Even though clients know they should start, they need help to clear some hurdles
While many clients know they should invest early, they can still fall into the trap of delayed action. And because they start too late, they can find that their nest egg is far below what they need to invest for their retirement.
A recent RBC Financial Independence in Retirement Poll found that 46% of Canadians 55 and older are behind where they expected to be with their retirement savings, according to the Globe and Mail. To help their clients avoid this trap, financial advisors need to step in.
According to Adrian Mastracci, a senior portfolio manager at Lycos Asset Management, the biggest factor behind people’s failures at retirement planning the lack of an investment game plan.
“When most people go to see an advisor or salesperson, their first question is, ‘What’s good to invest in?’ … but there’s no road map,” he told the publication.
“If this DIY investor came to see me, I’d ask, ‘What’s your dream, what kind of income do you want and when should it start?’” he said. “I’m looking to come up with a custom-designed game plan, but I want them to figure out what they have to do. The next thing is to prepare realistic retirement projections based on their goals.”
Finally, he guides them through investment selection. He asks questions to determine the client’s investment appetite, and then he determines the mix of stocks and bonds that would be appropriate. He also considers savings capacity, noting that people typically get the highest salary they can get at age 50 and have probably paid down or repaid most of their debt, which means that’s when they can save the most.
According to Edward Kholodenko, president and CEO at robo-advisor firm Questrade, people delay saving for retirement because they want to avoid immediate pain.
“A lot of people don’t like to do things that are slightly painful,” Kholodenko said. “Taking money from your monthly budget and socking it away somewhere means you probably have to tighten somewhere else. Most people don’t like to do that.”
He acknowledged that people might also procrastinate because even though they know they should be doing something, they don’t know what to do. To help DIY investors facing such challenges, his firm offers an online managed investing service.
“We’ve got a professionally managed advice product that’s kind of like a mutual fund, except it’s made up of all low-cost ETFs, so the costs are much lower than your average mutual fund,” he said. “You’re saving a lot on the fees because there are no trailer fees attached with it.”
Kholodenko said Questrade also has a service to help more self-motivated investors figure out whether they should invest in ETFs or individual stocks, as well as how long they should hold those investments for.
“Many people are interested in doing that and having complete control over their finances, but it takes a lot more effort,” he said.
For more of Wealth Professional's latest industry news, click here.
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Canadians are counting on a long retirement — without preparing for it
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A recent RBC Financial Independence in Retirement Poll found that 46% of Canadians 55 and older are behind where they expected to be with their retirement savings, according to the Globe and Mail. To help their clients avoid this trap, financial advisors need to step in.
According to Adrian Mastracci, a senior portfolio manager at Lycos Asset Management, the biggest factor behind people’s failures at retirement planning the lack of an investment game plan.
“When most people go to see an advisor or salesperson, their first question is, ‘What’s good to invest in?’ … but there’s no road map,” he told the publication.
“If this DIY investor came to see me, I’d ask, ‘What’s your dream, what kind of income do you want and when should it start?’” he said. “I’m looking to come up with a custom-designed game plan, but I want them to figure out what they have to do. The next thing is to prepare realistic retirement projections based on their goals.”
Finally, he guides them through investment selection. He asks questions to determine the client’s investment appetite, and then he determines the mix of stocks and bonds that would be appropriate. He also considers savings capacity, noting that people typically get the highest salary they can get at age 50 and have probably paid down or repaid most of their debt, which means that’s when they can save the most.
According to Edward Kholodenko, president and CEO at robo-advisor firm Questrade, people delay saving for retirement because they want to avoid immediate pain.
“A lot of people don’t like to do things that are slightly painful,” Kholodenko said. “Taking money from your monthly budget and socking it away somewhere means you probably have to tighten somewhere else. Most people don’t like to do that.”
He acknowledged that people might also procrastinate because even though they know they should be doing something, they don’t know what to do. To help DIY investors facing such challenges, his firm offers an online managed investing service.
“We’ve got a professionally managed advice product that’s kind of like a mutual fund, except it’s made up of all low-cost ETFs, so the costs are much lower than your average mutual fund,” he said. “You’re saving a lot on the fees because there are no trailer fees attached with it.”
Kholodenko said Questrade also has a service to help more self-motivated investors figure out whether they should invest in ETFs or individual stocks, as well as how long they should hold those investments for.
“Many people are interested in doing that and having complete control over their finances, but it takes a lot more effort,” he said.
For more of Wealth Professional's latest industry news, click here.
Related stories:
Canadians are counting on a long retirement — without preparing for it
Early retirement, unexpected costs put squeeze on retirees
