This is an original post of a 3 part series co-authored with colleagues Mary Ellen Tomlinson & Marie Howes from June – August 2016 on the website Planet Longevity which will be reconstituted as part of Change Rangers on Jan.1 2019
Personal advocacy as we age is a learned life skill. In these times, when our potential for greater longevity is increasing, this learning should not happen only when we are standing at a moment of crisis at a later stage of life.
Perhaps we are learning the lesson in real time, if we are the ones operating as advocates for those older than we are. So how do we best become more proactive about our own protection?
To continue from our last post on this subject by Mark Venning, I want to comment as a now-retired Certified Financial Planner (C.F.P.), and a Professional Retirement Planner (R.F.P.) holder, focusing here on protection within the financial component. My concern is about the individual being self-sufficient. As Mark suggested, it is a good idea, as you find your life stage situation changing, to assess your relationship with your financial planner to make sure you are getting the best advice.
In my view, a good financial planner should be educating their clients as to the various options, appropriate to meet their client goals. The planner who offers only one solution needs to think more about what they are suggesting to clients. The options can vary.
Yet it is you, the client, who must keep your financial planner up to date with changes in your life – such as divorce, death of spouse, new grandchild. This is the only way your planner can come up with possible scenarios for your well-being.
Just as you the individual is ultimately responsible for whatever is reported to the Canada Revenue Agency (CRA) on a tax return, (even if a tax preparer/accountant prepared it); so too, you are ultimately responsible for your own financial realities. No one knows what you need or want better than YOU!
Personal financial advocacy, beyond self-education
The more you are self-educated, the better you will be able to evaluate the worth of the advice your financial planner is giving you. You need to know how your planner is being compensated. If their method of compensation causes concern as you evaluate your planner’s advice, then you may need to consider finding a planner more compatible with your values. For example, know if your planner is “fee-only”, OR “fee-based” in which case they may be licensed to sell securities such as mutual funds, life insurance, stocks and bonds, OR they may be “commission only” OR “fee and commission-based”.
Surprisingly, not everyone who works with a financial planner, whether the planner is a CFP or not, understands the differences in compensation methods. Knowing the differences allows the client to ask important questions. There is no fiduciary standard for “financial planners” in Canada, just a looser “best interests of the client” requirement.
However, beyond self-education you must keep your designated advocates informed of your relationships with a financial planner and other professionals such as the lawyer who drew up your will and powers of attorney. You need to let your Power of Attorney (POA), know what your general attitudes are toward various financial issues such as investment priorities and prohibitions against investing in certain businesses.
Personal advocacy, carried with trust through a POA
Your POA needs to know who your current financial planner is, so that individual can be consulted in the management of your affairs, should you be unable to speak for yourself. The same is true for Executors of your will. Your POA and Executor should also know about the family dynamics, if they are non-family members for example. There are significant numbers of people that have a non-family POA, let alone the fact that, according to a number of reports, about 50 % or more of adult Canadians do not even have a POA.
Personal advocacy is carried with trust through a POA is a huge responsibility. Here is the Government of Canada link to information on the roles and responsibilities of a Power of Attorney. While the document addresses the “older Canadian”, that is an oversight – this is a life learning of increasing importance for people in their younger years, as they will, some day, be asked to be advocates for their parents as well as for themselves down the road.