William (Bill) Green, CFP, FMA, CFDS, CIM
Cash Flow and Debt Management
Bill works with you to help you get the most out of your cash flow. He teaches you how to control your spending and how to manage your money and your debts. After all it is not really what you make that is the most important, but rather what you get to keep that is far more important. Our society has a habit of encouraging us to spend our money on current wants versus helping us save for our longer term goals, all this in an effort to “Keep up with the Joneses” we often get caught up and spend more then we really should. We often forget that when we see that new car, or boat in our neighbour’s driveway, that it is likely a better representation of debt, than wealth.
Financial planning vs investment planning
Many people confuse financial planning with investment planning, or retirement planning. That is because currently across most of Canada there is no regulation on the use of the term “Financial Planner” almost anyone can describe themselves as a Financial planner. When in fact many people that use the term financial planner are really investment planners/advisors, or product sales people. There is regulation on the use of the CFP ® trademark. A true financial planner will discuss all parts of your financial plan with you and use the CFP® six step process to analyze all aspects of your financial situation and create a written plan, they will follow-up with you on a regular bases and make adjustments to the plan as required.
Bill feels that insurance is a vital part of everyone 's financial plan, that is if they are not at a point where they are self insured, or simply do not have a need. Bill will analyze all types of insurance including Life, and the Accident and Sickness areas of personal insurance, as well as property (Auto/Home) or casualty (Liability).
Insurance provides a safety net for those times, when our cash flow and investments simply are not enough to cover the bills. When it comes to life insurance his approach is straight forward, buy Term (or temporary insurance) when the need is temporary and buy Permanent when the need is on going and ever lasting.
Bill will analyze your insurance needs and any current or proposed insurance plans and provide you with easy to understand recommendations that you can implement through your insurance advisor, or he can refer you to one of the many agents that he works with.
Insurance is a unique product, and has many valid uses inside of a well structured financial plan and can be a valuable part of your estate plan when it comes to funding your Success Tax liability.
Investments form a critical part of your financial plan, however investment returns, should not be the sole focus of your investment decisions. Risk tolerance, Objectives, Asset Allocation, Investment Time Frame, Tax Planning, Asset Protection and Preservation of Capital, also need to be considered in all of your investment choices.
Bill will analyze your current or proposed investments and based on your goals, objectives and risk tolerance he will make recommendations as to your desired asset allocation and product types, that will meet your goals and objectives. Bill provides you with easy to understand recommendations that you can implement through your investment advisor or through your own account, or he can refer you to one of the investment planners that he works with.
Estate planning is an essential part of any financial plan that often gets neglected. Bill will review your Wills and Powers of Attorney to make sure that they are in line with your wishes. If you do not have a valid Will or Power of Attorney, he can refer you to one of the lawyers that he works with. Many people are simply not aware of the benefits of having a well thought out estate plan, and while there is no "Estate Tax" in Canada, there is "The Success Tax" and most people do not know just how much “The Success Tax” could cost their heirs.
Financial Divorce Work
In his role as a Chartered Financial Divorce Specialist (CFDS), Bill works with you and assist lawyers and/or mediators in designing settlement proposals that will maximize his client's satisfaction, considering all the available financial options. He provides financial analysis of a couples' assets, liabilities, income, child and spousal support payments, also taking into consideration inflation and the changing tax consequences. Additionally, Bill will provide insight with respect to pension plans, other investments and insurance (including ongoing protection), while showing options for future financial projection scenarios. Bill helps educate his clients on tax and other financial consequences of retaining or giving up certain assets, as well as budget management during the difficult period before and after a divorce.
Hourly vs Asset Management Fee vs Commission
There are 3 basic ways you can pay for a financial plan.
The most common in the past has been a “free” financial plan provided along with the purchase of investment products, these products paid a Commission or trailer fee to the planner. In this case the client was often unaware of the fees that they where really paying, as the fee or commission was often hidden in the price of the products they where purchasing.
Currently the most common is an Asset Management Fee or fee for service, based on the assets that the investment planner is managing or over seeing. These fees can vary but often fall within the range of ¼ of 1% to 2 ½% of the assets that the planner is managing. Some planners charge a lower fee, and base the fee on the client’s total net worth in order to avoid any conflicts of interest.
The third way, is a newer trend in Canada, that has existed in other parts of the world for several years. The Hourly planner. An hourly planner works for you on an hourly basis, much the same as your accountant or lawyer would. Most hourly planners have an annual package available for purchase, so that clients are not concerned about contacting their planner an getting an invoice in the mail each time they do. Hourly fees vary depending on the experience of the planner. A more experienced planner will charge a higher hourly fee, but can often do way more work in less time then someone without the same experience. While hourly fees may initially appear to be fairly high they often are lower then Asset Management Fees. A client with a $1MM portfolio could be paying up to 2% which is $20k a year in fees, that would be 80 hours of work by a $250 an hour, hourly planner*.
* Please note that Asset management fees usually also include the selection and management of specific investments, while most hourly planners do not pick or hold actual investments for their clients, they focus more on asset classes and asset allocation. The hourly financial planning client, is often a do it yourself investor looking for a second opinion rather then someone to pick individual investments for them, or a client of a fee based or commission advisor looking for a more detailed plan or a second opinion. In Bills opinion the perfect match is to have an investment advisor and an hourly financial planner both working together to help you achieve your goals and objectives
Robo-Advisor vs Human Advisor
A new type of advisor is making an appearance in Canada called the Robo-advisor. A Robo-advisor is a call centre person that uses a computer program that selects and re-balances an investment portfolio based on the input from the client. The main selling point to Robo-advisor’s is that they promote lower fees, however fees are not the most important thing when it comes to your investments. Net returns (returns after fees and taxes) are the most important.
Don't get him wrong, if you have an investment that has a gross return of 7%, with a 3% fee, and another investment with the same 7% gross return but it only has a 1% fee, the lower fee wins hands down. However, if you have two investments and one has a gross return of 10% with a 3% fee, for a net 7% return and another that has a 7% gross return with a 1% fee, for a net 6% return the one with the higher fee provides the investor with a higher net return, despite the higher fee.
There have been several studies done over the years that clearly show that investors that use Financial planners end up with higher long term returns then those that do it themselves. This is despite the higher fees paid by the investor in order to compensate the advisor for the work they do. This is likely due to the emotional aspects that go along with investing. Historically investors buy high and sell low. They panic and sell when they should be buying and they often buy at market peaks. Robo-advisors have no ability to deal with human emotions and it is our emotional responses to what is happening in the markets that often effects our investment performance.
2nd Opinion service
Bill offers a second opinion service on almost any financial aspect of his clients lives. He helps answer questions like; Should I Rent/Lease or Buy; What is my best Financing/Loan/Credit option for me; Can I afford to…, I need some cash where should I take it from; Should I put money into an RRSP a TFSA or pay down debt? Is this really a good investment for me?
These are just some of the questions that Bill can help answer, unbiasedly* since he has no vested financial interest in the out come.
*There are many great commission/fee for service planners and sales people out there, but it never hurts to have a second opinion.
For a free review of your existing financial plan, or to discuss your financial planning needs, please send him an email or give him a call.
For a list of Frequently Asked Questions click here
Bill Green, CFP, FMA, CFDS, CIM
Bill also helps investment advisors and other financial planners with office systems, staff optimization, and CRM (customization of Goldmine and Maximizer), He creates customized excel worksheets. Bill will also prepare written financial plans for clients of advisors, where the advisor is either too busy or just does not have an interest in taking the time to produce a written plan.