Category Archives: Retirement Savings

RRSP vs RESP: How to Make the Right Choice?

By Bruce Q. Thompson, B.Admin, CFP®

Family in kitchen with laptop smiling

From the moment our children are born we want the best for their future. Success is never guaranteed, but we hope to be able to offer them opportunities. And what better opportunity is there than education? So it seems like a straight forward assumption that we would contribute to a Registered Education Savings Plan (RESP).

But what about our own future? What about contributing to a Registered Retirement Savings Plan (RRSP)? Canadians are living longer, and the cost of living is always on the rise. If we don’t have a solid retirement plan, are we at risk of living in our well educated child’s basement? OK, that may be a tongue-in-cheek option, but the question of where to place our investment dollars is valid. What’s a parent to do?

The Fundamentals: What You Need to Know

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CPP Expansion: A Rare Opportunity to Fine Tune Your Retirement Plan

By Sandra Mann, MBA Financial Services, CPA, CGA, FPSC Level 1™

I’m sure you’ve heard by now that the Canada Pension Plan (CPP) is set for expansion beginning in 2019, but you may be wondering how the changes will impact how you manage your money today as well as how it will affect your retirement.

Hand Inserting Coin In Pink Piggybank

The changing face of work in Canada

When CPP was introduced in 1965, it was meant to be supplemental retirement income to bolster workplace pensions and personal retirement savings and investments. That intention hasn’t changed. What has changed is the Canadian “workscape.”

Working 30 years for the same company is not likely (or even desirable) for many people at the start of their careers. Climbing one corporate ladder is less common than seeking new opportunities at different companies. (I myself left a traditional financial services position for the fresh challenge offered by Money Coaches Canada and the Women’s Financial Learning Centre). Many Canadians change careers completely, some go back to school or start their own businesses. There is no defined path. Even those who decide to build a dedicated career with one employer are not immune to lay-offs and decreasing pensions. Continue reading →

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The Real Secret to Making Smart Investment Decisions

By Tom Feigs, CFP®, CET

As a fee-for-service financial planner it’s not unusual to be approached for a “quick” portfolio review. “Can you just look over my investments?” or “Can you tell me if I’m saving enough?” As much as it’s in my nature to want to help people, it would be unethical and unprofessional to advise someone without a comprehensive look at their finances and a clear understanding of their goals.

The idea that investments are priority one is a by-product of how traditional financial advisors are paid – commission on investment sales. In fact, where and how to allocate your funds are decisions that should only be made after reviewing your personal situation and needs.

Imagine your financial journey. The destination is your retirement. Your personal framework (income, obligations, health, family commitments, risk tolerance, age) represents your vehicle and the road map is your various goals. Your investments and savings are the fuel to get your vehicle to your destination.  You wouldn’t be looking for fuel before having a car and directions.

I work with individuals and couples that earn upwards of $150,000 a year, and because of the possibilities their income allows, they will all have their own set of priorities and cash flow needs for retirement. They also have various personal situations (for example, some people may have family in distant locations, others have no children, others have health concerns and still others have various complexities in their personal and business lives.)  All this information is vital to the financial plan we create together. Continue reading →

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Three reasons to stick with a defined benefit pension plan

Karin M byline photo

By Karin Mizgala, co-founder and CEO Women’s Financial Learning Centre and Money Coaches Canada

Retirement planning can raise a lot of questions and feel overwhelming to many Canadians, so I was very pleased when The Globe and Mail newspaper asked me to be one of the go-to experts for their Retirement Q&A section.

Here is my most recent contribution.

globe and mail

pensionQuestion from Derrick Alstein, Port Elgin, age 60:

I have a number of friends and a relative who are considering cashing in a defined benefit pension plan. I think an article on the pros and cons of a cash out strategy versus taking normal payments would be informative. Many people I know that have cashed out are taking advice from people that want to invest their money, have not done well and have had to go back to work.

Answer:

While the lump sum offered to people who consider cashing out their defined benefit pension can be very tempting, I rarely advise clients to withdraw from their pension and invest the proceeds with a financial adviser. Here’s why:

1. Ease of Management

With a defined benefit pension, your employer hires an investment company to manage the pension assets and is responsible to ensure that employees receive the monthly Feb 3 tweetpayment they are entitled to based on a formula that considers earnings history, years of service and age. You have no direct involvement in the management of the investments and there is no need for you to make any investment decisions before or after retirement. At retirement you receive a regular monthly payment from your employer for life. Simple. Most people who want to weigh the pros and cons of a lump sum withdrawal turn to their financial advisers for advice. Of the almost 100,000 financial advisers in Canada, 99% have a vested interest in directly or indirectly managing your investments. I’m not saying that it’s impossible for advisers to provide unbiased advice on whether to stay with the pension or not, but when the potential investment dollars are significant, let’s face it, it’s not easy to remain impartial. To avoid any potential conflicts of interest, it is best to consult an accountant, actuary or fee-for-service financial planner on pension decisions.

