Checking your investments in financially stressful times is like staring in the rear-view mirror while driving.
You get a backward perspective, but there’s nothing to help guide your way forward. For that all-important view, you’ll need some financial planning help.
I highly recommend human planners – I have one myself. But there are reasons why that might not work for you, including cost. If so, consider joining the growing number of people checking out the do-it-yourself version of financial planning.
An example of a DIY financial planning app is Optiml, a Halifax-based company whose planning app has seen a 60-per-cent uptick in its average weekly website traffic in the past few weeks.
“With the recent trade war, everyone’s getting a lot more involved thinking about their finances,” said Max Jessome, Optiml’s chief operating officer and a software developer. “We’re hearing a lot of people say how happy they are to find a Canadian alternative for financial planning software.”
A Canadianized version of U.S. financial planning software can work just fine. You won’t see references to individual retirement accounts, or IRAs, instead of registered retirement savings plans. But in these exceptional times, going with Canadian software feels like the right choice.
Conquest Planning, used by roughly half of advisers and planners in this country, is Canadian-based and controlled. Canadian software on the DIY side includes the MoneyReady App, built by a scientist, and Adviice, built by a team of Canadians that includes a couple of financial planners.
Another Canadian offering is MVC Financial Forecaster, built by a guy with an MBA and a background in tech and financial services.
DIY in financial planning does not mean free, although free trials may be available. Optiml’s has three planning levels, starting at as little as $99 per year, or $9.99 per month, while Adviice charges $9 monthly and plans a $49 annual subscription.
You’ll wear yourself out by checking your investments often in these unpredictable times, and the same applies doubly to your broader financial health. But if you don’t have a baseline on where you stand with retirement planning and other goals, now’s the time to act.
Mr. Jessome said Optiml can help people in all age groups get a sense of how well positioned they are to meet their goals based on current circumstances, and help them look at different projected outcomes. For example, what happens if your investments average a 5-per-cent net return going forward, instead of the 10 per cent you made in recent years?
“I’m 25-years-old and I use this software personally for planning,” Mr. Jessome said. “When I get my salary, where should I put it? I’m kind of into saving for my first home – the software is telling me I should be maxxing out my first home savings account.”
Optiml allows you to set a fixed rate of return on your investments as part of your planning goals. Projected rates of return aren’t available yet, but the company is working on a historical growth rate simulator that would cover inflation as well.
Optiml and some other DIY planning software were developed by people with more of a software or science background than financial planners. Mr. Jessome said Optiml’s origin story involves his parents, both electrical engineers, working with a bank financial planner and not being satisfied with the level of detail provided. Optiml’s development also included input from the accounting department at St. Mary’s University in Halifax.
The typical Optiml user is a boomer or Gen Xer, with an 80-20 breakdown of men and women. Most are high-net-worth if you include real estate, but Mr. Jessome said there’s been a gradual increase in younger users.
He said the trade war has people thinking about all aspects of their finances – taxes, expenses and more. “Maybe they were planning to sell some assets, and all of a sudden, they’ve dropped 10, 15 per cent in the last month. What’s that actually going to cost them in the long run?”
The advantage of a human planner is that you can ask questions and benefit from the experience and training of an accredited professional. The reasons why many people do not have a planner when they could really use one include costs of $1,500 to $5,000 and up for full plans. Top planners also have waiting lists, and some may want to manage your investments as well.
DIY planning is a decent substitute for the human touch, and a way to get a quick made-in-Canada baseline on where you stand financially. With so much financial uncertainty, this almost seems mandatory.
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