Getting financial advice when you’re not sure what you need
Have you ever had the feeling that you would like some financial advice and guidance but you don’t know exactly what you need and what to ask for? It’s like knowing that something in your body doesn’t “feel right” but you can’t pinpoint exactly what and you have no idea what’s causing it. You might choose to wait and see how you feel rather than going to the doctor. Sometimes the problem goes away but often it doesn’t - and then you wish you’d gone earlier.
When something doesn’t “feel right” financially, you might not know who to talk to and what to ask. That’s understandable - financial planning can seem so vague. Is your unsettled feeling something that has a solution? If you get help, will you discover a bigger problem? Will the financial planner dismiss your concerns as not "big enough”?
There are so many aspects of managing money, and so many components of a financial plan. It’s understandable that you don’t know where to start or even what questions to ask. Don’t let that stop you from seeking help.
General undefined unease
If you can’t define what it is you need or what to ask, don’t worry - you don’t need to. It’s ok to say you feel directionless or that you don’t know what you don’t know. A good financial planner or coach will be able to work with you to figure that out. By reviewing all of your financial information and having an in-depth conversation that touches on all the aspects of your financial life, a planner or coach will help uncover and define your needs and goals.
Every person’s needs are different. Life stage, family structure, and lifestyle are three big influencers of what kind of financial advice or planning you need. Although there’s a lot of overlap with people who are in similar circumstances, it’s impossible to develop a template that will fit every person’s needs. A template has to be adjustable – whole sections can be added or deleted.
What is financial planning, anyway?
It might help to have a framework about what financial planning encompasses. The main components of financial planning include cash flow analysis, saving and investing, debt management, retirement planning, insurance and estate planning. Within these general areas are many sub-components like budgeting, automated banking, choosing an online brokerage, cost/benefit trade-offs, tax-efficient accounts and mortgage analysis. It can be confusing to determine what you need.
Not everyone needs everything and in fact most people don’t need everything. For some people, cash flow isn’t an issue but their savings are not invested properly. For others, cash flow is tight and they need to figure out why and what they can do about it but they’re rocking the self-directed investing. In some cases, it’s an issue with financial uncertainty and not understanding just how much is needed to retire which causes people to work and worry needlessly.
A financial plan can sound like a document that tells you what to do. It can feel structured and intimidating - but it doesn’t have to be. Some financial plans can be more like manuals, especially for young people. It can give an outline of what you should be considering as you move through life. There may be some things you can put into place now while giving you a “heads up” about what might be coming. Good plans also might be structured to offer you choices: if you choose this path, then this is what could happen but if you choose this path, this is what might happen. Other plans will indeed be prescriptive if that’s what you want and need: give me a plan and I’ll follow it.
What can you expect when you seek out some financial advice and planning? Here are the most common issues that I address with clients:
1. Cash flow: What does your cash flow look like? How much income do you have after all your deductions and income tax? How much is going out? How much are you able to save? Where does all the money go? Do you need to spend less or can you spend more? What’s the biggest priority for your money?
2. Owning a home: Can we afford to buy a house? How much do we need to save? Should we pay down the mortgage early? Should we use our home equity line of credit for the upcoming renovations and if so, what will our payments look like?
3. Work and retirement: When can I retire? How much should I be saving? How much do I need to have to retire at 65…or 60? When can I slow down and earn less money and do more of what I want?
4. Savings: Should I save for big expenses like vacations and renovations? Are we saving enough for our kids’ education? How much of an emergency fund do I need? Where should I be putting my savings?
5. Investing: Are the investments I have the right ones for me? What do I need to know to manage my own investments? What should I do with the cash I have sitting in a savings account?
You might also just have a laundry list of questions: RRSP, TFSA or FHSA? Should I commute my pension? How can I reduce my bank fees? How do I choose which investment company or platform to use?
From blurry to focussed
The purpose of getting some financial advice and a plan is primarily to put you on the right track financially. Other very important benefits include making you feel more organized and more confident, and to get rid of the nagging questions that are on your mind. Often the answers are simple once an experienced financial person has sorted through your financial information and talked through your hopes and concerns. What feels messy begins to feel tidy, what was murky is clear, what was scary is comfortable.
To bring the medical comparison to its conclusion, you’ll get a diagnosis, be given more information about your condition, and a recovery plan. Don’t wait and see. Get it looked after and feel better.