When we think about making investments there are so many products to choose from. Whole life insurance, segregated funds, TFSA’s, RIF’s, mutual funds and more… Financial and Investment advisors representing clients considering investments know that they are entrusting them to help them best gain a positive yield, balance risk and also consider their long term financial well-being.
When the economy is great and times are good people are in the mood to invest. Sometimes though the economy can take a turn for the worse and aside from the fact that your clients may not be in the mood to invest for a while, they may find themselves in other financial trouble.
While the Canadian economy performed well during the last recession it is a known fact that Canadian households are carrying significant debt, in excess of $40k per household, on average. When financial times are tough – someone loses a job, a divorce takes place, etc. - usually unsecured debt is the first thing to be sacrificed – it is easy to stop making payments on these in an effort to meet other financial responsibilities.
This is one reason why it pays for financial advisors and financial planners to have a strong relationship with companies who are equipped to guide their clients through tough financial times. Most people don’t know that many investments are actually protected through a consumer proposal or bankruptcy. Consumer proposals are an excellent way to gain legal protection for a client who is having a serious financial problem and help them retain their assets, such as their home, vehicle and some investments including RRSPs.
The challenge is that some financial and investment advisors send their clients directly to bankruptcy trustees in these circumstance which can be a huge mistake. Trustees have an obligation to protect the interest of your clients’ creditors. In the case of consumer proposals the fee is earned based on the amount of the consumer proposal. The more that they secure for your clients’ creditors, the better.
When you work with a debt consultant, the debt consultant represents your client. This means that the client receives a safe review of their income and assets and can have things structured before seeing the trustee to sign on the dotted line. This enables your clients to have areas of concern identified and addressed before these issues can impact their ability to get protection.
We all want to ensure the best for our clients so just referring your client to any debt counsellor to help is not necessarily the right answer either. Like your industry, there are good advisors and bad ones. It is prudent to interview and forge a relationship with a debt consultant that you can trust to refer your clients to.
For more information about how you can better protect your clients’ portfolios please contact Michael Goldenberg, president of DebtCare at 416-907-2582 or visit www.debtcare.ca.