Category Archives: Financial Planning

Hiring Financial Advisors – 7 Mistakes

Hiring Financial AdvisorsNone of us can afford to make a mistake when it comes to our personal finances. And yet many people will turn over all of their money, sometimes to a complete stranger, under the guise that this person is a financial adviser.

If you were planning to hire someone at work, would you hire the first person you talk to, hire them without talking to references or looking at their resume. Many people do this when they hire a financial adviser to manage their investments!  It happened to me and all the guy wanted to do was to buy and sell stocks for me. The worst part is that he could not even remember my last name! He did not last long.

Hiring Financial Advisors

What are the Mistakes that We All Make?

Here are seven common mistakes you can avoid when hiring a financial adviser.

  • Interviewing just one candidate
  • No background or reference check
  • Focusing the search on cost or payment style
  • Expecting credentials to make an adviser ‘good’
  • Expectations and results based entirely on returns
  • Letting the adviser control everything
  • Hiring friends and relatives

Let’s face it most people do ok, because most advisers are honest and hard working. However we have all heard of the terrible things that have happened to people that have lost everything because their advisers either made huge mistakes or defrauded them out of their life savings. If you avoid these most common mistakes, at least you have a better chance of avoiding losing everything.

Common Mistakes Made by Many People –  1: Interviewing just one candidate

You have decided that you need more than just a broker to help with your finances. You have questions about your investments and whether your savings will last into retirement. It is time to hire an adviser. Do you hire the first guy to come along or do you interview a number of people?

Do you buy the first house you see, the first car on the lot and do you compare prices for items you buy? Why not compare the services from advisers? After this is your savings for you and you family for retirement. This is important right?

Yet many people will hire the first person they talk to. Sometimes it is because a friend or a relative recommended them. Do you take the advice at face value or to do you do your own investigation? Sometimes word of mouth works great, but it still is the best advice to check several advisers out before you make a decision.

Common Mistakes Made by Many People –  2: No background or reference check

Fancy offices, nice cars, rich clients, and fancy clients does not mean success. After all they could be living off your commissions or even your own money.

Check with references that you trust. Radio hosts who have advisers on their shows are looking to fill time on the radio not invest with the adviser. As long as they sound good they will have them on their show. This is not a reference check. Some of the time on the radio  is even paid for by the advisers, so even though it sounds like investment advice, it is really just advertising.


Even after checking references etc, some may still get past you, however the chances are much reduced and your investments will remain safe.

Common Mistakes Made by Many People –  3: Focusing the search on cost or payment style

Everyone objects to paying fees for questionable advice. Most adviser collect fees by selling and buying investments on your behalf and therefore every recommendation must be suspect as a result.

Sometimes paying by the hour can be more beneficial and less costly, however it really depends on the trading action and investment style you have.

The real answer is how much money you will make , “NET” and which approach  will be more successful.

Common Mistakes Made by Many People –  4: Expecting credentials to make an adviser ‘good’

Professional credentials are easy to get for financial advisers. My adviser has a wall full and yet I don’t think I get any better advice from him than I did before he got all these diploma’s

Hire a person that you trust, and not a credential; Even if you trust the person completely, never let go of your control of your investments. Money corrupts and and after all it is yours to lose not someone else’s.

Common Mistakes Made by Many People – 5 : Expectations and results based entirely on returns

People hire advisers because they need help, they want to make money  and want to get their finances in order. They often fire advisers because they don’t earn a “big enough” return.

For every person who gets rich quick, there are a thousand that lose their money. You want an adviser who is going to counsel you to ride over the bumps of the market. They should position you to have a nice nest egg by the time retirement comes around.

Long-term performance is what really  allows them to ride the market roller coaster and retire comfortably.

Common Mistakes Made by Many People –  6: Letting the adviser control everything

It is your money and never relinquish control of your funds to someone else, especially your adviser. You have the most at stake , the most to lose so it only makes sense that you make the decisions!

Common Mistakes Made by Many People –  7: Hiring friends and relatives

It is hard enough to fire a person who works for you, i.e. your adviser, it is many more times difficult to fire someone who is a friend or a relative. If you have to fire that friend or relative, chances are they will no longer be a friend and your relative may not speak to you for awhile.

Hire based on  references, background checks, and performance.




