Understanding what flows through your estate

At every stage of our client’s lives, we feel they should have an up to date will.

Unforeseen events can happen and planning is essential to ensure your assets and estate are distributed according to your wishes.

The term “estate” can be used different ways. For purposes of this article, we will refer to any assets that are divided according to your will as forming part of your estate.

Below we will illustrate the “estate” term using various options that a client has with respect to their investment accounts, both registered and non-registered.

Registered accounts

Examples of registered accounts are Registered Retirement Savings Plans, Registered Retirement Income Fund, Locked-In Retirement Account, Locked-In Income Fund and Tax Free Savings Account. When a client opens a registered account, one of the questions we ask them relate to who they would like to name as beneficiaries. A client can name an individual(s) or simply name the estate as beneficiary.

In the majority of cases, couples will name their spouse the beneficiary of RRSP/RRIF accounts to obtain the tax deferred roll-over to the surviving spouse on the first death. With a TFSA, benefits exist for naming your spouse as the full amount of the deceased’s TFSA can roll into the surviving spouses TFSA without using up the survivor’s contribution limit. When a person or persons are named beneficiary on a registered account it essentially bypasses a person’s estate.

Individuals also have the option of naming their “estate” the beneficiary on their registered accounts. When “estate” is named, it is extra important for clients to have a will. Essentially, your will divides all registered accounts where “estate” is named.

In reviewing a client’s will, we have at times noted conflicts with what the will says and who the named beneficiary is on a client’s account. Some clients will want to specifically put account numbers and types of accounts within a will. This is not necessary if you have named beneficiaries on the accounts. It also can add confusion in your will if you leave certain accounts to certain individuals within your will — the specific outcome may not be as desired as the account values will change over time. In the majority of cases, we encourage clients not to mention the types of accounts and account numbers within a will. We encourage clients to focus on having a detailed plan with respect to their overall estate.

Non-registered accounts

Common types of non-registered accounts include individual, joint tenancy, tenancy in common and corporate accounts. Couples typically like to have investment accounts held in joint tenancy. Most joint tenancy accounts will have both couples names and then “Joint With Right of Survivorship” or “JTWROS” after the names.

Typically, with a JTWROS for couples, on the first passing, nothing flows through the deceased’s estate. In other family situations (i.e. not a spouse) where accounts have been structure for estate planning purposes only this may not apply. The surviving spouse would essentially bring us in a copy of the death certificate and notarized copy of the will.

Once these documents are brought in, we would have a couple of documents for the surviving spouse to sign (i.e. Letter of Indemnity and new account documents). Typically, a new individual account is opened in the name of the surviving spouse and then the securities would be rolled over as they are, including the book values, into the new account.

When a person passes away with an individual account or holds a percentage of assets in a tenancy in common ownership within their account, this would flow into the person’s estate.

Probate and executor fees

There are no probate fees for estates under $25,000, 0.6 per cent on the portion of the estate from $25,000 to $50,000, in B.C. The maximum compensation is five per cent for executors in B.C.

With couples, we typically try to arrange joint tenancy on all assets to ensure probate can be avoided on the first passing. In many cases, couples name each other executors to eliminate or reduce the executor costs.

In some cases, such as complex family situations (i.e. second marriages, children from a previous relationship), it is not always possible to avoid probate and executor fees to achieve your primary goals. Your primary goals will trump other goals such as avoiding probate and executor costs. In some situations, it is best to structure things so that probate and executor fees may apply.

Certainly on the second passing, it becomes more difficult to avoid probate and other costs such as legal and accounting. In some cases we are able to set up family meetings to deal with complex situations or to do further estate planning after the first passing.

Charts and visuals

I often use charts when discussing estate planning. I find it can be useful to help clients understand and visualize the purpose of a will. I’ll start the process by drawing a bucket in the middle of a blank page. On the bottom of the bucket I will write the word Estate. On the top side of the bucket, I will write the word will. I then pause to make sure that the clients understands that the will only divides what goes into the bucket. Many things can be structured to avoid the bucket altogether (i.e accounts that have named beneficiaries and JTWROS accounts).

On the left hand side of the page, I will begin listing all the assets that the individual has. Examples of typical asset listed include an RRSP, TFSA, boat, vehicle, bank account, non-registered account, house and life insurance policy. In each one of these examples, we draw a line to see which part of your estate flows directly to the bucket and which part of your estate flows directly to a beneficiary or joint owner.

We also draw a faucet on the right hand side of the bucket. The faucet represents probate fees, potential executor fees, accounting fees, legal fees and other costs outlined in the meeting.

Primary estate goals

Minimizing probate fees and executor fees are typically in the secondary goal category. As much as clients would like to avoid unnecessary fees, it should never trump achieving your primary goals. During an estate planning meeting, the majority of the time is spent mapping out details of your primary and secondary goals. Primary goals could be specific directions with respect to income taxes, protecting assets, succession planning for a business, asset distribution and transition, providing for family and friends and charitable giving.

These estate planning discussions are done to hopefully ensure all is structured correctly. Once we know what you are trying to achieve then we can compare your goals, both primary and secondary, to your existing will to ensure the two are aligned. If they are not aligned, then we could, in conjunction with your other professional advisers (lawyer and accountant), provide options or suggestions. Another goal of these discussions is to ensure your estate is distributed in a timely manner and to manage expenses and taxes in an efficient way.

Kevin Greenard CPA CA FMA CFP CIM is a portfolio manager and director, wealth management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week in the Times Colonist. Call 250-389-2138.

 

Updating your list of key contacts

We begin every meeting with our clients by reviewing a summary sheet of key macro items we believe are important for the client to either understand or communicate to us.

We provide new clients with a financial checklist to take home, fill out and return to us either by email, mail or at our next meeting. In many ways, it is similar to if you were visiting a medical professional for the first time. In order for the medical professional to best help you, they would need to know both your and your family’s health histories.

The purpose of this article is to outline some of the reasons why we ask for this information.

Accounting information

Do you prepare your own tax return or do you have someone prepare your taxes on your behalf? If you have an accountant, then at a minimum we obtain the name of the individual(s) you work with, the firm name, mailing address, phone number, fax number and email. We also like to know when the relationship began. If you do not have an accountant, then how is your return prepared (software package, paper version, family member)? We have all new clients complete a Canada Revenue Agency (CRA) representative form as a starting point. With your consent, this enables us to get some background information and all carry-forward limits. We obtain alerts from CRA when our clients get new mail (Notices of Assessments, reassessments, review letters). Often we are able to review this before our clients receive it. If we are not able to assist the client directly, then we can point them in the correct direction.

