Financial planning
Financial planning is an essential part of our (free) service offering. As with any life plan, retirement must be prepared. Most people, however, have little time to devote to retirement planning and are looking for a comprehensive solution to simplify their life and optimize all their banking, financial, tax and estate strategies. A financial plan is there to help you see the big picture and get a better handle on your financial situation and needs. Using the BMO WealthPath platform, we can offer you valuable advice. 360° Thinking The goal is to get a complete picture of an individual or family’s financial situation. It’s important to make sure that all the financial data works with each other, that every aspect of a balance sheet takes into account what’s going on elsewhere in the investor’s life. And the process begins with a thorough review of personal, family and professional circumstances. Here are four aspects that are likely to be addressed when you consult with us: Taxation Take the example of an investor who is only concerned with performance. Many people only look at the growth of their portfolio, without asking themselves if they hold the right securities from a tax perspective! It’s important to know that, for tax purposes, not all securities are treated alike. Therefore, after reviewing each individual’s situation, it’s not uncommon to be able to achieve tax savings simply by rearranging his or her portfolio. Only a detailed analysis that encompasses all of a client’s assets and objectives will allow us to develop a consistent approach from a tax perspective. Assets You have investments, but how do they work together? It’s important to analyze the correlation between your securities to ensure they don’t react in the same way to movements in the stock market, thus ensuring a better balance for your portfolio. That said, downside risk is not the only risk. Would the fixed income portion of your portfolio experience a sharp correction if interest rates rise? This question is especially relevant since the Bank of Canada is planning to raise rates. Diversification is one of the strongest pillars for building your portfolio, and only a wealth management approach will allow you to properly answer these types of questions. Liabilities This is the other, all too often neglected, aspect that is tackled as part of a wealth management approach. Here again, not paying attention to "the two sides of the balance sheet" can be risky. For instance, should you pay off debt X before you start investing in account Y? It’s all a question of rates: if the expected return is higher than the cost of the debt, you’ll want to choose a different strategy than if the debt costs a lot more than any return you may achieve. Insurance The need for protecting your assets will vary at different stages of your life. When you have a young family, you need to protect them from hard times. When you begin to own significant assets, such as a home, you need to protect your ability to pay for it. During their successful working years, some people feel more secure by taking out salary or critical illness insurance to maintain their income in the event of bad luck. People who want to diversify their assets and increase their estate values may consider purchasing whole life insurance. It’s a smart way to optimize your tax situation. The only way to answer these questions is to have a comprehensive plan. Estate planning Estate planning ensures that, at the time of your death, your assets will be distributed according to your wishes. Regardless of your age, the size of your estate or the complexity of your situation, there are some basic questions you need to be able to answer with certainty. For instance, does your plan ensure that:
The financial security of your spouse or dependents will be assured?
Your family will be able to maintain its lifestyle?
Income taxes and other estate costs will be limited and funded?
Your assets will be distributed as you wish?
Your assets and investments will be preserved in the event of physical or intellectual incapacity?
To take control of your finances and live the retirement you’ve always wanted, it’s important to gather all the elements that make up your financial situation in order to develop a detailed plan. While no one can predict the future, planning for your retirement can help provide greater clarity. By considering the various factors that can impact your retirement income, we can help you explore your options and make informed decisions.