The Hidden Cost of Not Having a Financial Plan

Many people don’t understand what they will get from a financial plan because too often, financial planning is mixed up with or used interchangeably with investment management. These examples are how a Financial plan can benefit you, and the examples are focused on people in the 45-60 age group:

1. This age group wants retirement security, but they also want to help their kids and aging parents. They want balance without guilt. Your financial plan can show you concrete trade-offs. An example might be contributing an extra $25000 to an RESP and which delays retirement by 6 months, but skipping the contribution could burden the child with high student loans. The plan might show you that contributing more to an RESP and getting the grants is a better investment than an extra payment on your 3% mortgage. Or spending $100,000 on parent care could delay retirement by 18 months unless extra savings occur. Creating a cash flow plan inside the financial plan helps you make informed choices, understand the trade-offs, and prevent emotional mistakes.

2. These are typically your peak earnings years. A plan ensures you are capturing this opportunity. Creating strategic RRSP, Spousal RRSP, and TFSA contributions, corporate investment accounts(if self-employed), and pension optimization can save you thousands in taxes annually, turning more income into wealth.

3. Create clarity and confidence on when you can transition to retirement. Stop guessing! A comprehensive plan shows exactly how retirement-ready you are and your current trajectory. For example, you can retire at 63 with $75,000 in income or you can retire at 66 with $95,000. The precision transforms anxiety into actions and informed decisions.

4. Understanding how the timing of the Canada Pension Plan affects your income and how it can affect longevity risk and taxes. Delaying to age 60 is a 42% increase, and the decision should not be taken lightly.

5. Risk Management at Life's Peak. You have the most to protect and the most to lose. Comprehensive insurance reviews ensure your disability, critical illness, and life coverage match your current obligations. One unexpected health crisis shouldn't derail decades of careful planning; proper coverage protects everything you've built.

6. If you're considering selling the family home(downsizing at some point), a planner models the financial implications: reinvestment strategies and how the proceeds affect retirement income. They might reveal that downsizing could fund 5-10 extra years of travel or allow earlier retirement.

7. Get your will, powers of attorney, and beneficiary designations properly structured now. A planner can coordinate with estate lawyers to minimize probate fees and taxes, potentially saving your heirs thousands and preventing family conflicts when emotions are already high. Estate planning is a lot easier if it isn’t urgent.

8. Retirement planning is not just about the numbers. A planner can help you understand how having a purpose, a planned social life, and focusing on your health will help make you more content in retirement. Planning is most effective when it aligns with your values and vision of retirement.

All of the above can be addressed in a comprehensive financial plan. You can also choose to focus on one modality and build a plan to achieve that goal. Financial planning is more than just investing in a certain fund. Book an initial consultation today.

RIFF’s, Death, and TAX

Recently, a couple in their mid-80s came to me for help with their taxes.
They have:

• Over $500,000 in a Registered Retirement Income Fund (RRIF)

• A paid-off home

• Pensions that give them more than enough income to live comfortably

Their big goal is to leave as much money as possible to their three children.

Here’s the problem:

• When one spouse dies, the RRIF can pass to the other spouse with no tax right away.

• But when the second spouse dies, the RRIF is treated as income and can be taxed at up to 53.5% in Ontario.

At age 85, the government requires them to withdraw at least 8.51% of their RRIF each year. That’s about $42,550. If they both pass away before age 92, there could still be hundreds of thousands of dollars left, and more than half of it could go to taxes instead of their children.

For example, if they both passed away at age 89, there could be around $300,000 left in the RRIF and a tax bill of about $160,500.

The Fix

Instead of only taking the minimum, they can withdraw more now in a smart way. This may mean paying a bit more tax each year, but it can reduce the total tax bill over their lifetime, and leave more money for their kids.

This is something that should be caught during the financial planning process. The sooner you plan, the more options you have.

The KEY takeaways:

1. Understand the tax consequences of your accounts at death

2. Think lifetime tax bill versus annual tax bill

3. Understand your income versus expenses and what potentially could be left over.

A more Compelling reason for a Passive Approach

There is a lot of evidence that shows that active fund managers underperform the markets over the longer term. Saying active management beats passive investing over the long term is comparable to saying Tylenol causes autism. That said, there is a more compelling reason to go the passive route.

Time in the market with average returns is the winning formula to achieving your goals. If you achieve average returns for 30 years, you will rank in the top for investors. By having patience and discipline, you allow compound interest to have maximum impact on your investments, and you will increase the likelihood of hitting your goals. You don’t need to beat the market or find that one high-performing stock; just be average for 30 years.

