Frankly Speaking

5 Financial Lessons I Learned While Swimming With The Sharks!

Posted by Frank Wiginton on Tue, Nov 15, 2016

As you can see by the picture below – I am not in a cage and I am not wearing protective gear! There was no need! This was a dive I did in the Bahamas, just off Nassau Island.

Before I get to my lessons learned, I strongly encourage everyone to learn more about these incredible creatures that play such a critical role in our ecosystem. A fun and easy way to do this is to watch the movie Shark Water. This is a docudrama and is very entertaining and enlightening.  http://www.sharkwater.com/

Do your homework before jumping in the water!

Before even considering doing a dive with sharks I had learned a lot about them. With this knowledge I had more interest in them and sought out the opportunity to do this dive. By the time I was ready to enter the water, I was calm and ready for the dive.

When it comes to your finances it is just as important to make the effort to learn more about them. The more you learn and participate in your finances the more opportunities you will find. By the time you enter the waters of the markets you will be able to approach it in a calm manner and be ready to deal with what ever happens.

sharkGo with a guide.

Even with my knowledge of sharks, I would have never considered doing this dive on my own. Terri (a very cheerful and fun women from Australia) was our dive master. With more than 300 dives and 50 shark dives under her belt, the rest of us listened carefully to her instruction and respected her knowledge. It gave us all greater comfort and confidence, and reduced a lot of the anxiety and stress! She coached us and put forth a comprehensive dive plan so we knew exactly what needed to be done and the likely outcome of the dives.

When it comes to your finances you should find a guide to help you. Your guide should be qualified with lots of experience. They should be a Certified Financial Planner (CFP) with at least 5-10 years of experience. Your guide should prepare a comprehensive written financial plan so you know exactly what needs to be done and what will be the likely outcomes. This will help highlight the risks and dangers to help you make better decisions. This plan will give you greater comfort and confidence, and reduced a lot of the anxiety and stress!

Not all sharks are vicious.

Now some of you have looked at the pictures and thought: JAWS! when in reality these are not Great Whites. These are Black Tipped Reef sharks. They are active predators of small bony fishes, cephalopods, and crustaceans. They have little to no interest in people. There are many other types of sharks in the ocean, most of which are timid and scared of humans.

The same goes for financial service professionals. When you go looking for your guide beware the vicious ones! Start by speaking with friends and family – people you know and trust. Go to the Financial Planners Standards Council (FPSC) to search for a CFP. http://www.fpsccanada.org/public/finding_planner Remeber that not all advisors are planners – ask them if they will prepare a comprehensive written financial plan and if they can provide you a sample of an annonymous one. Also remember that not all planners are out to sell you something. Some truely want to help you.

You don’t have to get bitten!

As we prepared for the dive one of the things Terri talked about were the risks and uncertainties involved (and man you should have seen the waiver we had to sign – AND have witnessed!). Having  a lot of experience with these dives she also explained all the actions we were going to take to mitigate the risks and help to prevent some of the uncertainties. For instance – we all had to wear dark wetsuits for the dive – this helped to change the colour of our skin so we didn’t look the colour of the sharks fish food. Now our hands were still bear – so to mitigate the risk of the sharks MISTAKING them for a fish they might eat, we were told to keep our hands within our body and not use them for swimming (if you waived your hand around they may see the movement in the water and think it was food and you would lose your hand.).

So by doing your homework and understanding your finances while working with an experienced guide, can really help to reduce your risk. Your CFP can, through preparing a comprehensive written financial plan, identify all the potential risks you may face and develop strategies to mitigate those risks and uncertainties. An idea might be to chang the colour of your investments so they don’t get eaten by the markets!

shark

Every shark for themself.

Watching Terri feed these beautiful creatures was an amazing sight of nature at its purist. When she pulled out a piece of fish and held it out for the sharks to eat, many turned and lunged at it with no consequence for the other sharks or anything else that swam between it and the food. As we divers knelt in the sandy bottom and watched the sharks swim in circles around us, you quickly realize that they don’t have the slightest interest in you. You are just another rock on the bottom, or creature of the ocean. When the fish bate was gone many of the sharks simply swam off in search of their next meal elsewhere. Everybody asks me if I was worried if the sharks would bite me, and my reply was “NO! I am not their food, and I am not threatening them – they have no interest in me!”

