The Wealthy Barber Podcast - #61 — Andrea Thompson: The Growth of Advice-Only Planning & Cross-Border Tips

Episode Date: June 16, 2026

Our guest this episode is Andrea Thompson — Founder and lead financial planner of Modern Cents, a virtual, advice-only firm she launched in 2022 after more than 16 years in the financial industry. A CFP who also writes and marks the national CFP exam for FP Canada, Andrea built her practice to serve Canadians who have cash flow instead of assets, making quality financial advice accessible to younger people and those below traditional asset minimums. In this episode, Dave and Andrea dive into the rise of advice-only financial planning in Canada. They explore why she walked away from the traditional model to build Modern Cents, the factors fueling the model's growth, how advice-only planners find clients and where the pricing sweet spot lands. They also break down one of the model's biggest hurdles, the implementation gap between receiving a plan and actually executing it, along with the question of whether financial planners and investment advisors should stay in their respective lanes. The conversation also explores Andrea's specialty in cross-border financial planning, including the common mistakes Canadian residents make with their US 401(k) accounts. They discuss the overlooked psychological and financial value of annuities and why so many people resist them, how young adults should balance saving for a down payment against retirement, and the case for term insurance over permanent cash value policies.  Whether you're curious about the advice-only model, weighing the value of professional financial advice or navigating the complexities of cross-border planning, this episode is full of practical takeaways you can put to use right away.    Show Notes (00:00) Intro & Disclaimer (00:55) Intro to Andrea Thompson (02:43) Why Andrea Started Her Advice-Only Firm (06:43) Factors Fueling the Growth of Advice-Only Planning in Canada (07:55) Lead Generation for Advice-Only Planners (09:25) How CFP Education Has Improved Over the Years (11:55) Community and Collaboration Within Canada's Financial Planning Industry (13:55) Overcoming the Implementation Challenge in Advice-Only Financial Planning (21:23) Navigating Investment Execution for Advice-Only Clients (23:47) Should Investment Advisors and Financial Planners Stay in Their Respective Lanes? (28:03) Should You DIY Your Retirement Plan? (29:52) What's the Pricing Sweet Spot for Advice-Only Planners? (32:27) Cross-Border Financial Planning Challenges (35:35) Common Mistakes with US 401(k) Accounts for Canadian Residents (36:53) The Psychological and Financial Value of Annuities (40:41) Why Don't People Like Annuities? (43:34) Balancing Down Payments and Retirement Savings for Young Adults (47:43) Childhood Money Lessons from an Actuary Father (48:29) Term Insurance vs. Permanent Cash Value Insurance (50:07) The Critical Importance of Disability Insurance (51:29) Conclusion

Hey, it's Dave Chilton, the wealthy barber and former Dragon on Dragon Stent. Welcome to the Wealthy Barber podcast. Well, we'll be hosting some of the top minds in the world of personal finance. Yes, that's to balance me out. The podcast is about making this subject not just easy to understand, but dare I say, even fun, honest. Whether you're trying to fund your retirement, figure out how to build a down payment, save for your kids' education, manage debts, whatever, will be here to help you.

You do it. Before we jump in, a quick but important note, nothing we discuss here should be taken as investment advice. We don't know you and your personal financial situation. So we're not here to tell you we're specifically to put your investment dollars. We're here to educate, get you thinking, and we hold entertained. But please do your own research and or consult with your financial advisor before taking any action. Hey, it's Dave Chilson, the Wealthy Barber with the Wealthy Barber podcast. The momentum has continued. We are thrilled with the number of listeners. getting every week. Thank you so much. And also the questions you're sending in have been very helpful. We pay a lot of attention to those. In fact, you've noticed we've addressed a lot of those

subjects if you sent them in through the experts we've been able to get on to the show. So it's really, really helpful that you reach out and say, I still don't understand this or you haven't covered this topic yet. We do try to get at it. Today's guest I'm very excited by we did something a little different. We reached out to a lot of the top experts in the industry, people we'd already had on the show and said, hey, if you were us, who would you get on? And this guest's name came up two or three times, which is a great sign that she's beyond competent. She commands a lot of respect in the industry. It's Andrea Thompson.

We have not met. You and I don't know each other. This is our first interaction. So you're coming here because, again, you're so highly respected with the industry. So welcome. Thank you so much. It's really a pleasure to be here today. And you run a company called Modern Sense and the Sense is C-E-N-T-S.

That's right. And every time I recall my own podcast, it gets it wrong. It writes at S-E-N-S-E. So yes, EMPS. That's why we use Aiden here and not AI. He's very, very, very good. So, and you have an advice-only financial planning firm. We'll talk a lot more about that in a moment.

You focus on a lot of younger people, often professionals, who have excellent cash flow, but not enough in assets yet, to command the attention of the AUM firms. You also are an expert in cross-border issues, and we were talking off-air about how many Canadians are finding themselves having to deal with cross-border tax issues nowadays compared to 20 and 30 years ago. So it's a very interesting practice. It's virtual.

I think you have four staff members. They're all CFPs, if I'm not mistaken. Yep, there's four CFPs on staff. That's right. Now, what made you leave the typical model? You were in the AUM model. You were with Raymond James, I believe, for quite some time, 15 to 17 years. What made you decide to go out and start something on your own?

Well, that's a loaded question. So I'll take you back in time a little bit. I call myself a career financial planner. I've dilly-dallied in this and that across all the different disciplines from estate and insurance planning to being a corporate financial planner to working in the AUM model, as you said. And about, I don't, 2010 or so, I was really interested in getting away from the sales-focused mentality that I found myself in the industry. I really didn't like the feeling of having to sell products and make money. And that was what I was. being pushed towards doing. And it just didn't really resonate with me. I felt really uncomfortable.

