written by Brent Soucie, CPA, CA
April 22, 2013

Every fall, my in-laws pack their bags and head for Florida, where they enjoy the warm weather and white-sand beaches. Every spring, they begrudgingly load up their van, and head back to Northern Ontario, where they settle for the summer. They stay at my house for a day or two each time they pass through. This weekend was their semi-annual stay, and on Saturday morning, they were welcomed with breakfast and view of a fresh coat of late-April snow. It was interesting to see their reaction, and a strange coincidence that the United States Senate is looking for ways to help alleviate this type of weather shock!

A new and interesting piece of legislation has been tabled for review in the United States Senate. It is entitled the Jobs Originated through Launching Travel (JOLT) Act. One of the provisions of this new act is a proposed Visa for Canadian retirees who spend a fraction of the year in the United States. The new Visa, which is being referred to as the “Canadian Retiree Visa” would allow Canadian snowbirds to spend up to eight months in the United States per year (an increase of two-months from current immigration standards).

written by Roland Chiwetelu, CFP, BComm
April 11, 2013

My colleague Blair Campbell wrote a brilliant piece (here) on the growing knowledge of the risks involved for organizations that sponsor a defined contribution pension plan. I also share the view that a tidal wave of litigation is coming for these organizations. Yet I feel the need to underscore a sense of urgency to this matter. I believe that the timing for this impending doom is linked to the upcoming retirement of the baby boomer generation, particularly the younger segment of this group currently in their fifties.

This particular group was the first to experience defined contribution pension plans for the majority of their careers. This is especially true for those that worked in the private sector. As their older coworkers accumulated years of service in defined benefit plans, counting down until they can break free of their golden hand-cuffs, younger boomers were left to be the sole caretakers of their retirement accounts, navigating the murky waters of recession, volatile markets, and changing policies to tax, investment, interest rate and borrowing. It is no wonder that overwhelming evidence points to the woefully inadequate retirement savings that this group has thus far managed to accumulate. (reference article here)

written by Brent Soucie, CPA, CA
April 2, 2013

As a financial planner who specializes in cross-border financial planning, it is my job to ensure that clients with cross-border tax exposure invest as efficiently as possible, without sacrificing exposure to a properly customized and balanced set of investments (after all, we don’t want to let the tax-tail wag the investment-dog). While there is no escaping a U.S. citizen’s obligation to file an annual income tax return, steps can be taken to ensure tax efficiency (i.e. – the minimization of the combined taxes paid to both Canada and the U.S.).

It is also my job to consider a client’s retirement objectives. My recommendations (i.e. – where to hold your investments, what type of retirement account, what currency, and/or what asset mix) could be very different for someone who is considering retirement in Canada than for someone who is considering retirement in the U.S. My recommendations would also differ if an individual’s ideal retirement location is uncertain.

written by Brent Soucie, CPA, CA
March 25, 2013

As mentioned in my previous post, filing a U.S. income tax return for a Canadian resident might be nothing more than a paper pushing exercise. I’ll give you an example. If a U.S. citizen lives and works in Canada, he or she will have to pay Canadian income tax on the employment income he or she earns. As a U.S. citizen, this person would also be responsible for reporting his or her Canadian employment income on his or her U.S. tax return. The first question that comes to mind is invariably “if I am reporting income on two tax returns (my Canadian return and my U.S. return), does that mean I am going to have to pay tax twice?”. The answer to this question is no. This is due to a double-tax prevention mechanism, commonly known as ‘foreign tax credits’. A foreign tax credit is a virtual dollar-for-dollar reduction in tax that a taxpayer can claim if he or she has already paid income tax to another country on income taxable in a second country. In the example noted above, the taxpayer would pay income tax on their Canadian employment income to the government of Canada, and subsequently claim a credit on their U.S. tax return (against the U.S. tax levied on that same employment income). Because the Canadian tax rates tend to exceed the U.S. tax rates on employment income (depending on what province and what state you are dealing with), this credit typically offsets an individual’s U.S. tax liability in its entirety. Foreign tax credits are non-refundable. In other words, they can only reduce your tax liability to zero (the U.S. government will not give you a refund for tax that you pay to Canada) – the IRS will however allow you to carry unused credits forward for a period of 10 years, in case you need to use them in a future year.

