You may recall our blog from last year, outlining the Financial Planning Standards Council (FP Canada) and Institut Québécois de Planification Financière (IQPF) guidelines for investment projections.
If you missed it, you can review it here.
Those guidelines have been updated for 2019, and we think it bears repeating that any comparison of a structured settlement to other traditional investments should be done on a proper basis.
It still holds true that “beating” the current return of a structured settlement is much harder than it might at first seem.
For 2019, the FP Canada and IQPF recommend that financial planners assume gross returns of no more than 4.41%, before fees and taxes for conservative investors. The current guidelines can be accessed by clicking here. A return of 4.41% (which is a projection only, and not guaranteed) will then be reduced by fees and taxes and may also affect a person’s eligibility for various Government Benefits.
Some people think that if a person’s marginal tax rate is low, it is easy to outperform a structured settlement. For many, however, it is less about the taxes and more about the loss of important social benefits and the toll taken by fees charged by financial advisors that make the structured settlement the better performer.
It is important to consider the fact that projected returns from financial planners or advisors are not guaranteed and are subject to market pressures and volatility (past results are no guarantee of future performance…).
Once again, even in the current low-interest environment, structured settlements continue to offer higher guaranteed rates of return than any other traditional investment.
For more information, please contact us.