It really struck a note in me that the corporation that I was working for at the time, which, by the way, wasn't Raymond James, wanted me to push whole life, universal life products onto the clients of the advisors of that firm because it made the advisors more money. And I was doing needs-based insurance, which I really strongly believe in still to this day. So that didn't align, and I became really disillusioned with that sales mentality. And I looked into what was called fee-for-service planning at that time. Now, advice only is this new term we use. And nobody was really doing it.

I tried to find other professionals in 2011 doing it, and I found one lady. I'll never forget. She was running her fee-for-service practice, but she said, you need to have a tax practice at the same time in order to make any money doing this. Nobody's going to hire you. And I thought, I don't want to run a tax practice.

No, thank you. So instead, I went to become senior financial planner for Raymond James in the corporate side, not working for any direct manager, but working with the asset managers and their clients to develop comprehensive financial plans. And I kind of went down that road and then transitioned to an AUN-based practice two years later when the advisory ran that practice was really planning focused. And I was very interested in working more directly with clients and doing financial plans. And that was a great experience.

And I have to give credit where this advisors do because I really learned a lot from him and his team. And they focused on cross-border financial planning, which is where I got that background. Got hooked. I got into it. And you know what? It's intellectually stimulating. I really joke. I get bored easily.

So when I was entering the world of cross-border, it was a whole new world. And that was intimidating, but very interesting. And I got to do a lot of education around that. But over the years, what, you know, was still resonating in the back of my mind was this fee for service idea. And it just never seemed to be the right time to do it. At the same time, we were going through COVID, I was having a lot of conversations with people who were transitioning from the U.S. to Canada at that time. Now, these potential clients were saying that they wanted financial planning assistance with that transition. How do what do I do? I'm going

from here to there. How do I move my money? What do I need to do with this account? What do I need to do with that account, et cetera? But we couldn't help them with. without a million dollars. And you know what? Sometimes they didn't have it or they were not interested in an AUM based approach. They actually just wanted the advice. And it just kept coming up over and over again. So in the middle of COVID, I made a bit of a mental leap and said, you know what, there is no better time to do it. It's this probably very cliche to say that COVID gave me the space and the time to really think about it. But it did. And I ran a book called lean out. And that book really inspired me to take the leap of faith to developing something for

myself. So in, I believe, 2021, I made that decision and it took me a long time to do some research, but eventually came to the conclusion that it was the right move for me. So I left the practice at the end of 2021. And here I am today. You know, you mentioned a woman back in 2011 saying to you that nobody's going to be willing to pay you for this. She wasn't far off back then. I mean, this was a very tough business to build because most Canadians, even if they knew it was available and most didn't, were hesitant to write that check for $2,000, $5,000, $7,000. What's changed in the last five years where we've suddenly seen the advice-only business start to flourish in Canada?

I really think that technology has changed the game drastically. In the middle of COVID, people started meeting virtually. We started to do this all the time. It became very standard commonplace to have meetings online versus the traditional. We're going to go sit in an advisor's office and have teams. and talk for two and a half hours. So as I think people got more comfortable with being online in an online presence, they became more comfortable of different ways of doing business, period.

And that's when that advice only or fee for service planning really took off more industry-wide, even though it's a very tiny small industry. Still, yes. Still, it really started to grow wings at that point because we were finally able to operate as independence, operate from wherever we wanted to be, no matter where you were across Canada, and have clients who are more comfortably using technology in a way that felt more natural to them. How do you get your clients?

I don't mean you specifically, but the industry. I mean, obviously a word of mouth can play a role, but not a huge role in that a lot of times your friends aren't in the same financial situation you are. It wouldn't necessarily, for example, in the cross-border counseling, do you develop relationships with people who can refer to you, like accountants, etc.?

There's so many ways that people find us now, not just our team, but also any advice-only planners. We have a great directory, advice-only planners.ca, which you might be familiar with. And we get a lot of prospective clients from that website. That is actually run by FPAC or the Financial Planning Association of Canada. So they're quite closely linked together. People naturally just still Google us. I mean, we have a lot of people who find us just by asking either AI or, you know, standard

Googling for advice or fee-for-service financial planners. And that's a great source of leads for us as well. but I would say that word of mouth and the relationships that we've built over the years. I mean, I've been in this industry a long time now over 25 years. So I do have a lot of connections. And I've talked to a lot of great people since I started my practice as well. I never said no to a meeting in the beginning, right? Wanting to make sure that I talked to everybody and everyone understood what it was that I was trying to do.

That was a little bit different. You know, lots of referrals from, you know, advisors. Actually, a lot of other advice-only planners will also refer to us for the cross-border specialization and former clients, existing clients, that sort of thing. No, that all makes a lot of sense. Now, before we go into financial planning and some of your thoughts there, you also mark the CFP exams. That came up in a little of our research, and I was intrigued by that.

What are you seeing out there? What is the strength of the course, and is there a weakness of the course in your mind still? And what about the graduating students? Is there an area that they're excelling in, but some areas that they almost constantly struggle in? It's hard to know the latter. What I can say is I've been an exam marker, I've been an exam writer, and right now I'm actually marking assignments for prospective CFPs who are going to write the exam, but they're going through the courses before that. Right. So it's so different than when I took my CFP and I won't say how long ago that was at this point, because it was a while ago. And I think that the education program has improved greatly since I did it, you know, decades ago now. There's such more robust content. And, an ability for those students to really have hands-on experience with real case studies and understanding

of the material and feedback from planners like myself who are going through the assignments and giving them those tidbits like, you did really wonderfully on constructing your argument around this. Something you might want to consider is that. I never had that when I was for sure. That program. It's huge. It's huge. I mean, that feedback alone. One of my planners also works with QAFP students, which is the qualified associate financial planning program. And she actually does discovery calls with them one-on-one to train them on how to do that particular. Yeah, that's invaluable. I mean, what an improvement over 20 and 30 years ago.

