The Institute of Financial Planning and FP Canada jointly publish the 2024 Projection Assumption Guidelines

TORONTO and MONTRÉAL – April 23, 2024 – The Institute of Financial Planning (the Institute) and FP Canada announced today the joint release of the 2024 Projection Assumption Guidelines and Addendum for professional financial planners across Canada. The new guidelines take effect April 30, 2024.

According to Chantal Lamoureux, LL.B., CRHA, Distinction Fellow, ICD.D, President and CEO of the Institute, "The Projection Assumption Guidelines are important because they allow financial planners to make financial plans knowing that their projections are based on solid assumptions. Reviewed by industry experts each year, the Guidelines are used in the development of simulations, and can therefore help clients achieve their medium and long-term goals."

Launched by the Institute in 2008, the Projection Assumption Guidelines became pan-Canadian in 2015, when the Financial Planning Standards Council (now FP Canada) joined the Institute in developing the tool. The document contains estimates of different rates that can be used for long-term projections (10 years or more). For shorter term financial projections, financial planners can use real rates of return on fixed term investments held to maturity and dividend yields on equities.

The Projection Assumption Guidelines are developed and maintained by a committee of financial planners (individuals who hold the F.Pl. in Quebec or CFP® certification in the rest of Canada) who are also actuaries or hold the CFA designation. The two members of the Committee who hold the F.Pl. designation are Nathalie Bachand and Martin Dupras, both of whom are Institute of Financial Planning Fellows. The Projection Assumption Guidelines Committee is overlooked by the Standards Panel, an independent group comprised of financial planners (F.Pl. or CFP®) and a member of the public.

The Projection Assumption Guidelines for 2024 are as follows:

Inflation rate: 2.1%

Return rates
Short-term: 2.4%
Fixed-income: 3.4%
Canadian domestic equities: 6.4%
Foreign developed market equities: 6.5%
Foreign emerging market equities: 8.3%

Year's maximum pensionable earnings (YMPE) or Maximum pensionable earnings (MPE) growth rate: 3.1%
Borrowing rate: 4.4%


New Considerations for 2024

While stability is an important consideration in setting the Projection Assumption Guidelines, significant changes in expected returns may occur from year to year. To account for this, as of 2024, the market-based expected returns are included in Projection Assumption Guidelines.

An Addendum to the Projection Assumption Guidelines

Since 2017, the Projection Assumption Guidelines are accompanied by an Addendum containing the data sources on which they are based. The Addendum offers financial planners an opportunity to fully understand and replicate the recommended calculations. The Addendum now includes a correlation matrix demonstrating the relationship of return patterns between asset classes.

Further, the Addendum includes a chart outlining the Projection Assumption Guidelines results from 2009 and how they’ve tracked compared to real rates of return over the years. “When looking at the actual rates from January 2009 to January 2024, the Projection Assumption Guideline rates are within the expected range of outcomes, which speaks to the reliability and validity of the projections,” says Derek Dedman, CFP®, M.Sc., CFA, and Chair of the Projection Assumption Guidelines Committee. FP Canada also publishes an FAQ document, which is a useful resource for those who wish to learn more about the development and appropriate usage of the Guidelines.

About the Institute of Financial Planning

As a leader in developing and promoting personal financial planning, the Institute of Financial Planning's mission is to ensure that today’s and tomorrow’s financial services professionals have the knowledge, the know-how and the social skills required to contribute to the financial well-being of people, families, and communities. 

About FP Canada

Established in 1995, FP Canada is a national not-for-profit education, certification and professional oversight organization working in the public interest. FP Canada is dedicated to championing better financial wellness for all Canadians by leading the advancement of professional financial planning in Canada. Visit FP Canada's website for more information.

Source:

Luc Landry,
Vice-président, communications et marketing numérique
514 767-4040 ou 1 800 640-4050, poste 237

Liette Pitre,
Responsable des communications
514 767-4040 ou 1 800 640-4050, poste 235