Progress in vaccinations, falling COVID-19 case counts and healthy savings from the pandemic are creating a perfect storm that is stoking Canadians’ dreams of big-ticket purchases, says Advocis. The association of some 17,000 financial advisors in Canada expects many clients to seek advice from their advisor when contemplating a major purchase. 

Based on a survey of 100 advisor members conducted between June 11 and June 18, 2021, Advocis summed up the top high-cost purchases being considered by investors. Clients consulted their advisors primarily about home renovations (41 per cent) or buying a cottage (22 per cent). The purchase of a car (10 per cent) or a recreational vehicle (10 per cent) also ranked high on the list. Other expenses mentioned include paying off lines of credit, purchasing income properties, and acquiring life or disability insurance. 

Significant purchasing power

The survey also found that one in five advisors said they were asked by 21 per cent to 40 per cent of their clients about major purchases they were planning to make this summer with money saved during the pandemic. Advocis told Insurance Portal that this proportion represents significant buying power. 

“After such a long and uncertain period, it would be expected that many individuals and families would be looking to purchase something that will help them bounce back from the stress of COVID-19," notes Greg Pollock, president and CEO of Advocis. “Working with their advisor can help to ensure that it won’t result in even more stress down the road,” he adds.

Discovering motivations and avoiding emotional decisions

Advocis advisors recommend ways to help their clients plan for this type of purchase. “The first thing to discuss with a client is to find out what is truly motivating the need to spend," says Norris Walker, a financial advisor at Kabs & Associates in Clarington, Ontario. Specifically, “is this something they’ve always wanted to do and only put aside in the past because of finances, or have they become caught up in the euphoria of COVID restrictions beginning to lift?”

Walker says it is important to keep the fundamentals in mind when making a decision. “How much enjoyment will clients get from it? Is this something that can appreciate? How will it affect their long- and short-term plans?” he continues.

Heidi Blondin, a financial planner in Kingston, Ontario, finds that clients are looking for what will bring them joy after several months of going in and out of lockdown. “My advice to them has been to not make emotional decisions based on current frustrations," she says.

Responsible spending

Jeffrey Graham, a financial planner and advisor with First Oak Financial in Port Moody, B.C., believes that big-ticket items can be purchased responsibly, after being carefully evaluated. “If there is disposable income and savings beyond the rainy-day fund, and other financial planning components are in place, then I would have no reservations with clients making a big-ticket purchase," Graham says. 

Taking with advisors first is a good way to ensure “that what you’d like to do is in alignment with the financial plan that you’ve built.”