FORUM Magazine - October 2018

FORUM OCTOBER 2018 • $5.50

The Magazine of Influence for Financial Advisors

SENIORS IN THE

RED

Why Boomer clients are racking up record debt

UNDERWRITING

MEDICAL CANNABIS HEIRS’ GUIDE TO CLEANING A HOUSE

SETTING UP INSURANCE DISCLOSURE FORMS

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FORUM VOLUME 48, 5

|

OCTOBER 2018

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ISSN 1493-826X

FEATURES

10

Debt Dilemma

Seniors are racking up debt in record numbers, but it’s not due to reckless spending. Tamar Satov explores the myriad reasons

DEPARTMENTS

COLUMNS

4

25 TAX UPFRONT

EDITOR’S JOURNAL Tales from an executrix

6

OPENERS Push marketing and life insurance buyers; implications of living longer; underwriting cannabis-related businesses

31 ADVOCIS NEWS Association updates and events

COVER PHOTO: HILL STREET STUDIOS / GETTY

34 THE FINAL WORD Learning from our past

BY AL JONES

What are some advisor assumptions on how much to save?

16

Death Clean

When a loved one passes away, who empties out the person’s house? In many cases, the heirs.

Deanne Gage spoke with downsizing experts on how they lessen the load

BY DOUG CARROLL

28 ESTATE DILEMMAS How taxes are calculated for personal-use property in an estate

BY KEVIN WARK

29 PROSPECTING PURSUITS Do you appear more well off than your clients?

BY BRYCE SANDERS

30 LEADERSHIP & GROWTH Next issue: Financial literacy

Finding new advisors helps with succession planning

BY PETE GILLESPIE

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22

Pen to Paper

Having clients sign insurance disclaimer documents protects your business from liabilities. Richard Parkinson shows you how to do that OCTOBER 2018 FORUM 3

BY DEANNE GAGE

Tales from an Executrix

M

y days as executrix for my father’s estate are coming to an end.

When I started, I whipped through my never-ending to-do list. At the three-month mark, an advisor friend sent me a checklist of items and was amazed to see I was already threequarters of the way through it.

I recall countless forms and phone conversations. The latter were somewhat comforting. When changing an address for the water bill, the woman at the end of the line cried. She hadn’t realized my dad had passed and she remembered the nice talks they used to have. He used to pay that bill in person every other month.

Some friends who had been executors warned me about the hassle in dealing with financial institutions, but I personally had no issues. True, they required a ton of information, but thankfully, I had what they needed. My father thought of everything.

I also learned that relationships matter.

People were willing to spend a bit of extra time helping their former client’s daughter.

My father used to take me to meet these professionals every year, and they were wonderful to work with.

Will intentions and beneficiary designations lined up. Probate and final tax returns unfolded without issues.

No family drama. We were an anomaly, my lawyer told my sister and me. Just before seeing us, she’d met with three sisters who had been arguing over the same minor estate issue for the last six months.

Now, here’s what was overwhelming for me. Cleaning up my dad’s three-bedroom split-level home — our family home. My father saved everything from stereo equipment to antique car parts to hundreds of letters I’d written him since moving to Ontario in 1991. Imagine every room filled to capacity. The many tools in his beloved workbench and garage rivalled what Canadian Tire had in stock. My dad grew up in a time where you stocked up for tomorrow. But when tomorrow is no more, the stuff still remains for someone to organize and dispose of … somehow.

4 FORUM OCTOBER 2018

FORUM PUBLISHER: Peter Wilmshurst advocisforum@gmail.com EDITOR: Deanne Gage dgage@advocis.ca COPY EDITOR AND PROOFREADER: Alex Mlynek ART DIRECTOR: Giselle Sabatini artdirector@forum-mag.ca ADVERTISING: Peter Wilmshurst advocisforum@gmail.com Tel: 416-766-4273 Fax: 416-760-8797

TFAAC BOARD OF DIRECTORS CHAIR Al Jones, CFP, CLU, ICD.D, ACCUD VICE CHAIR Abe Toews, CFP, CLU, CH.F.C., CHS PAST CHAIR Jim Virtue, CFP, CLU, CA SECRETARY Rob Eby, RRC, CFP TREASURER Catherine Wood, CFP, CLU, CHS CHAIR, THE INSTITUTE Stephen MacEachern, CFP, CLU, CH.F.C., CHS CHAIR, THE CLC David McGruer, CFP PUBLIC DIRECTOR Geoffrey Creighton, BA, LL.B, C.DIR, CIC.C

Downsizing did not exist in my father’s vocabulary, and I understood why. He took great pride in his vast weed-free lawn, flowers, and his vehicles.

So, my family began the task of sorting, boxing, donating, pitching, moving, and shipping. My sister lives in Vancouver and I live in Toronto, and with every trip back to Dartmouth, N.S., we were cleaning up.

We finally listed the house in July. A similar property on our street had already been on the market for six months, so I was prepared for a long haul. But to our surprise, we received two offers within a day, one of which was asking price. A bittersweet feeling, but one mixed with relief.

Do you discuss your clients’ physical assets and get them thinking about a plan for these items? This is also a key part of estate planning. Some may say it’s not their problem, but others don’t know what to do and aren’t aware of some options available to them.

If I had to do it over again, I might hire a downsizing expert like the two professionals featured in “Death Clean,” starting on page 16. I had touched base with interview source Shirley Blayney, a referral from my estate lawyer, about my dad’s house but the timing just didn’t work out for either of us.

Still, I often wonder how Shirley would have managed it, especially the tools.

DIRECTOR AT LARGE Eric Lidemark, CFP, CLU, CH.F.C, CHS DIRECTOR AT LARGE Kevin Williams, CFP, CLU, RHU DIRECTOR AT LARGE Patricia Ziegler, CHS, EPC PRESIDENT & CEO Greg Pollock, CFP FORUM is published six times annually by The Advocis Publishing Group, 10 Lower Spadina Avenue, Suite 600, Toronto, Ontario M5V 2Z2 TEL: 416-444-5251 or 1-800-563-5822 FAX: 416-444-8031 FORUM is mailed to all Association members, the subscription price being included in the annual membership fee. Address changes can be made through info@advocis.ca or by calling member services at 1-877-773-6765.

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OPENERS Fodder For the Water Cooler

W

hile consumers may go online to look for information about life insurance, it’s old-fashioned mail that originally sparks recognition about the importance of life insurance in many consumers, according to a U.S. LIMRA study.

