Local company has big impact on finances

Opinion

Hey there, time traveller!
This article was published 27/01/2018 (2811 days ago), so information in it may no longer be current.

John and Karen Stott are not snowbirds per se. Instead of sun and cacti, they prefer the temperate climate of the Fraser Valley. They spend late fall to early spring in a Vancouver suburb, living out a retirement plan several years in the making.

And John Stott says they have their financial planner to thank for making the journey free of detours and potholes.

“I would likely be here regardless because I put high demands on people who I partner with — only the best,” says John, 58, who worked for several years in senior positions in human resources.

“But Doug made it easier — the journey was more productive in a faster way than anybody else I could find, and believe me, I am a demanding client.”

Unlike a lot of people saving for retirement, the couple chose Doug Nelson — who owns Nelson Financial Consultants — because he was a fee-for-service planner, as well as a portfolio manager for their investments.

To boot, he’s a bestselling author of one of Canada’s most comprehensive books on retirement planning: Master Your Retirement: How to Fulfill Your Dreams with Peace of Mind. Indeed that title applies to the Stotts, who have no workplace pensions but are living out their retirement plan to a T.

So it comes as no surprise to them that Nelson recently claimed the client innovation scholarship award at the Distinguished Advisor Conference, held in Kelowna this past November.

Sponsored by the Winnipeg-based Knowledge Bureau and mutual fund giant Franklin Templeton, the award recognizes 25 years of Nelson’s trailblazing in financial planning.

“All his recommendations focus on achieving five things: pay less tax; take less risk; reduce fees and expenses; retain more income and build more wealth,” says Evelyn Jacks, president of the Knowledge Bureau.

It seems straightforward enough, but these pillars of financial planning can be exceedingly difficult to execute, particularly in a product-driven industry.

“A lot of this goes back to the question of if you did certain things consistently well over time, would you increase your odds of success however you define it? And I think the answer would be yes,” Nelson says.

But doing the things that help people achieve their dreams is tough in an industry that can be focused on generating fees from sale of mutual funds, stocks or bonds.

This setup for compensation involves potential conflicts of interest, and the investing public is left wondering who benefits the most from advice.

That’s why Nelson decided a few years ago to become a fee-for-service financial planner — something few other advisers had done at the time.

That’s now changed significantly, partly because of Nelson’s efforts demonstrating there is true value in a financial plan, and that the price of advice should be separated from selecting investments.

The main reason for-fee planning has gained traction, however, is because people are now more willing to pay for a plan than have that cost embedded in the fees for mutual funds.

“They’re happy to pay because often they just want to be told what the math is — ‘Am I on track?’” he says, adding most calls he gets from prospective new clients involve inquiries about fee-based financial planning.

While it’s all fine and good to read about a Winnipegger making positive waves in the financial industry, you might be asking: Just what kind of advice might one expect from an award-winning adviser?

Consider Nelson’s answers to the following fundamental, questions:

What is the most important concept to pay attention to when planning for retirement (and why)?

The simple and short answer is to examine your financial situation regularly, particularly with respect to where you want to be five, 10 and even 30 years from now. “By this I mean, whatever stage you are at, regardless of how many years you have until retirement, take time now to assess where you are today, where are likely going to end up based on the path that you are on, and then determine what you need to do” better to reach your goals. It’s like anything else in life involving time and effort — be it losing weight, pursuing your career or building a family. Being cognizant of your situation now within the context of your goals informs the process.

“Why is this important? Because good outcomes rarely just happen,” Nelson says. “Instead, great outcomes occur when even a modest amount of time and attention are paid to the details.”

What is the most important concept to manage your finances well throughout retirement (and why)?

Nelson cites one word here: risk. What is the risk of running out of money prematurely? What is the risk of market returns not turning out as projected? What is the risk of paying too much tax? What is the risk of drawing CPP too early? These questions need to be answered thoroughly to ensure your retirement income and savings are sustainable for what could be a 40-year, geriatric trip.

“Our goal, from our perspective, is helping people receive a safe and secure income in retirement, while paying the least amount of tax, and having a low-risk, lower fee investment portfolio,” he says.

Mitigating risk is central to every step of a complete retirement plan because “every decision you make will have associated with it some degree of risk,” Nelson says. But if you plan to manage risks as best you can, the likelihood these will have a negative impact on a well-funded retirement is significantly reduced.

When meeting with an adviser for the first time, what is the most important question you should ask? And what in your opinion would be a satisfactory answer, or a very bad one?

A good start is asking, “Can I pay you a fee to provide to me truly independent advice, without the concern that I need to buy a product from you so that you can earn a commission?”

Nelson says this “is important because it will help emphasize whether the advice you are receiving is based on knowledge, education, experience and insight, or if the advice you are receiving is driven more by the product that is being presented.”

And a satisfactory answer would sound like this: “Yes, we can provide to you separate financial planning services for a fee, where these services are based on our unique, preferred approach,” Nelson says.

As a followup, he adds you might want to ask about the expertise and skill the adviser’s team can bring to bear to provide solid, workable solutions to overcome your financial challenges.

Here, you would want to hear something like: “Yes… we are registered and licensed to provide a very broad range of product solutions that include stocks, bonds, exchange-traded funds, mutual funds as well as insurance and annuities.”

And what do you not want to hear?

“Anything less,” Nelson says.