Retired at 67 with a $3 million portfolio and a paid-off house. Is it worth the cost to get a financial planner to ensure our nest egg will last?

Using a financial planner

If you have $3 million in assets, a paid-off home and no other major financial concerns, you might assume that you don't need a professional to get involved. But there's a reason 25% of Canadians have a financial adviser or planner, per research from CIBC and FP Canada.

The upside of working with a financial professional is that you'll have an expert who isn't emotionally attached to your money offering advice on how to manage your assets. That could be invaluable, especially if life ends up throwing you a curveball.

Things may be going well for you financially right now. But what if your life circumstances change, or your health declines and you wind up needing long-term care?

If you’re uninsured, you could be looking at spending anywhere between $3,500 to $30,000 per month for a home health aide, a Scotia Wealth Management report found. A financial adviser or planner can help you not only prepare for these types of costs, but manage them as they arise.

Also, while you clearly have a decent understanding of saving and investing to have amassed $3 million in time for retirement, there may be some blind spots in your portfolio. A financial professional can help address those and make sure your portfolio is set up to not only produce income, but withstand a major market event or a period of rampant inflation.

Furthermore, if you have $3 million, it's feasible that you may be in a position to pass on an inheritance, and the value of $3 million today is not the value of $3 million in the future, especially if inflation soars. A financial adviser can guide you on estate-planning options so you're able to make sound decisions for the type of legacy you wish to leave behind.

Finally, working with a financial adviser could help you feel more secure as you navigate your senior years; it takes the pressure off you to be the expert and to stay current.

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Managing your finances solo

The obvious downside to working with a financial professional is that there is an additional cost involved. And that cost can vary depending on who you use, where you're located and the fee structure your adviser employs. If you manage your finances on your own, you won't have to pay a professional any fees.

Let’s say a financial adviser charges you a fee of 1% of assets under management. For a $3 million portfolio, you’re paying $30,000 a year for help you may not need.

Granted, because many financial advisers get paid as a percentage of assets under management, they’re motivated to grow your portfolio so they get paid even more. But once you’re retired, you may not need portfolio growth so much as stable income. And if you’re already getting that, there may be little sense in bringing in an adviser.

If you've been able to comfortably build and manage your portfolio all of these years, then you may be perfectly equipped to continue doing so — especially if you're a savvy investor with a pulse on the market who understands the importance of diversification.

Furthermore, while a financial adviser can offer guidance on estate planning, you’ll typically still need an attorney to create a will or trust (or whatever tool you use to pass down an inheritance). So while a financial professional can perhaps steer you toward your ideal option, you’re probably going to be looking at a separate attorney fee anyway.

Before you make your decision, it could be worth sitting down with an adviser or two and seeing what they have to say. But if you’ve gotten to $3 million and are managing this well, you don’t necessarily need to hire someone for extra help at this point. Just be sure that before making any major money moves, you’re as informed as possible. You’re essentially your own adviser.

Sources

1. CPP Investments: Nearly 2 in 3 Canadians worry about retirement savings: survey (Oct 30, 2024)

2. Statistics Canada: Assets and debts held by economic family type, by age group, Canada, provinces and selected census metropolitan areas, Survey of Financial Security (x 1,000,000) (Oct 29, 2024)

3. Cision: Most Canadians are going it alone when it comes to financial planning: CIBC and FP Canada™ Poll (x 1,000,000) (Nov 27, 2023)

4. Scotia Wealth Management: Why aging at home is unlikely for many — and how to change that (Jan 9, 2024)