The study says direct mail gave almost one-quarter of consumers the initial push to look for life insurance, ahead of speaking to a financial professional (15 per cent), talking with friends and family (15 per cent), and information received by email or at work (10 per cent each).

The study, The Purchase Funnel: How Buyers Buy, examines the four stages of the purchase process for life insurance — from recognition of need to shopping, obtaining a quote, and ultimately, buying a policy.

But once consumers begin to shop for life insurance, they tend to seek information from a number of sources, including online, email, and personal consultations.

Once consumers begin the process of obtaining a quote, they are more likely to use online (46 per cent) and in-person (34 per cent) distribution platforms than purchase by phone (21 per cent) or by mail (17 per cent). The study found that married consumers and those with dependent children are more likely to use in-person and phone to shop for life insurance. Males and females use all information sources in about the same proportions.

It’s only when they are ready to buy life insurance that most are likely to talk to an agent or advisor in person (27 per cent). Another 26 per cent will call to purchase a policy and a little more than one in five will go online (22 per cent).

Those buying in person are more likely to buy permanent products with higher coverage amounts, while those going online or using the phone are more likely to buy term products with average coverage amounts.

Consumers using direct mail buy term and permanent products in line with the overall average, but buy lower coverage amounts.

LIMRA research shows that of the 31 million who begin the process of shopping for life insurance, less than onethird of people (just nine million) actually purchase a policy. — Susan Yellin 6 FORUM OCTOBER 2018

LIVING LONGER HAS BENEFITS IMPLICATIONS: STUDY

S

ome significant implications arise from the longevity gap that has persisted between rich and poor in Canada over the years, according to a report from the C.D. Howe Institute.

The report, entitled Rich Man, Poor Man: The Policy Implications of Canadians Living Longer, is the first study of long-term changes in longevity across earnings groups in Canada and provides new evidence on the incomes and life expectancy of Canadians.

Authors Kevin Milligan and Tammy Schirle found that both men and women are living longer past age 50 than previous generations. And those extra years come with a potential cost in terms of pensions, healthcare, and other age-dependent expenditures.

When it comes to pension policy, for example, if those who are living the longest are the ones with the highest annual pension benefits then the total costs of the pension payouts may be higher than expected. Differential longevity also alters the net balance of pension contributions and pension benefits across high and low earners.

In addition, private annuity markets are shaped by the longevity expectations of different potential purchasers of annuity products. The valuation of public retirement income programs should reflect the differing longevity of different groups of Canadians, the authors say.

According to the report, the highest-earning Canadian women outlive the lowest-earning women by three years. For men, the longevity gap between the highest and lowest earners is eight years, or more than 10 per cent of a lifespan. “However, we find that this longevity gradient is fairly stable, with approximately equal gains over time for both high and low earnings groups,” the report states. “This finding is in stark contrast to the United States, where longevity growth has been concentrated in the top half of income groups.” — S.Y.

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PUSH MARKETING ENTICES POSSIBLE LIFE INSURANCE BUYERS

UNDERWRITING POV

BY DR. BRUCE EMPRINGHAM

UNDERWRITING CANNABISRELATED BUSINESSES

A

s legalization of cannabis becomes a closer reality, insurers are getting far more requests to insure individuals and businesses involved in the production or dispensing of cannabis.

Some industry observers say insurers are reluctant to offer group insurance products to companies whose business is related to cannabis because of outdated perceptions of those who use cannabis. This could not be further from the truth.

As insurers, our focus is on the risks and benefits of medical treatments, not the morality of the treatment’s usage. On the individual side, the evidence for cannabis as a treatment is really very limited. Cannabis defies easy classification. There is no drug identification number (DIN), which Health Canada only assigns once a drug product has undergone and passed a review of its safety, efficacy, and quality. Dosing and efficacy are both issues that need conclusive evidence and much more research is required.

Many risks are involved in associating with these businesses, including reputational and credit risk, but more significantly, money laundering. Many sectors are only now questioning how legalization will impact them.

It is acknowledged by experts that organized crime is involved in the illegal cannabis market and monetary penalties could be levied against any financial services company found to be working with these illegal actors. But more significantly, in an extreme case, an argument might be made that the insurer is in possession of the proceeds of crime and/or complicit in laundering the proceeds of crime.

Although legalization for recreational use will be a fait accompli by the time this article is published, this does not reduce the risks in participating in this industry. The burden of risk is increased as far more players are attempting to break into this new market. Both field and underwriting employees are among the first lines of defence in ensuring financial services organizations are protected from the risks described above, while still working to meet both client and advisor needs.

Other considerations may be specific to the insurer. For example, if a company is not currently licensed by Health Canada but is working toward authorized status, the insurer may be willing to consider offering group insurance if the company can confidently demonstrate that they are setting up facilities and logistics, pursuing a licence, and are not selling or growing illegally.

When is a cannabis-related business (or individual owning the entity) eligible for group or individual insurance coverage?

Some cannabis-related businesses are not direct producers/ distributors of cannabis, and therefore aren’t required to be licensed by Health Canada. Examples include businesses selling cannabis-related supplies (e.g., pipes) or counselling/recommendations for cannabis, but not the cannabis itself. In cases like this where the business is completely removed from the sale/distribution/handling of cannabis from seller to consumer (not involved in any aspect of the supply chain), insurers may be more willing to provide coverage. There’s not a hard-and-fast rule for these cases, and these groups and individual policies owned by these businesses need to be evaluated on a case-by-case basis.

Insurers need to protect themselves by developing robust processes for underwriting entities that are in the business of producing, distributing, or selling cannabis.

Generally, the first step an underwriter will need to take is to determine if the business is legally producing/distributing/ selling cannabis by checking the list on Health Canada’s website.

IF YES: the business is legal and the insurer may continue to underwrite the application, depending on the insurer’s comfort level with the industry.

IF NO: the underwriter returns the application to the advisor.

Best practices for advisors working with such clients include: • Understanding the operations of the business and their future plans for becoming licensed; • ALWAYS doing a web search on the company as well as applicant/insured to ensure there is nothing related to illegal activity; and • Reaching out to your insurance contacts to understand their company’s policies on writing business of this nature.

When is a cannabis producer or distributor eligible for group or individual insurance coverage?

At this point, the Canadian market is relatively small, with 118 authorized licensed producers of cannabis for medical purposes. However, time is quickly running out for sectors to figure out how they will do business with this emerging industry.

