Episode 6 – Busting Financial Planning Myths

 

I don’t know about you but I love when a Financial Planning Myths gets busted …from the moon being made of cheese to that being Trump’s natural skin tone (sorry, I had to do it).

But some myths can actually be pretty frightening and really hurt us financially, which is why in this podcast I’m debunking some of the most common financial myths I get asked about…like you can’t afford a financial planner, you started too late or you’re stuck in a defined benefit pension.

I also have a special guest on this episode who is going through these myths with me…but you’ll have to listen to find out who it is.

You don’t want to miss this episode, it’s one of my favs.

Show Notes: 

Zena (ZA): Hello, and welcome back to another round of our Heart of Money talks. I’m glad you’re here. The title of this episode is Busting Financial Planning Myths.

Have you ever talked yourself out of a reason why you should find a financial planner or told yourself some story about why you don’t need help with your finances or maybe deep down you don’t think you’re ready to talk money in retirement?

It’s a tough subject. In this episode, we’re going to burst your bubble and call you on it. I’ve invited Nicole Putz to join today.

She is a certified financial planner and she’s a true powerhouse and game-changer that helps millennial women get the financial advice they need. If you want a piece of her brilliant mind, you have to find her on Instagram and follow her.

It’s Nicole Putz, CFP. It’s brilliant. I’m blown away every time she posts. She’s smart saucy, you share financial literacy in a great storytelling way, I want to say thanks for joining.

Nicole Putz (NP): Yeah, that was so fun to be here. I’m pumped to be here every time I’m here, but today, especially doing this podcast with you.

ZA: It’s pretty special having you join, and I’m glad to share some of the burden of chatting because we can talk for hours, but today I’m hoping you’ll help us bust those myths and burst a few bubbles.

We’re going to talk about some of the stories we tell ourselves and some of the myths out there about financial planning. So, I’m going to start, I’m going to ask you, what is one of the biggest financial planning myths you’ve heard in your practice?

NP: So the biggest one, I probably hear maybe not even the biggest myth, but probably the one I hear the most often is I guess, on a small level, I don’t have enough money to see a financial planner, but on a bigger level, I don’t know enough about this stuff to reach out for help.

This one is fun because it’s like what we were saying is counterintuitive.

Really the point when you should see someone for helping any industry or any form of, whatever it’s when you need help, that’s when you go see them, it’s not like you get it all sorted out.

It’s funny. I think I did an Instagram post about this a while back about a surgeon. I played it out as you don’t figure out how to be a surgeon before you go to a surgeon for help. You just go to the surgeon when you need them.

ZA: I know, I know – and so the sooner the better. The last thing we want to do is wait until you’re already retired and go and say “Yeah. I wish I had seen you sooner.”

NP: And it’s funny to look, I think even in life, I feel like it’s got to be a human nature thing, but we’re always so reactive in the way we do things as opposed to proactive.

I don’t know if it’s human nature. I don’t know if it’s just us probably being perfectionists sometimes doing, we have to have it all sorted out beforehand, but yeah, especially in financial planning, I feel like being proactive is that is the number one thing, just get it sorted out before all the questions come up or have something in the play before all the transitions or changes or crazy things start happening in your life.

Yeah, like getting a job or having a baby or whatever it is.

ZA: We think of like the Warren Buffet and the Bill Gates. Okay. Yeah. They must have a financial planner. You must need a yacht before you even see a planner. And in some cases, it is true. some planners won’t see you unless you have a certain amount of money.

NP: Sure.

ZA:But in our last episode, we talked about how financial planners are compensated and if you can find a planner and a method of compensation that works for you, there’s access for everybody. And so, the best time to do it is when you’re starting off and then you’ve got that coaching and guidance. So, you don’t need a million dollars.

NP: A hundred percent – it’s huge. It’s I feel like that’s the biggest even in terms of like your episode, like that is a myth we need to bust constantly because everyone’s getting mean. And it’s funny. I usually tell clients too, I’m like, financial planning doesn’t matter until all of a sudden, it does.

Then by that point, it’s probably not too late, but you probably should have seen someone before that point hits. So, it’s like, why not just do it first?

ZA: We love to map out, like in five years, in 10 years, what does this look like.

So, if you’re young and starting out, imagine everything you can do rather than looking behind the scenes or back after and saying, “Oh, I wish I had.”

NP: Yes. Even I remember a couple of months back, I polled my audience to say, “Hey, listen, if you had gotten my advice, when you were in your early twenties or mid-twenties, whatever it was, like what would you have told your younger self?”

Everyone was like, “Start sooner, start earlier.”

