Financial Planning

financial planning

When I started my career at Smith Barney in the US, “back in the day,” people with surplus funds engaged a stockbroker to buy and sell securities on their behalf. This relationship was primarily transactional (with a few liquid lunches thrown in for good measure). Stockbrokers were paid by commission, and each buy or sell was discussed as an isolated decision. In an era when a single income could support a home, few people went to college and the workplace had a defined benefit pension. This was sufficient. Now most Canadians are in charge of their retirement, education funding, mortgage decisions, and lifetime financial strategy. Simply buying or selling a stock or bond is almost irrelevant. People need long-term projections and a larger context to inform their decision making. This requires knowing how to estimate and calculate future inflation, borrowing rates, investment returns, asset allocation and income strategies, as well as understanding how financial markets tend to evolve.

This process can be summarized as financial planning. No investment decision should be made without an understanding of the main objectives and context of an individual’s overall plan. And this is where challenges arise. Finding someone to advise you who has an appropriate educational background and designation is about as easy as finding a family physician! People are often left taking the advice of commissioned salespeople at their financial institution, or advice from those who are remunerated by what and how much they sell. Many of the banks only allow their financial planners to use in-house funds. This does not necessarily mean someone doesn’t have your best interests in mind. But it is an important piece of information.

There are three areas to consider when taking advice. The first is practical. Ask how that person is compensated. What are their designations and what do they mean? And finally, who supervises them? Are they a member of a licensing body that demands compliance to a set of ethical principles and ongoing education? Or did they take a three-week online course to get a paper to hang on their office wall?

The second consideration is emotional. How do you feel about this person? When making decisions about the markets we advise NEVER to use your intuition. But in choosing a professional helper, your intuition can be an excellent guidance system. It is not infallible, but it should be taken into consideration. Do you trust this person? Do you understand how they explain things? Do you feel respected?

And finally, are you willing to get up the learning curve to become functionally literate in financial language and principles. If you want a refresher, check out our webinars at, listen to our podcast, or re-read “The Financially Empowered Woman”. Education is a foundation for discernment and personal empowerment. You don’t have to know everything — just enough to discern who to listen to for the best advice.