One of the first considerations for any insurer is whether the company is officially licensed by Health Canada. All cannabis producers and distributors that have been authorized by Health Canada will be listed on its website.

DR. BRUCE EMPRINGHAM is vice-president and medical director at Great-West Life, London Life, and Canada Life. He has more than 27 years’ experience as a physician in the industry.

OCTOBER 2018 FORUM 7

DID YOU KNOW?

The number of Canadians opting for contract work has increased • Some 60% of small business owners become self-employed by choice • Other reasons for taking contract work: autonomy and control (49%); make extra money on the side (49%); balance career and family needs (42%); or it was the only way to make an income (27%) • More Boomers were likely to value autonomy and control when taking freelance jobs (70%) or felt it was the only option at this stage to earn income (35%) • Generation Xers valued balancing career and family needs more than other groups (52%)

Four in 10 Canadian Millennials have received or expect to receive an inheritance • Of these, 60% anticipate they will receive cash • More than half (53%) foresee inheriting a property or the proceeds from the sale of one • Generally speaking, only one in 10 Canadians say they discussed how they will put their inheritance to use with the person from whom they are inheriting SOURCE: TD BANK, AUGUST 2018

• Millennials were more inclined to work in the “gig economy” to make extra money on the side (53%), or until they found a better job (30%)

At the same time, those working in this economy face challenges: • 69% have no benefits, such as medical, dental, or disability • 55% don’t get paid when sick • 41% do not earn enough

WHO CARES?

The Cost of Caregiving Most Canadians say siblings ought to share the costs of care for an aging parent, yet only half do

1in3

Canadians are currently caregivers or expect to be in the next five years

59%

of siblings share the load of caring for aging parents

SOURCE: CIBC 2018 CAREGIVING POLL

SOURCE: BMO WEALTH MANAGEMENT, JULY 2018

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COVER STORY

Debt Dilemma R

ose Lashey* went through her working years thinking she did everything right. As a municipal employee in Toronto, she paid into a defined benefit pension and diligently contributed to RRSPs through payroll deduction. She even got through a divorce in reasonable financial shape, managing to afford a home of her own in Whitby, Ont. “I was always thrifty and never had any credit card debt,” says Lashey, now 69.

But things took a turn when she decided to retire with a full pension at age 58 after 35 years of service, and instead work part-time at a home décor shop. “I really thought it out,” she recalls. “I calculated the difference between what I would get in total if I started *Name has been changed for privacy reasons.

10 FORUM OCTOBER 2018

to collect between the ages of 58 and 65, and assuming I lived until 80.”

What she didn’t anticipate, however, was the tax hit.

Most of her income sources didn’t deduct enough income tax to meet her marginal tax rate and, to make matters worse, she also withdrew some funds from her RRSP that year to help her older daughter who had been through a rough divorce and had two young kids.

She admits she was blindsided. “I knew I’d have to pay a little bit in tax, but I ended up with a $7,000 tax bill, just for one year!” she says.

Her finances took another blow when her younger daughter — along with her husband and three kids — moved in after they lost their house in a failed business venture. Lashey eventually gave the house and its equity to her daughter to help her get back on her feet after she got divorced and struggled through cancer treatment.

PHOTO: HILL STREET STUDIOS / GETTY

Seniors are racking up debt in record numbers, but it’s not due to reckless spending. Tamar Satov explores the myriad reasons

OCTOBER 2018 FORUM 11

COVER STORY

To be sure, demographics and life expectancy play a role in the rising level of debt among seniors. At age 65, Canadians can expect to live about 20 more years — to an average age of 84 for men and 87 for women — and centenarians are the fastest growing demographic in the country.

12 FORUM OCTOBER 2018

6,700 personal insolvencies in Ontario that were filed with Hoyes, Michalos & Associates Inc., 12 per cent of insolvent debtors in 2016 were age 60 or older, up from 10 per cent in 2014. Their average unsecured debt load? A whopping $64,379.

To be sure, demographics and life expectancy play a role in the rising level of debt among seniors. At age 65, Canadians can expect to live about 20 more years — to an average age of 84 for men and 87 for women — and centenarians are the fastest growing demographic in the country. That makes retirement a lengthier, and decidedly costlier, proposition than ever before. But these factors alone don’t explain the rising tide of debt, particularly among younger seniors.

So, what’s driving this uptick in senior debt? And can anything be done to reverse the trend? We looked at the research and spoke to the experts to pinpoint the major reasons why senior debt is on the rise — as well as some potential fixes to the problem.

REASON: Credit is now more accessible and acceptable Credit card debt (32 per cent) and lines of credit (23 per cent) are the most common forms of debt seniors carry, the Seniors and Money report finds. According to Equifax, the average non-mortgage debt for those 65+ was $15,703 in the last quarter of 2017, up three per cent from the previous year.

“People have become very comfortable with credit in the past 50 years,” says Laurie Campbell, CEO of Credit Canada. “For my grandparents, it would have been sacrilege — don’t buy anything you can’t afford, scrimp and save for a rainy day. Now there’s YOLO [you only live once] and FOMO [fear of missing out] — we live a lifestyle we can’t afford.”

POSSIBLE SOLUTIONS: Bankruptcy or a consumer proposal can eliminate a senior’s debt. But they may not be necessary. If a senior’s only source of income is a pension, and there are no other assets like a home or investment, they are effectively “creditor proof,” says Doug Hoyes, licensed insolvency trustee and co-founder of Hoyes,

PHOTO: ISTOCKPHOTO

In addition to the tax debt, which Lashey is still paying off, she now has a “giant mortgage” ($270,000) on a twoand-a-half storey “big ol’ barn of a house” in Oshawa, Ont., which she bought in 2015 for $309,000. She shares the home with two tenants and gets rental income of $1,350 a month, which covers the mortgage payment. “Everyone my age thinks I’m crazy,” she says. “But it saves me $4,000+ a year on income tax because I can deduct housing expenses from the tenant income.”

Lashey’s golden years didn’t pan out as planned — what with taxes, divorce, and health issues — but she insists her financial circumstances aren’t unique.

“Everybody I know has a situation just as complicated.”

