B6
T U E S D A Y, N O V E M B E R 2 0 , 2 0 1 8
SECTION
REGINA LEADER-POST
FINANCIAL PLANNING WEEK 2018 Stress test: Are you able to withstand a financial emergency? Survey compares the financial health of Canadians for Financial Planning Week
not be paralyzed by confusion. A Certified Financial Planner® professional can open your mind to what is possible and get you moving in the right direction.”
A national survey commissioned by Financial Planning Standards Council (FPSC) reveals that one-in-three Canadians (33%) would fail the financial stress test – meaning they somewhat or strongly doubt their bank account would withstand a financial emergency (such as a car repair or emergency vet bill).
Below are the highlights of the FPSC Cross-Country Checkup survey including provincial breakdowns:
The FPSC Cross-Country Checkup, a Leger poll of 1,527 Canadians, was conducted in advance of Financial Literacy Month and in particular Canada’s 10th annual Financial Planning Week (November 18-24). The poll takes the pulse of Canadians on a series of financial questions and breaks down responses on a province-by-province comparative. The poll not only compares the provinces on issues such as how prepared people are for financial emergencies, but also examines how likely they are to engage professional financial planning guidance, as well as deterrents to seeking advice, such as embarrassment, lack of trust and portfolio size. “The results of the FPSC survey bring to light some provincial differences regarding the financial habits and intentions of Canadians,” says award-winning author, personal finance educator and FPSC’s Consumer Advocate, Kelley Keehn. “As Financial Planning Week approaches, it’s important to level set your financial situation and
One-in-three Canadians fail the stress test (33%).
One-third of Canadians somewhat or strongly doubt their bank account can withstand a financial emergency. That number rises to 45% in Atlantic Canada and drops to 28% in Alberta. Nearly three-in-10 Canadians are not confident they will achieve their financial life goals (28%).
Those living in the Prairies (Manitoba and Saskatchewan) exceed the national average where almost fourin-10 report a lack of confidence (36%); however, that number drops to less than one-in-four (24%) for those living in Ontario. Nearly two-thirds of Canadians (64%) do not have access to an employer retirement savings matching program.
One-in-four (25%) Canadians take advantage of an employer RRSP savings matching program, but 64% do not have access to such a program. That makes planning for the future even more critical to their long-term financial health. Atlantic Canadians have the least access to employer matching programs, with 71% reporting that this option is not available to them, while Québécois fare much stronger than the national average at 57%.
Getty Images One-third of Canadians doubt their bank account would withstand a financial emergency, such as a car repair or unexpected vet bill. Despite these trends, twothirds of Canadians report that they have not engaged the services of a professional financial planner (65%).
That number is highest in Atlantic Canada (76%) and Quebec (73%), and lowest in Alberta (57%) and British Columbia (58%). There are several reasons that Canadians cite for not seeking out the services of a professional financial planner, with the primary misconception being that they feel their portfolio is too small to engage a planner (50%). Other reasons Canadians have not engaged the services of a professional financial planner include:
• 22% of Canadians without a planner do not know who to trust – that number is highest in Alberta (28%) and lowest in Atlantic Canada (13%). •20% of Canadians without a planner say it is all too confusing and overwhelming – that number is highest in British Columbia (25%) and lowest in Quebec (12%). •19% of Canadians without a planner are embarrassed by their financial situation – that number is highest in Alberta (21%) and lowest in British Columbia (16%). Here are some other standout findings:
•20% of Canadians rarely or
never pay off their credit card balance each month – that number is highest in Atlantic Canada (28%) and lowest in Quebec (17%). •Six-in-10 (62%) rarely or never maximize their RRSP contribution each month based on eligible amounts – that number is highest in Atlantic Canada (67%) and lowest in Ontario (57%). •One-in-three (33%) rarely or never set aside savings at the end of the month, after all expenses have been paid – that number is highest in Atlantic Canada (42%) and lowest in B.C. (30%). Financial Planning Week is an integral part of Financial Literacy Month and part of
an ongoing effort to raise awareness about the value of financial planning with a professional planner. CFP® professionals have the knowledge, skills, experience and accountabilities to help you understand all aspects of your finances and are obligated to put your interests first. FPSC encourages all Canadians, regardless of their financial circumstances, to seek out the services of a professional financial planner. More information and tips on finding a financial planner are at FinancialPlanningforCanadians.ca. To find a professional financial planner in your area, visit FindYourPlanner.ca.
