# Financial advisor



## Suzuki12 (Apr 22, 2012)

I will be retiring in 1-1.5 years. I will have a significant non indexed defined benefit pension in that I have had no RRSP contribution room for years. My wife and I have also been able to save a considerable amount in our TFSA and non registered accounts. We have been using the couch potato portfolio for a long time with excellent results. We have never used a financial advisor.
I'm wondering if there is much value to hiring an advisor at this stage of our lives as we move from accumulating wealth to using our savings. I did contact one who said initial cost is $3000 and then $1000/year after that. I plan to take CPP at age 60. We just under 60 years of age.
Thank you


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## milhouse (Nov 16, 2016)

Sorry, no definitive answer from me but here are my thoughts...

I'm hoping to retire in under 5 years and am debating having someone do some analysis for me too. Outlasting our nestegg or having enough to fund our retirement goals is not our primary concern. However, I am curious if I can be more efficient with my withdrawals, taxation, government benefits, and a bit in terms of estate planning. In my forecasts, I see (good) problems like hitting the OAS clawback, high taxation on my RRSP/RIF and LIRA/LIF accounts due to a significant non-registered account, etc. And as a DIY'er, I've yet to find a very good tool or information to analyze my specific situation in depth. There's been some articles about there not being enough information about efficient decumulation as most FA's focus on accumulation. I've read conflicting information and have not seen a very good side by side comparison of different strategies showing the calculations. I've identified a few advisors that seem to specialize in decumulation strategies but it's a question of how much bang for your buck you'll get from the fees you pay them. I'm not sure if I could swallow a discretionary $3000 lump sum bill and $1000 yearly after that since that is quite a chunk of change that we can buy a lot with. But I suppose once your portfolio grows pretty big, like over $1M, the stakes get quite a bit higher in terms of efficiency drags that can easily top $1000 year.


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## like_to_retire (Oct 9, 2016)

Suzuki12 said:


> ......We have never used a financial advisor.
> 
> I'm wondering if there is much value to hiring an advisor at this stage of our lives as we move from accumulating wealth to using our savings. I did contact one who said initial cost is $3000 and then $1000/year after that..


I can't imagine what kind of advice would be worth $3000, plus $1000 a year.

You've never used an advisor. Why would you start now? 

Personally, I've never used an advisor, and am retired over 11 years. There's no magic to handling your finances and investments, just common sense. The notion that you need to pay someone else to do this grade school task for you is a canard perpetuated by the industry itself as it feasts on the foolish who wish to hand their hard earned money over to others. Don't fall into this trap.

ltr


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## AltaRed (Jun 8, 2009)

If you are unsure, you could do the $3000 thing once and forget it for 5-10 years. That is peanuts on a $1million portfolio. A good 'fee only' planner will run a number of scenarios. RRIFmetic by Steve Salter is a software program that you could use yourself if you wanted to purchase it. Steve regularly contributes to CMF and to FWF as well on some 'die broke' scenarios. Tis important to do a number of scenarios though on different market returns. 

Before I retired, I used FIRECalc (a US tool that can be used by adjusting the inputs for a Canadian scenario though it won't properly handle various program clawbacks like OAS). But one has to not get too tied up in the weeds (to the decimal point level). What you are looking for are higher level macro results because the world will definitely unfold differently than anything you have assumed.

A major key is to understand OAS clawback thresholds and methodology, and RRSP/RRIF withdrawals being fully taxed like pension income, etc. I never counted on OAS being there when I did my work 12-15 years ago before I retired. If you get to keep some of it, then good, it's bonus income over the real 'meat' and so I left it out of the calcs.


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## My Own Advisor (Sep 24, 2012)

FWIW, there a few free calculators out there and if you've been savvy enough to DIY your portfolio, surely you can run a few scenarios with some cheap/free or at least inexpensive software using a few combinations of inputs.

Here is one example:
http://www.taxtips.ca/calculator/rrsprrifwithdrawals.htm

I would advocate doing that and if you don't feel confident enough in those scenarios then for sure, spending $3k to make sure your $1 M or so is "enough money" is likely money well spent on a fee-only planner. 

AR, as usual, you're smart not to count on OAS for your retirement expenses; considering it "gravy" so to speak. I think that thinking provides a healthy cushion. I plan on doing the same based on your logic.


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## GreatLaker (Mar 23, 2014)

I had many of the same questions as Suzuki12 and millhouse. I was in the midst of transitioning to a totally self-directed portfolio. I found investing easy compared to calculating how much should I save and when can I retire questions. For me the big issues were when would I have enough to retire confidently, which accounts to draw from first, how to eliminate or avoid OAS clawback, what incremental and overall tax rates I should expect to pay, when to take CPP/OAS, pension vs. commuted value, and how to avoid massive tax hit to my estate. Most of the issues involved the combination of time value of money and income tax. Albert Einstein is reported to have said _"The hardest thing in the world to understand is the income tax."_

I went for a fee-only planner to do a one-time comprehensive plan. The cost was around $3k and involved 3 meetings, with an output of a plan of about 30 pages with full projections for net worth, cash sources and cash uses for my projected lifetime. I refer to it often. I did not go for any ongoing annual plan review program or investment management. for me it was worth it. The few friends I have told about it usually reply that the cost is really high, but when asked what they pay in total investment costs including MERs they inevitably give a blank stare. 

There are not many true fee-only planners because it is not vary lucrative. It's hard to survive on a stream of new clients at $3k each vs. managing someone's investments at 1% annually for life. My planner said if all her clients were like me she would not have much of a practice.