It’s true — by all measures, debt among older Canadians is a growing problem. According to Statistics Canada, 42 per cent of so-called “senior-led” families (age 65+) had debt in 2016, up from 27 per cent in 1999. And the amount of debt is substantial: a median of $25,000. The Seniors and Money report, an online survey of 1,000 Canadians age 60 and older released in June by the Financial Planning Standards Council and Credit Canada, portrays an even starker picture. More than half (56 per cent) of those polled carry at least one form of debt, and a quarter (26 per cent) carry two or more types of debt. The situation for Boomers is particularly dire — two-thirds (65 per cent) of survey respondents in their 60s are in debt, compared with 46 per cent age 70 or older. Insolvency among seniors is also on the rise.

According to the 2017 Joe Debtor study, compiled from more than

Rising real estate means a sharp increase in property taxes, which can be crippling to seniors on a fixed-income budget — leading them to rely on credit to pay the bills.

Some choose to tap into their property’s equity through consolidation loans or home equity lines of credit.

Michalos & Associates Inc. That’s because pension income cannot be garnished by creditors, and RRSPs (other than contributions made in the previous 12 months) are protected from creditors or when declaring bankruptcy.

REASON: Company pensions are disappearing While half of those 80 and older list a company pension as a source of income, just 41 per cent of those 60 to 69 do, finds the Seniors and Money report. Instead, Canadians 60+ are most likely (73 per cent) to be supported by the government (e.g., CPP and OAS) than through any other form of income.

POSSIBLE SOLUTIONS: Delaying retirement, if possible, can make a huge difference in a retiree’s income. A recent U.S. study out of Stanford University shows that even working just one month longer could increase standard of living in retirement to the same degree as saving an extra one per cent of pay each year for the 10 years prior to leaving the workforce.

REASON: Seniors are retiring before they can afford it — and not always by choice Canadians are leaving the workforce earlier than you might think.

According to 2015 census data, the average retirement age is 63.4, and the Seniors and Money report found that the vast majority (86 per cent) of poll respondents in their 60s do not work full time, and just 17 per cent work part time.

“Many Canadians underestimate their spending in retirement, or don’t anticipate that they may have to retire earlier than they’d like,” says David Nicholson, VP, Imperial Service, CIBC. In fact, nearly half of retirees (48 per cent) stopped working earlier than expected, according to a 2017 CIBC poll of retired Canadians age 50 or older. A third (33 per cent) of these retirements were due to an unexpected health issue, while 22 per cent were asked to retire by their employer.

Furthermore, expenses often increase in retirement — and not

just for those who travel. Uninsured healthcare costs, such as dental, physiotherapy, and some prescription drugs, can be significant.

Not to mention necessary home renovations that retirees may have put off during their working years because they were too busy. So they end up taking on debt to fill the gap. “They just thought they’d be OK,” says Campbell. “No one sat down with them to say, you can’t afford it.”

POSSIBLE SOLUTIONS: It goes without saying that the best fix here is to plan ahead by consulting an advisor well before retirement.

Those who didn’t must either find a way to top up their income with part-time work/consulting gigs or by selling assets (both have tax implications, which are explored below), or reduce expenses to be in line with their lower income.

REASON: Taxes in retirement are complicated As Lashey’s example illustrates, owing income taxes in retirement can come as a shock for salaried employees who never had to previously consider tax planning, as a self-employed worker might.

It’s extremely common for those with multiple sources of retirement income — including private pensions, RRSPs/RIFs, parttime work, non-registered investment, CPP, and OAS — to find that not nearly enough income tax was deducted at source, leaving them with a huge tax bill at year end.

In addition, retirees may face clawbacks on income-tested government benefits, such as OAS, which are added to taxes payable.

And they will likely also be required to make quarterly instalment payments after the first year of taxes owing.

“Once you get into this vicious cycle, you can’t get out,” says Lashey. “If I tried to increase my deductions at source, then I didn’t have enough income to pay my arrears.”

According to Hoyes’s Joe Debtor survey, nearly half (47 per cent) of insolvent debtors aged 60+ have tax debt; with a total tax liability of $27,329, or 33 per cent of their total unsecured debt.

POSSIBLE SOLUTIONS: While it goes against most of the messaging directed at working-age Canadians, maxing out RRSPs may not always be prudent. According to the CIBC poll of retirees, 38 per cent of those with retirement regrets wish they’d saved more outside of their RRSP to avoid benefit clawbacks and high taxes when they draw down their savings (as is required after age 71).

Lashey is among that cohort. “I regret buying RRSPs with my heart and soul,” she says. “It’s not good for people who have a private pension. You get an advantage when you put the money in, but it’s crippling when you take it out.” She would like the CRA to start deducting taxes from source on CPP income, and to alert retirees in advance regarding potential tax pitfalls.

Those able to afford it can reinvest RRSP/RRIF withdrawals in a TFSA to reduce their overall tax bill, but that’s not realistic for most, says Wanda Morris, chief advocacy and engagement officer for CARP, formerly the Canadian Association of Retired Persons.

She suggests the elimination or reduction of mandatory RRIF withdrawals as a better solution.

REASON: Skyrocketing housing prices The percentage of senior-led families (65+) with a mortgage has nearly doubled in the past 20 years, to 13.9 per cent in 2016, from 7.7 per cent in 1999. That increase is due, in part, to rising home OCTOBER 2018 FORUM 13

COVER STORY prices — fewer buyers can now afford a “traditional” 25 per cent down payment so it takes them longer to pay off the balance. Some may also have bought or “upsized” later in life, as the age of marriage and having kids has been pushed back, or due to a divorce or second marriage, says Nicholson.

(Anecdotally, the age of divorce is trending upward, compounding the problem. One Toronto law firm recently reported that “grey divorce” — clients age 50 and older — now represents 40 per cent of their business, up from 10 per cent a decade ago.)

Aside from mortgage debt, rising real estate means a sharp increase in property taxes, which can be crippling to seniors on a fixed-income budget — leading them to rely on credit to pay the bills.

Some choose to tap into their property’s equity through consolidation loans or home equity lines of credit (HELOCs). “Seniors are cashing in on their home equity for a variety of things, including bucket list items, discretionary spending, and helping children,” says Morris. The problem is that these forms of credit may require interest payments only, not payments on the principal, so they can be extremely costly over time.

POSSIBLE SOLUTIONS: Downsizing, where possible, is an obvious fix. A more systemic solution could be moderating the high cost of housing with a vacancy or speculation tax, as has been done in British Columbia, suggests Morris.

