Offer to help overspending clients

Four in ten Canadians (39%) overspent during the summer, says a new CPA Canada survey.

For these Canadians, anticipated expenditures were typically well off target, with 29% overspending by at least $1,000. They spent the most on:

• yard work;
• transportation;
• home renovations;
• and dining out.

Read: Make sure clients don’t live beyond their means

The good news, says the survey, is 42% of respondents stayed on budget. To keep on target, some people limited spending by only buying necessities (45%), while others followed budgeting plans (34%). Another 12% of participants held off on travelling.

Read: Are TFSAs valuable tools for clients?

How to help clients

Going forward, it’s especially key to help people who are nearing or in retirement. If these clients are worried about their cash flows or spending habits, for example, you have to make sure to discuss the details of their savings plans.

Read: Help clients secure their retirements

One Vancouver-based advisor, Dan Anders, typically asks clients to consider longevity risks as a way to craft sustainable long-term plans. In a January 2015 Advisor’s Edge story by assistant editor Katie Keir, he explained his process.

[Anders] asks retirees to consider how they’ll fare financially if they live to age 95, or even 100. He creates long-term plans based on that assumption, and usually revisits them bi- annually with retirees […] He suggests five- to six-page plans because clients can review and understand them more easily. These documents should include clients’ net worth, retirement cash flow projections and long-term care plans. He encourages investing in segregated funds, annuities and GMWBs, as well as LTC and critical illness insurance.

Read the rest here.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.