Welcome to my first column. I am part of the +55 demographic. As a major part of my undertaking, I will be giving you some informative and practical financial education from my perspective as an investment advisor. I will be assisted by Lindsay Taylor, my daughter. Wealth management is a family affair.
Achieving your financial goals doesn’t happen overnight, and it takes careful planning and execution. Let’s start first with the importance of a financial plan.
Picturing your retirement
A financial plan is the foundation of your overall wealth management strategy. To attain your goals, you need to know where you stand today, where you want to be in the future and how you’re going to get there. We call this financial planning. It takes into account all aspects of your personal and financial situation. Let’s take a look at some questions that are part of a financial planning questionnaire:
What will retirement look like? If retired, will your money last? What do you want to do in this next stage of life?
If you become disabled, will you have enough income to manage until you are well again?
When you pass away, will your family be financially secure?
Is your investment strategy consistent with your financial goals?
The most effective plan begins long before you look at the numbers –- it starts with a discussion about your values, your current situation and your aspirations for your future and your loved ones. Financial planning is a process.
The component parts of a professional and documented financial plan should discuss and analyze:
Current financial position. This is a combination of your net worth (assets, minus liabilities) and your annual cash flow (income, less expenses and savings).This information provides an overview of the financial resources currently available to meet your goals.
Investment planning. A successful investment strategy begins with asset allocation. This involves reviewing the asset mix for each of your investment accounts, along with registered and locked-in accounts.
Retirement planning. In this process, combined sources of retirement income are measured against retirement goals to ensure you can maintain your desired lifestyle throughout retirement. Can you stay comfortably retired?
Estate planning. An estate plan summarizes your estate’s distributable assets and obligations (income taxes, probate costs and debts). Perhaps more importantly, it gives you an overview of the income needs of the surviving spouse and tells you if more capital is needed to support the survivor’s lifestyle.
Tax planning. Your plan will take the tax rules into account, determining their effect on your investments and cash flows.
Recommendations. Key findings within each of the planning areas can be drawn upon to identify areas where financial action should be taken, and set priorities for dealing with them.
Experts on call
You may have to meet with other professionals, such as a tax advisor, an insurance specialist or an estate lawyer, to implement your plan. Your financial advisor reviews your portfolio and financial plan to ensure that it is consistent with your personal and financial objectives.
Once implemented, your plan should be reviewed every few years or whenever there is a significant change in life events, such as a change in marital status, a birth or death in the family, an inheritance or a new job.
Your advisor can help you meet your financial goals through the development of a financial plan – the foundation of your overall wealth management strategy.
Brian Taylor may be reached at BMO Nesbitt Burns 204-949-7580, and www.briangtaylor.ca.
Opinions are those of the author and may not reflect those of BMO Nesbitt Burns Inc. (“BMO NBI”). The information and opinions contained herein have been compiled from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. BMO Nesbitt Burns Inc. is a wholly-owned subsidiary of Bank of Montreal. Member, Canadian Investor Protection Fund.