For our corporate clients and incorporated medical professionals, it is important for us to speak at least annually, if not more frequently, with their accountants. We can provide the accounting firm with the information they require to expedite the preparation of corporate and trust returns. It also enables us to document the structure, shareholdings, and overall strategy with respect to tax sheltering, dividend payments and wages. This information needs to be consistent with all financial planning documents we prepare.

Legal information

One of the sections on our professional checklist requests details regarding the lawyer and notaries you work with. For our corporate and trust clients, they may have a different lawyer to help with the structure, records office and minute filings. All clients should have a notary or lawyer that helps prepare their personal legal documents. This is perhaps the area where we have to nudge clients along a bit as the natural tendency is often procrastination.

The benefit of us asking new clients to fill out the professional checklist, and asking existing clients to update or provide this information, is that it encourages people to dedicate time to get it done. The most basic of questions we ask is whether our clients have a will. We believe it is important to know when it was last updated, where the original(s) are kept and who the executor and alternate executors are? We also advise clients that we do not prepare wills and don’t require copies of our clients’ wills unless they have questions and concerns. When we have estate planning meetings, I will always want to know how our clients ultimately want their estate distributed. If the will does reflect their most current wishes, then I will work with their lawyer to ensure it is updated.

We also obtain details regarding power of attorney, including legal, bank, and financial information. Unlike wills, there is no registry for powers of attorney. We ensure that we document details that clients provide, and request that they confirm no changes at every meeting. In cases where clients are aging we will encourage them to bring the representatives that they trust in to meet with us prior to a situation where the client’s capacity can be questioned.

Often the legal section of our checklist is returned without the requested information or incomplete. In some cases, it may be because the client didn’t understand the question or that it is not applicable. Many people want to know about the different types of power of attorney and health care directives (i.e. representation agreement) available, but have never really talked to anyone about it.

Perhaps the most important part of this exercise is that it enables our clients to open up about personal situations that have been bothering them. After working with clients for a couple of decades, there are very few situations that we have not found solutions for if clients want to talk about it.

Banking information

When clients first open up accounts, they must provide a copy of a void cheque to ensure we have the correct details. In some cases, we have clients who have multiple bank accounts at different institutions. Many couples have joint accounts. Some clients choose to have individual accounts. Our elderly clients have, at times, had questions about setting children up as power of attorney on bank accounts and investment accounts or setting them up as joint owners. We try to both simplify our clients banking needs while at the same time ensuring they understand the pros and cons of each decision that they make.

Every investment account is linked to a bank account. It is possible to have different bank accounts linked to different investment accounts. That can get a bit confusing, especially as our clients are aging. We generally encourage closing unnecessary accounts and consolidating them into one Canadian chequing account. In this one account you can have all your deposits transferred in including CPP, OAS, RPP pensions, and withdrawals from your financial institution. Establishing a good relationship with one banking institution makes sense to have one point of contact. It makes cash-flow planning and taxation administration easier. Whenever our clients change their banking information they must let us know so we can update the applicable link to the investment account(s).

Insurance information

When clients come to the insurance section of the checklist, people often don’t have a clear understanding of what insurance coverage they have. Some may have had insurance they purchased years ago, but are fuzzy on all the details. Sometimes clients bring in policies that have lapsed, have been replaced, or converted. In other cases, they are fully in force. For existing in-force policies, we document all details, including why the insurance was initially put in place. We also obtain details of the cost of insurance and any periodic cash-flow needs to fund. In some cases, the insurance is fully paid up. In other situations, premiums are set to be paid monthly or annually normally. When we see monthly premium payments, we normally talk to the client about converting to annual as the cost of insurance is typically slightly lower. With annual payments we are also able to coordinate payments from a non-registered account to insurance companies on our client’s behalf. We ensure that cash flow is available to fund and we can make the payment direction, similarly to us making installment payments to CRA.

In some cases, our clients have no insurance and they do not need insurance. In other cases, our clients have young families, or have significant debt loads, partnership agreements, compliance with separation agreement clauses, etc. When there is an obvious need we will outline how risks can be managed in the scope of an overall financial plan.

Asking questions about insurance and obtaining details of all in force policies enables us to understand the full picture. One of the side benefits of gathering all insurance details is that it is required information to complete a comprehensive financial plan. Within a financial plan, a section covers insurance. Insurance can often help provide solutions to concerns, protection, taxation benefits, and estate maximization and ensuring asset transfers after taxes have been paid.

Family information

For every client, we request that they provide us some background of their family dynamic, usually via a family tree, starting with details on their parents. If their parents are deceased, then we request that they provide their age at the point of their death. This type of information is useful from a genetic footprint standpoint. In situations where parents are still living it opens up many discussions. Are your parents currently dependent on you or will they need assistance as they age? In some cases, we will encourage our clients to bring their parents in and we can assist them with any questions. When parents are living, there will likely either be some form of future cost (i.e. extended care, funeral costs) or future inheritance. This information is useful when mapping out future cash flow needs and financial plans.

Obtaining details about siblings is also important, as they, too, can provide information from a genetic standpoint. We have many situations where we can set up siblings and our clients on joint family accounts if the situation is right. When siblings open up accounts, it provides more options for estate planning with parents, such as in-kind distributions. Siblings can also be an option with respect to executor and powers of attorney depending on proximity, age and knowledge level.

Information on children and grandchildren is also important to know. For younger children and grandchildren, the discussion can initially focus on setting up Registered Education Savings Plans. We will often discuss with our clients what type of assistance, if any, they want to provide to any minor children once they become adults. In some cases we have clients that feel they have no obligation to assist their children after they leave them. Some feel they feel an obligation to fund education costs only. Others want to extend the assistance to helping their children purchase their first home. Every client is different and we try to get an initial understanding of where they are within this wide spectrum.

When family members combine accounts at one institution, it is referred to as “house-holding.” As overall asset levels rise and reach certain thresholds, then fees as a percentage can decline for all family members.

We also want to obtain details outside of a family tree if non-family beneficiaries are listed on life-insurance policies and registered accounts. At times, we have had beneficiaries that live overseas and have been challenging to reach. Making sure we have up-to-date addresses and phone numbers of key individuals that are part of your estate plan.

