Expert team approach helps answer essential retirement questions
By Lori Bamber, Managing Editor
One of Adelle Léger’s clients expressed his ultimate goal for retirement succinctly: “I want to do what I want to do, when I want to do it.” But while it’s a dream many aspire to, numerous studies show that most Canadians worry about being financially prepared for retirement.
According to Ms. Léger – a financial planning specialist within RBC Wealth Management – it’s a perception shared by people at all points on the income spectrum. No matter what their situation, the result of the financial planning process is almost invariably relief, she says.
The benefits of a comprehensive financial retirement plan can also translate into more effective investing, says Bryan Stephens, an investment counsellor with RBC PH&N Investment Counsel. “Many people spend a great deal of time choosing and monitoring their investments, but without a financial plan, they don’t know what rate of return they need in order to achieve their goals.”
One family had all of their investments in equities, and they were understandably nervous about the potential impact of market volatility on their ability to retire. Through the financial planning process, “we found there was a large disconnect between the structure of their portfolio and what was needed to achieve their goals,” says Mr. Stephens.
Mr. Stephens works with Ms. Léger, who is part of an RBC Wealth Management Services team that brings specialized expertise to the complex planning issues that today’s retirees often face. Their approach ensures that “all the pieces of the puzzle work together,” says RBC Wealth Management will and estate consultant Kathryn Aitkenhead.
“Many people have a solicitor, investment adviser, accountant, insurance broker, etc., but the challenge is that everything is siloed,” she says.
For example, one new client she met with had recently had his lawyer draft a will with a spousal trust that she describes as “wonderful drafted.” But during their conversation, he happened to mention that he’d recently changed investment advisers and had been advised to make all of his accounts joint with his spouse to avoid probate.
He was unaware that, as a result, there were no assets to fund the trust because it would all flow to his spouse automatically outside the estate. “It had undone all the checks and balances in the will,” explains Ms. Aitkenhead.
“Often people don’t know the right questions to ask their lawyer or other professionals, and so they may ask for something like a trust when that isn’t really what’s needed. Our approach means we can sit down together to get the big picture.”
Brenda Dineen, a registered clinical counsellor who specializes in the transition to retirement, describes the financial plan as the cornerstone that makes it possible to answer other essential retirement questions: “Where will I live? What is my social network and family situation? What activities will I enjoy? What do the next five, 10 and 15 years look like?”
People of the baby boom generation are very active, tend to see themselves as leaders, and may have found fulfilment through their jobs, so preparing for the next stage of life is critically important, she says. “Unless they feel they’re creating a new sense of purpose and new ways of connecting with people and contributing, it can feel like the bottom is dropping out. They may experience a great sense of loss.”
Conversely, those who are happiest often have a clear and structured plan for their retirement that includes “a deeper sense of themselves and purpose in their life,” she says. Many find clues in the dreams they put aside for pragmatic reasons along the way. “Perhaps you didn’t have the time then – say yes to that dream now.”
She encourages people to start early in order to give themselves lots of time to explore the questions, advice that Ms. Léger also stresses.
Developing a financial plan and working with a team of experts to fulfill the plan’s objectives provides peace of mind and a sense of relief whatever the client’s financial position, she notes. “That is true whether they find they have more than they need to meet their goals, as is often the case, or they learn they need to make adjustments.
“I meet with a lot of people right before retirement, and so often they’ll say, ‘Why didn’t I do this 10 years ago?’”
RBC Wealth Management series published Sept. 10, 2014
For more information, visit rbcwealthmanagement.com/canada.