REASON: Seniors are helping support adult children and aging parents The aforementioned rise in real estate, the proliferation of precarious jobs and contract work without benefits, and a rise in singleparent families are all making it exceedingly difficult for young adults to make a go of it. As a result, three in 10 Canadian seniors with children are stepping in with financial help, finds the Seniors and Money report. Again, Boomers are the hardest hit, with those age 60 to 69 significantly more likely (35 per cent) to be supporting their children financially than seniors 70+ (27 percent) or 80+ (22 per cent).

“In the past we would talk to clients about saving for kids’ educations, but now it’s about helping their grown kids with their mortgages — or even day-to-day expenses,” says Nicholson.

According to a 2015 CIBC poll, one in four parents are spending more than $500 a month to help their adult children cover expenses such as rent, groceries, and cellphone bills.

In other cases, adult children continue to live at home with their parents or come back to live with them after a divorce — often with kids in tow — as happened with Lashey. “Retirees may have wanted to sell their home to fund their retirement but can’t,” says Campbell.

Younger seniors may also have an aging parent living with them, or are providing financial support for a caregiver, long-term care facility, or other expenses. Lashey, for example, bought her mother a handicapped van.

POSSIBLE SOLUTIONS: Hoyes understands that seniors want to help their adult kids but advises them not to loan money if they can’t afford it. “Maybe find other ways to help, like providing child care one or two days a week,” he says.

For her part, Lashey would like to see tax credits for seniors who 14 FORUM OCTOBER 2018

“In the past we would talk to clients about saving for kids’ educations, but now it’s about helping grown kids with their mortgages — or even dayto-day expenses,” says David Nicholson. According to a 2015 CIBC poll, one in four parents are spending more than $500 a month to help their adult children cover expenses such as rent, groceries, and cellphone bills. are providing support to adult children and aging parents, since they are acting as a social safety net. “The government could be helping those who are helping family members,” she says.

REASON: Lack of financial literacy/no title protection for financial advisors Planning for retirement is complicated, and individuals are becoming more responsible for the decision-making either through selfdirected RRSPs or defined contribution company pensions.

“Somehow we need to educate ourselves,” says Lashey. “There’s a lot online, but it’s hard to get the right information.”

“The level of complexity is very high,” agrees Morris. “I think every Canadian should see a financial planner — especially before retiring.”

Unfortunately, because financial advice in Canada is not legally recognized as a professional activity and thus anyone can call themselves an advisor, it’s often difficult for individuals to know where to go for trustworthy guidance.

POSSIBLE SOLUTIONS: Canadians would be more likely to consult financial advisors if there was a governing body subjecting them to common professional standards of conduct, compulsory liability insurance, ongoing education requirements, and a disciplinary process. “The right financial advisor can help steer clients toward a secure retirement. However, today anyone can present themselves as an expert purveyor of financial advice,” notes Greg Pollock, president and CEO of Advocis. “We need to be addressing the need for a profession for financial advisors and planners. Consumers need to know with 100 per cent certainty that the person managing their finances is a professional.”

TAMAR SATOV is a Toronto-based writer and editor. To receive a PDF of this article, email dgage@advocis.ca.

ESTATE PLANNING

16 FORUM OCTOBER 2018

Death

Clean

When a loved one passes away, who empties out the person’s house? In many cases, the heirs. Deanne Gage spoke with downsizing experts on how they lessen the load

W PHOTO: CULTURA / SOFIE DELAUW / GETTY

hen advisors speak to their clients about estate planning intentions, it’s usually concerning wills and powers of attorneys. But what about the other assets, specifically, all the physical stuff they possess? While some items will be left to heirs, executors could still be looking at a big cleanup job of the person’s residences. Or a death clean, as author Margareta Magnusson calls it in her recent book The Gentle Art of Swedish Death Cleaning. In any case, downsizing in advance may be something your most senior clients should consider. FORUM consulted two experts in downsizing and decluttering for their perspective.

Shirley Blayney is president of Moving On Property Services in Halifax and Lindsay Whisen is founder of EASE Up: The Organizing Experts in Toronto.

FORUM: When do seniors typically make the decision to downsize?

Shirley Blayney: Some people are very organized and downsize after their kids have moved. Perhaps their spouse passes away and the surviving spouse doesn’t want to take care of all the maintenance anymore. Perhaps they physically can’t handle a large house and stairs and they need something on one level.

Others leave it too late and have the decisions made

for them by family or friends or their doctor. Some people have what I call age vanity. They stay in their homes far too long but they are not caring for themselves or their homes. Others just can’t imagine giving up their house and things while they can still afford to have them.

Lindsay Whisen: Most of the people that we help downsize are in a reactive and urgent situation. They are downsizing because they have sold their home, they are moving into a much smaller home, and there is a closing date on the calendar. It is common for people to vastly underestimate the amount of time that it takes to sort, make decisions, pack, and move their belongings to the variety of destinations. We often get calls from time-crunched clients who have embarked on the process themselves and they realize that the job requires more skill, focus, energy, and time than they have.

FORUM: When people don’t downsize and eventually die, cleaning up the house often becomes the executor’s job.

Shirley: I personally went through this. My parents lived in our family home until my father died in his early 70s. I stayed with my mother for a week to help clean out the house, mainly the attic and basement. I Continued on page 20 OCTOBER 2018 FORUM 17

ESTATE PLANNING Continued from page 17 have four sisters and my mother was a pack rat. The house was filled with a bunch of stuff, including most of our old clothes, furniture, and magazines. It took a whole week to bag it all up. At the time, you could still put as much stuff as you wanted out at the curb and local garbage pickup would take it away. We had stuff out in front of three houses. You can’t do that anymore!

Lindsay: Executors find us extraordinarily valuable in this situation.

We can get the job done thoroughly, typically in two to four days.

FORUM: Why is it so difficult to clean up the contents of a house?

Lindsay: There are a few main reasons. To start with, the average person goes about the process in a haphazard way. Without a process to follow, most people go through the house item-by-item, which makes the task wildly inefficient and lacking thoroughness.

Working inefficiently stresses the average person because they can feel their time and energy being wasted.

This work takes significant time, so if they don’t love the work, people lack motivation to keep doing it. My team of six organizers can complete 45 hours of progress in one day. This process would take our clients at least twice as long. Our clients realize that their 90+ hours would absorb their evenings, weekends, and holidays for months on end.

Shirley: There is also no market for many of the items in seniors’ homes. Kids don’t want the antique furniture, dishes, crystal, and silver that their parents view as valuable. If there isn’t a child that is setting up a home or going to university, there is no one to take these items. The antique barns and shops that used to litter the countryside no longer exist because no one is interested in what they have to sell. Some glass dealers who used to go to all the flea markets have stopped because no one is buying and they have large stockpiles of items they can’t give away.