written by Brent Soucie, CPA, CA
March 19, 2013

As this is my first blog entry, I figured it would make sense to introduce myself. I am a Canadian CPA, CA who specializes in cross-border financial planning (including income tax, investment, and estate tax matters). Before moving into a financial planning role here at T.E. Wealth, I spent over five years practicing cross-border tax at Ernst & Young LLP and BDO Canada LLP. I have served a wide variety of clients over the years, including Fortune 500 companies, professional athletes, and small-business owners. In my spare time, I coach minor hockey, and am an Ontario Hockey League scout.
Financial planning is an interesting and rewarding career. On a daily basis, we share our insights and expertise with people who are in need of assistance. A good financial planner will adapt his or her advice to the specific needs of the person(s) he or she is counseling. Different clients from different walks of life can present both complex and challenging circumstances. Very small facets of an individual’s life can drastically change the advice that we offer.
As mentioned above, I have spent the majority of my career advising clients with Canada-U.S. cross-border financial concerns. U.S. citizenship is but one example of how the Canada-U.S. border can cause a seemingly simple situation to become very complex. Specifically, U.S. persons (citizens, residents, and green card holders) who reside in Canada are subject to the income tax regime(s) imposed by both countries.

written by Matthew J. Ardrey, B.A., CFP, FMA, CIM
March 8, 2013

One of the first questions I ask any new client I meet is, do you have a Will? If so, when was the last time you looked at it?

A surprisingly high number of Canadians do not have an up-to-date legal Will. This has significant ramifications for both the family and the community of the deceased. It has been estimated that over $1.5 trillion will pass through estates in the next 20 years. Without a current Will, at best, these assets may not pass according to the deceased’s most recent wishes, or at worst, be allocated by the government based on intestate laws.

Intestate laws are determined by your province. Because of this, the variance in the preferential amount received by the surviving spouse ranges from the first $40,000 – $200,000 of the estate. After this amount is distributed, the remainder is divided among the surviving spouse and children, who inherit their amount at the age of majority. Also, who qualifies as a spouse varies from province to province, but most do not recognize common-law spouses.

When drafting a Will, one of the primary decisions is who will be your executor. The executor is the individual or corporation responsible for making the decisions for the estate. Some examples of this would be: ensuring that taxes and debts are paid, applying for probate or determining that it is not required, making the distributions to the beneficiaries, etc. Though the executor can appoint agents to assist them in their task, the ultimate legal responsibility rests with them.

written by Terry Willis, CFP, Vice President
February 8, 2013

You often hear that you are fortunate if you enjoy your profession or job and waking up every day and getting there is something you look forward to. Growing up I dreamed about being a professional hockey player but what actually happened isn’t half bad.

Last week I had a day that reminded me about why I do what I do. It isn’t very often that I need this reminder but they are meaningful when they happen.

I knew the day was going to be a busy one so I wanted to get to my desk early. It’s not uncommon for me to be at the office by 7:30a.m. but that morning the argument with the alarm clock lasted a little longer. After arriving, I started in on the “morning news” blast I send out each morning to my investment clients. With the markets’ recent surge it hasn’t been as difficult to find uplifting economic/market stories (this is the intention of this communication with clients. Media these days I feel tends to rely too much on shock and negativity).

My first meeting that morning was with a new corporate client. She is an American resident/Canadian citizen so I brought along with me our newest consultant Brent Soucie who has cross-border tax experience. We had a great meeting with her discussing her financial goals, concerns and retirement expectations. I really enjoy meeting new people and discovering their contribution to society – how they do it, why they do it, are they passionate about it and ultimately, how can I help them?

Written by: Robert Broad, Vice-President & Investment Counsellor, CIM, CFA
January 28, 2013

This chart was found online and contained in JP Morgan Asset Management Guide to Markets 2013. The entire package can be found here.

What I like about this chart is the different things people can draw from it. The headline that accompanied the chart was quite negative. The reporter pointed out how the market had attempted to rally past 1500 three times in the past 12 years and each time hit the wall shortly thereafter. Pessimistic investors might assume we will hit the wall again and follow a similar path downward. We think that outcome becomes less likely as time passes.

Written by Winston K. Mundy, CIM, CFA
November 22, 2012

In part 1 of this article, I offered my conclusion that gold has been an effective hedge against inflation, protecting capital and its purchasing power. To help shed some light on why gold has risen in value, we will now investigate which factors may be contributing to a higher gold price.

