What is Financial Planning?

According to FP Canada, Financial planning is a disciplined, multi-step process of assessing an individual’s current financial and personal circumstances against his future desired state and developing strategies that help meet his personal goals, needs and priorities in a way that aims to optimize the allocation of his resources. Financial planning is an ongoing process involving regular monitoring of an individual’s progress toward meeting his personal goals, needs and priorities, a re-evaluation of financial strategies in place and recommended revisions, where necessary. Our ongoing financial planning brings all financial topics together and applies to your specific needs and goals.

Money Problems that We Solve

Money Management and Mortgage Planning

Cash flow exercise is a basic but very important part of financial planning. We need to understand the nature of your income and expenses. If there is any spending issue, this needs to be addressed first. No financial plan is secured if there is a significant spending issue. We help you answer questions like:
  • Should I pay down debt or invest?
  • Do I have positive cash flow at the end of the month? Am I spending too much?
  • Is my net worth growing over time?
  • Do I have too much debt?
  • How do I become mortgage-free faster?
  • How do I plan for the purchase of a rental property?
  • How can I make my mortgage payment tax deductible?

Investment Planning

We go over the basics of investing and how stocks and bonds play role in your portfolio. This session digs into the historical performance of different asset classes. We review your investment at Nest Wealth and make sure it aligns with your long-term goal. Your portfolio recommendation is done by Nest Wealth based on your answer to the risk tolerance questionnaire. We educate you on questions like:
  • What is a stock/bond/ETF/GIC?
  • Should I invest in the stock market or should I invest in GICs?
  • What types of investment accounts should I use?
  • How much risk can I take?
  • Is my asset allocation appropriate?
  • Did my investment performance beat the markets?
  • Are my investment fees reasonable?
  • Should I be a DIY investor?
  • What kind of investments can I have within a corporation?

Risk Management

Any insurance conversation requires proper insurance need analysis. Finding the right amount of insurance coverage to provide adequate financial resources to cover expenses in the event of someone’s death. These expenses may include financial resources for surviving family members, legal fees, funeral expenses, taxes, education expenses for kids, and so on. The purpose of insurance is to buy peace of mind. We solve your concern on questions like:
  • Do I have enough and the right kind of life insurance coverage?
  • What does happen to my spouse and kids if I am no longer around?
  • Do I need disability/critical illness insurance?
  • What type of insurance do I need in retirement?
  • How do I understand my company benefits package?
  • Do I need travel medical insurance for my month-long trip to Europe?
  • How does my auto policy cover me from carjacking?
  • Am I covered under my home policy if there is a natural disaster?

Tax Planning

Canada has one of the highest tax rate systems in the world. Proper tax planning will save you hundreds of thousands of dollars over your lifetime. Every step of your financial plan has a tax implication, and we give careful attention to addressing these implications. In complex situations, we collaborate with other expert tax professionals to make sure you are not overpaying the government. We assist you with questions like:
  • How do I pay less tax?
  • How do I split my income with my spouse?
  • How do I pay less tax on my investments and rental properties?
  • How do I save for my retirement in the most tax-efficient way?
  • Should I set up a corporation?
  • Should I pay myself a salary or withdraw dividends from my corporation?
  • How do I plan for the sale of my private company?

Retirement Planning

The retirement landscape has been rapidly changing in our society due to the rising inflation rate and economic uncertainty. At FIRE financial, I believe that you should never retire. We prepare you to be financially independent so that you can choose and work on what you enjoy the most. When you enjoy your work, you do not work anymore. Myself, I love spending time in the stock market and solving financial planning problems for my clients. I can do it for the rest of my life without getting boring. We assist you with questions like:
  • How much do I need to retire by my FIRE retirement age?
  • How much do I need to save each month to achieve my goals?
  • How much can I afford to spend in retirement?
  • How can I maximize government benefits like CPP and OAS?
  • Should I take a lump-sum commuted value payout from my pension or a deferred monthly benefit?
  • Should I save using an RRSP or TFSA?

