Even financial writers need advice
I never thought it would happen to me but I met with a financial advisor and planner to discuss my own financial plan.
Usually I speak with advisors and planners for my articles but in the last six months, I found that I had questions that I couldn’t answer and couldn’t be answered by the robo advisor I currently use.
Let’s take it back to tax season, it’s early January 2024 and I’m being a good finance writer and sitting down sorting through my receipts, my payslips and my Freshbooks account. I also make note of my registered retirement savings plan (RRSP) which is like a 401K plus my pension contribution thanks to another role that I have. Plus other bits and bobs like a locked-in retirement account (LIRA) from a contract I did more than a decade ago that’s been sitting there collecting interest. I’m in this position because I’ve done a lot of contracts and some of them came with a pension and a LIRA.
As I sat on the floor, surrounded by small pieces of paper, my computer and a glass of wine, I realized that I have all of these financial puzzle pieces and they were invested in a way that met my risk tolerance and long term goals of retirement but it wasn’t a plan. I needed a completed puzzle, to stretch this terrible metaphor.
I have so many questions as a result: should I put more money in my TFSA than my RRSP? But I need the tax deduction right now due to my earnings, so what should I do? How much should I put in both?
The pension I have access to is a defined benefits pension, which is like winning the pension lottery. A defined benefit plan guarantees a specific retirement benefit amount, usually based on a formula that considers factors such as salary history, years of service, and age at retirement. What I love about it is retirees receive a fixed and predictable income stream for life, which is determined by the plan’s formula.
I also love that the employer bears the investment risk and must ensure that the plan is adequately funded to meet future obligations. In other words, unlike a defined contribution pension, I’m not solely responsible for funding and managing it, like my RRSP.
I can also contribute extra to my pension so my big question is, can I move my LIRA to it and how much should I contribute per year? What’s the most tax-efficient way to run my business? I don’t resent paying taxes but also, tax-efficiency. Does it make sense to take on more work? Should I incorporate?
And quite frankly, the emotional support. I want to talk to someone when the markets do something or if I feel stressed about my financial future. I work a lot of contracts and I do enjoy it but there’s no security. I know enough to make certain decisions but I’m not an advisor or planner so there are things I can’t and won’t do.
So here’s why I’m planning on working with an advisor:
Personalized guidance: Financial advisors offer personalized, one-on-one advice tailored to individual financial goals, circumstances, and challenges. They can help create custom strategies, something automated platforms might not fully accommodate. The advisor I spoke with mentioned insurance and a will. I have both but is there room for improvement based on my current situation or future plans? We’ll see.
Comprehensive planning: Advisors often take a holistic approach, addressing all aspects of a person's financial life, including retirement, tax planning, estate planning, and more. They can also help navigate complex situations such as business finances or unique tax issues, which I don’t really have. I obviously write about all of these things but I am not a qualified financial advisor so I’d rather hand it off to someone who is. Would I love to have or rent a small place in a Spanish-speaking country so I can practice my speaking? Absolutely. Can I do that? Hell if I know.
Accountability: An advisor can act as a coach, keeping clients accountable to their financial goals and helping them stick to a long-term plan. Yup but I’m fairly self-motivated when it comes to saving money. But it’s nice to know that you have to be accountable to someone who wants you to succeed with your financial and other goals. (Listen, fall is coming and that is my peak splurge period so the timing is perfect.)
Experience and expertise: I’ve talked about this already. Now I checked on the advisor’s credentials, they provided their fees and even references from their current clients. That was very positive, which motivates me to work with them.
Now is the robo-advisor bad? No, of course not. I’m very happy with them but it can’t answer these questions that I have. It set me up so that I am in a positive position that I can envision a possible financial future, which is wild to think about. I plan on keeping my emergency and tax account with it because I really like the platform.
This week’s readings:
This Substack post from Totally Recommend: Was Girl Math Invented by a Man? (Totally Recommend)
By me: Want to retire with $300,000? $1 million? $3 million? Experts map out three scenarios so you can retire with enough (Toronto Star)
Also by me: ‘Big difference between expectation and reality’ today in markets: Jason Pereira (Canadian Family Offices)
Other Countries Have Social Safety Nets: The U.S. Has Women (Early Learning Nation)
Of course I read this: Self-employed with no pension (MoneySense)