Gen Y Growing Up: My first chat with a financial planner

Another milestone! Today, I consulted a financial planner for the first time. I’d been meaning to find a financial planner who could review my setup and suggest other best practices, and I learned a lot from the session.

When I told the financial planner how I’d maxed out my registered retirement savings plan. She was impressed and suggested looking into corporate class funds. They’re taxed a little differently than regular mutual funds, and can be more tax-efficient than regular funds when outside an RRSP. I took the literature and promised to read up on it. Based on this Globe and Mail article about corporate class funds, it seems that corporate class funds are good for active investors who like switching in and out of funds, and not so good for buy-and-hold investors who favor index funds because of tax efficiency and low management expense ratios. (TD Canada Trust e-Series has the lowest-MER index funds I’ve seen so far, as the exchange-traded index funds that are increasingly popular in the US are somewhat bulkier over here.)

It was good to get some advice on uncommon concerns, such as international personal finance. How would I need to prepare for the scenario of moving back to the Philippines? I knew that my RRSP investments could be left in Canada, but I didn’t know how to handle my non-registered investments and other accounts in a tax- and duty-efficient manner. It turns out that I can leave money here, but I may not be able to give further instructions from overseas, and withdrawing everything could result in losses or high taxes. One way to handle this situation might be to convert all my accounts into long-term investments, then leave very good instructions. I’m currently planning to stay in Canada for a while, but it’s nice to know what I need to do in order to prepare for other options.

I answered her questions about my existing assets and expenses, and I asked her to help me prepare several retirement scenarios: the traditional retire-at-65 kind of plan, the ambitious be-flexible-at-40 plan, and the calculations for time in between. I wanted to figure out what a basic plan is, then inch that retirement date earlier and earlier. I gave her the numbers she asked for, and she’ll share some plans with me the next time we meet.

Writing about this gave me an epiphany. What I want to develop is not a retirement plan, but a medium-term opportunity plan. I don’t need to know how many dollars I’ll need in order to never work again. I’m not in the habit of postponing life until then, and I certainly hope I can continue doing meaningful work forever. What I want to know is this:

How can I position myself so that I can create and take advantage of opportunities while dealing with the risks?

(This post is not financial advice. Good luck!)

May 8, 2012
I ended up not going with the financial advisor or her advice, instead sticking with index funds with low management expense ratios. I’m not trying to beat the market, and I don’t trust actively-managed funds. The opportunity fund that I started building after this epiphany worked out really well, though. It enabled me to leave my full-time job and focus on building my own business, which is what I’m doing now. Yay!

3 responses to “Gen Y Growing Up: My first chat with a financial planner”

  1. gary says:

    learn, sell and invest in commercial real estate. consider canada, philippines and usa. partner with friends and relatives for initial down pay-
    ment. potential return is much higher than what financial adviser can recomment. use info from financial adviser + add the big picture of commercial real estate, gold, oil etc. gary

    1. Sacha Chua says:

      I’m not quite comfortable dealing with real estate yet – have to figure out if I can stay in the country for a while! =) – but I have heard a number of people recommend that route. It takes more work than most people realize, though! <laugh>

      I’m also interested in developing information products. That would be a good alternative source of income…

  2. Jason says:

    Watch out for some of the stuff financial advisors sell you, especially if it has an MER of over 2%. You might want to consider indexing using a couch potato method where gains can be higher due to a lower MER, and the fact that actively managed funds don’t beat the index some 80% of the time or something like that.

    But I’m just a programmer with a belief that I can know as much as a FA after a little bit of research (helps if you have a good accountant as well).

    The other option is a fee only advisor that doesn’t sell any products. Chances are there priority is more on you, rather than on making a commission.

    I to use the TE e-funds. An easy choice to start out with I think.

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