The same is true when it comes to your finances. If you dangle your investments in an ocean full of “sharks” you may get many lunging at it with no real consequence or care for what happens. If you don’t have a plan to manage your investments or direct what happens they will likely sit like rocks on the bottom of some investment account with little to know attention being paid to them. Many of the “sharks” in the financial industry are only interested as long as there is food. Once they have eaten and the food is gone, they simply swim off in search of their next meal. That why it is so important to work with a Certified Financial Planner who will help to monitor your investments and make sure your comprehensive written financial plan is being executed properly. Remember nobody cares more about your money than you do! If you haven’t heard from your “shark” in a while – then give them a call. Take care of what you have and you will have something to take care of you.

Another thing I learned is that if you want to have a successful event – BRING FOOD!

Please take some time and learn about these increadible creatures and the important role they play in our ecosystem. Visit http://www.savingsharks.com/ and http://www.sharkwater.com/ to get started.

Frank

Tags: certified financial planner, investing, Financial Planning

What is the process of a comprehensive financial plan?

Posted by Frank Wiginton on Tue, Nov 15, 2016

A proper comprehensive financial plan takes on average 20+ hours to prepare and depending on the complexity could take many, many more. If the following steps aren’t taken then you have to wonder how comprehensive the plan really is!

Initial Interview (1-2 hours)

The process begins with a 1-2 hour interview where many questions are asked to get a big picture of your situation and you are encourage to think about areas you may not have considered. It concludes with the signing of an engagement agreement outlining both parties roles and responsibilities.

Data Gathering

You are asked to fill out a comprehensive questionnaire and supply copies of investment documents, insurance policies, mortgage documents, Wills, Powers of Attorney, Trust indentures, incorporation documents, tax returns, and any other pertinent information.

Data Analysis (5-6 hours)

All the data is taken in conjuction with the information from the initial interview and an initial draft of the plan is drawn up with some solutions and recommendation.

What is the process of a comprehensive financial plan?Draft Plan Review Interview (2-3 hours)

A draft plan is reviewed and open discussion about your likes and dislikes about it and you are encourage to offer up additional suggestions as to how you would like see the plan. This typically takes about 2-3 hours depending on the complexity.

Preparing the Plan (3-5 hours)

Following the review, the plan is refined incorporating the ideas and solutions identified and suggested. Then the final plan is put together.

Plan Review (2-3 hours)

The plan is reviewed thoroughly to ensure you completely understand and agree with all aspects of it. The plan is continuly adjusted until you are 100% satisfied with it.

Plan Implementation (2-3 hours)

The solution needed to implement your plan are sourced and presented to you. All aspects of those solution clearly explain to ensure you are 100% comfortable and begin the implementation process.

Regular Follow Up

This is especially crucial in the first three months following the implementation of the plan to ensure that all questions and concerns are addressed and the implementation has been a success.

Following the completion of a plan we offer to answer any questions or concerns you have at anytime. As a trusted resource for unbiased financial information we are here to guide and advise you. We will work with you at no cost to update and change your financial plan through every significant life change and or every 18 months. It is important to know that your plan is on track and have the confidence to go out and live your life!

To start your financial plan or to learn how I may be able to help you please contact us.

Tags: certified financial planner, Financial Planning, Personal Finance, financial plan, Tax Planning

Why get a financial plan?

Posted by Frank Wiginton on Tue, Nov 15, 2016

planningPeace of mind and a better quality of life are simple answers.

I have been asked many times “Why should I get a financial plan? What questions can I get answers to?”

Many are not even aware of the array of questions they have when it comes to their personal finances. When I sit and chat with people about finances and mention some of the area’s to address they frequently respond with “I never thought of that before!”

To get a start here are just a few of the questions that can be answered by preparing a proper financial plan.

