Andrew McClelland
The Advocate

When it comes to being a successful agricultural producer, most farmers learn the basics of production from a very young age.

They watch dad or mom tending the livestock, harvesting the cash crop and caring for the land from as early as they can remember. Many choose to go to an agricultural college to learn the finer points of farm management. By the time they return to the family farm, they know how to produce.

But making a living and managing profit margins is another skill set. And often, financial planning and money management are areas where there is much less training.

Karine Vasseur learned from experience that financial planning can deeply affect a family farm.

Growing up in St. Sébastien, just north of Lake Champlain, Vasseur comes from generations of agricultural producers. But when her parents were both forced to seek off-farm income and give up farming, the importance of financial planning was brought home.

“I went on to study finances and wanted to become a financial planner,” Vasseur explained. “And I always wanted to work with the farmers more than anything.”

For the past 10 years, Vasseur has been able to live that dream in her role as a financial planner with IG Wealth Management.

During a videoconference co-hosted by the Quebec Farmers’ Association and Les Agricultrices du Québec last month, she explained that financial planning on the farm starts with asking yourself difficult questions – and giving honest answers.

“The first step is asking ‘What are my goals?’” Vasseur said. “How much income or savings will you need to achieve those goals? And how much time do you have to earn income before you need it?”

For Vasseur, who lives in Stanbridge in the Eastern Townships, clients commonly ask how to build and strengthen their retirement plan as a starting point to financial planning.

“If we’re talking about retirement, then we have to know where your retirement paycheque will come from,” Vasseur explained. “So do you have RSPs or RRIFs (Registered Retirement Income Funds from Épargne Placements Québec)? Do you have investment income? Will you get Old Age Security? Probably everybody in this videoconference will get OAS or CPP or QPP.”

Likely the biggest question in any agricultural producer’s career is the decision to pass the farm on to the next generation or sell the farm. This, she explained, is where estate planning comes in.

“If your children are not interested in taking over the farm, those assets can be your primary retirement income. But that’s not what we see in most families.”

What is a frequent occurrence in farming families is what Vasseur describes as a difference in work/life balance between generations. Frequently, the older generation is prepared to put in more hours of labour for less income than the younger generation is. When the primary producer gets sick or passes away, the burden for the incoming generation can be too much.

“That’s when you need to consider: ‘If I couldn’t work, how many people would be needed to replace me? If I get a critical illness, how much would I need to pay someone to do my share of the workload – and how much would it all cost?”

That’s why Vasseur always highlights the importance of insurance in any financial plan for a farm.

“Insurance helps you manage risk and guard against the unexpected. And that’s something you need to do at every stage of life,” Vasseur said. “As you continue to build your financial base, you need insurance to help protect the assets you’ve saved.

“For instance, long-term-care insurance can help provide needed care so you don’t have to deplete your financial capital.”

For Vasseur, the most important part of financial planning is coming to the process without fear. The future will always arrive, and not having any plan should be the scary part.

“A financial planner is going to look toward the future. We’re going to project your finances and ask, ‘OK, if we just keep doing the same thing, are we going to get where we want to be? And if not, well, then we’re going to make some changes along the way to make sure that we’re going to achieve your goals in the future.”