Mortgage interest rates are rising. What should you do? By Elizabeth Ireland
In light of increasing mortgage interest rates, there are strategies that prospective homebuyers or homebuilders should keep in mind. These also apply to current homeowners who are about to renew a mortgage. Saskatoon-based Chantelle Stefaniuk is a Mobile Mortgage Specialist with Conexus Credit Union. She has worked in the financial services industry for 14 years, including three years in her current role. Conexus Credit Union is the largest credit union in Saskatchewan. “The biggest impact we see with increasing interest rates is in the overall mortgage payment amount. In the grand scheme of things, interest rates are still relatively low. It’s worth remembering that in the early 1980s Canadian mortgage interest rates hit a high of 21 per cent,” says Stefaniuk. Stefaniuk encourages her clients to spend time reviewing their household budget, making sure to have a financial cushion in place. With the use of debit and credit cards, it can be an eye-opener to see how much items (such as groceries or entertainment) cost each month. It is usually more than clients expect. Then there is what Stefaniuk refers to as “the million-dollar question.” What advice does she have on the best mortgage option right now, in terms of the length of amortization and fixed versus variable options? “While many of our clients go for a five-year fixed-rate mortgage, it really does depend on individual
ing to something smaller. In all these cases, she recommends the twin strategies of thoroughly reviewing your household budget and getting pre-approved for a mortgage. On the issue of credit scores, Stefaniuk has thoughts on how it can impact the mortgage interest rate that financial institutions offer a client. “It’s definitely important to maintain your credit score. Any missed payments can be an issue and that includes items like speeding tickets, parking tickets and cell phone bills. Always pay your minimum payment on time. Also, be wary of having too many credit checks in a year since that can count against your credit score. People don’t think of it, but something like car shopping with multiple dealerships doing multiple Getty Images credit checks can have an impact.” The most important thing you can do before putting an offer on a home is to be pre-approved for a Finally, is it ever a good idea to mortgage. There is no cost to be pre-approved. switch lenders or to refinance an existing mortgage? goals and what makes the most Canada’s five-year benchmark rate In Canada, mortgage default insur“If it’s a new home, a mortgage ance lets qualified clients purchase or the client’s mortgage interest rate sense at that point in time. Are you renewal or a new mortgage product, a home with a down payment of as plus two per cent, whichever is the potentially moving in a few years or then yes, do your due diligence. For little as five per cent. The insurance higher. The ‘stress test’ applies to is this your forever home? Are you an existing mortgage, do your homeprovides a safety net for federally new mortgage loan agreements and newlyweds who are planning on work to ensure that the switch will regulated banks and credit unions. does not apply when a homeowner growing your family soon? Does the be cost effective. This means that When a client makes a down payis renewing an existing mortgage. company you work for have rumors the administrative costs or penalties ment of 20 per cent (or more) on of layoffs to come? A mortgage for switching lenders will be less Stefaniuk emphasizes that the most the home price, it is considered an specialist can help walk you through than the money saved with the new important thing a client can do uninsured mortgage. these considerations.” mortgage terms. before putting an offer on a home is As of January 2018, the Office of to be pre-approved for a mortgage. “My best advice overall would be to Because a variable-rate mortgage the Superintendent of Financial There is no cost to be pre-approved. trust your mortgage specialist and floats with the overall prime rate, it Institutions (OSFI) introduced new build a good, available team around might be advantageous for making rules on mortgage lending by setting As well as mortgage renewals, you. After all, this is the largest higher payments on the principal. Stefaniuk’s clients include first-time a ‘stress test’ for uninsured mortfinancial commitment of your life.” On the other hand, a fixed-rate mort- gages. The rules now require that homebuyers, clients building a new gage can provide a sense of stability home or an infill, and clients upFind out more at the minimum qualifying rate for an uninsured mortgage is the Bank of when interest rates are rising. grading to a larger home or downsiz- www.conexus.ca/mobilemortgage.
THIS SECTION WAS CREATED BY CONTENT WORKS, POSTMEDIA’S COMMERCIAL CONTENT DIVISION.