Most financial plans are linear. What happens when the goal posts move?

Many advisors take a linear approach to financial planning, assuming most clients follow the same milestones – progressing careers, marriage, kids and retirement. But what happens when a client has a new goal that changes the plan?

Nicholas Hui, certified financial planner (CFP) at Vave Financial Planning in Markham, Ont., sees millennial clients regularly in his practice who want to make a major life change, from a new career to starting up a new venture, usually after spending several years working in an industry.

While the client is seeking change, there’s also some hesitancy about whether to move forward, particularly during tough economic times.

“It’s very daunting,” he says. “They just don’t know how to start, how to continue to build their finances.”

Brandon Chapman, CFP at SaaS Wealth Insurance in Vancouver, has clients who no longer find fulfilment in careers they once loved and want a life change – fast.

“They want to pursue their passion, but the harder part is how do you monetize that and turn it into something that can create the lifestyle you want?” he says.

Janine Guenther, portfolio manager and senior family wealth advisor at Bellwether Family Wealth in Vancouver, makes a point of asking clients every year about their plans.

She’s noticed that since the pandemic, more clients believe life is too short for constant routines and they want to fund big ideas.

Ms. Guenther relates to this on a personal level. Her husband wants to spend the first few years of their retirement on a sailboat. While the couple are competitive racers, she’s not convinced her husband will relish life on a boat 24/7.

So, she gave him the same advice she gives her clients: test it out before committing.

“You can rent before you buy and see if it’s going to work,” she says. “What if you don’t like it?” (It turns out her husband only loves the boating lifestyle for so long.)

Ms. Guenther has clients who want to start a consulting business in their field, but she notes it’s a huge leap from employee to business owner.

“It’s a bit of a mind shift to go out and find business versus just going to work every day,” she says.

She encourages clients to consider the capital investment and the financial viability of the business. Perhaps they can get the business off the ground while still working to build up funds.

Some clients use their savings, but it’s important to have some financial backing, she says, which can be secured more easily while still employed full-time.

“If you need a line of credit against the value of your home, it’s important to do that while you have the income to support it,” she says, noting that also applies to retirees.

“To be able to access money if you need it in an emergency, whether it’s $200 or $30,000 – it’s nice to be able to know you have that.”

Mr. Hui says he encourages clients to begin in steps so they aren’t walking off a ledge. He notes clients with big dreams will need to have a runway fund: enough savings to fund fixed and variable expenses during a period of no or low income for at least a year.

“The runway fund is like a timer,” he says.

He notes this money should be kept in cash, money market funds or short-term guaranteed investment certificates, as any other investment will be exposed to market fluctuations that can easily go the wrong way. Clients could also have a line of credit, but Mr. Hui prefers they’re not building up debt.

In the case of couples when one spouse is still working, Mr. Hui says they may not require as much of a runway fund if the family can meet most of its expenses on one income.

With a new venture or life change, clients need to be informed about how their plans will affect their goals for retirement and other things, Mr. Hui says. Will they require even more money to invest or are they committed to working longer?

Mr. Hui runs projections of worst- and best-case scenarios so clients understand the impact.