Written by Winston K. Mundy, CIM, CFA
November 14, 2012

Since the start of the new millennium, the price of gold has moved from roughly $255 per ounce to a peak of $1900 per ounce in 2011, representing a six fold increase in the price of the metal. Along the way, there have been those that have called for a much higher gold price, suggesting that mismanaged fiscal policies on a global scale will lead to higher inflation and a weaker U.S. dollar, each point justifying a higher price for gold. Early projections for $1000 per ounce were scoffed at and projections that ranged from $1500 to as high as $10,000 per ounce were ridiculed as pie in the sky. Alternatively, the bears have argued since the early days of the metals advance that it is in a bubble and is sure to collapse. Professional money manager are divided on gold, some arguing that since gold is difficult to value, it should be avoided as an investment. Many have argued that with no use for gold other than jewelry, that if India is not a big buyer, prices are sure to collapse.

Written by: Blair Campbell, B.A.
October 18, 2012

Recently, I read an interesting article in Benefits Canada magazine (October 4, 2012) entitled, “Legal Risks for CAP Sponsors” written by Paul W. Litner and James Fera. This article examines the current shift towards Defined Contribution pension plans by employers over the once mighty Defined Benefits pension plans. The reason, from an employer perspective is evident; fuelled by the necessity to elude the bogged down, hefty costs and legal risks that were an obligatory element of the DB plan. But what we are just starting to learn is that these Defined Contribution plans once thought to be the new and improved alternative, not to mention much easier on the employers purse strings are carrying with it a new inherent risk; a pandora’s box of future litigation!

Written by: Kathryn Jankowski, Vice -President, Financial Divorce Specialist, B.A, CFP, FDS, FMA, FCSI
October 15, 2012

I don’t know if you remember the investment world in the mid-90’s? The media were focusing on the lack of value being offered by their investment advisors advocating that anyone could pick the best stock picks. The local papers even had a stock-picking, dart throwing contest to see how dart throwing faired against the professionals selection of investment choices. Discount brokerages lapped up the frenzy posting marketing ads with slogans indicating that clients could manage their own portfolios for less cost. It was all great until the bottom fell out of the market with the turn of the century! Then the value of advice seemed to be in vogue again.

What people lost sight of in their euphoria was that this was not financial planning. Investment solutions are only part of the consideration when drawing the roadmap to your future. Calculating your cash flow at retirement, ensuring you have enough but not too much insurance, tax planning so that you are not paying the Canada Revenue Agency more than your fair share and developing an estate plan should also have equal footing in the decision-making process.

Written by: Karen Hall, Vice President, Financial Education & Employer Services, B.Sc., R.F.P, CFP
September 21, 2012

When crafting a Financial Education Communications Program, organizations need to understand their employee populations. Before a program is undertaken, we suggest employee input be obtained through a company-wide survey that covers one or more of the following:

Written by: Blair Campbell, B.A.
September 18, 2012

In my role as a Financial Education Business Developer I come across employers who are looking at ways to best provide financial education programs to their employees. The traditional course of holding group employee seminars is still the champion of the day, with a financial education specialist who can capture the audience’s attention with their knowledge of the subject matter, overall experience and wit. Remember that high school teacher you liked the most? You remember them because they were engaging, funny and somehow made you think they cared. Teachers that left a lasting impression on you had one agenda – YOU. This still holds true when hiring a financial education specialist to teach your employees.

Written by: Marcy Ages, Senior Consultant & Certified Professional Consultant on Aging, B.A, CIM, CFP, CPCA,CLU
August 15, 2012

Does your family have a plan in place in the event that a family member becomes critically ill? Most people assume that they will manage just fine due to disability insurance through their place of work or private coverage. But when was the last time you reviewed your disability insurance coverage? Do you know, for example, that if you do not pay the premiums for the insurance, you will have to pay tax on the proceeds when you receive it? When your insurance coverage is already a percentage of your pay this can be even more of a financial blow to you. Do you know that with many company disability policies you must take any available job after two years even if it is not the job that you were doing before you became disabled? If you do not, your insurance will be cut off.

Written by: Matthew J. Ardrey, B.A., CFP, FMA, CIM
August 14, 2012

With all of the turmoil and volatility in the markets over the past few years, the question of fees has moved to the forefront of investor consciousness. The impact of fees on long-term returns has been known in the industry for some time, but it is now being highlighted more frequently in the financial press. This gives rise to questions in most investors’ minds, such as, “What fees am I paying?” “How are fees impacting my long-term investing goals?” and “What are my alternatives?”

One of the more familiar investment structures is the mutual fund. The mutual fund can have several types of fees attached to it. Some of this depends on who is selling you the fund. One constant fee will be the Management Expense Ratio (MER). The MER is the fixed percentage that you pay annually to fund for the management costs of the fund. These costs on an actively managed equity mutual fund can run between 2% – 2.5%.