Read points 2 & 3 on the Globe and Mail website

 

 

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Money Coaches in Conversation – What you should understand about fees and financial advice

Recently Women’s Financial Learning Centre and Money Coaches Canada co-founder Karin Mizgala sat down with Money Coach Noel D’Souza to discuss the changing landscape of financial advice in Canada.

Women's Financial Learning Centre and Money Coaches Canada co-founder Karin Mizgala

MCC & WFLC co-founder Karin Mizgala

Karin: As someone in the financial industry, it’s very common to be asked by people outside the industry, to explain the different fee structures of financial advice. So, Noel, let’s start with an overview of the common compensation models available to Canadians today.

Noel: The most prevalent model we see in the industry is the commission-based advice model, where an advisor sells products, typically mutual funds or some other investment product, they may also sell insurance, and they receive a sales commission for making the sale and also quite likely receive a trailing commission which is supposed to cover on-going advice and services. Usually the client never sees the commission fees, and we’ll be discussing how that may change in the future, but usually those fees are hidden within the cost structure of the product they are buying.

The second type is fee-based. An advisor will charge the client fees based on the size of the assets under management, a percentage of the total portfolio.

The third model, which is up and coming, is the model we work under; fee-for-service. Clients pay a fee directly and explicitly to the advisor for services rendered and it’s not tied to product sales, or size of assets, in any way.

Karin: So that will sound pretty straight forward to most people, why does it become murky, what are the implications for someone seeking financial advice? What are the benefits and shortcomings of each model? Continue reading →

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Meet our Money Coach: Tom Feigs

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Tom Feigs, CFP®, CET

Financial planner and money coach Tom Feigs was born and raised in Calgary, Alberta, but his favourite piece of advice for Canadians concerned that they aren’t prepared for retirement, comes from the East, not the West. It’s a Chinese Proverb: The best time to plant a tree was 20 years ago. The second best time is now.

And now is when Tom can help. Tom’s ideal clients are in their 40’s or 50’s and are really motivated to create a retirement plan that they can be excited about.

“One of my favourite moments as a coach, is helping people realize their dreams faster than they anticipated,” he says. “It’s great to be able to tell someone who hopes to retire within five years that in fact they can retire now.”

“There is no single road to personal or financial fulfillment,” says Tom, “and the journey is as important as the destination.”

Tom’s own journey began in the Energy Industry after he earned a diploma in Engineering Science Technology. But outside of work he was studying investing, and reading books on finance. Then, seven years ago, inspired by watching his children follow their unique paths; his daughter is an actor and artist, and his son is a correctional officer, Tom decided to follow a new path of his own.

He started by committing nine months to completing the Certified Financial Planning Curriculum, because it was very important to him to have the CFP® designation and the standard of excellence it represents.

Tom had only one dilemma; he wanted to be a planner, coach and educator, not a salesperson.

“I believe there is an inherent conflict for planners who also sell products” he says. “I want clients to know that my advice has only their needs at its core.”

A solution appeared in the June 2010 edition of Forum Magazine, a trade publication for financial advisors. The cover featured an image of Sheila Walkington, co-founder of Money Coaches Canada and the Women’s Financial Learning Centre. Tom found Sheila’s goal of creating a network of money coaches across Canada appealing and was soon on board.

“I like to get to know my clients, and get them excited about their possibilities,” Tom says. “Once we crystallize their retirement goals we can plant the seeds to achieve them.”

Contact Tom today for a free consultation.

 

 

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Meet our Money Coach: Annie Kvick

“My family and I get out and enjoy life. I want that freedom for all my clients.”

For many Canadians, taking charge of their finances feels like being asked to scale a mountain. They may feel overwhelmed, intimidated, or afraid of making a misstep that sends them tumbling financially backwards.

Money Coach Annie Kvick, knows what it feels like to face a big challenge. At 25 years-old, and newly married, Annie and her husband left family, friends and careers in Sweden to begin a life in North Vancouver, British Columbia. The young couple realized that money management would be vital to establishing themselves in their new country, and Annie committed herself to the task. Continue reading →

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