I was shocked when I read the following in the 2014 PricewaterhouseCoopers (PwC) study, Sound Advice: Insights into Canada’s Financial Advice Industry:
More than 90% of all Canadian households have less than $500,000 in financial assets and 80% of households have fewer than $100,000 in financial assets.
Think about that: 80% of all Canadian households have less than $100,000 of financial assets. When you consider the amount of savings necessary for a comfortable retirement and that 80% of all Canadians have less than $100,000, it suggests that most people are ill equipped for retirement.
So why should people work with a financial advisor? That same study showed that people who work with an advisor save up to 4.2 times more than people who don’t. That can be the difference of enjoying a comfortable retirement or just scraping to get by.
Another study from 2012, this one by the Center for Interuniversity Research and Analysis of Organizations (CIRANO), revealed that households who use a professional financial advisor have almost 3 times the median assets of non-advice households.
Therefore, one very important benefit of working with a professional advisor is clear; households who work with an advisor typically save a lot more money than non-advised households.
However, a person has to be careful when choosing an advisor. Unfortunately there aren’t any regulations defining who can call themselves a financial planner. A good place to start is to see which professional designations the advisor has obtained. Although this can also be confusing as there is a wide range of designations and not all of them are equal.
One I recommend is the Chartered Financial Consultant designation (CH.F.C.). A Chartered Financial Consultant (CH.F.C.) is a financial advisor with advanced knowledge in wealth accumulation and retirement planning. An advisor with the CH.F.C. designation is an expert in retirement planning and capital accumulation strategies.
Another good one is the Certified Financial Planner (C.F.P.). The CFP is an internationally recognized standard for financial planning. An advisor with a CFP may help you with personal financial planning and offer advice on investment products and strategies.
Even just starting the conversation with a Financial Advisor can put you on the right track to securing a comfortable future, no matter what your current situation is.