Education Planning

College/University educations are expensive. Rising inflation will make it even more expensive in future years. Early planning will help your children not to be indebted to student loans. The last thing you want is to have your kids go financially broke due to massive student loans. Questions we tackle:
  • What types of accounts should I open for my kids?
  • How much grants and bonds do I get in the RESP account?
  • How does a family discretionary trust work?
  • How much do I need when my kid goes to university?
  • What kind do expenses qualify for RESP-eligible expenses?
  • How much should I save for my children’s education?
  • Do I qualify for any tax credit for my tuition expense?
  • Which universities/colleagues do qualify as designated educational institutions?
  • Does an RESP reduce the provincial student assistance program such as OSAP?

Disability Planning

Planning for disability is complex as it requires very complex government and health care professionals’ paperwork. Canadians often miss out on various grants and bonds due to a lack of disability planning. Setting up a plan to take care of your loved ones when you are not around can be an emotional process and requires gentle handling. We prepare you for questions like:
  • What is a disability tax credit (DTC)?
  • What government benefit do I qualify and how much is it?
  • What happens to my special need child when I am not around?
  • What is a Henson trust? How do it protect qualifying from government benefits?
  • How much do I qualify for grants and bonds in Registered Disability Savings Plan (RDSP) account?
  • Do I have the appropriate paperwork to take care of my kids when I am not available?
  • Who will take care of my disabled child if I die? Is that person qualified?
  • How does the taxation work in the RDSP plan?
  • What is the assistance holdback period in an RDSP plan? How does it impact the RDSP withdrawal?

Estate Planning

You worked hard all your life to build wealth, but the wealth may unnecessarily go to the tax authority or lawyer fees if documents are not properly drafted, or your wishes are not communicated with your beneficiaries. As part of the financial planning, you need to make sure your wealth goes to the next generation or your desired destination with little hassle and less cut from the tax authorities. Estate planning is a process where you regularly update your plan to incorporate life changes and make sure that the beneficiaries receive what you intend to give. We will guide you to decide what to include in your Will and Power of Attorney. We use a third-party online service for simple Will and POA. However, we work with Estate Planning Lawyers when the situation is complex and needs careful planning. We coordinate with lawyers to solve questions like:
  • Should I have a will? What assets will pass through my will?
  • What beneficiaries should I name?
  • Should I own assets jointly?
  • Should I add my name to a parent’s account?
  • How do I minimize probate fees?
  • Should I consider an estate freeze?
  • What is a power attorney for property or personal care?
  • Should I establish trust?

Strategic Charity

Everyone likes to donate and help other people. However, your donation can have a bigger dollar impact if planned properly. Eligible donation qualifies for both federal and provincial tax credits which can reduce your tax liabilities substantially. If you would like to donate a large sum of money, insurance policies can be a very inexpensive way to get larger tax savings. We plan with accountants and lawyers to formulate plans to answer questions like:
  • How do I maximize my charitable giving?
  • How do I use insurance policies for large donations?
  • How much do I save in taxes for my donation?
  • What kind of legacy I can leave with my donation?
  • Which charities do qualify for tax credits?
  • What is a donor-advised fund?
  • Should I set up a family foundation for my donation?

Business planning

You worked hard to build your business. Now it is time for you to retire and enjoy your retirement life. Whether you should hand the business over to your children, sell it to a third-party buyer for top dollar or just shut down, it all depends on your personal situation. If you have a family-run business, the succession plan can become even more complex. We prepare you to address questions like:
  • Should I incorporate or run my business as a sole proprietor?
  • How do I start the conversation about the transition with my family members?
  • Is there a strategic buyer who will pay top dollar for my business?
  • Do I pay myself a salary or dividend from my corporation?
  • What are an estate freeze and lifetime capital gain (LTCG) exemption?
  • How do I prepare for my business if something happens to me?
  • How do I fund the tax implication from a death of a shareholder in a buy-sell agreement?
  • Do I need a separate Will for my corporation?

Financial Planning Steps

Complimentary Introductory Video Call

This first call clarifies whether FIRE Financial is suitable to address your personal need. We will go over what I offer and what kind of service can you expect. It also allows you to ask further questions that are not specified on the website.

Engagement Meeting and Data Gathering

If we are a good match, we go over the engagement letter that outlines the areas we will be covering in our professional relationship, our shared responsibilities, and discuss fee structure. This meeting is followed by a data-gathering task where I will collect key financial information that is needed to build a comprehensive financial plan. Security is a core of any business, and we collect information using industry-leading software companies’ data aggregation tools.

