Thus basic aspects such as budgeting, debt, insurance, wills, retirement planning and taxes are completely absent or neglected.
Lots of attention oriented investments
This raises concerns because people’s perception of what a financial plan is is not complete. They do not understand that in order to help themselves they need to have a good knowledge of all aspects of their finances. If their advisor focuses only on investments, says Aurèle Courcelles, assistant vice president at IG Wealth Management, it doesn’t manage other risks.
He says investments tend to get a lot of attention, because the topic is more real than estate planning or taxes. “Customers can see at a glance on their investment statement what they own, what is gaining value and what is losing. Other aspects of a financial plan are less realistic and more difficult to understand,” he says.
The study also found that Canadians with a comprehensive financial plan are three times more likely to believe that they will achieve their financial goals than those without. This fact tends to show that comprehensive financial planning enhances clients’ sense of confidence and financial well-being.
Improving financial plans
Here are some tips to help your clients develop a more holistic view of their finances.
- Don’t overlook any part of financial planning. Without a tax strategy, your clients risk paying more taxes, and therefore have less money to invest.
- Start the conversation about this with your clients to take a long-term perspective on their financial health.
- Increase your level of knowledge of the different aspects that must be covered in order to prepare a complete financial plan designed to prevent major risks.
- Educate your clients on the importance of budgeting. Help them better understand cash flow and choose savings according to their needs.
- Regularly review your clients’ financial goals with them and develop a strategy to achieve those short to long-term goals.
These efforts will not only educate clients about the benefits of having comprehensive financial planning, but also improve the design and implementation of their financial plan.
