Take Control Of Your Finances After Losing A Partner

Change is inevitable, and certain life situations present challenges. Losing a spouse or partner can bring about new difficulties, responsibilities and challenges. Franklin Templeton Investments’ Own Your Future is a program designed to help you and your family prepare so that you are able to take control of your financial well-being.

What are my financial needs following a personal loss?

Covering expenses

One immediate concern is making sure you have enough cash flow to cover your short-term needs, especially those directly associated with the loss of a spouse or partner. For longer-term expenses, cases in which there is a transition from a dual-income to a single-income situation can be challenging. Working with your financial advisor to create a plan can help you manage your expenses based on your new income, while investing for the future.

Understanding your finances

In many families, one person often handles the majority of the family’s day-to-day and long-term finances. If he or she passes away, it can cause a lot of stress for the remaining family members, who have to quickly understand and assess their financial situation. That includes understanding income levels, any remaining mortgage debt and other liabilities, life insurance and the value of any pension assets and other investments.

Planning for retirement

Losing your partner may have an impact on your previous plan for retirement. This may involve revisiting your retirement plan and adjusting your goals based on your new situation. Seek the advice of a financial advisor to help you develop or update your retirement plan.

How do I find the right financial advisor?

The right advisor will be able to work with you and your family on setting new objectives. However, training, philosophies and areas of expertise can vary greatly from advisor to advisor. Moreover, it is important that you feel comfortable with the person with whom you are working, and that you trust this individual to put your best interests first.

Here are a few things to help you understand the different options available to you when searching for the right advisor relationship:

Understanding areas of expertise for financial advisors

The right advisor can help you at every stage of your life. Your needs may include day-to-day investment activities or longer-term plans, such as retirement and estate planning. Here are some subjects you can ask your advisor about:

  • Retirement planning (e.g., Registered Retirement Savings Accounts [RRSPs], Tax-Free Savings Accounts [TFSAs], etc.)
  • Estate planning
  • Tax planning
  • Education planning (e.g., Registered Education Savings Accounts [RESPs], etc.)
  • Pensions
  • Household budgeting
  • Insurance
  • Banking/mortgages

Understanding how financial advisors are compensated

Advisors can be paid in a number of different ways, and understanding how they are paid can help you choose the advisor that best suits your needs. Payment structures can depend on the type of products and services advisors offer and the way they work. Common advisor compensation structures include:

Commission-based advisors are paid each time a transaction is made on your behalf. For example, when the advisor buys or sells a security or fund for you, he or she is often paid by the company that offers the investment product or is facilitating the purchase.

Percentage of assets
Some advisors charge a fee that is based on a percentage of the total value of the investments you have with them. This type of pay structure is common for advisors who have clients with larger investment portfolios.

Fee-based charges
Fee-based advisors charge a quarterly or annual flat fee for their services based on performing a certain task for you, such as creating a financial plan.

Hourly rate
Some advisors who provide a very specific service may be paid an hourly rate, similar to how other professionals are compensated. This option is not as common in the financial advisor industry.

Some advisors may be compensated with a blend of commissions and fees.

Understanding who financial advisors work with

Talk to your advisor about what relationships he or she has with different types of professionals whose services you might also require. These other professional could include:

  • Lawyers (estate, divorce, corporate, etc.)
  • Accountants
  • Insurance brokers
  • Mortgage brokers
  • Bank managers
  • Other professionals as needed

Understanding how the financial advisor services you

Advisor teams come in all shapes and sizes. If you are working with a single advisor, you will probably be in contact with that person most of the time. However, some advisors have a team of people who work with them, and it may be beneficial to gain an understanding of how they all work together to serve you.

Your advisor can outline the different roles and responsibilities each team member has and how these individuals’ roles might affect you. For example, you could ask who will handle administrative issues, such as a name or address change, and who will handle your investment and portfolio questions.

Setting expectations with a financial advisor

Advisors and clients should know what to expect from each other. Determine how often you should be meeting with your advisor, and what other contact you can expect throughout the year.

Here are a few subject areas you may want to speak to your advisor about:

  • One-on-one portfolio and update meetings
  • Market update information (e.g., newsletters, emails, etc.)
  • Statements and other reporting
  • Client events

Understanding designations for financial advisors

The financial services industry encourages continuing education for all financial advisors. Here is a list of some of the industry’s most common designations that you can speak to your advisor about:

  • Canadian Securities Course (CSC)/Conduct and Practices Handbook Exam (CPH)
  • Certified Financial Planner (CFP)/Registered Financial Planner (RFP)
  • Chartered Financial Consultant (ChFC))/other insurance training
  • Certified Retirement Planner (CRP)
  • Chartered Financial Analyst (CFA)
  • Chartered Accountant (CA)/Certified Public Accountant (CPA)
  • Mentorships (ask about any mentoring programs your advisor has participated in)
  • Additional education/certifications/courses/training

What financial information should I provide to my advisor?

Collecting the documents that detail your income, debts, investments, insurance and other relevant financial information can help you gain a better understanding of your financial situation. When meeting with your financial advisor for the first time, bringing along all this information will also be very helpful. Your financial advisor can better assist you with financial planning by being able to provide a holistic view of your finances. This checklist will help you get started.

Banking and income documents

Up-to-date statements for:

  • Checking and savings accounts
  • Credit cards
  • Mortgage
  • Loans or other line of credit
  • Up-to-date pay stub
  • Other income statements
  • Company stock options
  • Investment income and taxable dividends statements
  • Most recent tax return and “Notice of Assessment”

Investment statements

Bring the latest statements for each investment plan you have:

  • Registered Retirement Savings Plan (RRSP)
  • Registered Retirement Income Fund (RRIF)
  • Registered Education Savings Plan (RESP)
  • Life Income Fund (LIF)
  • Locked-in Retirement Account (LIRA)
  • Any other non-registered investment accounts

Pension and benefits documents

  • Old Age Security (OAS)
  • Canada Pension Plan (CPP)
  • Death benefits or a survivor’s pension
  • Spousal pension
  • Private health care benefits

Insurance documents

Bring your most up-to-date policies or statements for:

  • Life insurance
  • Long-term disability insurance
  • Critical illness insurance
  • Home insurance
  • Car insurance
  • Recreational property or recreational vehicle insurance

Legal documents

  • A copy of your will

Key contact information

Bring a list that includes the names and numbers of the following:

  • Lawyer
  • Accountant
  • Executor