It's Your Money  

Virus wreaks money woes

The COVID pandemic has left nearly one third of Canadians in a situation so dire that they feel they will never recover from it  financially.

That is according to a survey released last week by FP Canada, a national professional body that works in the public’s interest and is dedicated to championing better financial wellness.  

The FP Canada survey also found that almost half of Canadians are not in a strong enough financial position to handle the challenges of a full-blown second wave.

While many thought that the millennial generation would be the hardest hit due to high debt loads and grim job opportunities, it turns out that the “sandwich generation” is the one being dealt the harshest blow.

Sandwich generation refers to those in their 40s and 50s who are caring for their aging parents while trying to raise children of their own at the same time. 

Why are Canadians in such rough shape financially?

Certainly, there is an argument that the lockdowns early on were too severe and the damage to the economy has far outweighed the benefits. Though I’m sure anyone who lost someone from the pandemic would disagree…

The real reason the pandemic has caused long-term financial challenges for so many is the lack of a plan to handle this type of thing.

  • One of the most basic elements of a financial plan is to have a proper emergency fund.
  • Another is to keep debt loads under control to keep back from the brink of insolvency.

But most Canadians have been skating along for years spending everything (and often more) than they earn and taking on massive amounts of debt.

It didn’t take a full-blown pandemic for many to get into financial distress, for some all that was needed was one missed paycheque.

The same study also found that those who worked with a financial planner were substantially more likely to report feeling confident about their financial well-being at the onset of COVID (77%) versus those that didn’t use one (51%) – regardless of their net worth.

I’m not stating this to simply say “I told you so” to those that haven’t accessed the advice of a professional financial planner in the past. In fact, the financial advice industry is at least partly to blame due to the confusion that exists in the marketplace.

There are more than100,000 people working in some aspect of the financial advice industry in Canada and less than 20% are certified financial planners (CFPs).

Many (most?) of the others say they offer holistic planning advice, but are really just trying to sell investments.

The other big issue is that the industry has not yet found a way to provide true planning advice to all Canadians, regardless of their net worth.

Less than a third of Canadians have an actual financial plan.

FP Canada is working hard to tackle both issues. For example, they are working with provincial governments for clear job title reform, so consumers know the qualifications of the person they’re dealing with.

Legislation has recently been passed in Ontario and Saskatchewan while Quebec has had rules like this in place for years.

Many consumer interest advocates including myself feel that all Canadians, regardless of their income or net worth, deserve the services of a professional financial planner to increase their odds of financial success.

 We’re looking into new ideas and technology to make this a reality.

But at the end of the day, it is up to Canadian consumers to seek out the services of a professional financial planner and it’s never too late to start.

For those unsure of where to start, feel free to reach out to me for a referral to a qualified planner that I trust. Alternatively, you can search FP Canada’s find a planner tool here.


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About the Author

Brett, designated as a chartered investment manager and certified financial planner, is the regional director (Okanagan) for IG Wealth Management.

In addition to his “day job," Brett was appointed to the board of directors of FP Canada (formerly FPSC) in 2014, named as the board’s vice-chair in 2017 and took over as board chairman in 2019. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FP Canada board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected]

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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