Investor profiles

Ashleay: Welcome to the In Your Interest! podcast from iA Financial Group, where we discuss your need-to-know economic news and how it affects your finances. All this in under 10 minutes. Today we're talking about the investor profile. Why is it so important to include it in your financial goals? Are your savings at risk? Are you missing opportunities? My name is Ashleay. I'm here with my colleague, Sébastian Mc Mahon, Chief Strategist and Senior Economist at iA Financial Group. Hi, Sébastian.

Sébastien: Hey, Ashleay.

Ashleay: So, what is in an investor profile? Why do we need one? How do we benefit from having one?

Sébastien: An investor profile is a very simple thing. It's just like looking at yourself honestly in the mirror. And I emphasize the word honestly here, because what you put in an investor profile is something that's going to help you reach your objectives, whether they're short term or longer term, and how you get there. You want to put on paper a very realistic portrait of yourself to guide you on your path towards your investment objectives and your decisions. Depending on many factors and various aspects of your personal situation, that may change through time. If you don't have an up-to-date investor profile with you, you may be missing out on some capital gain opportunities, or you may be putting your savings at too great a risk.

Ashleay: Right. So, if someone has never invested before, what can they expect?

Sébastien: An investor profile is just like a snapshot of where you are at in your life. So, it's important to take time to look at your personal situation today and look at things like your personal situation. Your marital status, your age, the number of dependents that you have, the age of your kids, the objectives that you have - are you saving just for a rainy day or are you saving to buy a house or saving for your retirement, or maybe you're saving for all of these things at once. So, they're all different objectives. Your fiscal and financial situation, the assets that you have now, the tax brackets that you're facing, the liquidity that you might need. Sometimes our objectives are just so long term that you don't need to sell at any moment. But if you're saving for a rainy day, then likely you need to have some liquidity. So, access to your money in the very short term, is your income stable? So, there are many things here, your investment horizon for each of the objectives that are listed, your risk tolerance and also very importantly, some people might over- or underestimate their investment knowledge.

Ashleay: Right. And can you explain what an investment horizon would be? What do you mean by that?

Sébastien: An investment horizon is if you're saving, let's say, for something that will happen in 25, 30 years, like your retirement, then that means that you can take some more risk in the short term, because short term volatility has absolutely no impact on your long term target, right? If you're saving for, let's say, a trip that you want to have this summer with the kids, then that’s a very short term objective. How you save, where to invest - it's going to be wildly different between the two.

Ashleay: Right, right. Okay. And so, what are the advantages of completing an investor profile?

Sébastien: Well, the first one is that if you have a good investor profile, you really put your DNA on the table in a good snapshot of your current situation. You guarantee, or you raise strongly the odds at least, that you will have a portfolio that will better suit your needs. So, it should allow you to sleep at night. Even when the markets are volatile, you should be in good position to benefit from the market and to have at least a financial situation that suits your needs. Another very important advantage is if you complete one with your financial advisor, you will be protected because the financial advisor will have a legal obligation to offer you solutions - investments that are in accordance with your risk profile. So, it's an obligation that they have and it protects you.

Ashleay: Perfect. And an investor profile isn't something eternal. It does have a shelf life, right?

Sébastien: Of course. Just like times change, everyone changes. Our personal situations may evolve. The kids are growing up. Maybe your objectives are changing. Maybe your financial situation has changed. So, it's always important to make sure that you reassess the situation every few years or when there's an important change in your life. And if at some point you find that, you know, you're getting worried about the volatility in the markets, but that was not the case last year or maybe two years ago - that's a good sign that maybe you should go back to the drawing table, review your investor profile, and maybe you need to adjust a few things.

Ashleay: Right. Perfect. So, a properly completed profile with a trusted advisor is definitely worth the effort. Well, Sébastien thank you.

Sébastien: Thanks, Ashleay.

Ashleay: Love this podcast? Want to know more about economic news? Follow our In Your Interest! podcast available on all platforms. Visit the economic news page on ia.ca. Or follow us on social media.