Finally, many of our clients have pets that are an integral part of their family and have concerns about what will happen to them as part of their estate. We can provide solutions that give pet owners options and peace of mind.

Other information

With extended families and complicated family situations we ask our clients to provide marriage contracts, prenuptial agreements or any information that gives us a complete understanding. We also ask clients to provide any additional details that they feel we should know. Stated another way, are there any specific concerns that are bothering them?

Kevin Greenard CPA CA FMA CFP CIM is a portfolio manager and director of wealth management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week in the Times Colonist. Call 250-389-2138.

 

Time management helps with work-life balance

Getting the most out of your day involves a significant amount of organization and goal setting.

Working on your big-picture goals may take some time.

Sometimes you have to stop everything you’re doing and step back to establish your work-life balance goals. Although you may lose some time in the short-term, you will be on track to saving significant time in the long-term.

First, working on short- and medium-term goals that have actionable steps will lead to your bigger long-term goals. It is surprising how doing multiple little changes can free up more of your time.

One of the biggest time wasters is spending too much time on things that we are not experts at. If you believe “time is money,” then spinning your wheels on something that requires specific expertise is a mistake.

Opportunity cost

One of my favourite lessons in microeconomics is the concept of opportunity cost. The concept can be applied at various levels. To illustrate, let’s assume Louise can earn $80 an hour doing her self-employed professional job. Louise has a small home that needs a paint job, but also wants to have some vacation time. Louise has the option to either hire a painter or take time off work and paint the house herself. The painter could paint the house in four days (32 hours). The painter’s hourly rate would be $30. The painter has the tools and the expertise to paint the house quicker. It would likely take Louise six days (48 hours) to paint the same house. From a purely economic standpoint, it would make no sense for Louise to paint her own house. If Louise hired a painter, she would have to pay $960. Louise would lose $3,840 in lost income if she decided to do this herself. Although she would save $960 by painting the house herself, she would either lose six days of her vacation time or lose $3,840 in lost earnings. Either way, Louise should likely not paint her own house.

Hiring a wealth adviser.

The same concept of opportunity cost can be applied to financial services. Whether working or retired, individuals have the choice to either manage their own money or getting a wealth advisor. An adviser would have all the tools and the expertise that will hopefully save their clients a significant amount of time. If in the short-term, you spend time finding the right wealth adviser, this should save you a considerable amount of time in the long run.

Consider a managed account

Portfolio managers are also able to offer managed accounts that enable them to execute trades on a discretionary basis. It is not necessary for the portfolio manager to talk to you about every trade in your account. You will know that if you are busy, away on holidays, or simply have other interests — someone is always keeping an active eye on your finances.

Periodic phone meetings

Not every meeting with your wealth adviser has to be done in-person. When your time is limited, you can ask your adviser to set up a phone meeting. As a suggestion, you can rotate in-person meetings with phone meetings. Some clients would prefer not to deal with traffic and parking. When phone meetings are set up, we will send the agenda, holdings detail and recommendations out ahead of time by secure email. The benefit of the phone meetings is that you can look at the documents before the actual phone conversation.

Consolidating accounts

Handling less paperwork will help you get more out of your day. For risk management and efficiency purposes, we encourage clients to consolidate accounts with one financial firm. Having multiple RRSP and TFSA accounts, at different investment firms, increases the amount of time you need to effectively manage your overall holdings. Position size, sector diversification, geographic exposure and underlying holdings are all easier to manage if you are at one financial institution. You will also have fewer income tax slips come tax time.

Online access

Online access allows you to look at your investments at your leisure, either through a phone app or via a website. Once you have online access set up, you also have the option of going paperless. This can save you time in the long run either looking information up or not having to file or shred paper copies that are mailed to you. Online access will assist you in getting rid of some of the paper clutter and knowing that your financial information is always available at your fingertips. Paperless option also ensures that you will not be impacted in the event of a postal strike or disruption to mail service.

Agenda items

One of the most important parts of meetings is for us to stay connected with our clients on important financial cash flow updates and issues outside of financial items. I encourage clients to email me any specific questions prior to our telephone meeting or in-person meetings. We will always add those specific items to a meeting agenda and ensure the proper amount of time is allotted to cover everything. As wealth advisers, we realize that not all goals are financial. In many cases it takes financial resources to achieve non-financial goals. If you have a life event or a situation in your life that is concerning you we have likely had a past client that has gone through something similar. We can either propose options to you that will save you time or point you in the direction of the right people to talk to.

Kevin Greenard CPA CA FMA CFP CIM is a portfolio manager and director of wealth management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week in the TC. Call 250.389.2138.

 

 

 

The snowball effect on net worth

Over the years I’ve had many people ask me for advice for someone wanting to improve their financial position. Below are a few of the concepts of how people generate wealth over time. These may seem like elementary concepts but can be valuable for someone new to investing.

Savings trumps investing

The first concept I want new investors to learn is that savings is more important than investing initially. I can illustrate this with a simple example of Jack Jones who is 35 years old and has $50,000 in capital to invest in his RRSP.

Let’s make the assumption that Jack can make six per cent a year on his investments. If Jack does not contribute to his investment account then his account balance at the end of the year is $53,000.

In talking to Jack, we encouraged him to think about saving $500 per month (or more), this would contribute $6,000 per year to his RRSP. The investment return only contributed $3,000 to annual growth whereas the savings was $6,000 in one year, far greater than the investment returns.

If Jack is serious about improving his wealth over time, then savings initially is the key until the account value gets built up.

The snowball effect

Visualize yourself as a kid making a snow man. You would start with a small snowball and then begin rolling it on the ground. As it rolls it gets larger. The more you roll it, the more rapidly the growth occurs. The snowball effect can be described as both good and bad.

The bad snowball effect relates to when people get themselves into a bad debt situation.

Examples of high interest debt include: delinquent bills, credit cards, non-favourable business loans, car loans, and other personal loans. Spending beyond your means is a sure way of destroying wealth accumulation.

If interest costs and debt are spiraling out of control then it leaves little discretionary cash flow after each pay cheque. In the worst scenarios, net worth is declining every month.

The good snowball effect positively impacts investors who have accumulated significant savings/investments. Up above we mentioned that savings is more important for Jack. Below in a table we have outlined the growth for Jack’s portfolio over 10 years, assuming he doesn’t contribute and makes a six per cent annual rate of return.