Discuss Finances with your Spouse

Discuss Finances with your SpouseMy friends in the financial planning business routinely tell me about couples who do not share information with each other about their finances and how one spouse or the other has no clue about what would happen to them financially if the other spouse were to suddenly pass away. A car dealer also told me that routinely many guys will come in and purchase a car, which is a major purchase. They do not even tell their spouse about it before completing the deal. Another friend of mine was looking for some advice about investments. So I sat down with him to go over what his options were.

I expected his wife to join in and at least listen. She not only did not join in the conversation, she said she had no interest in the subject and felt that her husband would make all of the right decisions. What a mistake in my opinion. In fact now he has been diagnosed with short-term memory loss and probably does not even remember the conversation that we had with each other. This is another reason both spouses should be involved and at least know what the other is doing. Now she has no idea of what he is doing or has done and must investigate at some point. all of this could easily be prevented. It does not mean that she has to make the decisions in this case, but at least know where everything is, how much money is involved and what the investments are.

Discuss Finances with your Spouse – Get in Involved

Even my own wife will not get involved in the details, although I have introduced her to our financial adviser and I routinely discuss investment changes with her, I know she is only half listening.

It is a well established fact that women live longer than men. Chances are that your wife will have to deal with the aftermath of your investment planning. Doesn’t it make sense that she should know what is going on? I purposely used these genders in the previous sentence, since this appears to be by far the norm. With baby boomers retiring in droves it is even more important that everyone take more interest in planning their retirement years.

Men and Women have Different Goals and Objectives for Retirement

It should not be surprising that men and women have different ideas about retirement. Even though you have been with your spouse for many years your plans and opinions about what you would like to do in retirement may be quite different.

The only way to get at this is to start talking about your finances and your plans. Using a financial plan as the catalyst is a good way to start. A financial plan requires assumptions to be made about your needs for retirement. So discussing these assumptions will go along way to getting each other engaged in planning your finances.

Two Heads Better than One

Two heads are better than one anyways and I have definitely found that with my own spouse. Some of her desires are different from mine. She has come up with ideas and suggestions that I would not have thought about.

Sometimes when you state an assumption and someone asks you to justify that assumption, you are going to find out that you cannot. This challenge is good in that it makes you think things through better. So take challenges in a positive light and not as an affront to your planning skills.

Who Is Dominant

This subject may seem archaic. However in every relationship one spouse will be more dominant than the other in various areas. If one cares more or has more expertise, let them take the lead. However never relinquish the topic solely to the other spouse. You need to stay involved for the reasons I mentioned earlier. Make a contribution to the discussion.

Your dominant spouse will appreciate your input and thoughts. Keep a mature attitude about the subject. Do not let your emotions get the better of you.

It is not easy to do a financial plan emotionally with your spouse. But it is well worth the effort. Once you have all of your assumptions made and the facts about your current situation identified, developing the financial plan is pretty simple! Use a third-party to assist in developing the plan. They can act as the common sense expert to help you through this emotional process.

Baby Boomers Retiring

Baby Boomers RetiringBaby Boomers retiring in droves and the banks are issuing study results galore about retirement and baby boomers who will be flooding the market over the next several years looking for something to do. The first wave of baby boomers turns 65 this year. As a result if they have not already retired prior to 65, then many will begin retiring this year.

The banks do all of these studies and report the obvious. Many are concerned about retirement. What will they do, do they have enough money? Will they be bored and will they go back to work? The answer is yes to all of the questions. Also no to all of the questions. It really depends on the person and the situation that they are in.

How Silly are These Surveys?

I have a neighbor who retired last year at 65. His wife has been retired for several years. She is a retired teacher and he retired from a senior job at the government. We chatted one day. He expressed the concern that they do not know if they have enough money for retirement! Well of course they do,. But it comes down to lifestyle and how they want to live their life after retirement.

So forget all of these so called surveys and focus on your situation.

Baby Boomers Retiring – Plan For the Future Now

Regardless of age (if non baby boomers are reading this post, then you should pay attention to this part), you should have a financial plan. It does not have to be complicated. Basically you need to assess what your retirement life style desire will be in realistic terms. Then map out a financial plan to help you achieve your goals.

The later you start this plan the more difficult it will be for consumers to achieve their objectives. Starting early makes it very easy. While starting at 65 really means you must live on what you have and pension income that you take in. A financial adviser can assist you with the development of the plan in terms of the numbers. However you are the one who must do the work along with your spouse. Decide what kind of life style you want and what you can afford.


