Here's what you need to know about financial planning

Annual projection assumption guidelines published jointly by the FP Canada Standards Council and ICQF

Here's what you need to know about financial planning
Steve Randall

The annual projection assumption guidelines have been released to help financial planners make long-term financial projections.

The jointly-published 2019 guidelines from the FP Canada Standards Council and Institut québécois de planification financière (IQPF) are deigned to guide financial planners in their projections for 10 or more years and are without potential biases or predispositions.

“Financial planners make projections every day to help their clients plan for things such as retirement income, insurance needs and funding post-secondary education,” says Susan Howe, EPC, MBA, CPA, CMA, CFP, s Chair of the FP Canada Standards Council’s Standards Panel. “The Projection Assumption Guidelines are an invaluable resource that helps planners provide unbiased professional advice.”

The guidelines are published annually but this year, for the first time, the FP Canada Standards Council and IQPF also surveyed key individuals at financial institutions and other relevant organizations on their long-term projections for inflation and rates of return.

“Predicting the direction of the economy and financial markets is a difficult exercise with many variables,” says Martin Dupras, a.s.a., F.Pl., M.Fisc., ASC, a member of the Projection Assumptions Guidelines Committee.

The survey results provided a new source of data to replace the Willis Towers Watson Annual Canadian Investment Perspectives Survey, which was discontinued after 2016.

“By using multiple sources of data, including the new survey that we introduced this year, we eliminate the potential bias that may be created by relying on any single source,” added Dupras.

The Projection Assumption Guidelines for 2019 are:
Inflation rate: 2.1%
Return rates
Short-term: 3.0%
Fixed-income: 3.9%
Canadian equities: 6.1%
Foreign developed market equities: 6.4%
Emerging market equities: 7.2%
YMPE or MPE growth rate: 3.1%
Borrowing rate: 5.0%

Vision for the future
FP Canada’s CEO Cary List recently spoke to WP about his vision for the future of the financial planning profession.

He said that technology is driving change and that planners must stand out in a meaningful, human way.

“The human element that technology can’t take on is being able to hold the client’s hand through the good times and the bad. It’s always being seen as the ultimate professional who is looking after their best interests, and it’s the ability to see the whole picture, which is a big part of it,” List said.