Also, find someone you trust right off the get-go. That was one of the biggest things. Everyone was like, just start sooner.

ZA: Another one – so, we were just chatting before we hit record here. And it was, you work really well with millennial women and they are generally very organized.

NP: Yes. Incredibly organized. It’s funny there. They’re like intuitively planners – organized. They’re very big picture thinkers, which is financial planners.

We always are telling people, you’ve got to look at the bigger picture, which yes, millennial women just innately are and they’re excellent at following a plan they put into place.

So, if there is a plan that they understand and that they’re, given they’re working with someone they like and trust, they’re not really going to deviate from a plan. They’re going to do the plan because they put it in place and they know why, and they understand the benefit of getting the plan done.

Yeah, it’s funny, because they are probably some of the better candidates for financial planning because they’re already just great at it.

ZA: And knowing how to protect their future self, knowing that they need to see you.

And so, one of the myths though, is that possibly they need to get all their ducks lined up and be super organized before they see a financial planner and therefore wait 10 years.

NP: Okay. yeah, and just like we had been talking, before the podcast, we were saying how I have a client, and but she, we’ve known each other forever and ever, and she touched base a year ago and was like, “Hey, love what you’re about. I think I need this. I’ll reach out when I’m ready.”

And I said, cool, whatever ready is to you. I actually didn’t press it at that point. But then now, like we’re just now in your later years, we’re starting to actually work together. And she was like, “Yeah, like I legit just wanted to go learn.

You know about investments, about how money management works. I wanted to learn all the things I wanted to understand how tax works before I came to see you.”

And I was like, “Why, because that’s something you and I do, and I help and coach people through. That’s all part of the plan is to help you understand these money, things that may be going to be scary or just overwhelming.”

ZA: Whatever the case it’s part of your fee is why you’re being compensated so that you can guide and educate and offer the resources.

And then I laugh because I’m like, “And that’s why I don’t have a house cleaner to come in once a month because I would have to clean the house before she came, because heaven forbid the house cleaner sees my house messy.”

NP: And it’s that same idea. We’re all perfectionists, for whatever reason and that even I can even say myself. Even when I was first new in the business, I very much felt like I had to learn it all before I could even be in the room with other advisors who were seasoned and stuff, but it’s kind of like what we’ve said and what we’re talking about is you don’t have to be perfect.

Nobody’s perfect. Nobody goes into this perfect. Just shake that off and reach out for help anyway.

ZA: It’s accountability and coaching and you get through it and that’s what you’re there for. So that’s one of the biggest myths, I think. And it’s not just millennial women. I think it’s also that procrastination, I just don’t have everything organized yet, so yeah, that plays into there.

So, here’s one. “I’m too young”, which we already touched on though, but also, it’s too late.

NP: Yes. That’s a big one.

ZA: Is it ever too late?

NP: No. And it’s funny, I’ve addressed this before, too, but, and I’m going to screw this up, but there’s like that saying about the Oak tree. I think it’s an old Chinese proverb when it’s like the best time to plant a tree is yesterday, but the second-best time is right now.
So, it’s just, in a forum that it’s okay.

Yes. You didn’t start when you were 20, even 30, even forties. Whatever it is, what it is. You can’t go back and change it, but is it too late? Hell no, you can still partner with someone.

You can still change things around. It doesn’t mean anything, really.

ZA: Our specialty is retirement planning. And so, what people forget though, is that at 55, you possibly still have another 40 years of retirement, which is 40 years of tax planning and still needing to make the right decisions.

NP: Totally.

ZA: And even with somebody and I’m going to lead into our last kind of myth that we want to talk about that even, with people that maybe have a defined benefit pension, you still have that 40 years.

And so, if you think 55 or 60 is too late, you’re wrong, we’re living so much longer, and so we need that tax advice to save, because that’s the 30 years of tax.

That’s 30 years of time. Fees from every investment performance. Should it be a TFSA or RSP, or when to pull out of what bucket and which bucket should you start? I mean, there’s just so it’s never too late. Yeah.

DP: Oh yeah. And that’s so right. I wasn’t even thinking about that. In terms of we all live much longer. We’re not all just dying at 60, right? Like hopefully crossed fingers.

We’re all going to live well into our eighties and nineties. So, to your point, yeah. There’s still, even if you are at that 50, 60 age, there’s still so much you have to plan for – a hundred percent.

ZA: Retirement is pretty new. This is only in the last a hundred years. It used to be the, where you just worked until you physically couldn’t do it anymore.