Beginning balance Return Ending balance Accumulated earnings
Year 1 $50,000.00 $3,000.00 $53,000.00 $3,000.00
Year 2 $53,000.00 $3,180.00 $56,180.00 $6,180.00
Year 3 $56,180.00 $3,370.80 $59,550.80 $9,550.80
Year 4 $59,550.80 $3,573.05 $63,123.85 $13,123.85
Year 5 $63,123.85 $3,787.43 $66,911.28 $16,911.28
Year 6 $66,911.28 $4,014.68 $70,925.96 $20,925.96
Year 7 $70,925.96 $4,255.56 $75,181.51 $25,181.51
Year 8 $75,181.51 $4,510.89 $79,692.40 $29,692.40
Year 9 $79,692.40 $4,781.54 $84,473.95 $34,473.95
Year 10 $84,473.95 $5,068.44 $89,542.38 $39,542.38

After 10 years, Jack’s net worth would have accumulated to $89,542. Over a 10-year period, Jack’s net worth increased only $39,542.

Another example: Jill Jones has $1,000,000 in an investment account at the beginning of the year. Below we have put a similar table for Jill assuming she earns the same six per cent rate of return and makes no further contributions.

Beginning balance Return Ending balance Accumulated earnings
Year 1 $1,000,000.00 $60,000.00 $1,060,000.00 $60,000.00
Year 2 $1,060,000.00 $63,600.00 $1,123,600.00 $123,600.00
Year 3 $1,123,600.00 $67,416.00 $1,191,016.00 $191,016.00
Year 4 $1,191,016.00 $71,460.96 $1,262,476.96 $262,476.96
Year 5 $1,262,476.96 $75,748.62 $1,338,225.58 $338,225.58
Year 6 $1,338,225.58 $80,293.53 $1,418,519.11 $418,519.11
Year 7 $1,418,519.11 $85,111.15 $1,503,630.26 $503,630.26
Year 8 $1,503,630.26 $90,217.82 $1,593,848.07 $593,848.07
Year 9 $1,593,848.07 $95,603.88 $1,689,478.96 $689,478.96
Year 10 $1,689,478.96 $101,368.74 $1,790,847.70 $790,847.70

The larger the accumulated savings balance, the larger the potential accumulated earnings and the greater the snowball effect of accumulating wealth, especially over time. It is tough to get the full snowball effect until one has saved enough to get the base level of capital.

Although Jack and Jill both made six percent, Jill was able to accumulate $790,847.70 of additional wealth, while Jack only accumulated $39,542.38. Jill is fully able to take advantage of the snowball effect in a positive way. The magic of compounding investment returns is magnified when you have accumulated enough savings — making money on money.

Investing rather than speculating

Investing is the concept of thinking longer term and picking solid well run companies. Speculating is more short-term type trading that may or may not have the desired long term outcome. The probability of making a mistake and moving backward when speculating is higher.

We would rather encourage savings and investing rather than speculating.

Kevin Greenard CPA CA FMA CFP CIM is a Portfolio Manager and Director, Wealth Management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week in the

 

 

The Greenard Group’s 10 principles on how we pick stocks

Over the years I have been asked several times how we pick our stocks. The process for picking stocks really begins with our overall investment philosophy. All decisions are made in the context of achieving the best risk adjusted returns for the entire portfolio over a medium to longer term. Returns can be achieved through both distributions to shareholders (i.e. dividends) and share price appreciation. Here are a few principles we consistently have used over the years:

1) Zero speculation

Nearly all of our clients have one primary investments objective — capital preservation. Our clients have worked really hard for their money and they don’t want to lose it.

One of the guiding principles we believe in when picking stocks is investing for long term rather than speculating on any short term volatility. Sometimes people have asked me what the difference is.

One of the ways that I have described it is the mind set of thinking longer term (investing) and avoiding the temptation of shorter-term (speculating). It can be tempting to jump on the latest craze or hot stock pick suggested by a friend or neighbor in the hope of a significant gain in a shorter period of time.

One client told me years ago that he likes to grow wealthy slowly. He was willing to forgo all short term significant gain opportunities to ensure his capital was prudently invested in solid well-known companies. Avoiding the mistakes was more important than trying to hit home runs.

Although we steer away from giving advice for clients wishing to purchase speculative names, our general comment is to keep the position size small, hold it in a non-registered account (to claim the loss if it does not work out) , as future performance data will be impacted if our model portfolio recommendations are not adhered to.

2) Large capitalized companies only

Another guiding principal is avoiding smaller and medium capitalized companies. From our experience, the smaller and medium sized companies often have greater levels of volatility and greater risk.

Our equity selection process focuses 100 per cent on the largest capitalized companies within Canada, United States, and outside of North America. Our screening process first begins with approximately 1,200 constituents companies as follows the 500 largest companies in the U.S., the 350 largest companies in Europe, the 250 largest companies in Canada, and the 100 largest companies in the Asia/Pacific region.

We feel that a portfolio biased only to Canada has, and will continue, to underperform other markets over time. Although 1,200 individual companies may still seem like a lot, once the other principles below are applied the subset of companies narrows and becomes reasonable.

3) Corporate profitability

We will never purchase a company that is not profitable. The most simple of ratios to look at when assessing profitability is Earnings Per Share (EPS). If a company is not making money, it is automatically excluded. Projected growth in earnings or future outlooks provided by analysts can provide a good rationale for what will drive growth in earnings for the company.

We spend a significant amount of time reviewing internal and external research reports from analysts — with both positive and negative comments. Past profitability normally gets a company on the initial subset of companies to be considered, though future and current profitability are even more important.

4) High capital efficient companies

What does “high capital efficiency” mean? Let’s break it down to two terms we use returns on invested capital (ROIC), and free cash flow (FCF). All companies finance operations either through the issuance of debt or equity. The cost is the interest rates on the debt and dividend expectations on the equity.

Leverage is perhaps the one component we will focus on. A company that has internally sourced capital is always in a better situation then one that relies on external capital. A company that has low financial borrowing costs and leverage will have less dependence on external financing and external events. The more predictable a company’s ROIC and FCF are the better.

5) Lower leverage

If a company is profitable it can naturally expand its operations organically (with its own profits). If a company wishes to grow faster than the current profits allow, then it must choose to issue additional equity or debt to finance assets purchases or acquisitions.

