Tanya Wilson, a Kelowna-based financial advisor with Raymond James Ltd., says a comprehensive financial plan is vital, especially during times of market volatility.

Why a comprehensive financial plan is vital in volatile times

When life throws us curve balls, whether it’s an unexpected career change or international crises like COVID-19, we might question the importance of planning for our financial future.

But circumstances like these are exactly why a comprehensive financial plan is vital.

“When markets are volatile, like we’ve seen now, the financial plan becomes vitally important to help my clients determine whether they continue to be on track to achieve their goals,” explains Kelowna-based financial advisor Tanya Wilson. “The financial plan adds in a lot of contingencies for negative years in the market to ensure that a significant market collapse doesn’t mean that my clients now need to go back to work.

“My clients have been very calm and logical through this particular pandemic, because they rely on their financial plan and know that their retirement income and future are still safe,” Wilson says. “This provides them with important peace of mind. They know exactly where they stand.”

Creating a plan that’s unique to you

By helping clients articulate their goals together they can determine the best investment strategy to meet those goals, one that includes strategies for tax, estate and retirement income planning.

For business owners, that plan also includes succession planning to minimize taxation and to enhance retirement income.

“Every client has a financial plan and this becomes the roadmap for all of our investment decisions,” Wilson says.

All plans and subsequent strategies are based on the required rate of return needed to meet goals – the most important determinant when deciding on what to invest in and why.

Reducing fear by accommodating the unknown

Wilson believes the fear created for investors right now isn’t because markets or their investment portfolios are down. After all, most investors know the markets and their portfolios will recover.

“What people truly fear is that they’ll run out of money in their lifetimes. Ultimately, this is the reason people invest – to make sure they have enough to pay for their lifestyle for the rest of their lives. Term deposits normally won’t do this for people because inflation rises faster than the rates we receive on term deposits. (Term deposits and GICs are among the only asset classes that guarantee losses when factoring in the effects of inflation.)

However, many who are fearful of investing resort to this strategy because they don’t have a proper plan to help guide them through their financial lives. “They allow fear to dictate their investment decisions, which means they ultimately can set themselves up to the biggest risk – outliving their money,” Wilson says.

The solution is creating a financial plan and investment strategy that will withstand all market conditions, will provide them with their required rate of return, and will ensure that they have enough to last them their entire life. Revisiting this plan, especially in markets we are seeing today, helps clients know that they’re on track and that their biggest risk of outliving their money is still not a concern.

“Each plan is based on that client’s unique and special circumstances. Every person will have different spending habits, risk tolerances and needs to provide an inheritance, not to mention tax brackets – and their plans reflect this,” Wilson explains.

To learn more about planning for your financial future, fill out the raymondjames.ca/tanyawilson/contact-us.aspx or call 250-869-2447.

RELATED READING: Investment Fee Transparency: Are you overpaying?

Tanya Wilson is a financial advisor with Raymond James Ltd. Information provided is not a solicitation and although obtained from sources considered reliable, is not guaranteed. The view and opinions contained in the article are those of the author, not Raymond James Ltd. Raymond James Ltd. member of Canadian Investor Protection Fund.

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