Remember, we used to get courses like this in a box and you opened it up. Do you remember that? That's what I, we used to say, the Canadian Securities course, it would come through in a box, and you would open it up and your textbook would be in there and you'd take it and there was no interaction. And I remember we had a no assignments version available. So if you didn't want to take the assignments, you could just drive down and write the final, but you had to get 70% to pass instead of 60.

But I think now looking back, the assignments, of course, are so helpful because they are interacting with professionals, experience people like you, learning from the tidbits, learning from the tips. That's such an important part of the growth process. Yeah, it really is. And it does actually create a lot of possibilities as well for them to understand what real financial planning looks like out in the world. I've had some opportunities to speak to something. of those students through the Financial Planning Association of Canada as they're going through

their courses. So there's a lot more connectivity, I would say, between students and practicing financial planners that there ever was. And even between practicing financial planners and practicing financial planners, it's amazing, especially in the advice-only end of things, how often you guys are going back and forth and getting together and sharing ideas on the open platforms like Twitter, et cetera. I think that has really helped raise the bar. And people are recognizing, hey, you better be pretty smart at all this. And on top of it, if you really want to be out there helping people, it's been an all positive development.

Do you not agree the industry has come light years in the last 10 years? I can't even believe it. And I think also being outside of the brokerage model, when you're inside of a particular company, sometimes it's a little bit of a black box, right? Sure. But once you get out on your own, it sort of opened up the world a little bit.

And I have to give so much credit to FPAP and Julia Chung, Jason Pereira, you know, who have created this space for financial planners to really connect and professionalize the industry, which is what they really want to work on doing and professionalize the career of financial planning and promoted as a wonderful option for students coming up as well. As a new advice-only planner,

I couldn't have survived without it, honestly. I mean, it was an invaluable resource for me at that time, and it still is. But if you're launching something new and you're on your own, having that community around you is essential. Yeah, you said all that very well. And we've had Julia and Jason on the show and they're so knowledgeable. They're really smart. They're great communicators. But honestly, that's not what impresses me most about them. They are so caring to help other people in the industry, including direct competitors. People who compete with them, they don't care. They'll answer all your questions. They'll return your calls. They've really led the charge here again to use that expression raising the bar. They've been such a huge part of that. And there are others too. I mean, we're single. them out, but there's a group of 10, 15 people who really are slowly changing the face of

financial advice giving in Canada for the better. And the clients are all going to win over the next 10, 20 in years. So that's all good. All right. Now, with the advice only model, obviously there's always one area of great skepticism. Will these plans get implemented? So somebody comes in, they get this marvelous, well-rounded advice. It's unbiased, but they've got to walk out the door and they've got to do something with that plan. They've got to put it into action. And in the old days, that didn't happen. A lot of times you'd see people fall down. It would get dust on it, sitting in a drawer. What's changing? How are we helping people to implement? I love that you ask this question because I'm really passionate about this. Something that I've seen as a financial planner

going back and looking through the archives of the way that I used to do planning was exactly what you're talking about. It's the dust covered plans. It's how is anyone going to implement it. And the problem is all behavioral. And you had Dr. Crosby on recently and we're talking about that with him. behavior is everything. And if you give someone a giant report with a lot of tasks to do, they're never going to do it. At least nine out of ten people aren't going to do it. That's overwhelming. They're already trying to take in so much information in one session. How are they ever going to be successful at implementation? All on their own. It doesn't work. It just flat out doesn't work. So when I started my practice, my goal was not to just replicate that

model. My goal was to change that model and develop working relationships with clients. So I don't believe in a one-end-dine plan. I don't produce a five, this in quotations, and he said he was listening. I don't produce a financial plan. I don't like them. I actually work through in more of a what I call modular fashion with clients. So I break down financial planning into six different subjects, sometimes seven if there's a corporation, for example. And we work on one subject at a time. And the goal is threefold. The first is education. If the client doesn't understand, and again, they don't be PhDs, but if they don't fundamentally understand the basics of each of those particular subjects, then they don't necessarily feel comfortable accepting the recommendations that

we're making. I agree with that. Totally. Or sticking with it. Exactly. So education is number one. When they are educated, then they are empowered to make the decisions for themselves. I'm not here to tell you what to do. I'm here to give you the tools, the resources, and the recommendations to be able to then make the decisions that are most appropriate for your family. So when we go through a module, it limits the scope of work for the clients into, I say, bite size or digestible pieces. So instead of coming out of a meeting with your brain exploding because you've taken in all of this information and you're trying to remember what someone said to you and then trying to remember what you're supposed to do, coming back to it in the future and forgetting most of it,

I tried to do this sequentially over the course of a year with someone. So we work on cash flow and debt management first and foremost almost every single time with a client. So we're going to break that down. That's where it all starts. A hundred percent. And you can't do anything else without that. You know, I'm so happy to hear you say that. And to be honest, that's been a weakness of a lot of the financial planners across North America.

As they go straight to the investment aspects of it and everything else. But it really starts to your point with cash flow management. That's step A. Yeah, absolutely. And so when I became an advice only planner, I realized that was a huge gap in what I was doing. So I went out and got a designation called Certify Cash Flow Specialist because I really wanted to focus on my weakness at the time. Did you just make that designation up? That sounded like you just made that up. No, no, no, go look it up. Go look it up. It's run by a woman named Stephanie Holmes. I'm kidding. Anyway, so several of my planners also have this designation because we strongly believe in cash flow as the foundation of financial planning. And so we really start with that. At the end of each meeting, we give a client a short list of tasks.