Many advisers will look at various ratios to screen for good stocks. The financial leverage ratio is definitely worth looking at. It is relatively easy to calculate. From the financial statements you must determine the total debt of the company and the total equity held by shareholders. You simply divide the total debt by total equity. The normal rule of thumb is that this should not be above a level of 2.0, though some exceptions exist.

Leverage is essentially when a company borrows money with the expectation that the profits made from borrowing the money will be greater than the cost of the amount borrowed (i.e. the interest costs) . If a company is financing its operations by continually taking on debt and other liabilities then naturally it is riskier than a company with less leverage. This is especially the case in periods when interest rates are rising.

6) Prudently managed

Investing in companies that are prudently managed is a key component to any quality stock. This is particularly important as the landscape is constantly changing and we have to feel confident that management will make prudent changes to stand the test of time. Understanding what the company does is fundamental to selecting the stock. Management of the company should be able to provide information that makes sense.

A simple starting point is the company’s annual reports which are all available on each company’s website. My favourite section to read in financial statements is the “Management Discussion and Analysis”, also referred to as the MD&A.

An independent auditor must prepare and audit the company’s financial statements. The information is historical which immediately discounts its use from a planning standpoint.

The one exception is the MD&A statement. Although this statement is not audited it does give the management’s opinion on the current results (compared with previous results) and provides a forecast of future operations. Thoughts and opinions can be expressed that should include both positive and negative information. After reading the information you still don’t understand what the company does, or you do not agree with the future direction, then it’s best to avoid.

7) High cash in-flow

High net cash in-flow, consistent cash flows, and predictable cash flows are all attractive features to equities we add to the portfolio. If a company has a “burn rate” (term used to describe a company losing money and how quickly the company’s shareholder equity will be used up) it is automatically excluded on several grounds. A company must have high net cash-in flows to be considered in the model portfolios.

If companies have consistent earnings that are also predictable, we often refer to this as having an annuitized income stream. Royalty rights, contract obligations, licensing, subscription revenue, locked in contracts, membership fees, renting/leasing can all be sources of annuitized cash flow.

8) Competitive advantages

Within Canada, our favourite companies to invest in are those with a competitive advantage. We love companies that have a natural monopoly. Any business or industry that is capital intensive and has a high cost to entry is worth considering. In Canada we have some examples, such as banks, telecommunication, railways, and utilities.

We feel that well established companies that have competitive advantages are generally lower risk and have more predictable cash flows. They are lower risk in the sense that they do not have the immediate threats of new entrants to replace the product or service.

9) Corporate governance

One of the components we review is overall transparency and how that may impact shareholder returns. Transparency begins with the company policies, controls, compensation for executives, and communications to shareholders. We ask ourselves, is management providing clear information on the direction of the company that is understandable?

We always use caution if activities are overly complex and are not transparent. The more complex the accounting policies, the more scrutiny that needs to be put on a company. Are the executives and managements objectives also aligned with shareholder interests? Do we understand the direction the company is taking with any mergers, acquisitions or spinoffs?

10) Complimentary to other holdings

Our model portfolios typically have 30 to 35 holdings when fully invested. When we add or remove a stock from the model portfolio we must assess the impact of diversification and correlation. Typically when a stock is removed from a particular sector, we would replace it with a better holding option within the same sector.

Strategically we may change the weighting of sectors depending on our outlook for the economy and the stock market cycle. When adding stocks to a portfolio it is important to also look at how they are correlated to each other.

It’s important to have a disciplined approach to your criteria by which you pick stocks. If those criteria’s are stuck to consistently we feel that you’ll have fewer losses and more successes.

Kevin Greenard CPA CA FMA CFP CIM is a Portfolio Manager and Director, Wealth Management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week in the Times Colonist. Call 250-389-2138. greenardgroup.com

 

 

Inheritance enhances retirement and estate plan

Over the years we have helped new clients and existing clients deal with inheritances. In the majority of cases the inheritances are coming from parents. These can be done upon the parent’s passing away but are also done while they are alive in more and more cases. In other cases we have clients receiving inheritances from uncles/aunts, siblings, friends, and other individuals.

The greater the inheritance the more critical it is to get some professional advice. One positive part of receiving an inheritance in Canada is the money is not taxed. Following are some topics we would discuss when a client receives an inheritance.

Paying off debt

We like the idea of paying off debt, especially personal mortgages, credit cards, and lines of credit that are not tax deductible.

To begin with, we obtain a summary of all loans, current rates, and repayment penalties, if any.

If only some debt is repaid, then the highest non-deductible interest rate debt should be paid off first. If fees or penalties apply, it is important to obtain an understanding of these and your wealth adviser should be able to map out the best options.

If you still would like to invest some, or all, of your cash then you’re best to take a new loan out for the specific purpose of investing.

The interest expense incurred from the money borrowed is generally tax deductible if the purpose of the use of the borrowed funds is to earn income in non-registered accounts.

Increased income

One of the results of receiving an inheritance is that your annual taxable income is likely to increase. If you purchase GICs and bonds, you will have to factor in the interest income received. If you purchase equities, you will have tax efficient dividend income to report and some deferral options.

We provide an estimate of what the income will be once the investments are selected and calculate an estimated income tax liability if the funds are invested in a non-registered account.

Type of non-registered account

If you feel a non-registered account is your best option you should determine the type of account.

If you are single the choice is easy; an individual account. If you are married or in a common-law relationship, you may consider to open an individual account and keep the funds only in your name. Alternatively, you may open a joint-with-right-of-survivorship (JTWROS) account with your spouse or common-law partner.

The person who received the inheritance would be primary on the account. If a non-registered account is already opened then we have a discussion regarding the risk of commingling funds in the event of a marriage breakdown.

This discussion has many other components to talk about including tax, income splitting, and estate wishes. Consulting a family law attorney may be required in cases of marital breakdowns.

Topping up RRSPs

One way to defer some of the above income is to deposit funds into a tax sheltered Registered Retirement Savings Plan, if contribution room exists.

The greater your income, the better this option is. If your income is at or below the lowest tax bracket then there may be other options you would want to consider.

The determining factor is your future income expectations. As an example: John received $250,000 as an inheritance. He is using $150,000 to pay off all debt and would like to invest the remaining $100,000. John has accumulated a $140,000 RRSP deduction limit, as he has never contributed the maximum each year. John plans to work for the next five years and earns approximately $80,000 in T4 income.

