People who use a financial advisor acquire a greater savings discipline, which plays an important role in growing household wealth over time and in having sufficient funds for retirement.
Canadian investors who rely on a financial advisor enjoy many important benefits, including significantly higher wealth accumulation compared to people who invest on their own.
In fact, research shows that the longer you get financial advice, the more your assets tend to grow*. People who use a financial advisor acquire a greater savings discipline, which plays an important role in growing household wealth over time and in having sufficient funds for retirement.
Specifically, the research shows that Canadians who work with a financial advisor for four to six years accumulate 1.58 times more household financial assets than those who go it alone. Households with an advisor for seven to 14 years amass 1.99 times more assets. After 15 years or more, households using an advisor have 2.73 times more assets.
A research study has shown that Canadians who work with a financial advisor accumulate more assets, and the longer they get advice, the more their wealth grows. Those who benefited from advice for 15 or more years had 2.73 times the assets compared to households without an advisor.
A trusted partner to keep you on track
Your financial advisor is someone whom you can trust and get advice from for all your financial matters. He or she can help you by doing an in-depth analysis of your current financial situation and by asking questions to help you identify and articulate your personal needs, goals and objectives. Based on this information, your advisor can then help you to formalize realistic financial goals and establish a clear strategy for meeting them.
One of the more common behavioural pitfalls investors make is allowing fear or emotion to guide their decisions. Based on their knowledge and experience, a financial advisor can provide a valuable historical perspective on the challenges of investing and encourage you to remain invested, especially during difficult market conditions. Your advisor can:
- Act as a sounding/discussion board for ideas you are considering.
- Work with you to alleviate worries that keep you awake at night.
- Anticipate future changes and proactively work through them with you.
Investment and tax strategies designed with you in mind
In addition to helping you to establish disciplined saving and debt minimization habits, a financial advisor can add significant value by arranging your investments to improve returns and limit your tax liability now and in the future. They can help with potential income-splitting, tax-efficient products, and how to effectively allocate your investments among registered and non-registered plans. They can devise an asset allocation strategy to diversify your portfolio and achieve the best rate of return for your individual level of risk tolerance. Your advisor can also work with your tax and legal advisors and other professionals to facilitate and coordinate your overall financial plans, and suggest creative alternatives that you may not have considered.
Look to your advisor to assist with:
- Reviewing and revising your portfolio as conditions change.
- Helping consolidate, simplify and improve your investment performance.
- Monitoring and managing your investments and converting them into income as needed.
A lifetime of protecting your assets and providing for your family
Effective planning requires looking not just at your financial needs today, but toward a variety of events throughout your working life and into retirement. Some of the services your advisor may provide include:
- Reviewing and recommending life insurance policies to protect your family.
- Identifying ways for you to make effective use of RESPs.
- Helping establish your will, retirement, estate and business succession plans.
- Identifying ways for you to make effective use of RRSPs and spousal RRSPs.
- Helping you transfer wealth efficiently to the next generation.
Simply put, your advisor keeps you focused on reaching your goals and helps you make informed financial decisions with confidence. With an advisor, you are likely to save more and to be ready for life’s challenges and opportunities.
*Source: An econometric analysis of the value of advice in Canada, by Claude Montmarquette, CIRANO, 2012