The organization's figures are intended for use in financial planners' long-term projections of at least 10 years
The latest projection assumption guidelines for Canadian financial planners has been published by FP Canada and IQPF.
The figures are intended to be used to inform long-term projections of at least 10 years and are agreed on by an independent panel comprising CFP professionals, at least one licensed financial planner from Québec, and a member of the public.
“Making projections is critical to creating financial plans that help clients realize their long-term goals," says Julie Seberras, CFP®, MBA, FCSI and Chair of the FP Canada Standard Council™ Standards Panel. “The Projection Assumption Guidelines are a useful tool for planners to ensure their projections are based upon sound assumptions.”
As well as being long-term projections, the guidelines are meant to look beyond the current day rate environment.
Financial planners should use their professional judgment when applying the guidelines to client situations and should ensure that clients are aware of the nature of the projections.
For financial projections of less than 10 years, financial planners may use actual rates of return on fixed-term investments held to maturity and dividend yields on equities.
The Projection Assumption Guidelines for 2023 are as follows:
|
Inflation Rate |
2.10% |
|---|---|
|
Return rates |
|
|
Short-term |
2.30% |
|
Fixed-income: |
3.20% |
|
Canadian equities: |
6.20% |
|
Foreign developed market equities: |
6.50% |
|
Emerging market equities: |
7.40% |
|
YMPE or MPE growth rate: |
3.10% |
|
Borrowing rate: |
4.30% |
The projections came into effect on April 30, 2023, and use publicly available data from a variety of reliable sources and the full report is available at:
https://www.fpcanada.ca/docs/default-source/standards/2023-pag---english.pdf?sfvrsn=911e63c0_3