One option we may suggest to John is to contribute the $100,000 into his RRSP and claim $20,000 a year as a deduction over the next five years assuming that there is no extra cash flow for additional contributions. One of the main benefits of putting funds in the RRSP (and not claiming the full deduction right away) is that all income is tax sheltered.

Tax Free Savings Account

Any income earned within the TFSA is tax free, if you have never set up a TFSA, the cumulated TFSA contribution limit for 2019 is $63,500. It may be worthwhile to understand the advantage of this type of account and top up to the maximum limit. Starting in 2019, the annual limit is $6,000, indexed to inflation thereafter.

If you have both non-registered account and TFSA, then we would recommend you to transfer your assets (up to the maximum limit) from the non-registered account into the TFSA, to take advantage of the tax-free feature.

Skipping a generation

Sometimes the people receiving the inheritance do not need the funds themselves. In these situations we often map out a strategy that will skip to the next generation. Sometimes this will help younger generations pay off mortgages, purchase a home, or build up retirement savings

Structure of accounts

Many Canadians only have RRSP or TFSA accounts. Often when significant funds are received (inheritance, sell of a business, life insurance proceeds), people open their first non-registered account.

One thing that we see is people buying GICs and bonds where the interest income is fully taxable in a non-registered account while leaving the equity investments which have tax-efficient dividend income within their RRSP. When this happens, the structure of investments is backwards.

There are many benefits of consolidating investments at one institution, including lower fees and more account options. It is beneficial to deposit the inheritance cash into a non-registered account at the same institution as the RRSP. If this is done then the structure can be corrected.

We are able to do a series of trades that will correct the overall structure will ensure that interest income on fixed income is tax sheltered within the RRSP. By holding Canadian equities in the non-registered account, you will receive the benefit of the dividend tax credit, and taxation of capital gains and losses.

Updated documents

Obtain the appropriate forms to update your investment accounts, Powers of Attorney, beneficiaries and ownership. We always encourage people to update their Will and other legal documents (if necessary).

Kevin Greenard CPA CA FMA CFP CIM is a Portfolio Manager and Director, Wealth Management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week in the Times Colonist. Call 250-389-2138.

 

Rebalancing helps manage risk

Wouldn’t you love a strategy of selling high and buying low?

Naturally we have the tendency to want to let our winners run without taking profits.

On the flip side, a good stock might be going through a rough patch and, rather than sell the stock, adding to it might be the right move.

Creating a disciplined rebalancing process begins with determining the portion of your investments in cash, fixed income and equities.

Below we have mapped out our general structure rule with respect to the equity component. A holding is common shares in a single company (for example, Canadian Pacific Railway or Apple).

Clients who have between $500,000 and under $2.5 million will typically hold a minimum of 25 holdings. An optimal number of holdings is 30, and no greater than 35 holdings.

Portfolios between $2.5 million and $5 million we recommend holding a minimum of 30 holdings, optimal number of holdings is 35, and no greater than 40 holdings. We use the term “optimal” to describe the dollar amount invested in each company in normal markets conditions.

Reba Watson has a portfolio valued at $1.4 million. She has a moderate growth portfolio where 80 per cent, or $1,120,000, are held in equities. Based on her portfolio size and being moderate growth, we can illustrate rebalancing.

Optimal positions size

$37,333 (essentially the equity portion of $1,120,000 divided by 30). Without going through this exercise, one would not know what a normal position size is. I have heard people say I purchase 100 shares of everything. That simply does not work for a host of different reasons. The most obvious reason is that some stocks trade at very low prices/share and others at much higher prices.

Half position size

$18,667 (essentially half of the optimal position size). Sometimes we wish to underweight a holding or overweight a holding from a strategic sense in the short term. If we feel that the markets are getting long in the tooth, or late in the bull market cycle, then reducing position sizes can be a strategic decision. This reduction would help if markets declined or had a correction. Another example of utilizing half position sizes may be a new client that has never invested before, to get the level of comfort up we may suggest half positions sizes to begin with. As time goes on, we would typically work toward optimal positions sizes.

Rebalance position size

$44,800 (essentially the equity portion of $1,120,000 divided by 25). If the long term goal is no fewer than 25 names this is a natural starting point to calculating your rebalancing number. Whenever we are reviewing portfolios, one of the first items we look at is position size and if any holdings need to be rebalanced. For example, we purchased $35,000 of Microsoft initially for a client. Today, we see that the position size for Microsoft has increases to $47,744. At a minimum, we would recommend to reduce the position by $2,944 (down to the rebalance positions size) or reduce the position by $10,411 (down to the optimal position size).

Excessive position size

$70,000 (this is calculated taking the total portfolio value of $1.4 million and multiplying by five per cent). If a client chooses to take an excessive holding in one company we document the extra risk incurred within the Investment Policy Statement (IPS).

Rebalancing frequency

Over the years, several studies have been done to determine the frequency of rebalancing reviews. Should investors rebalance quarterly, semi-annually or annually? As the markets vary from year to year, the frequency should be adjusted based on current conditions. Rebalancing asset mix and individual position size can normally be done at the same time. Rebalancing to your optimal asset mix should be done at least once a year. Prior to rebalancing, it is important to periodically review your Investment Policy Statement (IPS) to ensure that you are comfortable with the asset mix. Changes in market conditions and interest rate outlook are factors to discuss with your wealth adviser when revising the asset mix within your IPS. Your personal goals, need for cash, and knowledge level may result in your optimal asset mix needing to be adjusted.

Rebalancing to Investment Policy Statement

When an Investment Policy Statement is set up the optimal asset mix is outlined. To illustrate, we will use Reba, who invested in a portfolio with the following asset mix —fixed income 20 per cent and equities 80 per cent. Asset classes do not change at the same rate. Over the last year, equities grew faster than fixed income making the growth in her portfolio uneven. If after a year we meet with Reba and her portfolio is $1.6 million. Based on the optimal asset mix outlined in her IPS, 20 per cent, or $320,000, should be in fixed income. The remaining $1,280,000 should be in equities. When we looked at Reba’s portfolio, she had $283,000 in fixed income, and the remainder in equities. A disciplined approach would result in us selling $37,000 of equities and purchasing fixed income.

