Cash flow and emergency funds are an essential part of financial planning

As a result, RBC advisors and planners are having more conversations with clients about their current and future cash positions to minimize uncertainty, Gray said. Advisors also stress to clients the importance of having an emergency fund “available to meet those short-term needs,” he said.

Jeff Bartja, managing director of Scotia Global Asset Management, has seen a similar trend.

“The pieces that I consider unique this year [of the pandemic] is certainly, with each ongoing month of the pandemic, the impact on emergency funds and savings rates becomes a little deeper for clients,” Bartja said. “A lot of people were able to get by for the first three months with savings,” but two years into the pandemic there continues to be “volatility in income levels.”

Scotia advisors are noticing clients who didn’t have an emergency fund bringing up the concept in meetings because they’ve “definitely seen the benefits of it,” Bartja said, adding that many of those who did have an emergency fund emergency saw him become exhausted during the course. of the pandemic.

Money for the emergency fund can come from “very conservative” or safe investments such as cashable GICs, Gray said. Clients for whom leverage is appropriate might consider obtaining a line of credit.

Clients are also worried about whether they will meet their retirement goals, Bartja observed. He said they ask questions such as “What savings rate do I need to get where I want to be?”

Bartja said 45% of respondents to Scotia Global Asset Management’s January investor sentiment survey said the pandemic had impacted their retirement plans.

“Nearly half of our clients say the pandemic has impacted their retirement plan based on savings rate, cash flow, unforeseen expenses or unforeseen missing income,” he said. . “It’s a large population that then has to reset itself and say, ‘This has impacted my retirement plan. What must I do now ? What savings rate do I need? What long-term plan do I need? »

Other concerns now abound as well. An RBC poll in January found that inflation is one of Canadians’ top three retirement concerns compared to previous years, acting as a “top barrier to saving” for 29% of 2,000 questioned person.

Sam Febbraro, senior vice president of Investment Planning Counsel, agreed that inflation, along with market volatility and health issues, are top of mind for clients. Therefore, financial advisors must consider “all sources of income,” including government benefits, small business, if applicable, and employment income.

In addition to helping clients deal with these challenges, Febbraro noted that IPC advisors are doing much more intergenerational planning work as the Canadian population ages.

He said advisers hear from middle-aged clients who are worried about being able to care for both their children and their parents.

“We’re finding that a number of advisors can provide financial planning by bringing all three generations together,” he said. “They can bring in an accountant, a lawyer, and discuss family requirements for intergenerational planning.”

Febbraro said advisors should approach this planning by setting goals, developing strategies to achieve them, determining how to generate the client’s retirement income, and arranging a family meeting with an advisor to understand needs and goals. of each one.

In the current environment, he said income can come from a mix of dividend-paying stocks, growth stocks and traditional fixed-income securities combined with higher-yielding strategies.