planners have great tools that allow us to run sensitivity analysis and cash flow analysis. We try to bring it down to the practical level, showing clients the numbers and projections under different scenarios.”
Knowing that multiple scenarios have been built into the financial plan helps ease people’s fear of uncertainty. “And then when life happens, as it does, we just come back to the plan,” says Ms. Bernstein.
Adapting to shifting priorities and goals through life
TD Wealth Financial Planners recommend the investment products and financial approaches appropriate to each client and to where they are in their life’s journey.
Today’s economic challenges are often most concerning to people embarking on their retirement, Ms. Bernstein says.
“The clients expressing the most worry these days are those who are in the decumulation phase and are beginning to withdraw funds from a Registered Retirement Income Fund (RRIF) because they’re drawing down their savings. They’re typically invested in a more conservative portfolio that isn’t generating the same returns as it was three to five years ago.”
For retirees, “it is very important that we have them in the right products to protect their savings,” she says. “Then we go back and run our cash flow models to demonstrate how long they can continue to live comfortably.”
No matter the client’s age or stage in their life or career, the overarching goal of TD Wealth’s Financial Planners is to “build financial confidence for our valued clients,” Ms. Bernstein says.
The recent TD survey contained another finding that highlights the importance of having a knowledgeable and experienced planner to help instill confidence when the individual may have none.
“In the February survey, almost half (47 per cent) of Canadians said they are not confident in their understanding of mutual funds and Guaranteed Investment Certificates (GICs),” she says.
“Our role is to help our clients make educated investment decisions based on their personal circumstances and to recommend products like mutual funds and GICs when they are the right vehicles. It is very rewarding when we can calm our clients’ fears, offer beneficial strategies and build their confidence for the future.”
Nearly six in 10 (56 per cent) Canadians responding to the survey said they’re worried about getting through the next year and haven’t started thinking about their future financial security. pekic via getty images
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