A financial plan will give you the answers and solutions to the following questions:

  • When can I retire?
  • Will I run out of money?
  • What should I invest in?
  • How much do I need to save?
  • Should I participate in my company’s pension or RRSP plan?
  • Should I pay down my mortgage or contribute to my RRSP?
  • Should I contribute to my RRSP or the TFSA or both?
  • Should I borrow to invest?
  • Should I have a fixed or variable mortgage?
  • What can I do to reduce my taxes?
  • How much and what kind of insurance should I have?
  • What is the most effective way to transfer my estate to my children?
  • How should I set up and or structure my business?
  • What is the most effective way to give to charity?
  • Am I on the right track?
  • Am I taking too much or too little risk with my investments
  • and many more!

To start your financial plan or to learn how we may be able to help you please contact me.

Tags: Mortgage, Charitable Giving, certified financial planner, Financial Planning, RRSP, Insurance, Personal Finance, Investment Management, business health insurance, defined benefit plan, life insurance, Debt, Line of Credit, income splitting, Tax Planning

What is a financial plan?

Posted by Frank Wiginton on Tue, Nov 15, 2016

I have met many people who tell me that they have a financial plan. When I ask to see it they say ” I don’t have it written down.” or they will show me one or two pages with a chart or graph showing the asset allocation of their investment assets. When I start asking question about their taxes, goals, real estate, estate plan, insurance, etc. they inevitably have little to no answer.

So what is a financial plan? and what should it cover?

Let’s start by saying what a financial plan is not!

A financial plan is not: a two page document that you get after spending 15 minutes sitting with someone at the bank that tells you how much you have to put away every month into the banks balanced mutual funds. AT BEST this may be considered a retirement goal plan – but not really.

A financial plan is not: spending an hour or two with an investment advisor at a brokerage firm review the investments you have and building a new investment portfolio strategy after answering a two page questionnaire to determine your ‘risk profile’. AT BEST this may be considered an investment plan – but not really.

A financial plan is not: sitting with an accountant to figure out how to reduce your taxes this year. AT BEST this is a tax plan – but not really.

A financial plan is not: working with a life insurance agent to get a bunch of different insurance policies and segregated funds that claim to give you retirement at 55. AT BEST this may be a combination of an investment plan, and a protection plan – but is REALLY not!

A financial plan is not: dealing with an advisor whose only solution is to offer you investments in mutual funds and GIC’s and talks of big returns! AT BEST this is an investment plan – but not really.

A financial plan is definitely not: buying lottery tickets, getting advice from Dad, hoping to sell a business, flipping real estate, gambling at the casino, or trying to pick the next Google stock! AT BEST this is entertainment – but not really.

Financial Planning is a process where you and a Register or Certified Financial Planner (RFP, CFP) go through many aspects of your life and your finances to identify and change areas to improve and achieve the goals set-out.

Through preparing a financial plan you will:
Identify and understand where and what you spend your money on

  • Understand, organize, and structure debts efficiently
  • Understand where and what your money is invested in
  • Set goals that are specific, measurable, attainable, realistic, and time limited
  • Learn effective way to reduce your taxes every year and over your lifetime
  • Develop solutions to further reduce taxes and increase personal wealth
  • Identify areas of personal risk and develop solutions to protect against them
  • Determine investment returns needed and structure asset allocation
  • Identify and structure income efficiently to reduce taxes
  • Develop solutions to protect and reduce liability
  • Learn and understand effective ways to donate to charity
  • Learn how and when to draw income from various sources such as RRSP, CPP, trusts, etc.
  • Develop income splitting strategies to reduce taxes and avoid government benefit clawback.
  • Learn ways to get money out of RRSP’s effectively tax free

Most importantly: Achieve peace of mind through having a solid understanding and confidence in your finances!

Tags: Budgeting, Mortgage, Charitable Giving, interest, health insurance, certified financial planner, employee benefits, investing, Financial Planning, RRSP, Insurance, Rants, Investment Management, Debt, Budget, benefits, Tax Planning, tax deferral