What is the added value of a financial planner?

C.L. What motivated us at the outset was a strong need to regulate the profession, to ensure that people had the level of competence required to provide their clients with the best possible guidance. We focused on the highly technical dimension in areas such as protection, insurance, investments, taxation and legal aspects. This is as important as ever, but with the advent of technologies, the emphasis is elsewhere now. Acquiring technical skills, working with technology, yes, but above all working with people.

B.F. The profession’s mandate hasn’t changed: it’s still to help people achieve their goals, except that the goals have evolved and so have people’s needs. We’ve had to adapt. People skills have become essential, because understanding people requires a great deal of sensitivity. The landscape has also changed: the number of financial planners, the place they occupy in their institutions and the recognized value of a financial plan.

B.F. There was a time when each aspect of planning was treated separately. But there was no comprehensive vision. The industry has come to realize that you can’t talk about insurance or taxation without talking about investments, because they’re all interconnected, and that an integrated approach is essential. Just as an orchestra must have a conductor to lead it and play in harmony, the different aspects of planning must be in symbiosis and “talk to each other” through the coordination of a planner. It’s all about delivering a total package.

C.L. Numerous studies have proven the added value of financial planning, including a recent one by the Financial Resilience Institute which shows that people who have a financial plan and work with a financial planner have a much higher level of financial resilience, regardless of income level. Financial resilience is the ability to continue to meet your financial obligations, regardless of the difficulties that come your way and that are beyond your control. It means being able to continue paying your mortgage or rent, even if inflation, interest rates or market challenges arise, even if you fall ill or lose your job. In a society, the more resilient people are individually, the more resilient that society’s economy will be. This study is very interesting because it covers all income brackets. Personally, I’ve never known anyone to say: “I went to a financial planner and wasted my time!” On the contrary, it’s more like: “If only I’d known earlier!”

B.F. Planners are generally trained in finance or business schools, and acquiring technical knowledge is fairly straightforward. On the other hand, there are two areas in which schools offer less training. The first is the ability to integrate several dynamics simultaneously. Disciplines are studied individually (law, accounting, marketing, etc.), but a financial planner needs to integrate them all, just as a conductor needs to be trained to hear many instruments. And this ability is not innate; it has to be built and assessed by examination.

The second element is people. Financial planners are usually graduates of law or business schools, but they need to be able to understand the person, their client, and also to make a complex language, the language of the industry, accessible. Explaining things in laypersons’ terms is not something you learn at university, but it’s vital if a client is to understand and integrate information and take action.

C.L. I would also add that money remains one of the last taboos in our society. We talk about a lot of things, but when it comes to financial stress and finances, we avoid the subject. People get information left and right, on the Internet… A financial planner has to help the client understand all this data and manage his or her emotions, because the financial aspect is charged with emotions and is also linked to our values.

C.L. It’s important for everyone, but in the case of the self-employed, their ability to earn a living is essential. They don’t have time, they’re busy with their business and their affairs, but I think talking to a financial planner is one of the greatest gifts they can give themselves. Their business is their passion, their baby, but they have to protect themselves, they have to protect their ability to earn a living.

B.F. That question brings us to another aspect of how the profession has evolved: specialization. The Institut de planification financière has developed a specialization program, because there are certain types of clientele for which a financial planner would do well to specialize. I can draw an analogy with a medical problem: an athlete who requires physiotherapy treatment is well advised to consult a physio who treats athletes. The same principle applies to the self-employed: they should deal with financial planners who understand their reality, because it’s a complex one.

B.F. It’s always the capacity paradox. If I go back to my physio example, the more time a doctor spends understanding each patient, the fewer patients he can treat. For example, if a pharmacist who wants to become an owner approaches a financial planner who knows nothing about his profession, the planner will first have to understand his client’s reality to be able to give him the right advice. If, on the other hand, the pharmacist turns to a financial planner who is already familiar with the issues of his profession, things become much simpler.

C.L. I would add, to continue with the orchestra conductor analogy, that an entrepreneur or self-employed worker needs to surround himself with several specialists: accountant, lawyer, tax specialist… And this is where the value of the financial planner comes into play: the integrated aspect, because the financial planner takes into account not only the needs of the business, but also those of the individual, his or her family, etc.

C.L. It’s a big project that takes many years and a lot of thought: what do I want and what don’t I want, what is my business worth, what am I going to do next? Many entrepreneurs don’t even know the real value of their business! They think it will finance their retirement, but they don’t have the necessary data to know if this is realistic… There are so many factors to consider… A financial planner can help a self-employed worker or entrepreneur define his or her objectives and build a plan, but it takes time.

B.F. It’s also important to realize that transferring a business is an irreversible act. For this transfer to take place under optimal conditions, you need to be able to rely on the best possible ecosystem: this is key. A dentist, a pharmacist or an architect spends his or her life building a practice. And you need to think about the transfer of your business so many years in advance, because the decisions you make can influence the timing of the sale, the way in which the transition takes place… By working with a financial planner, he or she can already begin to lay the groundwork for making the right decisions.

B.F. I see that young people need advice and financial guidance. Of course, there’s the question of our ability to ensure that everyone has access. There are 5,000 financial planners in Quebec, and as Chantal mentioned, once you’ve dealt with one of them, you want to continue doing so!

C.L. Many young people may have thought that financial planners are only needed for retirement. But the perception has changed: a financial planner can also advise you on buying a home or making the transition from salaried employee to entrepreneur… And young people have an advantage: they have time on their side. The younger you start, even if only to understand some basic concepts like compound interest, the better your chances of achieving your goals!

B.F. For me, it’s at university because that’s where debt starts. Many students finish university with a lot of debt, because some programs can be expensive, such as dentistry or certain medical specialties. A financial planner can help manage the size of the debt and integrate these liabilities into the young professional’s working life, career ambitions, personal life… For students who will become self-employed, this is very important: they will have to manage their business with these liabilities in mind, but they also have to start their personal life. A financial planner can simplify the task for them.

B.F. A financial plan is a structured way of guiding a person towards success. I can compare it to a travel plan: I’ll create a road map to show me the route to take, but once I’m on the road, I also have to take reality into account, which is not static: traffic congestion, road closures… you have to be ready to make the necessary adjustments to complete the journey within the time horizon you’ve set. A financial plan is therefore a structured, agile and flexible way of reaching a destination.

C.L. I would add that the more personalized the plan, the more likely it is to succeed. With a financial planner, each person can look at the different options and ways of achieving their goals, and then make a decision. The best plan is the one you implement, the one you stick to and the one that gets you where you want to go.

C.L. The profession of financial planner is highly regulated, but when it comes to the relationship between people, it’s the human filter that really comes into play. A long-term relationship develops between a financial planner and his or her client. So it’s important to be able to say: when this person explains things to me, I understand, I’m at ease and I feel we’re communicating. The human aspect, the lived experience, is very important.

B.F. There’s a very strong link between the quality of advice a financial planner can give and the openness of his or her client, the client’s willingness to share the necessary information. The more easily information is shared, the better the quality of the plan or advice.