Written by Warren J. Baldwin, Regional Vice President, CFP, R.F.P., CIM
August 2, 2012

The familiar refrain in the movie Ghostbusters was “who you gonna call?”

Over the years I have spent as a personal financial advisor, I am reminded of this simple statement many times by clients who call me with regard to all manner of questions. Many events impact one’s financial life such as the obvious ones like retirement, getting a new job, or becoming disabled or having a spouse or other dependent who becomes disabled. Clearly these are situations where a financial advisor would be working with a client during these events or in advance of them.

Written by: Nicholas J. Miazek, Consultant & Manager Financial Planning, CFP

Financial planning as a profession is one open to a wide swath of interpretation, filled with practitioners of different stripes, varying degrees of education and, unfortunately, with minimal standardization and regulation. We are often referred to as Financial Advisers and perceived primarily as investment product providers. In pursuit of your assets. There are many consequences to this perception of our profession, one being that many people do not experience the benefits of genuine financial planning and its resultant advice, separate and detached from any investment advice they could receive.

Written by: Robert Broad, Vice-President & Investment Counsellor, CIM, CFA

This is the final posting in a three-part series.

As noted in the first and second parts of this three-part series, we would like to continue the conversation on some of the “innovations” in the investment industry that have not made it into the hands of our clients. In this third and final installment, we will talk about hedge funds and private equity.

Hedge Funds and Private Equity

Many large institutional investors have moved a greater part of assets away from public markets and into alternatives such as hedge funds, private equity or infrastructure holdings. The argument for doing so is sound. The idea is to find un-correlated and stable return streams that do not depend on the day-to-day movements of public equity markets. This makes a lot of sense for large institutional investors who can access these types of investments at reasonable prices, and also have the time horizon to take advantage of investments that may ideally be held for decades or more.

We agree that what makes sense for large institutions often makes sense for smaller investors as well. However, the problem in this space is finding products in the market that suit high-net-worth investors. The industry in Canada doesn’t seem to be mature enough to provide many of these opportunities.

Written by: Terry Willis, CFP, Vice President
May 17, 2012

I read an article the other day about the wife and family of Ruslan Salei, the Belarus hockey player who, along with 43 others, died in the Lokomotiv plane crash in September of last year. Ruslan was only 37. The article spoke of how the family, and specifically his wife Bethann, have been coping since that horrific day. Obviously, it has been a challenge for her. A single mom now, raising three young children would be hard for anyone. Before his death, he and Bethann had made a deal: she would take care of the children; he would take care of her. Now it was all on her shoulders.

Luckily they had found time to ask the question, ”what could happen?” Bethann and Ruslan had been together for 14 years, married for six, and were raising a family with a home in California and another in Belarus. Ruslan had accumulated plenty after collecting NHL pay cheques for 14 seasons (just over $22 million) and this year in the KHL was another year of guaranteed money. So when answering the ‘what could happen?” question they found themselves at an attorney’s office in July 2011, putting the finishing touches on their wills, planning the estate and setting up trusts for the kids. This is what good financial planners do— they ask their clients the difficult questions, not necessarily the same questions everyone is concerned about at the moment. A good financial planner would not primarily focus on how to invest $22 million, but takes the client’s entire financial situation into consideration.

Written by: Robert Broad, Vice-President & Investment Counsellor, CIM, CFA

This is the second in a three-part series.

As noted in the first part to this three-part series, we would like to continue the conversation on some of the “innovations” in the investment industry that have not made it into the hands of our clients. While we are not against these ideas all of the time, or for all people, our belief seems to be that simple and understandable is better.

Principal Protected Notes (PPNs): These products, which have some similarities to index-linked GICs, were huge through the first half of the last decade. The goal was to participate in the growth of some sort of portfolio, while preserving the capital value in the event of market declines. The manager or sponsor set aside enough money with a third party financial institution to guarantee the return of principal at maturity. The balance was then invested to generate a return. Typically investors had to commit their money for anywhere from five to ten years in order to take advantage of the capital guarantee.

Many of these PPNs got more and more confusing as time went on. They started out being based on simple indexes. But then returns were linked to individual stocks, managed portfolios, commodities, and all sorts of obscure combinations. And the exposure to the underlying portfolio also became more confusing with many funds using leverage and unusual “portfolio insurance” strategies. A large number of these instruments did not make it through the crisis. While most delivered on the principal guarantee, many had to shut down the managed portfolios (and potential for upside) when markets declined beyond a pre-determined breakeven point. There are still some investors waiting for the guarantee period to run out in order to get their original investment back.

