• Thu. Apr 18th, 2024

What keeps a financial planner up at night? ‘People withdrawing all of their savings to meet their new mortgage needs’

Whatever happens this year in personal finance, the events of 2022 and 2023 will have a big influence.

Accumulated increases in the cost of living and high interest rates have had a grinding effect on household finances. The coming year may bring a start to rate declines and smaller increases in the cost of living, but many people could use help in the near term. For ideas, I turned to my community of financial planners and advisers on LinkedIn. Here’s a lightly edited selection of the contributions they posted:

On preparing for a tough year: “Do a cash-flow plan, including ‘crash test’ scenarios such as one person losing a job.”

– Thomas Wimmer, adviser

On ducking your financial problems: “My number one concern for clients is related to money avoidance. Challenging financial times can contribute to increased avoidance and procrastination when handling financial tasks and making effective financial goals and decisions. This amplifies money-related stress. My number one piece of actionable advice is the opposite of avoiding your money. To weather a difficult financial climate, I suggest creating a regular money routine. Start by getting really clear on your numbers, especially if you are worried about job security.”

– Meri-Li Forrest, certified financial planner (CFP) and financial coach

On what worries advisers: “What keeps me up at night? People withdrawing all of their savings to meet their new mortgage needs. Last year was tough for a lot of people, with inflation really rearing its ugly head and people withdrawing at an unprecedented rate. That’s my fear for 2024 as well. The number one moving day/closing day in Ontario is from July 1 to July 15, so I expect the majority of fixed-rate mortgages due in 2024 to come due during Q2 2024, and it’ll be ugly. That is the headwind I am really worried about.”

– Brandon Currie, adviser and CFP with Sun Life Financial

More worries: “I have helped more clients with cash-flow management and just struggling to pay for ‘life’ in the past six months than since I started as a planner five years ago. My biggest concern for some is just keeping their heads above water. Not every client has assets to invest.”

– Paul Nieuwland, CFP

On housing costs: “My biggest concern for the next 12 months is housing affordability. And I don’t just mean the ability to qualify for a mortgage – I mean the ability to find a place to live, rental or otherwise. Are you fine where you are now? Then stay as long as you can before having to make another leap. Is your housing costing you so much you cannot save? Consider cheaper options like roommates or moving in with family for the short-term.

– Benjamin Sammut, capital markets consultant and onetime mortgage broker

On your mix of stocks and bonds, Part 1: “Investing in a balanced portfolio – 20 per cent fixed income, 40 per cent Canadian stocks and 40 per cent U.S. equity – will be a reasonable things to do in 2024.”

– Sabu Varghese, portfolio manager

On your mix of stocks and bonds, Part 2: “If you haven’t already, time to increase fixed income weighing inside your portfolio. Rates are almost certain to go down in 2024.”

– Michel Gallant a CFP and division manager at IG Financial

On reviewing your 2023 results: “With some good returns as of late, this could be a good time to revisit your overall asset allocation to make sure that it’s still in-line with your risk tolerance/capacity. Another notable mention would be to revisit your portfolio makeup. Is there exposure overlap? Can you trim some fees for the same exposure at a lower cost? Do you thoroughly understand the strategy?”

– Tyler Gliebe, adviser and CFP

On resisting the impulse to keep tweaking your investment portfolio: “Long-term investing is like a bar of soap, the more you touch it, the smaller it gets. Stay the course.”

– Alok Tomar, adviser with Edward Jones

On not being too self-critical: “Give yourself some grace – financial wellness is a journey. You are allowed to enjoy your money now while saving for future needs. You just need to work out the ‘how’ for saving.”

– Charlene Sutherland, qualified associate financial planner (QAFP)

On dealing with your adviser: “Schedule quarterly meetings with your family and trusted advisers. Block sufficient time in advance to pause, reflect and then build strong agendas. Effective leadership is required to ensure that your advisers are able to execute on your clearly articulated long-term goals.”

– Adam Hoffman, family office fiduciary

Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.

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