Advisor’s Edge puts business in focus

(December 29, 2003) When it comes to planning, one might assume financial advisors are ahead of the curve, since financial planning is a big part of what they do for their clients. But when it comes to their own businesses, advisors might not be exercising the same foresight they offer clients — and that’s the cover story of the January 2004 issue of Advisor’s Edge magazine.

“Our research shows that most advisors do not have a business plan,” says Deanne Gage, managing editor of Advisor’s Edge. “They do not consider their practice to be a business like a manufacturing business. The bottom line is that they still need a business plan — how else are they going to achieve their goals?”

Not only does the article explain the importance of having a business plan in place, but it offers help in drawing one up.

“There’s a step-by-step guide which walks an advisor through the process,” Gage points out. “You can read this article and then go and draft your business plan.”

Also included in the January issue is part three of the four part RRSP Survival Guide. This month the guide tackles portfolio construction.

“Now that the markets are on the upswing, there’s a tendency for people to want to be in what’s hot now,” says Gage. “What’s important is having a well constructed portfolio — making sure the right elements are in a client’s portfolio.”

The cover story for the guide looks at the lessons learned from the mistakes made by both clients and advisors during the bear market. The article discusses applying a consistent scientific methodology to build the portfolio, offering advice on finding quantitative data on investment products and crunching the numbers for your client.

The article also reminds the reader of the importance of reviewing the portfolio from time to time to ensure it is still properly balanced in light of a client’s changing goals and circumstances.

The RRSP Survival Guide also includes an article by tax expert Jamie Golombek, who looks at how post-secondary students can pass their tax breaks on to their higher-income earning parents.

And finally the guide includes a look at Tax Pre-paid Savings Plans (TPSPs). These plans are seen as a potential “rival” for RRSPs and may be particularly well suited to lower- and middle-income households. TPSPs allow investments to grow within a tax-deferred environment, but unlike RRSPs, contributions are not tax-deductible.

“They’re more of a concept at this point that the federal government is looking at, so we had Richard Shillington take a look at some of the features that should be in a TPSP,” says Gage.

In the article, Shillington offers his “wish list” of how these investment vehicles would work, if the government is to press ahead with them.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com