If you’ve never engaged in comprehensive financial planning with a qualified planner such as a CFP® professional, you might wonder about the process and whether it’s right for you. There are many misconceptions about financial planning. Read on to get the facts.
A financial planner is someone who handles my RRSPs or taxes
A comprehensive financial plan covers every area of your financial life, from investments and real estate to insurance and retirement planning. A professional financial planner will guide you on how decisions about one aspect of your finances will affect other areas – and how it all affects different areas of your life. For example, an investment decision can have tax consequences harmful to estate plans, while a decision about a child’s education may affect when and how you meet your retirement goals. A CFP professional can help guide you toward the decisions that will help you reach your overall life goals.
Financial planning is all about budgeting and cutting back
When you have the right financial plan for your circumstances, you can balance what you need and want today with the personal goals you have for the future. An effective plan goes beyond saving to help you live the life you want with the resources you already have.
If I’m generally moving in the right direction, my financial goals will take care of themselves
Life is hectic and all too often we get sidetracked from reaching our life goals. Specific, measurable financial goals will help you target what you want to achieve. A CFP professional will help you understand what is required to attain a “comfortable retirement” or a “good education for my children” so that you act today to reach your life goals in the future.
Financial planning is for people who are wealthier, older or younger than I am
The tools and strategies of financial planning work for all ages and all levels of income. It’s never too early or too late to start, nor do you have to be wealthy to have a plan. Planning is for everyone. You can read more about how financial planning has impacted the lives of over 15,000 Canadians from all economic and demographic backgrounds in the Value of Financial Planning study.
Working with a financial planner means I can sit back during the process
When working with a financial planner, you need to be sure you understand the process, what the planner is doing, and how they are being compensated. You also need to be an active participant in the process – your financial planner relies on you to provide all the relevant information about your financial situation and life objectives. Ask about your planner’s recommendations and play an active role in the decision making.
Financial planning is a quick fix for my finances
Financial planning is generally a long-term approach to managing your finances so that you can reach your life goals. It won’t change your situation overnight. Remember that factors beyond your control, such as the stock market, inflation or interest rates, will affect your planning results.
Once I have a financial plan in place, I can forget about it
Financial planning, like life, is a dynamic process. Your goals or priorities may change over the years due to changes in your lifestyle or circumstances, such as a birth, an inheritance, marriage, house purchase or change of job status. Revisit and revise your financial plan to reflect these changes so that you stay on track.
Having a financial plan isn’t going to make a difference to my situation
Comprehensive planning with a professional financial planner will help you proactively navigate your financial future, helping you reach your goals as well as deal with inevitable financial surprises along the way. Committing to the financial planning process with a CFP professional is committing to your future.