Now the best people can do with many items is to take them to Value Village. Good quality solid wood furniture — unless it is mid-20th century — can’t find a home. I work with charities and in the last few years we gave a lot of items to the Red Cross or those helping Syrian refugees. Often in these situations, you need to find someone with a truck to take things away, otherwise your client ends up paying to have the items trucked away. This is happening more and more and my clients find it difficult to understand that they have to pay to give it to charity.

FORUM: Tell us why and how you started your business and the types of clients you help.

Shirley: When my mother passed away in Waterloo, Ont., I was living in Halifax. Luckily I had two sisters who lived in Waterloo, so they did the bulk of the work to clear out my mother’s apartment. I was working for a large tech company at the time and as I sat on the plane going to retrieve the few items I wanted from my mom’s estate, I wondered what people did when they live farther away and don’t have local relatives. I knew the amount of time it took just to clear out the basement and attic of our family home, and couldn’t imagine that my employer would be pleased with the leave of absence it would necessitate for me to complete that project.

20 FORUM OCTOBER 2018

Lindsay Whisen

I know what it feels like to be hopeless, to feel stuck, to feel like doing anything is too much of an ask. Because I have felt those things in their extremes, now there is nothing more rewarding for me than to relieve those feelings for others.

I find joy in increasing ease for people, and organizing allows me to do that in a way that feels truly useful and lasting.

So, I thought maybe this was something that I could do when I retired — help out-of-province executors clear and clean houses to get them ready to sell.

Lindsay: Being organized was my main coping mechanism for managing the internal stress caused by my mental illness. Being organized allowed to me to persevere and produce at a high level for a lot longer than I would have been able to otherwise.

I know what it feels like to be hopeless, to feel stuck, to feel like doing anything is too much of an ask. Because I have felt those things in their extremes, now there is nothing more rewarding for me than to relieve those feelings for others. I find joy in increasing ease for people, and organizing allows me to do that in a way that feels truly useful and lasting.

FORUM: Do you see this sort of outsourcing becoming more of a trend instead of doing it yourself?

Shirley: I think some seniors will do it themselves with the assistance of friends or neighbours. Others won’t because they don’t want to or they don’t know where to start, are too attached to their belongings, or can’t physically do the work. Then there are situations where people die unexpectedly. People move away to work and families are not living nearby, which presents situations where there is no one to pitch in to assist.

If a person is coming home to clean out a house, they have the costs of travel and the lost personal time to do the work. They don’t have the benefit of the connections that someone locally has. We also don’t have any sentimental attachment to the items we are dealing with, which is far more efficient!

I have seen houses turn over quickly on the market because they have been cleared and cleaned well. So, I view outsourcing as keeping people’s overall costs down, and the house gets on the market more quickly and often with a better return.

The family identified what they wanted and either came and moved it themselves or we made arrangements to have it moved for them.

I worked with antique and second-hand dealers and charities who had trucks and could pick up the items. I worked with a contractor who had a trailer and could haul garbage to the waste Lindsay: I am approaching six years in business facility. I contacted an environmental company and I have experienced a measurable increase who removed the coal from the basement in from year to year in the number of people paybuckets and cleaned the area. A local contractor ing for professional organizing expertise. People fixed the bedroom ceiling. All hazardous waste who have used our services know what they was collected to be taken to a special depot in Shirley Blayney have, because they can see it all. It is easy to Halifax, as were the many number of old paint retrieve and put away. The trend is certainly in containers. the direction of more and more people wanting the greater ease The whole cleanup took five weeks. The house was given a thorthat is experienced day to day when they stop wasting their space, ough cleaning. It was sold in three days with $25,000 over asking, which covered the cost of the work to clear it and clean it. Everyone belongings, money, time, energy, and sanity to disorganization. was very pleased — no one more so than the son.

FORUM: Describe the hardest clean up job you had to do and how you worked through it.

Lindsay: We’ve seen and smelled it all. Gagging is rare, but is some-

Shirley: It was a large three-storey, six-bedroom Victorian home in south-end Halifax. A family had moved into it in the early 1960s and all the rooms were packed full, from the basement to the large rooms on the third floor. The basement was also very wet.

One of the ceilings in a second storey bedroom had to be reconstructed.

No one had lived in the house for over two years. The son had tried to clear it out but he had struggled since he worked full time and had a family.

times part of the game. Rotten food, dark and musty basements, hot attics, pet droppings, mouse droppings, insects, dirty laundry.

But the hardest jobs have never been the ones that are gross.

The hardest jobs are the ones where the clients are, for a multitude of legitimate reasons, less able to be trusting, optimistic, and gracious. Tough jobs involve clients who deal less adaptively with disappointment, who have a tendency to magnify the negative and discount the positive, who have unreasonable expectations or a sense of entitlement, and who are more rigid in nature.

J.G. Taylor Award Nominatio ons The Institute for Advan nced Financial Education needs your help! Nominations for the 2019 J.G. Taylor Award are being accepted until November 30, 2018.

The h individual is an exxample a to others who wan a t to have a ta angible impact on their profes o e ssion and on the public they serve.

Th he individual has had a positive impact on their community,, outsside of the work o they’ve done fo or and in the industry.

The h individual exemplifies e Th he Institute’s code of profes o e ssional con nduct.

Th he individual ha as participated in the industry, e either with Advocis o or Th he Ins I titute, or within other profes p o e sions s in the financial services industry.

If you have any questions about the J.G. T Ta aylor award or the nomination process, please contacct Member Services at 416.

16 444.

444 4449 or 1.8 877.773.

3 6765, 5 or emailil in i fo@iaf @i fe.ca

INSURANCE

PEN TO PAPER Having clients sign insurance disclaimer documents protects your business from liabilities.

Richard Parkinson shows you how to do that

W

ithout a doubt, documentation is the most the company have an electronic application form, non-medical important part of our job as advisors. It will limits, and non face-to-face limits? Do they need wet signature save us from being sued by a client and frankly, originals for the application or forms? What’s the product mix like? it’s just good business practice to record how I keep a running spreadsheet of the many aspects of all the comand why specific advice decisions were made panies I do business with to help me manage this Rubik’s cube of and approved by clients. information. I recommend you do the same.