Although it may seem counter intuitive to sell an asset class that is doing well or buy one that is not, however that is precisely what is required if the fundamental principle of “buy low, sell high” is to be followed. By rebalancing your portfolio, you are staying the course and increasing the potential to improve returns without increasing risk. Rebalancing also helps smooth out volatility over time.

Disciplined rebalancing can provide comfort by taking the emotion out of your investment decisions. It does not seem natural to sell a portion of your investments that has done well and buy more of those that have been more sluggish. This discipline allows a reassuring way to buy when it is difficult and sell when it seems counterintuitive. When markets are down, human nature would have us get out rather than buy low, but a disciplined rebalancing process can prevail in the long run.

Although at times, the changes in the market may not be large enough for an investor to feel that there is any need to rebalance, the benefit to doing so can be significant over the long run with compounding returns.

Other forms of rebalancing

A more complicated component of the rebalancing process looks at geographic and sector exposure. Often at times, investors will have no clear benchmark at the beginning to assess the geographic and sector exposure. Without these parameters outlined at the beginning it is more challenging to have a discipline approach to rebalancing. Professional judgment and current conditions often move the benchmark of how funds are invested. Interest rates, political news, government policies and other factors can determine geographic and sector weightings.

Tax efficiency rebalancing

When a client opens up new accounts or makes significant deposits and withdrawals, this is an ideal time to look at all levels of rebalancing. Even with smaller deposits into an RRSP or TFSA account, it may be a good time to rebalance. In some situations, certain investments have better tax characteristics in different accounts. For example, we try to put interest-bearing investments and those that pay other income (such as foreign income) within an RRSP/RRIF. Investments that generate capital gains and obtain the dividend tax credit are often better situated within a non-registered account.

Managed accounts provide piece of mind

A managed account is a broad term that has been used in the financial-services industry to describe a certain type of investment account where a portfolio manager has the discretion to make changes to your portfolio without verbal confirmation.

There are different names and types of managed accounts which may be confusing for investors when looking at options between financial firms. To assist you in understanding the basics of managed accounts, we will divide the broad category into two subcategories — individually managed accounts and group managed accounts.

Both individually managed and group managed are fee-based type accounts, as opposed to transactional accounts, where commissions are charged on activity. Individually managed accounts must be fee-based and generally have a minimum asset balance of $250,000.

Before we get into the differences between individually managed and group managed accounts, we should also note that strict regulatory and education requirements are necessary for individuals in the financial-service industry to be able to offer managed accounts. The designation portfolio manager is typically awarded to individuals who are able to open managed accounts. Financial firms may also stipulate certain criteria prior to allowing their employees to provide discretionary advice or portfolio management services. Examples of additional criteria that may be required by financial institutions include a clean compliance record, minimum amount of assets being managed, good character, and significant experience in the industry.

For the purposes of this article, the term investment adviser is different from portfolio manager.

A portfolio manager may have the ability to offer individually managed accounts on a discretionary basis, whereas an investment adviser does not. An investment adviser must obtain verbal authorization for each trade that they are recommending. A client must provide approval by signing the appropriate forms in order for the portfolio manager to manage their accounts on a discretionary basis.

Above, we noted the two broad types of managed accounts — individual and group. A portfolio manager is able to offer both individual and group accounts on a discretionary basis. The individual account is a customized portfolio where the portfolio manager is selecting the investments. Although an investment adviser is not able to offer individually managed accounts, they can offer group managed accounts through a third party.

A simple example of this is a mutual fund which is run by a portfolio manager. A more complex example of this is the various wrap or customized managed accounts offered by third party managers. An investment adviser can recommend to their clients a third party group-managed account.

The role of an investment adviser in a group-managed account option is to pick the best third party manager and to assist you with your asset allocation. When looking at this option, you must weigh the associated costs over other alternatives. The group-managed account has set fees. With individually managed accounts, the portfolio manager has the ability to both customize the portfolio and the fee structure.

Trust is an essential component that must exist in your relationship to grant a portfolio manager the discretion to manage your accounts. Prior to any trades, the portfolio manager and investor create an Investment Policy Statement (IPS) to set the trade parameters for the investments. The IPS establishes an optimal asset mix and ranges to ensure that cash, fixed income, and equities are suitable for the investors risk tolerance and investment objectives.

Quicker Reaction Time: Having a managed account allows the portfolio manager to react quickly to market changes. If there is positive or negative news regarding a company, the portfolio manager can move clients in or out of a stock without having to contact each client individually. With markets being volatile this can help with reaction time. For an investment adviser to execute the movement in or out of a stock, it would involve contacting each client and obtaining verbal confirmation.

Strategic Adjustments: If a portfolio manager has numerous clients and would like to raise five per cent cash, this can be done very quickly with an individually managed account. It is more difficult for an investment adviser to do this quickly as verbal phone confirmation is required for each client in order to raise cash. Even with a group- managed account, an investment adviser would have to contact each client to change the asset mix weighting.

Rebalancing Holdings: With managed accounts, clients have unlimited trades. This is important as it allows a portfolio manager to increase or decrease a holding without being concerned about going over a certain trade count. As an example, we will use a stock that has increased by 30 per cent since the original purchase date. Trimming the position by selling 30 per cent is easy for a portfolio manager as a single block trade can be done. This block trade is then allocated to each household at the same price. If an investment adviser wanted to do this same transaction, it would likely take multiples days/weeks and over this period each client would have a different share price depending when the verbal confirmation was obtained.

Extended Holidays: If you are travelling around the world or going on a two month cruise, then you probably want someone keeping an active eye on your investments. An investment adviser is not able to make changes without first verbally confirming the details of those trades with you. A portfolio manager is able to make adjustments within the IPS parameters, provided you have a managed account set up before your departure.

Aging Clients: When our clients are aging, we often recommend that they introduce us to their family members and the people they trust. We encourage most of our clients to set up a Power of Attorney (POA) and to plan for potential incapacity later in life. Portfolio managers have a distinct advantage in this area as we can have a meeting with the family and document everything very clearly in an IPS. Having managed accounts, clearly documented IPS, and a POA will ensure that a portfolio manager can continue managing the investments appropriately.

Not Accessible: If you work in a remote area (mining or oil and gas industry), chances are you may be out of cell phone reach from time to time. In other situations, your profession does not easily allow you to answer phone calls (a surgeon in an operating room). In other cases, a lack of interest may result in you not wishing to be involved. A managed account may be the right option for clients that are frequently difficult to reach to ensure opportunities are not missed. In these situations, the portfolio manager can proactively react to changing market conditions.

