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Financial Planning

Financial Planning: The Importance

The Importance of the Financial Planning Process Do you know how much you need to save to achieve your retirement goals? Have you started to put funds aside for your child's post-secondary education? Will your family be able to maintain its lifestyle in the event of your disability or death? These are just a few of the many issues that can be addressed in a financial plan.

Most people have not yet determined their financial goals let alone developed a plan to reach them. As your advisor, I can assist you with this but first you must make the decision to get started. You should follow a systematic approach to ensure that your goals are well defined, a set of achievable steps are determined, and appropriate benchmarks are put in place.

Six steps to financial planning

The Canadian Association of Financial Planners defines six distinct steps to the financial planning process:. Clarify your current financial position
2. Identify measurable goals and objectives
3. Identify financial barriers or issues
4. Provide alternative solutions and create a strategy
5. Implement the strategy
6. Periodically review and adjust the plan.

There are many different areas that can be covered in a financial plan. Retirement planning is always popular, as is planning for a child's education. Estate planning is growing in importance as baby boomers age. Investment and tax planning are essential components of a comprehensive plan, and other issues such as saving for a major purchase or deciding which option to take in a pension buyout can be addressed.

Whatever your goals may be, the actual purchase of financial products comes late in the process. The investment vehicles that you select should only be chosen for their ability to help you to meet your goals, not because of their short-term performance. Your investment portfolio should be reviewed in light of your objectives and, as necessary, adjustments should be made to the asset mix, etc.

Financial planning is a process, not a one-time event. A plan that works today may be inappropriate tomorrow due to a change in your financial circumstances or things that are beyond your control, such as the income tax system. It is important that we meet on a regular basis to ensure that you remain on track to meet your goals. The BMO Nesbitt Burns sophisticated planning software can help us get started on your plan. Don't wait - the earlier we begin the process, the easier it will be to achieve your financial dreams.


Most people have not yet determined their financial goals let alone developed a plan to reach them. As your advisor, I can assist you with this but first you must make the decision to get started. You should follow a systematic approach to ensure that your goals are well defined, a set of achievable steps are determined, and appropriate benchmarks are put in place.

Six steps to financial planning

The Canadian Association of Financial Planners defines six distinct steps to the financial planning process:. Clarify your current financial position
2. Identify measurable goals and objectives
3. Identify financial barriers or issues
4. Provide alternative solutions and create a strategy
5. Implement the strategy
6. Periodically review and adjust the plan.

There are many different areas that can be covered in a financial plan. Retirement planning is always popular, as is planning for a child's education. Estate planning is growing in importance as baby boomers age. Investment and tax planning are essential components of a comprehensive plan, and other issues such as saving for a major purchase or deciding which option to take in a pension buyout can be addressed.

Whatever your goals may be, the actual purchase of financial products comes late in the process. The investment vehicles that you select should only be chosen for their ability to help you to meet your goals, not because of their short-term performance. Your investment portfolio should be reviewed in light of your objectives and, as necessary, adjustments should be made to the asset mix, etc.

Financial planning is a process, not a one-time event. A plan that works today may be inappropriate tomorrow due to a change in your financial circumstances or things that are beyond your control, such as the income tax system. It is important that we meet on a regular basis to ensure that you remain on track to meet your goals. The BMO Nesbitt Burns sophisticated planning software can help us get started on your plan. Don't wait - the earlier we begin the process, the easier it will be to achieve your financial dreams.




Your Money and Your Life - Tying your financial plan to your life plan

Bob and Monica Collins recently visited their Investment Advisor concerned about the state of their retirement plans. They had been working with their Investment Advisor for a number of years and had confidence that their financial plan was well looked after.

'It's not the money that concerns me', said Bob during the meeting. 'Here we are at 50 years old and, to be frank, neither Monica nor I have any idea what we are going to be doing with our life in the future.'

Monica chimed in, 'When retirement was such a long way away, we used to dream about the life we would lead and the fun we would have. Our planning became all about building up our nest egg so that we would never have to work again after age 55!'

The issue for the Collins is a similar one to many aging baby boomers who are on the verge of retirement. Retirement is no longer a future plan and is very quickly becoming a current issue that has to be planned for and addressed. Also, the financial planning strategy that built a nest egg for the Collins and many other Canadians must now focus on how to help them live the kind of life that they want.

It is common to set financial goals for yourself. It is a lot harder to set goals in other life areas because most people are not as comfortable setting non-financial goals, outside of 'New Year's Resolutions'. Yet, goal setting takes on increased importance as so many Canadians are focusing on achieving the fulfilling life of their dreams. As the old saying goes, 'If you don't know where you are going, then how will you know when you get there?'

There are other areas of your life that require some attention as you set your plans for the future:
• Your health
• Your work and career
• Your family and your social relationships
• Your mind and spirit
• Your leisure activities
• Your money
• Your home

As you look at each one of these areas, ask yourself
• The goals that I have specifically in this area are…?
• The reason that I want to accomplish these goals are…?
• The reason that I am not doing this now is…?
• The specific strategies that I am going to use are…?

Some goal-setting tips
• Make your goals as specific as possible (i.e., I am going to travel to Britain in September)
• Make sure they are both realistic and achievable
• Always put a time frame on your goals (i.e., I am going to do this by June 2005)

In setting goals for your retirement, an important first step is to clarify in your own mind what you would like the end result to look like. As you look at the next phase of your life, what is it that you really want to achieve? How will the assets that you have accumulated help you create a legacy, provide for your future enjoyment and allow you to live the kind of life that you dream of?

Your Investment Advisor can help you understand the financial consequences of the life goals that you set for yourself, and can also help you clarify your goals so that you have a clear view of where you want to go and what you want your assets to build for you.

Today, Bob and Monica Collins are focusing on creating a plan for themselves that will see them downsize to a more manageable home, and pay more attention to doing the kinds of things they had always dreamt of doing.

As for early retirement, Monica says, 'We have kind of put that on hold. We have been looking at buying a small business and we have decided that maybe we won't really retire until we can't move anymore!'

Guest Columnist, Barry LaValley, is President of The Retirement Lifestyle Center, an education and research organization specializing in retirement lifestyle planning issues for Canadians.