November is Financial Literacy Month, and the theme for 2021 has been “make change that counts.” Over the month, the Financial Consumer Agency of Canada maintains a database of events put on by organizations across the country designed to strengthen the financial literacy of individuals and families.

The underlying premise of financial literacy, of course, is that if people just knew better, they’d manage their money and debt wisely to save for the future. They’d have emergency funds and own homes and own insurance and build wealth and start businesses and pass them on to the next generation and give to charity. In the face of adversity their knowledge will give them confidence to make good decisions and the resilience they need to survive and thrive.

It seems like a nice, well-meaning idea, but the concept of knowing your way to financial success is actually nice, well-meaning baloney.

Just knowing more about finance doesn’t help you make good decisions about your own life (or else we could hand everyone a textbook and call it a day)...but knowing more about you does.

Unless you’re a Model Canadian Citizen Robot Mark 1™ fresh off the factory floor, the financial decisions you have to make for yourself, your business, and your family are not the same as the ones your neighbour has to make. The outcomes you’re looking to achieve might be wildly (or just mildly) different from anyone else’s. Applying general financial principles and knowledge of how taxes work is not the way to create a life well spent, unless your life is the same as everyone else’s life.

Nope. You don’t need financial literacy - at least, not on its own.

Rather, you need financial support: the kind of compassionate safety net that creates equitable outcomes for everyone, not just those who are lucky enough to begin running the race a couple of strides ahead of everyone else at the starting line.

You need financial guidance: the applied knowledge of people whose whole job is knowing so they can support you in what you’re doing.

You need financial empowerment: the wisdom that comes from deeply understanding who you are, what you value, and what success looks like for you.

I am all for making change, personally and professionally. I built my planning practice around a unique (at the time) set of values, top of which is identifying what “change that counts” means for each individual and family I work with before developing a plan to make it happen.

This need for financial empowerment over financial literacy is the reason I’ve been encouraging you all year to reflect on your own values and consider how you can live them out everywhere - yes, even in (and especially in) your estate plan.

Ah, September. Simultaneously a month that includes the last delicious bits of summer, the first delicious bits of fall, and an almost irresistible urge to buy new binders... even if you don’t know anyone going back to school and haven’t used real paper in years.

Remember, September can be anything you want it to be. For me, it’s become an unofficial New Year, a time to evaluate how I’ve done with all the hopes and dreams I had for myself and my clients at the beginning of the year, a time to refresh and reset my goals, and a last burst of energy to get me through the (always-busy) fall income-planning season and through to the end of another year.

If you’re not in the habit of pausing to reflect on what you’ve accomplished recently, or are deeply uncomfortable with the very idea of celebrating your own success (whatever that might look like), I highly recommend that you consider building this into your regular life.

The truth is that we’ve all accomplished something pretty remarkable, just by continuing to show up after an exhausting 18 months of pandemic living. Parents of school-aged children faced with yet another uncertain school year are accomplishing the impossible every day... just by getting out of bed at this point, quite frankly. If you can find a way to celebrate yourself, even if it’s small (or big like you deserve), DO IT.

Originally Posted in Canadian MoneySaver
By Sandi Martin
September, 2021

A Registered Education Savings Plan is a multi-purpose, somewhat complex, tool that is useful for many different kinds of people in many different kinds of circumstances. Perhaps you have low income and little ability to save, have moderate income and want to get the most bang for your buck, or have high income and/or strong values around paying for all the costs of post-secondary. Regardless of where you land, opening and investing in a solid RESP is always the right choice if you have beneficiaries who will one day be in need of post-secondary financial resources. 

Originally published in Canadian MoneySaver, I detail the differences between each income bracket and outline why RESPs are more than a single-use tool. By breaking down the math, I effectively refresh our understanding of how RESPs are a useful and wise investment regardless of your current economic status. 

“Along with whatever investment income the amount earned along the way, you've given the beneficiary a tremendous leg up on the cost of post-secondary schooling and should be incredibly proud.”

Subscribers to Canadian MoneySaver can read the full article in the September issue to learn more about how RESPs are applicable to any situation.

