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Proper Financial Planning can require more than one professional



So almost a decade ago, I was handed a file. I was asked to work with a person who had recently moved from Quebec to Calgary. She had some assets with the firm I was working for and she was really in a horrible state. 


Having moved from Quebec to Calgary - to leave an abusive relationship - she had very few assets. At that point, she was just a single mother trying to make ends meet and she had very few ends. One of the assets she had was a RRIF. I found this curious because the lady was only a few years older than me. At the time, I was in my late thirties and she was in her early to mid 40s. 


For those who don’t know, a RRIF is a Registered Retirement Income Fund. It is not normally the financial structure that anyone under the age of 60 uses, let alone someone who is still employed. Given my confusion, I asked her a question: Why did she have a RRIF?


Her answer was simple: she needed the money to make ends meet. Another advisor, at my same firm, had recommended the action and had set it up. My confusion only grew. With that in mind, I asked many questions. 


At the end of the process, one thing became clear: this client had a lot of debt. I ran the calculations several ways and I couldn’t find a way for her to consolidate her debt and still come out on top. I asked a banker and they didn’t have any solutions. I asked a lawyer friend of mine and he asked me one question: why are you even considering helping this person? As he pointed out, if I cannot help her with the products and partners I have, maybe these problems were beyond my capacity. He suggested she see a Bankruptcy-in-Trustee. 


I was hurt by the suggestion. My job was supposed to be a financial advisor. Why couldn’t I do this? I struggled for a bit and then gave the client the advice the lawyer had given me. When I gave the recommendation though a weird thing happened: the client was relieved. The worry seemed to fall off of her face. Yes, she would have to find a different financial professional; but her debt problem might be solved. She would no longer have to worry about balancing accounts or debt products and there might be light at the end of the tunnel for her.


This experience was instructive for me for a number of reasons. Firstly, it reminded me that being honest with clients is the best thing. Secondly, but most importantly, it reminded me that I cannot do everything. Yes, I have a lot of experience; but, sometimes, I cannot solve every problem.


At the time, I was licensed by the Ontario Securities Commission, the Alberta Securities Commission, the Financial Services Commission of Ontario and the Alberta Insurance Commission. That meant that I was able to sell and advise clients on many financial products which had a basis in life, health or A&S Insurance as well as doing the same for various forms of securities.


While I could do many things, I could not prepare a will, power of attorney in the areas of health or finance, a medical directive or a living will. While I could speak broadly about debt products, I could not make specific recommendations about why one mortgage was better than another. In fact, in the areas of Bankruptcy, Property and Casualty Insurance and “stock picking”, I found myself reminding clients that those topics were largely outside of my scope and depth of professional activity.


I shied away from other products because while I was familiar with the concepts, I learned that I didn’t understand the details. Just as an example, in my own life, every time I have made a claim on my property and casualty insurance policies, I was - and sometimes still am - constantly bewildered by why some things are covered and other things aren’t. When I ask my Property and Casualty (P&C) Insurance professional for an explanation, I always feel like I should know this stuff. After all, we both provide products which reduce risk. However, what I am constantly surprised by is that the way you reduce risk of a claim on a car, house or liability insurance is different from how you do so in the world of life, health and accident and sickness insurance. In my world, I ask a lot of questions beforehand; and when necessary, have to explain exclusions, ratings at the beginning of the process. In the world of property insurance, there are a lot of exclusions at the beginning, changes and our new exclusions written in at any renewal; and there is always the chance that you could get dropped at renewal. It is a different world and that is why I have a P&C expert helping me through it. 


For my clients, I have learned to do the same. I don’t just count on myself. I build a team around my clients. Since I can’t do wills or powers of attorney, I make sure they have a lawyer. Since I can’t do bankruptcies, I help my clients to find a proper provider. At the end of the day, I have learned that a proper financial and estate plan requires a lot of people at the table. Ensure that you make sure your table is a large one.


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Location: Alberta, Canada

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