But we don't send them out on their own to do it. We have a client portal. We assign them tasks like homework. We give them two or three tasks that they have to complete. Sometimes we have deadlines. Sometimes we don't. We follow up with them on those tasks, which is an automated practice between meetings. And then we go to the next meeting and we talk about what was done, what was the roadblocks,

what support do they need assistance with? And sometimes it's coordination with external. professionals, sometimes it's not. Often it's upload a document to your portal. Not that hard. Sometimes it's go think about this, you know, have a conversation with your spouse. So it's the active work on the planning rather than here's a plan, here's your things to do. And that active work leads to more planning success. And when the client feels that they've seen these little baby steps of success, it gives them the confidence to say, hey, I can do this. You know, this isn't that bad. I can work on the next one or I can do the next thing. And once we've gone through, let's say, the first module and we've

started to work on the task, then that we'll move on to the second one and so on and so forth through the course of the year. And often it'll take someone longer than a year to get through all the modules because the work takes time. People are busy. We're not always prioritizing doing financial planning every single day. So we give the people the space and the time to work through their tasks. And then we continue our work as we go. Well, you've listened to the podcast. You know what a fan I am of spending summaries and of people chronicing all their expenses. And in essence, that's what you're helping them to do here is learn from their own current habits, their own current spending and start making moves and adjustments from there. Now, you mentioned that designation.

And I was kidding when I said it was made up. I think that started in Canada, did it not? Am I wrong about that? It is a Canadian designation. Yeah. She was from out in eastern Canada, I think. If I'm not mistaken, that she came up with that. And I'm a big believer in it.

So I should not have made that joke. I wish I hadn't made that joke because I'm actually a huge believer in that. everything you're describing is what I believe it, which is you have to start with the basics around the cash flow. And you said something interesting there. If you can get people engaged in that aspect, it leads to more success in the planning around the other parts. They're fully involved. They kind of getting the bigger picture around cash flow and that bleeds positively into all the other areas. I'm totally supportive of that. And I've seen the evidence of that many times. Yeah, it's something that you can't underrate the importance of. We use, I don't know if you've

heard of Monarch Money. It's an app. It came from the U.S. It's been up here for about, I want to say, two and a half years. And the awareness of cash flow that you can get from using a tool similar to that, or you've probably heard of another one called Wynab, just any sort of tool that allows you to have an ongoing track of your money and what's happening, not to necessarily budget. Budgeting is a different skill set. It's really just the awareness of where your money is going. And having that awareness actually empowers you to make different decisions. or make more confident decisions with respect to how you're going to spend going forward. So part of what we do is that coaching element is that people can better understand their own cash flow

and then what they can do with that information to then empower them to make other decisions down the road. Well, you sound exactly like me. So how can I disagree? I mean, I said all that verbatim almost. And, you know, Aidan, whom you met off camera, he is a big user of Monarch and again, track it all. But you know what's interesting is most people won't do this. they'll say, Dave, I'm not going down that path. But I actually find having people write it down, which is 10 times more of a hassle,

is even more impactful. They tend to internalize it better, get a better feel for it. They're not just entering it into Monarch or they're not just having it drawn from bank accounts and credit card statements, et cetera. But again, realistically, most people aren't going to go down that path. Now, once you've done that and you've helped them to see, okay, this is where you are, this is where you need to go, et cetera, how do you help them when you're an advice-only plan actually execute on the investment front when you can't directly get involved in that.

Do you refer them off to other people? What's your approach? Every client that comes to me already has some sort of established way in which they have approached their investment planning, which we talk about in our discovery calls. Either they're already a DIY investor, they're already a robo-advisor client, or they have an established financial advisor. Then sometimes you have clients who just have group pension plans and they don't have any advisor. So they fall into one of those buckets. I put maybe, let's say, a bank advisor in the same realm

as a financial advisor here, someone at a bank branch. So it's talking through with the client. Does their ability and desire to manage money align with how they're currently operating? And what are the red flags or potential opportunities that exist that they are maybe not taking advantage of in their current setup? And I don't mean that I'm looking for opportunities to say, this manager is bad, he's picking a bunch of bad stocks, go over here. I'm looking for opportunities like, where are we having maybe duplication of investment strategies if you have two different portfolio managers?

Where are the highest fee items that I see? Maybe you've got some high-price mutual funds that you've had for 20 years that you're just not aware of that are possibly causing a drag in your overall investment returns of your portfolio. So that's part of it. The other part is always going back to education. Do people even understand? what their advisor is for or who they've hired and what they're doing and what their value proposition

is because one of the biggest disconnects that I see coming from where I am is that people do not understand the role of a financial advisor who manages money. They don't understand it. They think that for the most case, advisors are there to beat the market, to get outsized returns, and that's their role. And I can't tell you how much coaching I've had to do with clients to tell them the true rule of a financial advisor, which, number one, is to protect them from making bad decisions from an emotional place, from themselves, and number two, to manage their risk appropriately. So, you know, I think often that education leads to decision making that perhaps that individual wouldn't have come to on their own.

Are you seeing with the trends in the industry, the kinds of things you're talking about, that a lot of the investment advisors, I'm going to use that expression as that a financial advisor, are going to be forced to do a more well-rounded job in terms of the things. of helping clients. They're not going to be able to just focus on the investment dollars, but now they're going to have to start providing financial planning advice, retirement income advice, insurance needs analysis, estate planning advice, etc. Because again, the bar is being raised and people are listening to this podcast. They're listening to people like you and saying, hey, I want a more all-encompassing approach taken. I don't want to just have somebody trying to beat

the market. And by the way, normally fail at it. You could say that or you could go the opposite way. So I can see it from your stance, but I can also see it from this stance. If you're an investment advisor and you really like just managing money, just do that really well. You know, stay in a way, stay with what you're really good at and what you know. Don't try to do all the things that you don't need or that you don't know how to do. Because often what happens is when advisors over promise, oh yeah, of course we can do that. Look, it's on our website. And I see a lot of cookie cutter websites where people say they do all these things and they don't.