Investing at its most basic is a tangible act of hope that the future will be good. The difficulty in seeing it that way, of course, lies in the different, personal definitions we all have of what “future” and “good” mean.

For some, “future” and “good” mean only having enough money for their lifetime and possibly the lifetimes of their children. That’s understandable - in our culture of scarcity the first thing we’re trained to do when we’re scared (and who wouldn’t be scared right now?) is to huddle with people like ourselves around the resources we worked tremendously hard to gather. Investing for these people sometimes feels like an act of desperation, not of hope.

For you, the meanings of “future” and “good” might cast a wider net: good for entire communities, good for the earth and all its inhabitants, good for future generations. With such broad definitions, you might even have a broader understanding of investing, which could mean the creation of wealth that’s not limited to dollars, but encompasses the wealth of participating in a healthy community with thriving ecosystems and sustainable relationships. To invest this way, and to keep investing this way even when it feels like things are only getting worse, requires that you are deeply connected to your WHY.

Easy, Bad Answers and Harder, Less Bad Answers

More than any other tool in the financial planning kit, investing is the home of easy, one-size-fits-all answers, and it’s not necessarily because there’s a whole industry designed to lull you into buying their products by making them seem perfect for everyone (even though there is).

In part, investing is home to easy answers because the hard answers are...hard.

Your values are personal. They’re complex, and they’re unique. And so are the companies and causes you want to invest in. Matching your values fingerprint with someone else’s is hard work, especially if you haven’t actually examined your own fingerprint that closely.

Off-the-rack solutions, like relying on ETFs and mutual funds with ESG ( environmental, social, and governance criteria screens) branding aren’t all horrible. But just ask my friend and colleague Darryl Brown, CFA, about what you might find when you look closely at the companies you end up owning. He’s got plenty of examples of people wanting to invest in companies that advance social justice, diverse representation, and fair employment standards and finding out they now own Amazon, Google, and Tesla instead.

Bespoke solutions, just like suits, are more expensive, but are typically worth the cost. Working with a professional to articulate what you want (and don’t want) and tailor a portfolio around your unique values is a good way to avoid the easy, bad answers. It’s hard, because you still have to rely on someone else’s understanding of your values, and imperfect, because you will be relying on proxy characteristics (like board representation, or the CEO’s personality) to screen for a good match...and it won’t always work.

This leads to another hard truth: investing with more than just the growth of your own personal net worth in mind is harder to measure, and not because values-based investing generates lower returns (it doesn’t). Rather, it’s because a definition of success that includes the health of the entire planet, for example, requires more than the simple math of financial statements to measure. Not only do you have to examine and articulate your personal values, you have to design your own personal scorecard.

Trying to build a good future using only traditional investing tools is like trying to buy a tomato in The Good Place: there is simultaneously too much and too little information to make a perfect decision about the impact your dollars will have, and no tangible evidence that all that hard work to make the best decision had the impact you wanted anyway. But it’s worth doing anyway.

Hard Answers, and How to Live With Them

Yes, investing your time, labour, and money in creating a good future is hard work, just like most worthwhile pursuits. The sheer amount of work might feel daunting, so here’s how to get from wanting to invest according to your values to actually doing it:

Start With Why

As my friend Bonnie Foley-Wong writes in her book Integrated Investing:

The first thing people ask me when they are thinking about investing is, “What should I invest in?” But the first question they should be asking is, “Why am I investing?”

Articulate the kind of future you want. Discuss it with your family and the people you work with in your community, and be as specific as possible about what you mean by “good”, and what you mean by “future”. Describe the change you want to see in the world: is it a problem you’re participating in? Is it a solution you’re not participating in? (You may find that the Design Thinking framework is a helpful tool to use for this.)

And here’s a potential bonus: involving future generations in your investing decisions and teaching them how to carry on after you may also line up neatly with your values around education and family!

Practice Explaining Yourself

Imagine you’re explaining your values to someone who doesn’t know you from Adam but who will be responsible for executing your vision. You might know what you mean by “I’m against consumerism” but they probably don’t - so tell them: what companies or attitudes do you want to withhold your resources from? What endeavours would you feel comfortable supporting?