Documentation starts with a good customer relationship manPersonal Sales Tools agement (CRM) system. Doing so allows you to document every A software spreadsheet such as Excel provides amazing insight. call and email you make or receive, and will become invaluable when you get a call from an insurance company compliance officer For example, pick a date, say Sept. 22, 2018, and then ask, what is asking, “What did you know,” “what did you recommend,” “do the significance of a specific date? On this date you quoted the you have documentation proving you did what you said,” and of client a rate, and then wrote up an application for your client with course, “did the client sign any documents detailing that they a birthdate of March 25, 1980. Did you realize this client is only understood the plan you were recommending?” three days away from an age change? The policy is issued on When I receive a new prospect, I enter the data into my CRM October 22 and you find it is $13.50 per month more than you quoted. Now you have to go back to your client and explain why system and create a dedicated folder in my computer for every prospect. Each folder stores every piece of correspondence, statethe policy premium increased because on September 25, they were ments, signed forms, a photo, and identifications. When they considered a year older. Wouldn’t it be better to go over this with become a client, they get a new type of folder, which stands out your client beforehand and prepare them, and also advise them from other folders. of the implications of age change? When I quote a client rates, I Email is my primary method of communicating information generally use a spreadsheet with a common summary (see below), so I am prompted when an age change is imminent. Then I use with clients. I have created 38 pages worth of template emails, which I can call upon to quickly and efficiently reply to a client’s emails or new sales ideas. When Preparation date: September 22, 2018 September 22, 2018 I send or receive an email of any consequence, I also copy it into the client’s CRM contact Input Data: Client Client record, for easy access for future reference, and a backup.

Product Organization I am contracted with 24 companies and licensed in seven provinces so I have to be organized for my licences and continuing education credits.

Keeping track of company quirks is an ongoing battle so you need a plan to organize the important aspects of each company. For example, does 22 FORUM OCTOBER 2018

March 25, 1960

March 15, 1960

Actual Age:

38

38

Nearest Age:

38

39

Days Before Age Change:

3

359

Smoking Status:

No

(For rating purposes) most insurance companies base the premium on your nearest age.

No

PHOTO: ISTOCKPHOTO

Date of Birth:

my “save age” sheet in Excel that is automated, so all you need to enter is the information in the yellow shaded cells and the spreadsheet does the rest.

Using a tool like this shows you are on top of things and saves the embarrassment of having to explain something you should have noticed earlier.

Calculator to Assess the Benefit of Saving Age Preparation Date:

September 22, 2018 Client

Coverage Term

March 25, 1980

Term 20

Actual Age:

38

Coverage Amount

Nearest Age:

38

$1,000,000

Days Before Age Change:

4

Input Data: Date Of Birth:

Smoking Status: Date Nearest Age Changes Age: Coverages Term:

No September 25, 2018 20

Annual

Monthly

Annual Premium Don’t Save Age

$1,590.00

$143.10

Annual Premium Save Age

$1,440.00

$129.60

$150.00

$13.50

Difference Months

To Save Age, Policy Issue Date Needs to be Approx. September 25, 2018

1

Sept.–Oct.

$129.60

$129.60

2

Oct.–Nov.

$129.60

$259.20

3

Nov.–Dec.

$129.60

$388.80

4

Dec.–Jan.

$129.60

$518.40

5

Jan.–Feb.

$129.60

$648.00

6

Feb.–March

$129.60

$777.60

Save Age Month(s)

Prepayment Month

Months to Receive Back the Extra Cost of Saving Age Cost of Saving Age

Monthly Savings

Breakeven Months

1 Month

$13.50

9.60

2 Months

$13.50

19.20

3 Months

$13.50

28.80

4 Months

$13.50

38.40

5 Months

$13.50

48.00

6 Months

$13.50

57.60

Approximate Total Savings from Saving Age over 20 Years:

$3,105.00

Breakeven months are calculated by dividing the number of monthly premiums you need to pay, to bring the policy current, divided by the monthly savings. E.g., we apply this week and if the application is approved within 1 month, they would ask for $259.20 to save age, i.e., $129.60 to pay the backdated 1 month, Sept.–Oct., and an additional $129.60 to cover the current month, Oct.–Nov., given premiums are always paid one month in advance. In your case the breakeven to save age is 9.6 months.

Product Summaries Many clients have medical issues, such as diabetes or past heart or cancer issues, which make them difficult to insure. You’ll definitely need documentation in cases like these. I have an email template that summarizes what I call the three forks in the road. The email goes like this.

Life insurance has three forks in the road for those who would prefer not have to go through the detailed medical questions and tests: Medically underwritten: This generally involves a nurse visiting you for blood and urine samples. The benefit is you get the most coverage for the least cost, and the widest selection of plans. The downside is people with some medical issues run the risk of a rating (i.e., they want you to pay two to three times their standard rate) or a decline.

Non-medical/simplified issue, with a few questions: These plans don’t ask a lot of questions, and no paramedical tests are taken. But the rates are approximately double that of medically underwritten plans, and limited coverage amounts, typically $50,000 to $100,000, with one provider up to $500,000.

The appeal of these plans is you know upfront whether you qualify or not. Some of these plans are called “deferred,” which means that if you were to die from something other than by accident in the first two years, your beneficiary would only receive a return of the premiums you paid. After two years the benefit amount is paid, regardless of cause.

No questions asked plans: These plans ask no questions at the expense of even more limited coverage, typically $50,000 or less, and charge expensive premiums especially for those over age 60. People in this category typically opt to self-insure, as these too are deferred life plans.

The non-medical/simplified issue plans are particularly troublesome in the sense that you really need to review the medical questions with clients to determine which plan will work for them given their issue. I found the best way to solve this was to create a 40-page summary of the available plans, which on two to three pages per plan, identifies the history of the company, as many of these providers are not household names; name of the plan; the age and coverage amount summary; any significant pros or cons; and the qualifying questions asked. Having this in a single document makes it easy for you to go from one plan to the next.

OCTOBER 2018 FORUM 23

INSURANCE Compliance Compliance was always an informal requirement, which has now been made mandatory as of July 1, 2018. Insurance advisors must be able to prove that we have properly considered our client’s best interest and have documentation to prove it. We have long had to provide replacement forms to the client and have them sign them, but I find few agents seem to do so. Now we have a “needs analysis worksheet,” a “reason why letter,” and a “reason for the sale acknowledgement letter,” which the client is required to sign and initial to show that you have done your job properly. I find that clients don’t mind taking the extra few minutes to complete these documents. And they now have documents to remind them of why they bought the plan they did in the first place.

