YOUR PRACTICE-Debt management helps advisers help clients
* Advisers often focus on client investments, not debt
* Many advisers lack training, confidence in debt management
* Increased fee transparency may make debt management a must
By Andrea Hopkins
TORONTO, April 4 (Reuters) - A common misconception among Canadian wealth managers is that their best clients don't have debt, but with more households carrying red ink into retirement, advisers now need to look at both sides of the balance sheet.
Canadians have embraced credit. The ratio of household debt to personal disposable income reached a record high 165 percent in 2012 - up from 66 percent in 1980, according to Statistics Canada. This means that, in aggregate, households owed C$1.65 for every dollar of disposable income.
Financial advisers are trained to sell insurance and investments, and they often don't know where to begin with debt management, and prefer to believe clients don't need that kind of help.
"The most common reason advisers stay away from debt management is because they are under the illusion that many of their clients, who are buying investments or insurance with them, must not need any debt management," said Stephanie Holmes-Winton, who specializes in teaching advisers about debt management in her Money Finder training program.
"They tell themselves that to feel better: 'If I don't look at it, it is not there.' But statistics show that 76 percent of average Canadians have debt, and 59 percent of retired Canadians have debt. So they are fooling themselves," Holmes-Winton, a Dartmouth, Nova Scotia-based financial adviser, added. Continued...