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You have to plan to live! Too many people plan till retirement not planning to live 30 years in retirement. Current stats show that couple who are age 65 today has a 50% chance that one of them will live to 65. 1 in 4 women turning 65 today will live to age 95. Can you see where I'm going with this? I would suggest running retirement planning numbers using age 100. I would also look closely at the Canada Pension Plan and Old Age Security and consider your situation when deciding to take them. They offer inflation-protected income for your whole, like with increased payments if you delay.
You need to review your taxes as part of your investment plan (taxes). If your advisor is not at least reviewing your tax returns, then they can not help you as effectively as if they did and you are paying the advisor too much. Tax saved is permanent and not subject to market movements.
You need to know your costs! In the absence of value, fees do matter. I will be the first to tell you that cost does matter. The truth, however, is that professional money managers and advisors do add value. The challenge amid all the ‘Questrade’ Ad’s is showing where that value is. Vanguard, one of the worlds largest investment companies, they did a study using conservative numbers and found that good advisors can add as much as 3% to a client’s overall return. This is through planning, behaviour coaching, asset allocation and other factors. So, my suggestion when finding an advisor is to ask about fees and how the advisor gets paid but also ask them what kind of service and value do they provide. This a comprehensive list of advice and services your advisors could/should be offering. Have a look and see how your advisor is doing!
*© 2019 CI Financial Inc
You need to review your wills and powers of attorney! You need to periodically review the beneficiaries on your registered plans as well as your powers of attorney and your wills. I call this a beneficiary audit. It involves sitting down and playing out the ‘what if’ scenarios. What if I was to pass away today? Where would my money go, and how would it get there? It’s also essential to have the conversation with your executors; beneficiary’s et al. This conversation is best had while your living 😊 versus leaving your wishes to be interpreted by your heirs.
You need to update your investment strategy and allocation! Diversification has changed. We are a global economy and to truly diversify; you must include private investments. Think back to the great recession in 2008…which economy or asset class was spared? Think today with President Trump threatening tariffs and taxes? You must invest as the big pension plans do. There is a saying, “go to where the smart money goes.” These major pensions all have significant allocations to private assets, Canada Pensions Plan (CPP) 44% private assets, Ontario Municipal Employees Retirement System (OMERS) 32.5% private assets, Ontario Teachers Pension Plan (OTPP)33% private assets and the Harvard Endowment Fund 50% private assets. Private assets as an investment class only became available to Ontarians in 2016, so while they are new to Ontarians, the investments themselves have history. You need to have an advisor who is well versed in these and can help you incorporate them into your plan. The objective is to maintain returns while still reducing volatility.
Here is a peek at the Canada Pension Plan and a little bit about how they manage our investments.
Please note the exposure to Private equities, infrastructure and real estate. This number has been increasing dramatically.
*CPP INVESTMENT BOARD 2019 ANNUAL REPORT
Please note the limited exposure to Canada. This is called country bias. Canada is a great country to live in but represents a small amount of global ecology. Professional money managers look outside of Canada, and so should all investors.
Planning is critical; please find the link attached to help you have a better understanding of your plan. Any financial information entered is strictly confidential and will not be stored/shared with any third party.
https://my.razorplan.com/ca/Advisor?advId=D009ad818
Always speak to a qualified Certified Financial Planning professional about your specific situation to ensure the plan you have is right for you.