Written by: Robert Broad, Vice-President & Investment Counsellor, CIM, CFA

This is the first in a three-part series.

Our approach is to find solutions that work and stick with them. Generally, we wouldn’t buy into an approach unless we thought it was going to work for the long term. Markets won’t always cooperate, but sound investment approaches should provide value over time. This can be misconstrued as a lack of activity, but people are often unaware of the work going on behind the scenes.

Occasionally, our clients wonder if there are more exciting things they should be doing with their investments. We are always on the lookout for new ideas and approaches that might benefit our clients. The reality is that there aren’t all that many worthwhile new ideas! Investing is pretty basic: blend together stocks, bonds and cash to participate in the long-term growth of the globaleconomy. If we can find more opportunities for diversification and
enhance returns, we’ll take full advantage. But, in the retail or high net worth space it is seldom that easy. Sometimes investing is about what you don’t buy, rather than what you do.

Written by: Marcy Ages, Senior Consultant & Certified Professional Consultant on Aging, B.A, CIM, CFP, CPCA, CLU

You’ve spent months working with your financial planner to put together a plan that covers all of your financial planning needs. You’ve reviewed your investments, your insurance coverage, your estate planning and whether or not you can retire when you want to, on your terms. But you never mentioned to your planner that both you and your spouse have parents who are elderly and are starting to show signs of ill health. You have not included a crucial item in your plan for a successful retirement.

Written by: Kathryn Jankowski, Vice -President, Financial Divorce Specialist, B.A, CFP, FDS, FMA, FCSI

The mention of the Financial Divorce Specialist (“FDS”) designation conjures up various ideas and definitions. What does the designation have to do with the role of the financial planner?

Let’s start with what it is not. An FDS does not replace a lawyer, or negotiate the financial issues around a divorce with a soon-to-be-ex which are, all too often, assumed the responsibility of the FDS. So, what then, does a Financial Divorce Specialist do?

If we were to break it down there are up to three issues to be negotiated when divorcing: children custody, children access and division of the financial pie. When negotiating the financial piece the solution is not as simple as dividing half of every asset. What needs to be divided is net family property. Consequently, assets are allowed to be swapped. For example, RRSP assets can be floated over to the “ex’s” side of the balance sheet in favour of keeping more equity in the family home, especially if it’s an asset you intend to keep. Where an FDS’ expertise is important is how your financial future plans pan out once you give away your existing retirement funds. Have you done a financial budget? Can you afford to keep the house? Are you able to save for the children’s education? What do you need to reconsider with respect to re-writing your Wills and Powers of Attorney? What are your financial goals going forward, on your own?

Written by: Karen Hall, Vice President, Financial Education & Employer Services, B.Sc., R.F.P, CFP

When employees know what it means to them.

Let’s consider Jade, perhaps a typical employee in your company. What does that year end pension or Group RRSP investment statement mean to her? If she sees an account balance of $115,000, is it just a number? Or, does she have the knowledge and tools to convert that number into an income stream, and relate it to her future retirement income needs? With that knowledge, Jade’s statement suddenly has meaning.

Where does Jade go to get the tools needed to understand her statement? She’s looking to you, her company, to provide them. If you, the plan sponsor provides this information, great. However, the issue facing most organizations is the information that is supposed to build awareness and understanding is not being accessed by the employees. Or, alternatively, too much information is provided all at once, which may overwhelm employees.

Written by: Robert Broad, Vice-President & Investment Counsellor, CIM, CFA

These days, more and more investors, including our clients, are asking whether their portfolios should include Exchange Traded Funds (ETFs). With lots of positive press lately investors are interested in the possibility of a lower cost, more readily understood portfolio approach. We thought it would be useful to share our opinion on these products.

Written by: Warren J Baldwin, Regional Vice President, CFP, R.F.P., CIM

Savings has been described as consumption deflected. Of course, savings is what you don’t spend on consumption of either services or products. Canadians used to be terrific savers, however within the last few decades our savings levels have plummeted while levels of debt have now almost never been higher.

Written by: Nicholas J. Miazek, Consultant & Manager Financial Planning, CFP

Joe called one day, a day no more unusual than many of the others before it; markets were swinging, headlines were screaming of calamity, impending doom. The media seemed to be competing for who could come up with a worse case scenario. Joe was not sure his asset mix was appropriate at this time; he felt that something, possibly something big, was coming over the horizon. He wanted to get out of the markets, not for long, but just until he felt the markets were going to be less risky, a month or maybe three. He was worried his retirement may be at risk, the income stream he draws from his portfolio in jeopardy.