because they refer them to an internal department where somebody who doesn't know the client puts together the type of plan we were talking about earlier gives it to them and says, here you go. I've seen them all the time. So I would encourage advisors stay in your lane in a way. And I don't mean that in a negative way. I mean, if you really just enjoy investment management, just do that and market that really well. And don't try to be everything and maybe partner with an advice only planner if that's what you want to do. But don't try to do the things that are perhaps outsomely.

side of your acumen, just like any practitioner, I'm not going to try to develop an investment portfolio for someone because that's not what I do. But I think it puts the investment advisor in a tough spot and that if you're charging, let's say, 100 basis points or you've got embedded fees and whatever products you're using, the public has started to realize that overcoming those fees on the performance front is darn near impossible. Not impossible, but very close to it. 90 odd percent of funds won't, of money managers won't. And therefore, they're leaning more and more towards index funds, what they want when they pay that 100 basis points, 125 basis points, is they want that all-encompassing advice. So your point is fair that they should maybe stay in their lane,

but that's a tough lane to stay in with a more educated public, becoming more and more skeptical that you're going to indeed be able to outperform the broad market averages. Of course. And I think that's not akin to all advisors, first I would say. I used to work on a team and I was the planner on the team. So there's definitely great financial advisory teams out there who do have that capability for that overall AUM fee on their team. I'm more referring to the advisor who just doesn't have the desire to understand or learn financial planning as a discipline because it is a separate career and a separate discipline in a way. So for those individuals, I think you have to recognize, you know, if what you're going to be providing is that the same fee tier as a financial

advisory team that's also doing planning, maybe you need to revisit your fee tiers and then market, this is, you know, investment management only, this is what you're getting. and maybe it's a more reasonable cost for the client who doesn't want to pay one and a half and who's happy just looking for investment advisory management. So you can go either way. I think there's space for both in the industry. But I do think that there is room for people to just be what they are and just do that really well. You mentioned a model where the fee-only planner comes in, the advice-only planner does the financial planning,

and they charge the flat fee. And then you also have somebody using the AUM model for the assets under management, but a lower fee because it's already been paid for the financial planning advice. You're seeing that model pick up more momentum U.S. side. Are you seeing much of that in Canada? Not as much in my practice. I have heard of other advice only planners who have, I don't want to say partnered because that's the wrong effect, who do have trusted investment advisor partnerships

in a way. But I don't see it as much because I think the type of client who often comes to my doorstep is a do-it-yourself investor. So they're really not interested in Portfoling. portfolio management. With the caveat that on the cross-border side, which I know we'll talk to, often they do require the appropriately licensed financial advisor to manage their assets. No, that's well said. We'll get to the cross-border stuff in a moment. Back to the DIYers, the one thing I say to them, a lot of them listen to our podcast is don't do your retirement

income planning on your own. Get some advice. You need the software involved. You need people who've seen the mistakes that Knoftomi made that know how to do the different tricks of the trade, Do you agree with that? I do, because here's the thing. You know, software is becoming a tool that's actually pretty readily available to a lot of Canadians if you want to do it yourself. True. There's actually a platform that you probably heard of called advice. I'll give a shout out to my friend Owen who runs its platform.

You can go on and for a very reasonable monthly cost, you can run your own retirement planning and you can access an advisor, you know, by clicking a button, I believe, to be able to have a conversation about it. So I think we have to realize that technology is going to get there. The piece that's missing, though, is the experience and advice component of the financial planning that goes behind it. You know, people running their own numbers, that's going to become easier. But it's not going to have the financial planning overlay, the behavioral coaching. They're not maybe going to have the strategies built in to, say, do an RSP meltdown early or to understand the tax implications of doing A or B or should they defer CPP or OAS, yes or no. How does that affect other things? So I think having that experience lens is the part that people are missing.

And I have DIY investors who come to me and they've already done their own preliminary financial planning on their own. But they're still hiring me because they do want a vetted professional to actually get checks and balances. Because at the end of the day, are we really trusting the tools that are out there to make very super important decisions for our future? I don't think we're there yet. Hopefully the human will always have a place in this equation, but we're definitely not. there today. No, I agree. All right, I'm jumping all over the place, but I wanted to get to this one. You know, years ago, it may still be true now. A lot of the people in the advice only industry didn't charge enough. And the reason I say that, because most of my listeners say,

Dave, what are you trying to do? Get us to have to pay more money? I am in a way because they didn't charge enough and then they didn't last in the business. And so what I thought could have been a very helpful part of our business, more and more advice only. Many of the people faded away because they couldn't make enough. And I would see what they were charging us. It's crazy. There's no way you're going to make a living, but also the value proposition is too good for the customer in that particular case. What have you seen on that front? And do you think that in general charges are where they need to be now a little bit more? Yeah, that's definitely been an interesting conversation topic between advice and lay planners, especially at FPAC,

is where is the right sweet spot for ensuring that we can earn a living still, an appropriate living? We're not talking about any sort of dollars that are close to what I would say the traditional advisory relationship may make. an advisor, but to be fair and to compensate us fairly for what we do. So that's an ongoing discussion. What I would say is because of the connection of advice only planners that we do have an F-PAC, we have the more senior experience advice-only planners mentoring the ones who are coming in more so and trying to get them to understand and have the confidence to price themselves appropriately because at the end of the day, your experience, your professionalism, your credentials and certifications are why someone is hiring you. And we often,

lack the confidence when we start a practice to say that we're worth it. I definitely went through that myself. I mean, I remember when I started. I'm embarrassed to even say what my starting price was for a comprehensive financial planning relationship. I'm not even going to say it now because it's absurd. But a few of my mentors in this profession, especially, I'll give a shout-up to Julia again and also Sandy Martin said to me, and we're very helpful in the start of the practice to say, you have to charge what you're worth. And your experience of being a 20-year financial planner now is worth something and you have to price appropriately. So I do think that we are getting there, absolutely, but you're still going to find a range. And I think you have to be aware of what that