Goal Setting and Analyze Facts

Setting realistic goals is the first step of financial planning. We discuss what resources you have available to reach your goals and then allocate financial resources appropriately to achieve these goals. The more open and clear you are with your vision, the easier it will be to build the financial plan and Implement it.

Plan Development and Presentation

Traditional long-form financial plans are often difficult to digest from clients’ perspectives. It is even harder to implement as most clients lose track when financial advisors go through pages of spreadsheet numbers.

In contrast, at FIRE Financial we do modular financial planning which breaks down different financial topics in bite-size content. In each meeting, we address any urgent matter that needs immediate attention. Then we cover each area of financial planning and implement it.

Review and Updates as Needed

Once we complete the full financial plan, we need to review it regularly to make sure your plan is adjustable enough to accommodate any changes that you have in your life.

Graduating

Unlike most financial advisors, I strongly believe you can take control of your money if you educate yourself. I aim to graduate most of my clients in a reasonable period through financial education. However, I understand not everyone is comfortable being on their own.

Portfolio Manager Referrals

Numerous academic studies have shown that traditional active mutual funds do not outperform their benchmark over a reasonable timeframe. The underperformance is even greater for mutual fund investments that are sold in Canadian financial institutions due to high fees. The 2 ~ 3 % fees for mutual funds are one of the highest in the world.

To solve this problem, FIRE Financial Inc. has partnered with Nest Wealth and ShariaPortfolio Canada as our portfolio managers. Most average Canadians are well served by diversified low-cost exchange-traded fund (ETF) portfolios. Both Nest Wealth and ShariaPortfolio Canada use several risk analysis questions to determine your risk tolerance and willingness to take the risk. Based on the risk profile, it recommends appropriate asset allocation for your portfolio.

Nest Wealth Sharia Portfolio

Ideal Client Profile

We work with clients who invest at least $100,000 with our referral partner or have a high household income of at least $100,000. This allows us to give unbiased advice while still staying profitable as a business.

Frequently asked questions

A financial planner has extensive knowledge of personal finance, tax planning, asset allocation, risk management, retirement planning, or estate planning.

All banks only sell their products which may or may not be the best solution for clients. As an independent financial planner, I shop around for the best product for my clients.

A fiduciary advisor seeks to minimize conflict of interest, be transparent and be a trusted person. Like doctors, fiduciary advisors must put their clients’ best interests before their own finding the best solution at the best terms and conditions. Financial Planning Association of Canada (FPAC) is the only association in Canada that advocates on behalf of fiduciary financial planners across Canada.

Unfortunate no. Only Portfolio Managers (advisors who typically manage over $1 million in investable assets) in Canada legally need to be fiduciary. This means the vast majority of financial professionals are not legally required to act in your best interest. Most advisors follow suitability standards which is a much lower bar than a fiduciary standard. The suitability standard does not require the advice to be in the client’s best interest. As a CFA charter holder and CFP professional, I am required to put my client’s interest ahead of my interest.

According to the Financial Services Regulatory Authority (FSRA) of Ontario, Financial Planners hold a deeper level of knowledge and experience than Financial Advisors. The educational requirement for Financial Planners is higher than that for Financial Advisors.

The financial industry typically segments wealthy households into three categories:

  1. Mass affluent – investable assets between 100K to $1 million
  2. High net worth – over $1 million in investable assets
  3. Ultra-high net worth – over $30 million in investable assets.

Our sweet spot is the mass affluent market. Unfortunately, this market segment often does not receive the best quality advice that they deserve as they do not have enough assets to hire excellent quality advisors.

We work with mass affluent or high household income earners (at least 125K) who are in the accumulation stage of their lives. This allows us to give unbiased advice while still staying profitable as a business.

FIRE Financial is a virtual financial planning practice. Our meetings are conducted over Zoom, Microsoft Teams, Google Meets, etc. We use the screen share features so that you can follow the charts and graphs to have a meaningful conversation.

Yes, you will be able to access the client portal where you can see your financial plan and pending task that you need to act on to achieve your financial goals.

All referral fees or investment management fees are subject to the applicable tax rates based on the province you live in. We will specify the applicable tax during our engagement stage.