Get a Game Plan for 
Your Finances

In the last three years, I’ve had to change my will, banking services, and life insurance. For the most part, I was reacting to increased fees and charges rather than acting on new or better opportunities that would have benefited my family. Luckily, I work in the financial services industry and have the contacts, time, and financial tools to easily make those changes. However, for most people, finding the time and information is often a challenge. That’s where a financial quarterback comes in.

Running Interference
A financial quarterback is a financial advisor with well-established connections who are experts in their fields, from legal to accounting to financial. Ideally, your financial quarterback will bring to your attention related topics other than just your financial portfolio.
For example, it may not occur to you that changing needs, newer products in the marketplace, and potential costs savings warrant re-evaluating your insurance program every few years.
Turning 50 for me was a big deal financially. It coincided with the renewal of the 10-year joint term policy, purchased at age 40, for my wife and me. Our initial annual premium for $200,000 in coverage was $466 a year. On its 10-year anniversary, the renewal rate increased to over $2,200 a year. This prompted two questions: did we have adequate insurance and is this the most cost effective insurance policy available to us?
While I am licensed to provide insurance, I turned to my partner Ian David Clark to help evaluate our situation. Ian analyzed the needs for both term and permanent insurance. His evaluation determined that our family needed more term insurance. We were able to increase our coverage to $800,000 and our premiums dropped by over $900 a year.
Here’s why: when you buy term insurance, you must pass medical tests and provide a full medical history. Underwriters then consult actuary tables to determine the odds of a healthy 50 year old, for example, dying in the next 10 years. The odds are low; thus premiums are inexpensive.
But what about when it comes time to renew the policy at 10 years? True, you don’t have to pass a physical, but insurance companies, to protect themselves, assume poor health so renewal rates go sky high.
Most people don’t realize that if they take out a new policy and pass the medical tests with flying colours, the insurance company can again consult with the actuary tables and may calculate the odds of a healthy 50-year-old dying is quite low and therefore issue a new policy with low rates.
{advertisement} Leave Nothing to Chance
Your financial quarterback will have a strong relationship with a lawyer who deals with family and estate law. In our experience, many Canadians either don’t have a will or have neglected to update it to reflect current family needs such as beneficiaries, power of attorney, and trust agreements. Leaving those matters to chance causes financial hardship in many cases.
The use of trust agreements sometimes extends beyond the contents of a will. More and more frequently, people require the use of trusts for succession planning for the protection of their wealth.
For business owners, it’s critical to have an accountant who practices in matters of incorporation, family trusts, as well as personal taxes. While most business owners and professionals simply consult with personal accountants or business comptrollers, this can lead to missed opportunities and missed tax savings because some accountants prefer not to take on the liabilities associated with investment strategies recommended by other financial professionals. Having said that, it has been our experience that having a qualified accountant in your corner, when facing Revenue Canada, is money well spent.
Divorce is another event that requires significant advice and planning, and where a financial quarterback can be of good use. The splitting up of family assets may require the advice of professionals who specialize in mediation, financial planning, and legal matters.
For example, more often than not, during a divorce, you may need to take action on renewing a mortgage. While it might be convenient to talk to your existing financial institution, with the change in family dynamics, it is often advisable to seek out a mortgage broker to analyze the market for the best product and rates.
Knowing the Game
Ensure your financial advisor has relationships based on mutual trust and regular communication with a network of professionals who can assist in developing your business and financial planning needs. This network may include professionals in accounting, legal, mortgage, and real estate — and their expertise can inform the overall financial planning process.
In the words of former Miami Dolphins quarterback Dan Marino: “In the end, nobody knows the game like the quarterback.
Steve Bokor, CFA is a licensed portfolio manager and Ian David Clark is a certified financial planner with PI Financial Corp., a member of CIPF.