How advisors are helping clients spend with confidence

A Mackenzie Investments survey revealed Canadians are more confident that they can afford and maintain their lifestyle than they were 10 years ago.

In 2007, with a global recession around the corner, a corresponding poll showed people’s confidence in their financial situation just wasn’t there, according to Carol Bezaire, the company’s vice president of tax, estate and strategic philanthropy.

A decade on, people feel their confidence in spending habits is down to a number of factors, including new technology that has made it easier to splash the cash (89%) and more of a willingness to get help from an advisor (35%).

Bezaire said: “I think people are paying more attention [to their finances]. Also, our big thing at MacKenzie is that we are working with financial advisors, so what comes out is that people are feeling more confident about handling their money better if they actually do get the right advice, instead of just trying to do everything themselves.

“They are more comfortable in getting a formal plan in place because if we fly by the seat of our pants all the time, we forget where the money goes.”

The survey also revealed that, in the past 10 years, 47% of Canadians have had a salary increase of up to 50%, while 63% are optimistic they will have the same or better lifestyle in 10 years.

Bezaire said she would urge advisors to get their clients to look at the “whole picture”.

“We are looking at an entire situation, not just selling a point,” she said. “Mackenzie sells mutual funds but we also have to help advisors have the conversation with their client. What’s your RRSP? Are you utilising your RRSP? Should you also be utilising your TFSA? Or either or.

“What kinds of investment do you have? Because we are at the beginning of the year, should we look at asset reallocation? Take some capital gains or capital losses at the beginning of the year that you couldn’t do at the beginning of last year.”

With analysts warning investors to prepare for the end of this bull market, is this spending optimism misplaced? Bezaire believes the survey actually reveals clients are better prepared for another potential slowdown.

She said: “If we are looking at the confident level of our clients, and of Canadians, we’re better off and more confident than at the time of the last downturn; 2008 was a tough one.”

With interest rates on the rise, Bezaire also advised investors to manage their debt and not to lose sight of the importance of a financial plan. This is also the time of year, she says, to put in place good habits.

“It’s the beginning of the year and we are coming into tax season, so clean your house from a tax perspective. What are you not utilising? Last year there were a number of tax credits that changed in Canada; make sure you have someone who knows what they are because that’s going to reduce your taxes filed in April.

“It’s also RRSP season and we know that people working with a financial advisor, 92% of them are more likely to plan to use their RRSP rather than 72% who don’t have a financial advisor. So are you going to maximise the use of your RRSP in the next 60 days because that will help you save tax going forward.

“Look at your tax-free savings account. If you can, another $5,500 goes in, in January in contribution room. Use that because that is a terrific way to give yourself your own line of credit that has no bearing on interest rates.”


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