The bank surveys also show that baby boomers are concerned about their health and what impact their health will have on their retirement. Obviously if you are in ill health, you are not going to be able to some of the things you planned on. All you need is one serious bout of sickness to make you realize that life is precious and you had better enjoy it as much as possible while you can.

Once you have a stroke or some other debilitating problem, no matter how much money you have, you are not going to be able to do all of the things you planned on including travel, sports etc.

In Canada, medical costs do not play as significant a role as they do in the US because the government covers our routine medical costs. In the US, if you get sick and have no coverage, then you run the risk of either being totally broke or you do not get treatment and you die prematurely from something that is easily treatable.

Baby Boomers Retiring – Summary

The bottom line is plan for your retirement taking into account your life style needs and desires along with the amount of money you expect to have available during retirement. The two will have to be balanced no matter how much money you have. Apply a business like manner to managing your assets and grow them to ensure that you have what is needed for retirement. For baby boomers, it is never too late to develop your plan, however you will need to limit your objectives in order to meet your goals and objectives for retirement.

Enjoy your life now. If health issues become significant, they will put more of a crimp on your activities than money ever will, so figure out what you want out of life and go after it while you still can.





A Will In Your 20’s or 30’s!

A Will In Your 20'sMany of young people  think of estate planning and financial planning as something only seniors must do. The truth is, if every adult with a spouse, child or business, regardless of age, had solid plans in place when they were young we would all be very well off during mid-life and into our senior years. People with A Will In Your 20’s and 30s are in the prime of life. They have a lot of years to set aside money for later. If you start early then you do not need to set aside very much each year. You can end up with a really nice nest egg .

Young people  marry, start a family and buy a home. Some will also  start or buy a business so there are a lot of pressures on the financial side of life. Which can be made easier if you have a solid financial plan, an estate plan and a will to protect you and your young family.

A Will In Your 20’s or 30’s

Whether we realize it or not we all need to think about the following as we take steps in our lives:

  • Getting married
  • Having Children
  • Buying a home
  • Saving for retirement
  • Buying life insurance
  • Starting a business
  • Preparing a will

Having children

Once you have children, you have taken on a huge responsibility that goes on whether you are alive or die in an accident. One of the ways to ensure that your child has the life you had hoped for them is to have a will that states how your assets will be used to support them and who will look after them. If there is no will, someone in the government will decide who will raise your kids and how the money will be used.

Your will can also state how the funds will be used to support the kids, when they have access to the funds and who will manage the funds until they are old enough to manage the funds themselves.

Buying a home

When you buy your home, most couples will do so in joint tenancy which means that if one dies , the other takes over the ownership of the home automatically, called a right of survivor ship . The house remains out of the estate and  probate is not required for its transfer to the surviving owner meaning you pay less probate or death taxes as a result.

Without joint tenancy, you have tenancy-in-common which doesn’t provide a right of survivorship. The half of a house owned by a deceased tenant-in-common falls into the deceased’s estate, where it’s subject to creditors, claims and delays.

Saving for retirement

Savings plans for retirement should start early in life. Investors should consider how these assets will be handled in probate. Plans in some situations can be transferred to spouses tax free. In the early years when you do not have a lot of savings, many people will take out insurance coverage to protect their families should something happen to them.

Buying life insurance

Leaving a life insurance policy to a spouse directly also keeps the insurance proceeds out of the estate. This ensures that there are funds in the spouse’s hands no matter what is going on in the estate. This is better for the spouse. On the other hand, there are excellent reasons to name the estate as the beneficiary of a life insurance policy. The main benefit is that it provides cash in the estate that can be used for paying taxes. Or paying debts (such as paying off the mortgage on the couple’s home).

Life insurance can also be used to provide money that can be distributed to one of the children. For example, the deceased was leaving his or her major asset – a business or farm, for example – to one child. If they didn’t have enough assets to give a similar amount to another child. Another use of life insurance is to create funds for holding a property such as a cottage in trust.

Life insurance is much cheaper at younger ages than it is when people are older. Young people should consider the various ways that life insurance can be used to their advantage. It can replace income. It can pay out a mortgage, leaving the widowed spouse with clear title to the home. Also it can provide funds to leave in trust for the children. It can provide cash flow to be used to pay taxes and expenses.