says about perhaps where we need to go still in this particular profession. We do need to come a little bit more closely together. I think there is still quite a range of fees that you'll see out there. Some of them are still way too low. Now, all of our listeners should know that as a special favor to our audience. Andrea is going back to her original charges for anybody who contacts her. What an incredibly generous woman, an amazing offer. No, I'm kidding. She's not really doing that. Okay, let's go on to the cross-border issues. I mentioned to you off air when I was helping people, I was horrible at that. It's for whatever an area that didn't capture me, always surprised me it didn't, because it's a kind of thing I normally like, you know, the complexities and the nuances

of it all. I love math, like all of it, but I never really threw myself into it. But it is important stuff. I mean, it's an area fraught with mistakes. And again, the nuances of it are very significant. Talk us through why you focus there, the value proposition. Are you dealing primarily with Canadians still? Or are you dealing with many Americans who are moving up to Canada and having to deal with what do I do with my 401K or both sides? Both sides. I mean, I work with Canadian residents only. So if you're on the U.S. side of the border, I'm really sorry. I can't help you till you move here. But I'm working mostly with U.S. citizens who are living in Canada or Canadians who have perhaps worked in the United States before accrued a bunch of pensions and assets in the United States and then

move back to Canada. Don't really have managed that aspect of their wealth with their Canadian well. And when I worked for the investment management team I was referring to before, I was licensed to actually provide securities advice on both sides of the border. I did learn a lot in that process of what are the intricacies involved on the investment side when it comes to not just holding and maintaining the assets and investing the assets, but taking the assets out or moving the assets across. You know, really that complex administrative angle. And also, what I would say is for a lot of people who are looking at the cross-border angle, we often think of snowbirds and, you know, people leaving the U.S. or we think of people living in the U.S.

I mean, cross-border is a massive space. There is so many permutations and combinations of what a cross-border person can be. I don't focus on all of them. There's a lot of different practices at there that actually do focus on specific segments of cross-border financial planning. So, you know, to be clear, it's still a bit of well west of who's doing what and who can specialize in what elements. And that is really interesting. I will say it's 50 Shades of Gray, if you know the movie or the book, 50 Shades of Gray. It is 100% often the interpretation of the tax act between the U.S. and Canada in what you should or should not do. do. Oftentimes I'll hear a lot of clients say, well, I shouldn't have a TFSA or I shouldn't do this or I

can't. Nobody says you shouldn't or can't, except for with a few very, very specific things that I won't get into today. But it's just about how you interpret the act and how, if you want to call it, how aggressive your accountant is being with their filing positions or conservative. And then what choices, right? And then what choices you need to make as an investor to make sure that you causally amount of friction with her U.S. tax filings once you're a Canadian resident. No, I know 50 Shades of Grade because I got many calls, people in the publishing industry saying that it's sales were catching the wealthy barber from behind. And I shouldn't say from behind with that book. But yes, it took off and, of course, did exceptionally well. So I know I'm

very familiar with the book. And of course, I might have watched the movie. I might. I don't remember if I did it. And so let's go back. What mistakes do you commonly see? And let's, first off, focus on people who've come back to Canada and let's say they have a 401K because that's the question that you hear often asked. I think the mistake is that you think you need to do something and that people are always in a hurry to do something. A 401K is probably the best account to not do something with because the 401K is coming from a pension.

It is governed really well in the United States by a program called ERISA. And you can leave it there as long as you want. You're not going to get kicked out. You can put a Canadian address on a file. I've seen no issues of 401Ks. but the thing that people don't realize is they're eligible for Canadian pension income splitting at retirement. So that is a really cool feature that often people aren't aware of. And it has some great estate planning benefits as well.

So I would say from that standpoint, unless you're desperate to get your assets out of the United States, which in this day and age, honestly, a lot of people are. There's a lot of smart planning decisions you can make around absolutely doing nothing with your 401K. That being said, making sure you have the proper asset allocation in the account and sort of a more of a set-it-and-forget-it mentality is always best for assets in a country that you are not resident. Okay, that was very good. All right, I'm going to jump over to another topic. You recently wrote something about annuities. And it was music to my ears because I have argued forever that although annuities have drawbacks, no question, and I do not think people out there should be jumping in to annuities with all of their monies, et cetera, there are a role. they can play in financial planning, in retirement planning. Talk to me a little bit about your thoughts. Yeah. So I grew up in a household with an actuary as a father. And he, he's told me all sorts of stories. So he's, he told me the stories about how when you had an RRSP back in the day, I'm talking,

you know, 50 years ago, the only option that you had for conversion was to go to an annuity. There was no such thing as a RIF. RIF didn't exist. That's a, that's, that's, I had. hasn't been the vehicle that we've now all gotten used to. There was only the ability to annuitize. And back in the early 80s, when interest rates were really high, these instruments, you know, they sing because an annuity is an interest rate and mortality-based product that you can buy. However, they did really fall out of favor when wrists were introduced, and advisors could manage riffs. And that's to say there's a lot of other reasons why annuities have fallen out of favor, other than they can now be managed by an advisor and a RIF.

