Whether you want to achieve your short-term goals or enjoy your retirement to the fullest, a financial plan is your best bet. Here’s why, plus some information on how to make a plan that holds up with the help of an advisor.
“Financial plans are indispensable; they allow us to evaluate our goals and work out the means to achieve them,” asserts Mohamed Wakkak, senior advisor at the National Bank. “It takes into account our needs, particularly for our retirement, and establishes concrete steps for getting there. Not having a financial plan is kind of like driving with neither directions nor a destination, even. Your plan is a roadmap, prepared by an expert, that will help you reach your financial destination in a more effective way.”
To help direct discussions with your advisor, we suggest thinking ahead about your personal budget. Financial plans and budgets are two complementary tasks that can be done with your advisor. “Budgets evaluate your income and expenses, and allow you to structure your daily finances to see how much you can set aside. Financials plans are much more exhaustive and take your goals into account. An advisor will base themselves on a finely tuned budget to develop a realistic financial plan.”
Financial plans are made with a National Bank expert. Often, your advisor will ask you certain questions before your meeting so that you arrive to the appointment with specific numbers on hand, like the amount left on your mortgage. They will compare your personal situation and your balance sheet to your goals to see if you’ll have enough money to achieve them.
“There are many things you can do ahead of time. Think hard about the lifestyle you’ll want when you retire. Where do you see yourself in the next 10, 20 or 30 years? Which goals really matter to you? Do you think you’ll keep working part-time? Travel? These goals can all be quantified; they will guide discussions with your advisor and significantly influence your financial plan,” Mohamed Wakkak explains.
Have you tried our retirement planning calculator? It may be a good idea to give it a go before meeting with your advisor.
These are the documents you will need to gather before your appointment (if applicable):
If you’re an entrepreneur, make sure to also include:
With your advisor, you’ll begin with an overview of your balance sheet to determine your cost of living:
They will make a list of all your assets: property, vehicles, bank accounts, savings, life and disability insurance, contributions to a pension plan and to investment accounts (whether registered, like an RRSP and TFSA, or non-registered). They may also include the value of your permanent residence, but be careful. “I advise my clients to think of their home as a non-liquid asset. You’ll always have to live somewhere, even if you move into a smaller home. Don’t finance your retirement with the value of your property only,” tempers Mohamed Wakkak.
The most common debts include mortgages, student loans, personal loans and lines of credit, and credit cards.
They will take a look at your pay stub and your last tax return to determine your net income. They will also include other sources of income such as tips, commissions, bonuses or support payments.
This is where your budget will prove to be very useful.
The discussion will then proceed from a strategic point of view. To do so, picture your long-term objectives. “The idea is to see if you’ll have enough income and savings to reach your goals,” notes Mohamed Wakkak. “Does your investment portfolio reflect your current situation and your future ambitions? Adjust your investment strategy based on when you plan on retiring. Take a look at how they will be spread out and how they can generate money while adhering to your risk tolerance. You could also go over a withdrawal strategy for your investments. The purpose of meeting with your advisor is to get the advice you need to make a financial plan that will guide your actions.”
“Making a plan is great, but it doesn’t stop there. The plan has to be maintained and adapted over the long term. To do so, the best thing is to meet with your advisor once a year, especially if you’re nearing retirement. Together, figure out whether your net value has changed and whether your balance sheet has changed to the point of impacting your financial plan. Of course, if a major life event occurs that may shake up your financial situation, such as a loss of employment, a breakup or even a promotion, speak with your advisor immediately. Finally, remember that a plan is not an immutable document; it’s a tool that changes over time,” Mohamed Wakkak concludes.
In general, it doesn’t cost clients anything to meet with an advisor; it’s included in the National Bank’s service offering. However, fees may be incurred in some cases, particularly if your file and asset portfolio are very complex and require the services of a tax specialist or notary.
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