For Those Who Need a Comprehensive Financial Plan on a fee basis...* Legal Disclosures Comprehensive Financial planning consists of the following six distinct steps that should guide you and your planner. Becoming familiar with them will help you get the most out of the process. And remember, it's this big-picture approach that sets financial planners apart from all other financial advisors, who may have been trained to focus only on one aspect of your finances. 1. Establish the client—planner engagement Your planner should: Explain issues and concepts related to the overall financial planning process that are appropriate to you. Explain the services he or she will provide and the process of planning and documentation and renumeration. Clarify your responsibilities as a client. Clarify his or her responsibilities as your planner. This should include a discussion about how and by whom he or she will be compensated. You and your planner should: Discuss the scope of the client/planner engagement. Agree on how decisions will be made. 2. Gather client data and determine your goals and expectations Your planner should: Obtain information about your financial resources and obligations through interviews or questionnaires. Gather all the necessary documents before giving you the advice you need. You and your planner should: Define your personal and financial goals, needs and priorities. Investigate your values, preferences, financial outlook and desired results as they relate to your financial goals, needs and priorities. 3. Clarify your present financial status and identify any problem areas and opportunities Your planner should: Analyze your information to assess your current situation (cash flow, net worth, tax projections, etc.). Identify any problem areas or opportunities with respect to your: Capital needs Risk management needs and coverage Investments Taxation Retirement planning Employee benefits Estate planning Special needs (i.e. adult dependant needs, education needs, etc.) 4. Develop and present the financial plan Your planner should: Develop and prepare a financial plan tailored to meet your goals and objectives, values, temperament and risk tolerance, while providing projections and recommendations. Present the plan to you and establish an appropriate review cycle. You and your planner should: Work together to ensure that the plan meets your goals and objectives. 5. Implement your financial plan Your planner should: Assist you in implementing the recommendations discussed if you want. This may involve coordinating contacts with other professionals such as investment funds sales representatives, accountants, insurance agents and lawyers. 6. Monitor the financial plan You and your planner should: Agree on who will monitor and evaluate whether your plan is helping you progess toward your goals. If your planner is in charge of the process, your planner should: Contact you to review the progress of the plan periodically and make adjustments to the recommendations required to help you achieve your goals. This review should include: A discussion about changes in your personal circumstances and how they might affect your goals. A review and evaluation of the impact of changing tax laws and economic circumstances. A review of your life circumstances and an adjustment of the recommendations if needed as those circumstances change through life events such as birth, illness, marriage, retirement, etc. (CFP Flame logo)™ Certified Financial Planner™ and CFP™ are certification marks awarded by Financial Planners Standards Council under a license agreement with the CFP Board of Standards, Inc. Copyright © 2002 Financial Planners Standards Council. All rights reserved. * Global Maxfin Investments Inc. does not supervise and is not responsible for any activities related to comprehensive Financial Plans or income tax assignments or any products sold through Global Insurance Solutions Inc. as they are not the business of Global Maxfin Investments Inc
Goal Based Computing for Your Financial Plan The reason we work, save, and agonize over our investments is not because we love to focus on our assets and liabilities. Rather, it is because we desire a smooth predictable lifestyle out to a certain age, and (perhaps) provide an estate to pass on to our survivors. Setting our lifestyle and estate goals, then letting the computer calculate the cash flows -- salary, inheritance, movement of capital between registered, equity and non-registered assets, and so on -- is what goal-based computing is all about. This is allows you to interactively explore "what-if scenarios". The Burger Quotient The Burger Quotient (BQ) is a measure of lifestyle. Your BQ represents that annual maximum lifestyle which, if followed, will be sustainable to a set age. In other words, you want a smooth, predictable income (after tax/inflation) over your entire lifespan such that on your 95th birthday you will walk into the bank and deplete/exhaust your retirement savings to the dollar. It is a lifestyle annuity......another way of saying 'I want to maximize my burger intake (lifestyle) and just die broke'. Tax Accuracy Taxation math is known and fixed. The laws of compound interest and inflation aren't subject to interpretation. The RRIF minimum rules, the algorithm which generates CPP, OAS, etc... these are all published and available to anyone. Why then should there be such a variety of financial planning software "solutions"? And why is there such large variablity in their results? Reverse Tax Engine RRIFmetic takes the standard taxation formula (which applies the tax rules to your salary, age, province, investment income and so on to derive your net income) and rewrites it in terms of investment cash flows (capital moving in and out of your registered and nonregistered investments). This reverse tax engine allows you to specify all the known values such as salary profile, age, future capital gains, etc., as well as a desired lifestyle or net income profile and it tells you what your capital will do under those circumstances. Live Rich - Die Broke We would all like to know: what is our maximum achievable lifestyle while still leaving behind an estate of a certain value (perhaps $0)? What are the optimal cash flows (moving capital into and out of our registered, nonregistered and equity pools) that allow us to achieve these goals? RRIFmetric can tell you precisely. Done your T-zero yet? The main difference between the "T0" and the annual T1 you prepare at tax time is that, with a T0, you enter your net income/lifestyle as data, rather than the other way round. In other words, you specify what your lifestyle will be. This is a bottom-up calculation.... it works 'from', rather than 'to', net income.