interest rates have come down significantly, which does impact annuity rates in the long term. And that stayed for a long time after 2008. We had really, really low interest rate environment, which made annuities a little bit unfavorable if you're comparing it to market-based returns. However, that being said, when I'm doing retirement planning for someone, the biggest drawback that I see in people's plans is when they don't have enough fixed or guaranteed pension income and it leads them to not want to spend their own money. There is a gigantic fear of decumulation or withdrawals. When people see their money go down, nobody likes that feeling,

right? It's psychological. Everybody likes to see their money go up. Nobody likes to see it go down. So it's this shift that nobody really talks about when we move to retirement is we have to normalize that it's okay for your money to go down. That's why we saved all that money is so we could spend it. The problem, though, is that people are always worried about running out of money, and therefore it leads them to not spend. And that's why the research and data out there shows that retirees automatically become more frugal because they are worried about outliving and outspending. So annuiting or purchasing an annuity, which is a form of a defiant benefit pension plan, is a wonderful way of being able to pay yourself and continue to pay yourself first like a salary

while you're retired and guarantee your baseline spending. The way that I like to look at it for retirees is this. When we go back to the cash flow conversation we were having before, we have our committed spending, which is all the really boring, unemotional stuff that we spend money on. And then we have our spendable bucket, which is all the emotional and fun stuff that we do, which can include groceries, by the way,

because we can shot the pusataries or we can make other decisions. That's right. There's some discretion for it. There is. So if you can cover your committed or baseline or boring, expenses with CPP, old age security, maybe social security, and a defined benefit pension plan, and an annuity if you don't have the other ones, then you can create a baseline that will cover all of your bills so that you don't have to be worried that you're not going to be able to pay your

bills if you live until you're 98. Your bills are covered by defined benefit pension plans. Then all the fun stuff you do, all the fun spending, can then be funded from your lifestyle assets, So from your investment portfolios, from your retirement plans, from your savings. And that gives people the license to feel more comfortable to spend freely knowing that their, you know, their property taxes aren't coming from their investment portfolio, for example. Now, when you look at all of this, do you think one of the things that holds people back is the fear of inflation? So they look at it and they say, okay, you're making a lot of good points, but at least CPP is indexed to CPI as are some government-defined pension plans. I buy my annuity and I live for 30 years and inflation roars ahead. Let's say it goes back to

three and four percent up from where it's been a lot in the last 20 years of two, I might have a big problem. I may have the same income, but I don't have the purchasing power. Is that what holding them back? I'm not sure because you can buy an index to inflation annuity. You can buy annuities that keep up with the CPI over time. So I think it's maybe just them not understanding that element. I think it's also a little bit difficult to write the big check. So when you buy an you're taking a big chunk out of your net worth, let's just say, or a small check, depending on what you do, and you're writing a check, which is an irrevocable decision, and you're handing it over to an insurance company, which nobody likes, and in return, you're getting a check that

maybe is $2,000 a month, and you're going, so I just gave you, you know, $200,000, and now you're giving me two back. And that feels like a bad trade in the beginning. So I think it's, in a way, reconciling the reasoning behind why you're doing it, having a properly constructed retirement withdrawal plan and understanding your cash flow, which gives you the empowerment to be able to make that decision. Yeah, no, that's interesting. I think it's, go back to the CPI linked annuities. I remember when I looked at one carefully, five, seven, ten years ago, I get confused at time because I'm very old. But when I looked at it, I didn't love it. And it's because the actuaries, for good reason, used very high estimates for inflation, obviously

wanted to protect the insurance company. And when I looked at it carefully versus what normal expectations would be, I didn't think it was a very good product. So there's no perfect way to handle this, but I'm still with you, that psychologically having some money come in that you know is going to arrive every month

that's going to last for the less of your life, for many people can be a big plus. Now, people with a big defined benefit pension plan, they often don't need to look at this. And I'm not saying it's an answer for everything, but the fact that Canadians shun them almost totally, in my mind goes too far. I agree.

and it's not for everybody. If you've got great to find benefit pensions, fantastic. Maybe that's more than enough for you. It's not a one-size-fits-all solution. But I think for those who are heavily invested and who are concerned about outliving their money, which this is also a longevity product we're talking about, and who are also concerned about market volatility during retirement,

this could be a good option for a portion of your assets to guarantee some of your income. Yeah, I like the way you said that. And it goes back to advice I've given for 40 years. If you're out there listening, it's very important you marry a government worker who has a defined benefit pension plan. Always marry a government worker. Write that down. That's directly from the wealthy barber.

And it's a very sound piece of financial advice. Okay, here's a question we get asked nonstop. And we have not addressed very well, frankly, in the podcast since it came out. So today I want to get at it. Constantly people in their 20s and 30s are reaching out and saying, day, I can't save retirement. to building up my down payment fund. There's no way I can do that. We have such a huge need for this down payment fund to be large enough.

If you want to hit the 20% level, let's say we're trying to buy a home for 700,000. We've got to save 140 grand after tax. You know how hard that is to do? And you also want us wealthy barbering at 10% into an RSP or a TFSA for our retirement? Come on. Let's be realistic here. If you can't do both, what do you think? Do people prioritize to the down payment fund if homeownership is very important to them?

Well, in a way you can do both, but you're doing both with the same money. And I have a client who's in this situation right now. They don't own a home yet and they're living off of one income and they have a desire to own a home. The savings that have been done and are being done are being done into an RRSP and we're saving up enough to they can access the home buyer's plan. As well, they're saving into the FHSA accounts, the first home savings account for each of them. And if you don't use the funds for per person, purchasing a home, they go to retirement. So the RSP continues on as it does if you don't access it for the homebuyers plan. And if you do use it for the home buyer's plan, you do have to repay it, which goes to continue to fund your retirement after you buy a home. The FHSA is cashed out to buy a home if you do. And if you don't, you can actually roll it to your RRSP, not meeting contribution room. This is a really great way in a way of saving for two goals at once if you're not sure about which goal you might achieve and when. You're still saving and maybe you get that RSP to more than $60,000 and you can continue to leave the rest of it in there to continue to a crew

for retirement, right? It's not that you need to do all of it all at once. You're just doing what you can do to fund the goals that you have. And when you get to those goals, then that's how you reconcile what's going to go to what. And what I will also say to those in their 20s and 30s is getting any sort of savings going good for you. It's so hard this day and age with how much things cost. Don't beat yourself up. You've got so many years ahead of you before retirement. You don't need to be so worried about retirement when you're 20. I mean, if there's anything I can demystify and say is just develop the right habits when you're young and that will pay dividends across the decades that you have ahead of you. And there is so much that will change for you from a career and income standpoint over your lifetime

that you've got lots of time that you can, you know, double up on your savings. If you just get the right habits though in place today and get those savings going, then that's going to lead you to just better abilities to make different decisions for yourself and your older. No, you're right. Build that saving habit as young as you can, but you can't be too fanatical about it. You're still got to enjoy life and you've still got to be ready for all kinds of things that can come at you. I mean, one thing that we all agree on. We've had so many experts on this podcast, the FHSA, wow.