I found the exercise was well worth it, and if you have persistent questions or need another opinion to ensure you are not making any mistakes it is an option you should definitely consider.


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## AltaRed (Jun 8, 2009)

FWIW, there has been much discussion on what assets to draw from first and it is not a simple answer. Many believe they should defer OAS and CPP to age 70 and start accessing their RRSP, or convert to RRIF early (pre-70) to mitigate the amount of OAS clawback when they do start drawing OAS. This MIGHT make some sense if the RRSP/RRIF is large relative to non-taxable assets and thus the taxing of withdrawals at full taxation rates. 

Much of this is a red herring though since the leverage value of deferred tax in a registered account MAY (or is likely to) outweigh the 15 cents on the dollar clawback that MIGHT happen with OAS. Steve Salter goes crazy hearing about early drawdowns of RRSP/RRIF. Whether to access RRSP/RRIF money to fund my cash flow needs, or to sell non-reg assets.....depends on how much cap gains (and thus taxation) selling that asset brings. Think about it this way. if Stock A in a non-reg account has an ACB of $50 and the price today is $100, then selling that stock accesses $100 in cash flow, but the taxes to be paid are only ($100-50) x 50% x MTR. That is a lot less than $100 of fund drawn out of an RRSP where tax is $100 x MTR.

I think before one gets 'frozen by deer in headlights' syndrome, it is worthwhile remembering that, outside of a few decisions like whether to annuitize or not, most decisions in retirement (other than minimum RRIF witdrawals) can be adjusted and fine tuned as to where to take this year's money from using the various tax calculators (taxtips.ca). A lot of it depends on what is in one's taxable account vs registered accounts. 

Beyond that, there are then the bigger long term issues of estate planning, e.g. the use of trusts, charitable donations/foundations, stock in kind, gifting while alive rather than a lump sum tax bill as a result of death, etc. Those will all be individual choices based on one's unique situation.


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## Suzuki12 (Apr 22, 2012)

Your inputs have helped, thanks. You guys are good, portfolio is about 1m.
The advisor I spoke with would not do a one off review and insisted on a regular yearly get together. Since I'm in low MER ETF's and I also have my funds correctly placed for best tax results there's probably not much the advisor would change. 
I will use the calculators.


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## kcowan (Jul 1, 2010)

You might want to ask Steve which of the fee only planners in your area use RRIFmetic. They will likely remove the emotion out of decisions. But other than that, DIY seems to be the best approach for you.


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## Spudd (Oct 11, 2011)

Suzuki12 said:


> Your inputs have helped, thanks. You guys are good, portfolio is about 1m.
> The advisor I spoke with would not do a one off review and insisted on a regular yearly get together. Since I'm in low MER ETF's and I also have my funds correctly placed for best tax results there's probably not much the advisor would change.
> I will use the calculators.


That advisor may insist on yearly get-togethers but there's no way for them to force you to do them. If you still feel a need for advice after the calculators you may consider acquiescing to their demands for the initial meeting and then simply never go to any additional yearly meetings after that. Unless you have signed some kind of contract (hint: don't) they have no leg to stand on.


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## Nerd Investor (Nov 3, 2015)

Alternatively, you can find a few only planner who will do the initial plan and _not_ insist on getting together annually.


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## Mortgage u/w (Feb 6, 2014)

Not sure I would hire a FA at retirement. I tend to believe that I am managing my money correctly (as you are as well, I'm sure) so not sure how much more value the FA can add. Unless you have a very large and complex estate, then it may be worth it - but I would assume a wealth planner would already be involved if that were the case.

You can look at it this way: you can permit yourself to loose $3000 the first year and $1000 thereafter by managing it yourself! How wrong can you be?


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## tdiddy (Jan 7, 2015)

Agree against FA at retirement for $3000 + $1000/year. Really don't see the value unless you have complex estate planning, even then annual "check-up" is ridiculous. This country pays neurosurgeons less than that to take out a tumor deep within your brain vs someone to plug your numbers into a glorified spread sheet software lol That industry needs, and is getting, a shakedown.


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## Toya4 (Nov 21, 2018)

I also think that personal financial planning is extremely a difficult thing. My dilemma truly boils down when I start thinking about investments for retirement. Everything seems difficult so might get professional personal financial planning help. Do you know any good planner that can understand my requirements and create a custom plan for me?


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## birdman (Feb 12, 2013)

I have a small pension income, OAP (for 2), CPP, and investments in the market as well as GICS's, etc. I am comfortable with my asset allocation. Anyways, I paid my accountant $300. some 6-7 yrs ago to determine where to keep my divy stocks, interest investments, etc and he did about 4-5 different scenarios. The end result was a tax savings of about $3,000. PA and also avoiding OAP clawback. Best 300.00 I ever spent.


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## jeffpicone (Oct 30, 2018)

Toya4 said:


> I also think that personal financial planning is extremely a difficult thing. My dilemma truly boils down when I start thinking about investments for retirement. Everything seems difficult so might get professional personal financial planning help. Do you know any good planner that can understand my requirements and create a custom plan for me?


Toya4 - What part of the country are you in? I decided to do most of my planning/investments myself, and I am still seeking out a good online tool that can be a sort of robo-planner for me, but I do know of some planners in Western Canada that do a good job creating custom plans. As this discussion highlighted, it is often $3,000 plus to get an independent fee-for-service financial planner to create a plan for you. Feel free to PM me if you are looking for recommendations.


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