Time to take financial planning to a new dimension

Many financial planning concepts originated 20-30 years ago – and now one Canadian company wants to bring them into the 21st Century

“Progress is impossible without change – and those who cannot change their minds cannot change anything.”

The words of Irish playwright George Bernard Shaw were not written with the Canadian financial planning sector in mind, but they are certainly applicable here if one man is to be believed.
Step forward Michael Curtis, president of Ontario-based Vision Systems, a private corporation that has designed what it describes as “the only realistic program for personal lifetime financial management and estate planning in Canada”. His forward thinking software is designed to be flexible to meet the investors’ ongoing and immediate needs, rather than simply creating a “one plan for life” approach.

“I don’t want to be too ‘technical’, but most financial-planning concepts originated at least 20-30 years ago,” commented Curtis. “Many of these concepts were dictated by the state of computer hardware and software technology at that time.

“Financial plans which are just retirement plans often set up conflicts between clients’ lifestyle and the actions required by the plan itself. For example, no-one saves the same amount every year (the ‘fixed’ savings approach): we have children to raise, things we want to do around our homes, mortgages to pay, etc. The ‘mosaic’ of life changes from year to year.”

For Curtis, the idea of being able to adjust to the immediate needs of clients is vital for modern advisors.

“When I talk with advisors, I speak about the ‘dinner table’ conversation. Clients don’t sit around the dinner table and ponder if they have the right asset allocation in their RRSP or if they need critical illness insurance. They talk about lifestyle choices: “Can we afford to renovate the kitchen? How much kitchen can we afford?”

“Although preparation for retirement is very important, advisors can provide meaningful and immediate value, if they help clients make the most informed current lifestyle decisions. It is this immediate value, helping clients demystify the long-term implications of their current lifestyle choices so that they make the most informed decisions possible that will meet the CRM2 and robo-advisor challenge.”

Indeed the imminent arrival of CRM2 regulation is a vital reason why, in Curtis’s view, many advisors have to alter their approach.

“With CRM2 regulations, transparency will be the key,” he said. “Investors are going to be actively looking at their advisors and asking the question: ‘how successful are you at managing my money?’

“If all financial planners are doing is creating one plan for retirement and sticking to it, then investors will quickly see that they’re not getting true value for money. However, if they are able to broaden their focus then clients will see they’re getting something additional and are much more likely to stick with the advisor they know and trust.”