I mean, it doesn't get any better than that. You get the tax deduction up front. You get the compounding growth tax free. you withdraw the money tax free when you go to buy a home. Are you kidding me? So, I mean, if you're trying to save for a home, your first home, and you're eligible for the FHSA, do it. Yeah.

Okay, do it and get your partner to do it. This is a true no-brainer. When you take the money out of the RSP, the homebuyers plan, we discussed this, and you have a chance you've got to pay it back over 15 years. I was saying on an earlier podcast, you don't want to pay it back early. It's a little complex to explain briefly,

but you'd like to pay it back on that steady pace and not pay it back early. That's right. had a client once and he saw it as a debt. And I said, it's a zero percent interest debt to yourself, realistically, is what it is. There's a lot of better use for your money. You can still contribute to an RRSP over what you owe your repayment for your home buyers plan and get the tax deduction and let that continue to go for retirement. But don't prioritize paying off a zero interest loan if you don't need to. That money is much better served earning you a tax deduction. So again, it's the education and

and the awareness of the ramifications of doing that that I think is often missing. Now, did you have a lot of pressures growing up to be strong of math with your father being an actuary? Believe it or not, no, but he did give me a lot of financial lessons growing up. I sat in his lap when I was like two years old, and he taught me how to read the mutual fund pages of the newspaper. So I would give him yays and booze, depending on which ones were up or down when I was like two. I had GIC lessons when I was a young child. You know, I had a lot of good money lessons growing up, but there was never pressure to enter into the industry for sure.

It was just a natural thing that happened after university that I never planned on. Then here I am, however many years later that I won't say. I speak for the actuary groups a lot, and they're a tough crowd. If they don't like the speech, they chant your expected date of death. It's very, very difficult. It's the ultimate heckle. I find them very challenging. Okay, we're going to end up here.

We talked earlier about insurance needs analysis. And, you know, I've become a bigger and bigger advocate for term insurance and most instances. I do see some use for cash value, especially in the corporate environment, occasionally with excess retained earnings. We won't get into all the details here. But for the group you're dealing with, those people, a lot of times they're 20s and 30s, professionals, they've got good cash flow. Do you not think term insurance is the right way to go in most instances? They've got to max the RSPs, the TFSAs, pay down non-deductible debt. All of those options seem to be better route to take. 100%. And at the end of the day, you want to maximize your tax sheltered accounts, no matter what first,

before you enter into any sort of big, bad world of whole life for universal life insurance. Debt priority and pay down is really important if you've taken on either student loans or consumer debt or even if it's a mortgage that you want to prioritize paying down. I always advocate doing a little bit of everything. I just want to say this aside from the insurance conversation. I see a lot of young people focusing on just doing one thing. I'm just going to pay this down and do nothing else. And when I finish that, then I'm going to move on to this thing.

please treat your finances like a little bit of a scale. You want to do a little bit of this and a little bit of that. Working with a professional can help you understand where you can optimize that balance, but please try not to focus on everything. Anyway, back to the insurance question you asked me. I definitely agree. Term insurance is all you need. It's extremely inexpensive when you're young. Pretty easy to get, assuming you've had no health challenges in your life. And it can really serve your family when you're at the period in your life when you have the most earnings ahead of you to protect. attack and usually the highest debt load of your life once you've taken on a new mortgage. Aside from life insurance, though, I think what people fail to look at is disability insurance. I mean, often, I'm just seeing people say, I need life insurance. I'm like, great.

But when you're 25, what's the chance that you're going to die versus the chance that you're going to get hit by some sort of either shorter long-term disability? The chances of death are pretty low. We've got great medical technology keeping even older people alive these days. So yes, it's important to have life insurance, but even more so to understand your group disability benefits. And if you don't have that, or even if you do, looking at supplementing with individual disability insurance, I can't stress that enough. I didn't like the way you said keeping older people alive and then stared right in my eyes. I saw what you were doing there and I did not like that at all. But I couldn't agree with you more. It's amazing. In fact, to me, and I know a lot of entrepreneurs,

you know, you still get pitched a lot from the Dragon's Den Days. Plus, I'm in Waterloo, Tech Capital. of Canada. It's amazing to me how many of them are doing well and they don't have nearly enough life insurance. I'm very pro-life insurance. The industry is often mad at me because I don't love cash value. I think it's often oversold, but I'm very pro-life insurance. And on disability, they often don't even have a policy. And so it's their biggest asset by far is their earning power and they don't even have a policy. It just makes me shake my head. So I agree with you on all of that. And it's something we all have to continue to educate about more and more. Look, you've been a wonderful guest.

I really enjoyed having you on. Hopefully you and I will crass pass at some point down the row. But thank you for finding the time to join the podcast. Thank you. And I have to say, I know that you're a Rubik's Cube fan. Am I right? Or we're a Rubik's fan? Yes.

And I read that about you. And I just have to say my son has gotten into that recently and he adores it. And I just wanted to make that connection because he's going to listen to this and hear that. So shout out. Oh, that's good. How old is he? I have seven-year-old twins. Oh, you do.

Good. That's bad financial planning, but wonderful life. wonderful life. Anyway, thank you so much for coming on and enjoyed it immensely. Much appreciated, Dave. Thank you so much.