Managed accounts greatly simplify the investing process for both you and the portfolio manager. It enables our clients to focus on aspects of their life that are most important to them while knowing that their finances are being taken care of.

Kevin Greenard CPA CA FMA CFP CIM is a portfolio manager and director of wealth management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week in the Times Colonist. Call 250-389-2138.

 

Portfolio manager can react quickly to market changes

Many people do not feel they have the knowledge to best manage their own money. Some have the knowledge but they do not have the time.

Both portfolio managers and Wealth advisers can assist people with financial decision making. A wealth adviser must obtain consent from the client prior to any trades. Often this is done over a quick telephone call where the wealth adviser is recommending for you to either buy or sell an investment.

The client receiving the call is normally not as informed about the specific recommendations. Typical responses would normally be: “Whatever you think,” “You’re the expert, do whatever you think is best,” or “That is why I pay you for … to make those decisions.”

It is tough for most people to make decisions on something they do not feel informed about. With investment decisions it can still be challenging even when you are informed and trying to make decisions independently. There is so much contradictory information that it is hard for many to feel comfortable making decisions.

Over the years I have had great discussions with people about this process of financial decision making. When you work with a portfolio manager or wealth adviser, you have another person to discuss investment options with. With the traditional approach of working with a wealth adviser, you will be presented with some investment recommendations or options.

At this point you still have to make a decision with respect to either confirming the recommendation and saying “yes” or “no.” In other situations you must choose amongst the options presented to you.

As an example, an adviser may give you low, medium, and high risk options for new purchases. An adviser should provide recommendations that are suitable to your investment objective and risk tolerance.

Another option that clients have is to have a managed account, sometimes referred to as a discretionary account. Portfolio managers are able to offer the option of having a managed account. When setting up the managed accounts, one of the required documents is an Investment Policy Statement (IPS).

The IPS outlines the parameters in which you authorize the portfolio manager to use his or her discretion. The main items that are outlined initially are asset allocation, investment objectives, risk tolerance, unique preferences, and cash flow needs.

As an example, you could have in the IPS that you wish to have an optimal asset mix of 20 per cent in fixed income and 80 per cent in equities. Another client may wish to have 40 per cent in fixed income and 60 per cent in equities. The three investment objectives are Income, Growth, and Speculative Trading. Within an IPS you could state 40 per cent Income, 60 per cent Growth, and 0 per cent Speculative Trading. The three risk tolerances are low risk, medium risk, and high risk. A client could state 10 per cent low risk, 80 per cent medium risk , and 10 per cent high risk. Another client, could have 30 per cent low risk, 70 per cent medium risk, and 0 per cent high risk.

The IPS can also state specific investments that you do not wish to be purchased. If a client did not want any weapons/arms or tobacco/alcohol related companies then we could outline those as unique preferences. If they are outlined in the IPS then we are prohibited from purchasing those holdings.

The IPS also outlines the periodic cash flow needs that you have and where those cash flows are coming from. For example, the IPS may state that the annual Registered Retirement Income Fund payment will be paid to the non-registered account on December 15th annually with 20 per cent tax withheld. Another paragraph could state that every January we are to move funds from the non-registered account to top up the Tax Free Savings Account. Another typical paragraph is to outline the systematic withdrawal payments that are sent from the investment account(s) to the bank account.

Every two to three years we have a comprehensive meeting where we update the IPS. If a significant life event or withdrawal/deposit is made then the IPS is update at that time. We encourage clients to always communicate to us any material change in their circumstances so we can update the IPS. Clients make the decision with respect to the investment objective, risk tolerance, asset mix, unique preference, and cash flow needs. Once this is completed, clients do not have to make the specific decisions regarding the underlying investment holdings.

Portfolio managers are held to a higher duty of care, often referred to as a fiduciary responsibility. Portfolio managers have to spend a significant time to obtain an understanding of your specific needs and risk tolerance. These discussions should be consistent with how the IPS is set up.

The nice part of having a managed account with an up to date IPS is that your adviser is able to make the decisions on your behalf. You can be free to work hard and earn income without having to commit time to researching investments. You can spend time travelling and doing the activities you enjoy.

Many of my clients are intelligent people who are fully capable of doing the investments themselves but see the value in paying a small fee. The fee is tax deductible for non-registered accounts and all administrative matters for taxation, etc. are taken care of. A good adviser adds significantly more value than the fees they charge. This is especially true if you value your time.

For couples, it is pretty typical that one person in the household takes a great interest in the finances. In some cases one person has made all the financial decisions for the household. If that person who has independently managed everything passes away first it is often a very stressful burden that you are passing onto the surviving spouse.

I’ve had couples come in to meet me primarily as a contingency plan. The one spouse that is independently handling the finances should provide the surviving spouse with some direction of who to go see in the event of incapacity or death. In my opinion, the contingency plan should involve a portfolio manager that can use his or her discretion to make financial decisions.

In years past it was easier to deal with aging clients. Clients could simply put funds entirely in bonds and GICs and obtain a sufficient income flow. With near historic low interest rates, this income flow has largely dried up for seniors. When investors talk about income today, higher income options exist with many blue chip equities. Of course, dividend income is more tax efficient than interest income as well. A portfolio manager can add significant value for clients that are aging and require investments outside of GICs.

Try picturing a wealth adviser with a few hundred clients. A wealth adviser has to phone and verbally confirm each trade before it can be entered. The markets in British Columbia open at 6:30 a.m. and close at 1 p.m. Meetings with clients are often booked a week or more in advance.

On Tuesday morning a wealth adviser wakes up and some bad news comes out about a stock that all clients own. That same wealth adviser has four meetings in the morning and has only a few small openings to make calls that day. It can take days to phone all clients assuming they are all home, answer the phone call, and have time to talk.

A portfolio manager who can use his or her discretion can make one block trade (the sum of all the clients’ shares in a company) and exit the position in seconds. Sometimes making quick decisions in the financial markets to take advantage of opportunities is necessary. Hands down, a portfolio manager can react quicker than a wealth adviser who has to confirm each trade verbally with each client.

Kevin Greenard CPA CA FMA CFP CIM is a Portfolio Manager and Director, Wealth Management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week in the Times Colonsit. Call 250-389-2138.