Keep it simple and stress-free, and do it for a long time. Implementing a passive approach, typically with a low-cost, globally diversified, index-like fund for a long time, takes away guesswork and decision fatigue and significantly increases your chance of success. If there is a secret, this is it.

Survive the First Five-Pickleball and market crashes

I began playing pickleball in early September and am watching alot of videos on how to improve. There is a strategy called survive the first five. Good pickleball players’ rallies average 4 hits, and then someone will make an error. Therefore, if you can keep the ball in for four hits, the chance of you winning a point are greater because an error will occur soon. Keep it simple and keep it for five, and you will increase your likelihood of winning the point.

As an investor, you will go through 6-10 bear markets or 4-5 significant market crashes in your lifetime. These numbers are not 100% accurate because definitions are not agreed on, and investor time in the market can be very different. As an investor, survive the first 5! When the market crashes, and it will, stay invested. Better yet, keep your regular contributions going. Just like in pickleball, keep it simple, keep your money in, and you increase your likelihood of success. My belief is that your financial planner’s job is to help you not make big mistakes. We can’t control many things in trying to make you rich. We have a lot of control over our behaviours and emotions and can stop you from going broke or making the big mistakes. The next time there is a bear market or a crash, remember to survive the first five.

Investment Manager vs. Financial Planner: What’s the Difference?

Investment Manager vs. Financial Planner: What’s the Difference?

If you are getting close to retirement, you might hear two job titles that sound almost the same: investment manager and financial planner.
Both help with money, but they solve very different problems. Knowing the difference can help you choose the right help and avoid paying for services you don’t need.

What an Investment Manager Does

An investment manager looks after your accounts like RRSPs, TFSAs, or non-registered portfolios. Their main job is to decide how your money is invested and make changes when needed.

Before they invest, they will usually give you a risk tolerance questionnaire. This is a discussion and set of questions to find out how comfortable you are with market ups and downs. Your answers guide how much of your money goes into safer investments like bonds or growth investments like stocks.

Example:
Susan, 58, has an RRSP and a TFSA but hasn’t checked them in years.
She worries about losing money if the market drops just as she retires.
An investment manager reviews her accounts, checks her risk tolerance, and adjusts her portfolio to better match her age and comfort level.
Now she knows someone is watching her investments every day.

Typical Costs in Canada:
Most investment managers charge a fee based on a percentage of the investments they manage. It’s often around 0.5% to 1% per year of the total account value.
For example, if you have $500,000 invested, the cost might be $2,500 to $5,000 per year. The fund company will also charges a cost. The costs may be separated or included in the MER(management expense ratio).

What a Financial Planner Does

A financial planner looks at your whole life, not just your investments. They help you answer questions like:

• When can I retire and still live the life I want?

• How much income will I need each year?

• How do I lower taxes on RRSP withdrawals, CPP, OAS, or a business sale?

• Should I pay off debt, save more, or spend on experiences?

A good planner doesn’t just run numbers. They will talk about your values and goals—the things that bring you happiness and purpose. This might include family, travel, volunteering, or part-time work. By understanding what matters most, the planner creates a retirement plan that supports both your finances and your well-being.

Example:
David and Marie, both 60, have RRSPs, a paid-off house, and a small business they plan to sell.
They want to retire at 63 and travel every winter.
A financial planner explores what will make them happiest, runs retirement income projections, and shows a tax-smart way to draw from RRSPs and TFSAs.
They leave with a clear plan that matches their values, not just their bank balance.

Typical Costs in Ottawa:
Financial planners may charge a flat fee for a plan (often $2,000 to $5,000), an hourly rate, or an ongoing advice-only retainer (for example, $150 to $250 per month).
Some planners also offer investment management, but many advice-only planners charge only for planning and do not sell products.

Choosing the Right Help

Some Canadians hire just one professional. Others use both. The choice depends on your needs:

• If you need someone to manage and monitor your investments, an investment manager is the right fit.

• If you need a complete retirement plan that connects your money to your values and happiness, a financial planner is the better choice.

• If you want both the plan and the day-to-day management, you may work with both; just make sure you understand the costs so you’re not paying twice for the same service.

Retirement is more than numbers on a page. Whether you hire an investment manager, a financial planner, or both, the most important step is to choose help that keeps your money working for you and supports the life you want to live.

Ready to Plan Your Next Step?

If you live in Ottawa or anywhere in Canada except Quebec and want a clear, objective plan for retirement, I offer a free 45-minute planning review.
We’ll talk about your goals, your values, and what matters most to you without any pressure to buy products.