Starting a business

Finally, young people are tying up a great deal of time, effort and capital in a business. They must plan right from the start to protect their families in the event they pass away prematurely. If the business is incorporated and there are other shareholders, there should be a buy-sell agreement put into place. It should clearly states what happens to the shares of a deceased shareholder. Often the agreement provides that the other shareholders will buy back the shares. In a fledgling company (and often in more established ones, for that matter), this probably means that a life insurance policy owned by the company will be taken out on the shareholder’s life.

Start your planning today. Talk to a financial adviser and assess what your next steps should be. Enable a high quality of life during retirement as well as a high quality of life for your family should something happen to you.

Ten Financial Steps

Ten Financial StepsNo one wants to think about their death, however part of financial planning is to take this scenario into account so that your family is well protected and looked after in case you do die. Financial planning is also important to ensuring that your quality of life meets your objectives and that your family has a quality of life that is satisfactory.

This is the time of year to put everything in order and complete one of your new Years resolutions.

Without a will, what happens to your kids? to your wife ? How will they support themselves? What will they do when the bank will not release your assets, because there is no will? How will they pay the bills and buy groceries? These are just a few of the reasons why you need to have a will and what can happen if you do not have one. Basically you need to assume that all of your assets will be frozen until a government bureaucrat decides how your assets should be distributed.

Ten Financial Steps

Your will

When you pass away, your family should look after the funeral or memorial first, however the will should be consulted in case there are any special circumstances concerning the memorial that are mentioned in the will, but then they’ll have to focus attention on finding a copy of your will. Make sure your will is up to date and make sure your executor knows where to find the executed copy, and knows which lawyer prepared it for you. Having this information available makes their job much easier in an already stressful situation.

Your assets

Your executor will have to gather information on what assets you owned at the time of your death. Prepare a complete list  and update it annually. Tell your family who your financial advisers are since they will likely need them for help in dealing with your assets after you’re gone.

Funeral costs

Your family will be in a fragile state emotionally when you pass away. It will be difficult for them to negotiate funeral costs at that time. Solve this issue by planning your funeral today or delegating someone who can carry out the families wishes. You can even prepay for your funeral if you want. Visit a local funeral home to discuss it.

Bank accounts

If your spouse shares a bank account jointly with you, they will be able to access the cash immediately after you pass away. Joint bank accounts make sense for this reason. Consider making the bank account(s) used for day-to-day expenses joint accounts. Also, ensure that any corporation bank accounts have more than one signing officer so that those accounts can be dealt with efficiently.

Life insurance

Make sure your family knows who your insurance adviser is. Further, make sure at least one insurance adviser knows about every policy you might own, and ask him to keep a record of this information for you.

Government benefits

Three types of benefits may be available to your surviving family members. If you’ve contributed to the Canada Pension Plan, there will be a death benefit (a one-time payment, to a maximum $2,500), a survivor’s pension (a monthly pension paid to your surviving spouse, averaging about $300, but which can be as high as about $560), and a children’s benefit paid to a surviving child (a monthly benefit of about $215 a month per child under age 18 or up to age 25 while still a student). Your family must apply for these benefits after you’ve gone.

Registered plans

Any registered retirement savings plans  or registered retirement income funds owned by you at the time of your death can generally be transferred on a tax-free basis to a registered plan in your spouse’s name (or to a dependent who is a minor or has a disability). Simplify things for your heirs by reviewing your named beneficiaries on these plans today. Ensure the right people will receive these assets when you’re gone.

Employment matters

Your family should call your employer to determine whether there are any amounts owing. Such as salary, vacation pay or bonuses. They should also inquire as to whether the employer can pay any amounts as a tax-free death benefit. For example up to $10,000 can be received tax-free where it is considered a death benefit in recognition of an employee’s service. Let your family know  who they should contact at your office in the event of your passing.

Your debt

Have you purchased insurance to pay off your debts in the event of your death? If you’re insurable, make life easier for your family by doing this. Term insurance (the cheapest) is just fine. Especially if the debt has a term to it and is expected to be paid off in the future.

Summary of information

Much of the information you’ll want to provide about assets, contact names, and so on, should be summarized in one document. If you do not have a document template, search for one on the internet. Or ask your lawyer or funeral home if they can provide a document for gathering this information.