Planning is not Selling

By Ian Calvert on September 23, 2021

Having an up-to-date financial plan is perhaps the most powerful and useful document a family can have. An effective financial plan should be a comprehensive, forward-looking document, that examines items such as the family’s cash flow, balance sheet including all assets and debts, current and future taxes, saving and spending, retirement, and estate planning components. Once the family’s financial plan has been built, it’s the job of the financial planner to examine this document with an independent eye for strategies to implement, opportunities, concerns, and how to progress this plan forward to reaching the unique goals of the family. In other words, it’s the financial roadmap for the family and a roadmap that needs to be updated frequently.

What to Look out For

What is not a financial plan is a list of investment products. The lines between objective planning advice and product sales have been blurred making it very difficult to navigate throughout this very important process. One universal principle to follow when seeking financial planning advice is that a financial plan should never start with a product recommendation or something to buy as a solution. For instance, If the start to your financial planning process is a specific product pitch, you have likely identified a financial salesperson in a financial planner’s clothing. Secondly, if all the products are in-house options, like the recent ban by Banks suspending third-party mutual funds, you have now found yourself in a biased sales pitch when you are really seeking independent financial planning advice.

Portfolio construction and investment selection will undoubtedly be a component of any financial planning process. However, the start to this process should be focused on the specific financial goals of the family and establishing the target return for the family’s assets to achieve these goals. Once that upfront planning work has been completed by looking at the family’s needs holistically, it then becomes appropriate to discuss the portfolio construction, not the other way around.

The Difference between a Financial Planner and a Financial Salesperson

When the financial planner and the financial salesperson are the same role, it can result in significant conflicts. In Ontario today, there is no title protection for financial planners. This lack of protection can put families at risk of receiving financial planning advice from individuals who may not be appropriately qualified. Furthermore, it may be a financial sales pitch disguised as financial planning advice. When seeking financial planning services, it’s important to work with a qualified individual, with an appropriate financial planning designation, who has the proper training, experience, and expertise to offer independent and objective financial planning advise.  By taking this approach, it will ensure you are of client of a professional financial planner, not a customer for a financial product.

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