The world of investment can be a tricky place. With the shifting political and economic environment these days, we posed several questions to Rodney McPherson, a Financial Planner with TD Wealth Financial Planning. Having worked in the industry since 1996 and holding Certified Financial Planner (CFP) and Canadian Investment Manager (CIM) designations, his input makes it a little easier for us to put our money where it is most valuable.

GC: Why do you think an individual or couples should have a financial plan?

RM: Anyone can benefit from having a financial plan. A financial plan is tailored to your own financial needs and identifies shortfalls, presents solutions and helps monitor your financial success. It is a financial roadmap that will help keep you on track to meeting your financial goals.

GC: How can one become more financially savvy?

RM: There are many online tools and resources available that can help teach you more about personal finance and investing. Staying informed with financial news is a great way to get supplementary information. At the end of the day, speaking with an advisor can help you become more financially savvy and ultimately help you take control of your financial future.

GC: What is the first thing couples should consider when combining their savings?

RM: Couples should consider using a domestic contract when combining savings to determine how assets are to be distributed on divorce or death, exclude certain assets such as a business, or determine support requirements.

GC: What should one look for when considering a Financial Advisor?

RM: You need to consider whether there is a fit during the initial meeting. You need to get to know the advisor and they need to get to know you. Ultimately, you need to feel comfortable with the individual. Other questions include: What are your credentials and designations? Will you share your commission formula with me? Do you work on a fee for service basis? Do you get paid based on the number of trades made in my account? Are you an independent advisor or do you sell investments from specific firms only? Will you prepare a written financial plan and update it annually?

GC: A financial plan may fit your current situation and create a path towards your goal, but what if your current situation changes?

RM: A financial plan is a snapshot in time of an individual’s financial circumstances. When a life event occurs, this presents the need to have the financial plan updated and revised. Therefore, a financial plan is not ‘locked in’ like a mortgage and should be revised from time to time. Most individuals will need to update their financial plans every three years, or when there is a significant life change.

GC: What should same sex couples consider when investing? How do they protect their partner and ensure that their partner, either common law or married, is the beneficiary?

RM: There are no different rules for same sex couples verses heterosexual couples when investing. What is important is that their risk tolerance and investment objectives match the investment solutions. This is personal in nature and will differ from individual to individual. To protect their partner, beneficiary designations and joint registration should be considered.

Consider joint registration of assets such as bank accounts, principal residence, and cars "with right of survivorship"*. This enables the surviving partner to assume immediate ownership in the event of the death of the other partner. By excluding these assets from the deceased’s estate, probate may also be avoided. Naming your partner as the beneficiary of your pension and registered plans* aids in a smooth, tax efficient transition of assets, as funds can be rolled over to the surviving partner on a tax-free basis and may avoid probate.

[*Not applicable in Quebec]

GC: When considering a Retirement Plan with your partner, what are some of the do’s and don’ts?

RM: Develop a financial plan together to reflect your new family situation: update net worth, cash flow and investment plans, explore ways to minimize your taxes and review your retirement and other long term goals. Make sure your Wills are prepared or updated, since marriage commonly invalidates a Will made prior to marriage (unless it was made in contemplation of marriage).

GC: If in a partnership, not legally married, what should our readers know about family and estate laws?

RM: In certain provinces, there are still significant differences between the treatment of legally married couples and common-law couples, in respect of property rights, the matrimonial home, support obligations and intestate succession (dying without a valid Will). The very definition of "common-law" varies across the country and may range from two-to-three years of cohabitation depending on the province (or less if the couple are parents of a child).

GC: What is something every QLGBT person should know about financial planning? A rule of thumb, so to speak....

RM: In brief, there are no significant financial planning differences for same sex couples versus heterosexual couples. There are more differences related to whether you are married or common law than your sexual orientation. However, one estate planning consideration that sometimes arises is family members may be unwilling to accept the partner as a beneficiary; and family members who are excluded from a Will that favours a partner may challenge the validity of the Will. This makes it particularly important for the solicitor attending to the execution of the Will of same-sex partners to establish testamentary capacity, the absence of suspicious circumstances, and undue influence.