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.

Rental properties: Incorporation and Taxes?

Here are some links to articles discussing taxation and whether you should incorporate as a landlord. As you will read, there are many factors to consider.

Incorporating a Rental Property: Is it Right For You?

Owning Rental Properties in Canada: Corporation vs. Personal Ownership and Tax Implications

Incorporating Your Rental Property Business: Should You Do It? Here’s the Scoop

Mastering Landlord Taxation

During conversations with landlords, I often find they aren’t working with a financial planner because they don’t have much of their assets in investments. If you read through any of the links, you learned there is a lot to know and that planning, whether it’s with a C.F.P. or an accountant, can be crucial in saving you tax dollars.

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.

Why advice-only planning?

When I introduce myself as an advice-only financial planner, the first question is why. They ask the question for two reasons: 1. I have a license to offer investment management, life insurance, and can help with implementation. But in my advice-only role, I deliberately remove that part so clients know my only focus is the plan itself. 2. What is the difference between advice-only and engaging in planning with implementation?

First, we need to answer what advice-only financial or retirement planning is. It is comprehensive planning without a product. Regardless of the recommendations in the plan, advice-only planners will not offer or sell you products. No investment products, no life insurance sales. You are paying for advice and strategies in your best interest to help you achieve your goals. Advice-only plans typically cover: cash flow, retirement income, tax planning, estate strategies, and risk management. Commission-based advisors get paid commissions for selling products. Fee-based advisors get paid a fee plus sell products that pay commission. They typically get paid a direct fee or a percentage of assets under management.

Certified Financial Planners are regulated by FP Canada. We adhere to the Standards of Professional Responsibility.

Why is this important?

Compensation drives behaviour. You only need to watch the CBC investigation into bank practices. The employees in the bank make offers and recommendations to clients based on performance goals and compensation, not necessarily a solution based on customer needs.

Who uses advice-only planning?

DIY investors because they want to manage their investments but need help with other areas like taxes, insurance, decumulation, and estate planning.

Clients who do not want to move their investments and other products from where they currently are.

People want to limit the bias in the advice they receive.

People who do not have a large amount of assets understand that they need and want help. Many investment firms have minimum requirements for assets/investments to become their clients. Banks give attention and service to clients with minimal assets(often ignored). Some people have substantial assets in other forms, like real estate, who will benefit from planning. An example is someone who has rental properties and wants to start selling them and turning them into retirement income. They need help because of tax consequences and turning the proceeds into investments and an income source.

People who want a second opinion.

Clients who are more focused on retirement income planning or tax planning or estate planning.

People who want to reduce costs. Paying for a financial plan may cost more now, but you make it back and save money because you can achieve lower fees.

There is no one right way. I believe that most people would benefit from an advice-only plan because you are paying for the advice, and it gives you a road map for a higher likelihood of success. As Mike Tyson said, Everybody has a plan until they get punched in the face. The plan can help you take the punch, plan for the punch, and get back on track. And everyone gets hit, whether it’s a major health event, divorce (increasing at an alarming rate in seniors), job loss, etc.

Imagine walking into a bank and not knowing whether the recommendation is best for you or best for their sales target. Now imagine sitting with someone whose only job is to give you a clear, unbiased roadmap, and then you decide what to do with it.

If I don’t see it, did I really spend it

It is common to hear the advice, save up for it before you buy it, but we live in a world of instant gratifcation and the deck is not stacked in our favour. You often get hit with ads buy now, pay later or there are only two left, or my personal favorite, you will never see this price again (It’s my favorite because three weeks later you see the same price again.). There are points programs on credit cards rewarding our spending with free groceries or free travel. The average balance on a credit card in Canada in Q4 2024 was $4681 and delinquencies are on the rise.

Why the points programs? The credit card companies are for profit organziations so if they are giving you something for free, is it really free? Credit card companies know two things:

1. Usining a credit card means you will spend more than if you paid cash(one study found it to be 160%more).

2. You are twice as likely to make an impulse purchase using a credit card then using cash.

The reasoning is simple, when you pay with a credit card, you feel less pain. Should you stop paying witrh a credit card? Not necessarily. The trick is to trigger the same pain you would feel if you paid cash. The four suggestions I have are:

1. Remove apps from your phone that you make purchases from. It places an extra step to make the purchase. You need to log into your laptop or desktop to make the purchase.

2. Immediately after you make the purchase, make the payment. This way you get your points, you don’t need to carry cash, and you still feel like you spent money.

3. This is my recent discovery and what prompted this blog, use a credit card that shows up on your online banking profile so that everytime you log into online banking, you see your balance. If your credit card is separate, you can avoid looking at it until the bill comes due and it allows the balance to creep up without you feeling it.

4. If you are making a purchase that isn’t a necessity, contribute the same amount to your investment account. This gives you confidence that you can afford the purchase and reward your current self and it also looks after your future self.

We live in a world of ease and comfort and it is usually a good thing. Spending painlessly is not good and can, and is leading to cashflow and debt issues for many Canadians.

Need help getting your cashflow under control, book an hourly seesion we can review it together.