This is a new concept in what else is happening is that, I can’t remember if it was 15 or 20 years ago, there was a baby on the cover of National Geographic and it says this baby will live to a hundred.

And I remember thinking, “Oh, wow, with the Financial Planning Standards Council, now we have recommended to plan to age 96, right? How far off are we?”

NP: It’s crazy. It’s actually next to fate. It’s so funny too. I always say if you ever saw that it would be A Million Ways To Die In The West to joke like back then, she’s like, “Oh, I’m like, I’m almost 32 now.”

It’s just funny because it’s just to your point, yes, we’re in a day in age where likely, I think I remember like Dr. Oz brought it up and he said, “If you’re listening to me today, and this was like a year or two ago that I heard this, he said, “You have an incredibly big percentage chance of living to a hundred or plus.”

ZA: It’s just going to show it’s never too late.

tell me how many times have you heard this? “I have a pension at work, so I don’t really need to do any planning or any other savings.”

NP: I hear that funny enough a lot. And it’s a lot from, and you might think it’s weird to hear it from millennial clients, but I do hear a lot from millennial clients because a lot of the time, and maybe this is just because of the way I market myself as a financial planner for millennia women, but I do have a handful of women who come to me and say, “Hey, listen, how important is it for my spouse to be involved?”

And I usually say, “Know your spouse.”

So, they have to be somewhat involved. And I had just a client, like I was telling you earlier, just within the last month, we’ve said, “Hey, I think we just need to plan for me because my husband’s set.”

I said, “Oh cool. what do you mean by set?”

And she said, “You know, he’s already got a pension in place.

Therefore, he doesn’t really need financial advising.”

And now all of a sudden, for me, it was that doesn’t necessarily mean that like he set up for good, there’s definitely some, extra, not even extra planning, but there’s definitely planning to be involved for that’s for sure.

ZA: So that piece of the puzzle.

Okay, great. You’ve got one piece that fits in there, but now let’s talk about how does that look for taxes? How does that look for taxes for both of you when you’re 65 and how does the income-splitting and what buckets?

it means, okay, so now you’ve got this registered pension bucket, but how do we compliment it?

DP: Yeah.

ZA: So, there’s all this other planning that has to happen. And, registered, whether it’s a defined contribution or defined benefit pension, what we’re finding is they are great. They’re needed, it’s a big bulk and portion of someone’s income in retirement, but it’s not enough – and it’s taxable.

it’s funny because on the pension statements it’ll run, and it’ll say your pension is this. And so, I’m going to use it, it’s just looking at an RCMP pension, which happened to be my husband’s running the calculator and it says, your pension right now will be $4,000 a month. Okay, great.

But then the brain thinks, “Oh, that’s not bad.”

And I said, “Honey, that’s gross. You now need to take tax off that.”

And so, it’s just these reminders that it’s not really going to be enough. but there’s a myth out there that if you have this pension, there’s no other savings needed.

NP: That’s such a good point. When people see these pension amounts – and it’s funny coming from my point of view, working with millennials – sometimes those numbers, like the ones that are extrapolated outweighed in the future look really good.

And even to your husband, he’s like, “Hey, like $4,000 is pretty sweet.”

That’s really sweet, but it’s okay, hold on to your point, that’s going to be taxed.

And then we can even get into things like indexing and stuff, but what is $4,000, 30 years from now to mean? Is that really going to be enough?

Does your pension index keep pace with inflation, all these things, and like you said, like these are all things that probably most people are just going to think about on their own?

They just see the pension and say, “Check.”

ZA: Well, and it’s also the most leading cause some of them add in CPP for you. It’s a small little note at the bottom and they think that’s the pension.

And I’m like, no, that includes CPP. And they’re like, “Oh.”

So, a financial planner can help interpret those pensions. And right now, there’s a big move about pension options. So, you do, even if you have a defined benefit pension, how much do we get?

I get a defined contribution plan and they send over their choices. Okay. Let’s compliment the choice in that pension to what you have right now. So yeah, these are some big myths here.

I think the biggest part is we are, we’re going to come up with a story and I’m human too when it comes to things I don’t want to do.

When it comes to doing something that I don’t want to do, dentist appointments, I make up stories of why I can’t, and these are some of them – there’s not enough money, it’s too late or I’m too young and I have a pension or I can just do it all myself.

These are some of those myths that if you hear yourself saying it and, you need to dig a little bit deeper and peel the onion back and go, okay, wait, how much of this is true? And then go for it.

NP: Yeah. I think you’re a hundred percent.

ZA: Thanks for joining. I know we’re going to talk a lot more in future episodes, so thanks for joining and join us next week. Bye