A financial advisor can help you achieve major life goals

By Carla Wintersgill, Toronto Star

Meeting with a financial advisor feels like an act of intimacy to me.

Bound in a file folder are records of my darkest money secrets: Paltry RRSP contributions, scant savings, a bloated credit card bill, overwhelming student loan debt.

I’m embarrassed to share them.

“Being nervous is natural,” says Jeanette Brox, a senior financial consultant at Investors Group.

Brox isn’t here to judge. She works with clients to establish their financial priorities and create a plan to facilitate them.

I’m here because I need guidance. My life has changed a lot in the past year. I finished grad school, I started a real job with benefits, and my grandparents died, leaving me with an inheritance.

There’s another reason why I’m seeking professional advice: A recent report by the Investment Funds Institute of Canada found that investors who work with financial advisors have an average net worth of nearly three times that of non-advised investors.

And this isn’t just a case of the rich getting richer. The disparity in net worth between those who work with a planner and those who did not exists across all age groups and income levels.

Why is that? Those who worked with advisors were likely to develop a financial plan, take a disciplined approach to saving and avoid investment errors.

“You don’t have to be smart or have a lot of money to use a planner,” Brox says. Often their services are free to those who are already clients of a financial institution.

My greatest financial asset, according to Brox, is my youth. Time is on my side for meeting my top three goals: paying off my student loans, putting together a down payment for a home and saving for retirement.

Together, we review my finances. Brox tells me I need to stop carrying a balance on my Visa. She recommends using the available cash from my line of credit to pay off my high-interest credit card debt.

Next we focus on my student debt. Brox warns against consolidating my loans. By keeping them with the government, I can claim the interest on my income tax.

As I’m chipping away at my student loans, I should keep up my RRSP contributions, Brox advises. Although it might be tempting to channel all my resources to paying down debt, I would be missing out on the magic of compound interest to grow my retirement savings.

Right now, I put $200 from every paycheque into a balanced mutual fund. Brox declares it a suitable investment for a beginner. To make sure I keep up my contributions, I should set up automatic bi-weekly withdrawals.

So far, so good.

I mention the inheritance from my grandmother. I ask if I should use it for the house or paying off my loans. Without hesitation, Brox asks how stable my relationship is. It’s an intrusive question, but for good reason. If I put the money toward my debts, it’s mine alone. But if I use it for a downpayment, it becomes ours and would have to be divided should we split up.

I assure Brox that my boyfriend and I are in it for the long haul. But instead of answering my question, she asks what I think.

Brox won’t tell her clients exactly what they should be doing with their money. She wants me to make the financial decisions, using her as a guide.

Tips for working with a financial planner

Look for a Certified Financial Planner: Advisors are regulated by the Financial Planning Standards Council and write exams to get certified.

Find someone you feel comfortable with: Talking about money can be a deeply personal process.

If you and your planner aren’t meshing, find someone else.

Couples should see advisors together: Even if your bank accounts are separate, it’s important for life partners to openly discuss finances and goals.

Get an annual checkup: Have a yearly review with your planner to ensure you’re on the right track. Come back if you’ve had a life change of any kind, such as getting a promotion or having a baby.

First published in the Toronto Star on January 19, 2012.

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