If you think a particular CEO is power-hungry and represents everything wrong with the world, would trying to band together with other shareholders to force them out be a good use of your resources? Or would avoiding them and everything they touch be a better use of your time? Be as clear as possible: what is the outcome you want to achieve, and how will you measure it?

Perfect is the Enemy of Good

No matter how bad it seems like things are getting, remember that nothing is inevitable (no, not even Thanos). The top five companies in the seventies are not the top five companies now. Corporate decision-makers who don’t believe a word of their own greenwashing campaigns are scared of the reputational fall-out from not at least appearing to care.

The old paradigms of “investing is only about money” and “corporations only exist to maximize shareholder values” are actually shifting. Not fast, mind you, and it will take hard, sustained work to create long-term, meaningful change...but part of that change is the belief that it can be done. People like you, who engage with their wealth of resources as a source of future good can make it happen, and the first step is simply believing it can be done and acting accordingly.

Planning your retirement is a waste of time and money if you don’t start with your values. Full stop.

Oh, you might put together a strategy that squeezes every last dollar out of Old Age Security or perfectly calculates when to convert your RRSP to a RRIF and even feel good about it for a minute...but unless your only measure of success is how correct you are, you aren’t going to feel great about your retirement strategy for very long.

As I’ve written before:

I have learned that there is no one set of values that fits everyone. Even where people share values, how each of us approaches and lives those values is unique to each one of us. I have also learned that, without connection to our specific set of personal values, our goals fall flat, our achievements feel unimportant, and we lose motivation.

I’ve found over my decades in this profession that prospective clients often show up with “how” questions, like:

• How should I draw down my assets in retirement?

• How should my portfolio be managed?

• How much can I spend?

They’ve been trained (by every bank ad ever) to believe that answering the “how” questions are what retirement planning is all about, and since it’s likely the first and only time they’re going to retire, they’re understandably nervous about getting the details wrong.

The problem with starting with the details of “how” is very similar to the problems you’d encounter if you started to build a house without stopping to design it first. Even if you somehow manage to get the foundation poured properly and the walls and roof attached to each other, starting with design first is the only way you’ll end up with a home worth living in.

Think for a minute about your own financial situation: you may have the exact same income as someone else. Your portfolios may be eerily similar, and you may have retired on the same day and have the same cost of living. Spooky. Your retirement strategy can’t be that different from theirs, can it?

If you’re only comparing your net worth and cash flow statements, you might be tempted to say “no”. But what about your values?

What if you have a passel of kids and grandkids, strong values around education, and a family cottage that you inherited from your parents and want to pass down as seamlessly as possible to the next generation? What if your doppelganger has a second home but no kids and no other close family, suffers from anxiety, and had parents and grandparents who all lived into their very late 90s?

Your retirement strategy might include:

• Facilitated family meetings to help you understand what the next generation wants (you might be surprised!)

• Planned gifts to each child’s RESP.

• Setting your portfolio up for growth since it will definitely outlive you.

• Money set aside in your Will for a trust that will cover annual cottage expenses even after you’re gone.

• Even more facilitated family meetings so that everyone is clear about your intentions and hurt feelings can be addressed with care or avoided altogether.

• Overfunded permanent life insurance policies so that your final tax bill is covered.

Your double’s retirement strategy should look completely different, even if both of you spend the same amount every year and have identical portfolios down to the penny. Their strategy might include:

• A large enough cash wedge to cover two years of spending, and enough money in fixed income to ride out five full years of horrible equity returns.

• Canada Pension Plan benefits deferred all the way to age 70, with strategic RRSP withdrawals in the years before CPP begins.

• An annuity that (along with their CPP benefit) creates enough guaranteed income after age 70 to cover their core lifestyle expenses even if they lost every cent in the market (an unlikely scenario that nevertheless wakes them up at 3AM most mornings).

• A professional trustee named as their substitute decision maker and executor.

Applying your strategies to their life and vice versa might not be disastrous for either of you..but it would almost certainly feel that way!

It’s easy to dismiss feelings as irrelevant to the dollars and cents of financial planning, but paying attention to them is the key to making sure your retirement strategies are congruent with—and ultimately supportive of—your values.