Thursday, November 6, 2014

To Whom Do You Listen

When seeking financial advice, many people have admitted asking their friends, family, or colleagues what they have done.   It’s not uncommon to scout for information from the people with whom you feel most comfortable. However, is this really the best way to get financial advice? 

Advice about specific topics is best sought from professionals who have experience and education in these areas.  I am not saying all advice from people who don’t work in the financial industry is necessarily wrong advice; but consider that what their advisor told them may not work for you. If people receive only a tiny snippet of your story, you may receive inappropriate advice.  

One size doesn’t fit all.  Because some financial strategies may work well for some, doesn’t necessarily mean they’re right for you.  An analogy to help understand this concept can be made to clothing sizes. We do not all wear the same size.   What might be an ideal shoe size for you, size 6, doesn’t mean it will fit your friend’s size 9 ½ foot.

Think about these three scenarios:

If you opt to follow your colleague’s advice, some decisions may be irreversible.  For example, when selecting your pension options with specific guarantee periods and survivor benefits, these decisions, once made, are final.

If you take your friend’s advice, perhaps it doesn’t match your goals, dreams, and aspirations.  The advice you receive is more apt to suit theirs.

If you heed your family’s advice, who will monitor your progress to ensure you are on the right track?  Will you continue to check with them for follow-up guidance?

So if you shouldn’t get financial advice solely from family and friends, who can you look to to be your teacher? CERTIFIED FINANCIAL PLANNER® professionals have taken the appropriate courses and gained meaningful job experiences to qualify them to provide sound advice.  The comforting news for you is knowing that Certified Financial Planners follow a code of ethics ensuring your interests always come first.  

Information on the various topics related to personal tax planning, insurance, investment, retirement and estate planning is so vast.  Your “go-to-person” should have a strong understanding of these topics to help you make important life-planning decisions.     Who better than the people with financial knowledge to help you make decisions about:

  • taking Canada Pension benefits at age 60 or 65;
  • using Registered Retirement Savings or Tax Free Savings;
  • starting withdrawals from Registered Retirement Income Fund (RRIF) earlier than age 71;
  • paying down the mortgage or making contributions to Registered Retirement Savings Plan (RRSP);
  • choosing the best options for pension benefits?
Financial Planning Standard Council (FPSC) is a not-for-profit standards-setting and certification body that develops, promotes, and enforces professional standards in the financial planning field through Certified Financial Planner®certification.  FPSC compiled a list of questions to help you determine whether your financial planner is competent and qualified to provide appropriate advice.  Click here for a list of ten questions to ask.  You are in the position to hire someone based on their credentials to do the best job for you.  You certainly want to be assured they are qualified to do that.

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