While I have not had this happen to me, there have been stories of the family of a deceased client hiring a lawyer to sue the advisor for not doing a better job in getting their client to buy more coverage and protecting all risks. So, make sure you have documented that you have discussed critical illness, disability, and long-term care coverage, waiver of premium on disability, and have that as part of your sale acknowledgement letter that they sign.

I am a fan of annuities for the right client, but they too can be fraught with danger from either a client who changes his mind three weeks later or family members who are disturbed to find a loved one purchased a $250,000 annuity with a zero-year guarantee, and died two years later. I have every annuity client sign a “memorandum of understanding” that documents clearly that

Insurance advisors must be able to prove that we have properly considered our client’s best interest and have documentation to prove it. We have long had to provide replacement forms to the client and have them sign them, but I find few agents seem to do so. once they invest the money in an annuity, it is locked in and cannot be undone. The second element in this memorandum is a table showing the annuity rates for different guarantee periods. I also outline the reason the client chose a zero guarantee. It might have been their focus was maximizing their income while they are alive, and not giving their children even more money.

Documentation is a time-consuming but necessary part of running your book of business. It can mean the difference between thriving or facing possible wrath from clients.

RICHARD PARKINSON, CPCA, is an independent insurance broker based in Vancouver. If you are interested in Richard’s Excel sheets that generated the tables, email dgage@advocis.ca.

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TAX UPFRONT

BY DOUG CARROLL

Magic Number What are some advisor assumptions on how much to save?

H

ow much do I need to save for retirement? It’s the most common question asked of financial planners.

Of course, the response depends on how much you’ve already set aside, how much you need to live on now, and how much you want to (or must) spend in those later years. That’s the core of financial planning, and there’s a lot of information to be gathered, decisions and assumptions to be made, and calculations to be applied to come up with viable options and sound recommendations — and even then, there is still some degree of uncertainty.

This doesn’t mean that you don’t go to the effort, particularly if you are the financial planner tasked to make those recommendations. The critical step of any plan though, is putting it in motion.

HEURISTICS—THE APPEAL OF SIMPLICITY In the face of what may feel like a laborious and elusive task, people often prefer to use a heuristic, for example “save 10 per cent of your income.” This is also known as the 10 per cent rule. Because it is so simple, it may very well get things moving, which in fairness, is a victory in itself.

Once good saving habits are established and experience gained, adjustments can be made that cater to changing circumstances.

Even so, 10 per cent is just a nice, round, but otherwise arbitrary figure. The aura that surrounds it should not be confused with the principled due diligence that informs good financial planning.

Do you apply it before or after…?

If we’re not careful, the apparent simplicity can be misleading. How you apply it is equally and arguably more important than the rate you choose in the first place. Too little and there’s not enough when you need it.

Too much and the budget stress could

be overwhelming, perhaps leading you to abandon the initiative you have taken.

Consider these key tax issues: Is the 10 per cent set before or after income tax?

In other words, are you applying it to gross income or net income? As a rough example (which varies by province), the average tax rate at $100,000 is about 25 per cent.

So, do you target $10,000 based on the gross, or about $7,500 based on the net?

That could hinge on the mechanics of how you save.

If you pre-calculated $10,000 then you could pre-authorize a proportionate dollar amount from each paycheque/auto-deposit.

If instead you took 10 per cent off each deposit after it is in your account, it would come out to $7,500.

Are you saving with before or after-tax dollars?

As compared to the first question, which was about the amount to save, this is about deductibility. Put in more familiar terms, you could make a deductible RRSP contribution, or a non-deductible TFSA deposit.

While you can get more into the RRSP to begin, eventually that is taxed on withdrawal before you can spend. TFSAs face no further tax. You’ll need to look at tax rates now (known) and in retirement (assumed) to properly compare. If you’re doing some of each, the arithmetic is more challenging.

Pre- or post-payroll?

If you contribute to a workplace group RRSP, your employer will generally reduce its withholding tax, as it knows of this deduction. When you contribute to your own RRSP, the annual withholding will likely exceed your actual tax due, resulting in you receiving a tax refund. While you don’t have to, reinvesting the refund effectively boosts your savings rate.

Canada Pension Plan?

The CPP is a savings program, with a base premium of 4.95 per cent. It is withheld by your employer, so most people wouldn’t notice or think of it as saving, per se. But depending on your response on the preceding questions, it could be quietly baked into your savings rate. And with premiums increasing to 5.95 per cent over the next few years, and an additional four per cent premium on higher income levels after that, it warrants a closer look to make sure it dovetails with your intentions.

Housing and mortgage?

What does housing have to do with it?

Well, equity in a house is a type of saving, usually by first saving a down payment then servicing a mortgage. As an owner, you defray some of your future shelter costs, whereas otherwise you would need more savings to pay future rent. Whether this is before, after, or part of your 10 per cent depends on your circumstances, which is why a holistic financial plan should underlie your efforts.

DOUG CARROLL, JD, LLM (Tax), CFP, TEP, is practice lead for tax, estate, and financial planning at Meridian.

He can be reached at doug.carroll@meridiancu.ca.

HOW TO REACH US On Twitter: @advocis @deannegage On Facebook: facebook.com/advocis On LinkedIn: linkedin.com/company/advocis

OCTOBER 2018 FORUM 25

THERE’S ONLY

ONE GOLD

GAMA INTERNATIONAL CANADA’S

2018 Management Awards recognize the achievements of leaders in the financial services industry

2018 GAMA INTERNATIONAL CANADA MANAGEMENT AWARDS The 2018 GAMA International Canada Management Awards recognize the highest leadership achievements in Canada’s financial services distribution industry.

AGENCY BUILDER AWARD (ABA) WINNERS The Agency Builder Award (ABA) recognizes outstanding achievement in agency-building, production and field development. ● ABA Gold Award Winners Sally J. Arkell-Boles CHS Stacy S. Arseneault CFP, CHS Perry D. Badham CLU, CHS Chanchal Chakrabarti CLU, CHS Roshan Charles CHS Zhong Chen CHS Pavan K. Chowdry CHS Esther Po Yin Chu Daniel Li-Wen Chuang Juan G. De Guzman CLU Peter De Vito Mark E. Dickson Beverly G. Ellis CHS Joe Ferreyro CFP Gregory Fox CFP, CHS Angela Fu CFP, CLU Adrian K. Fung CLU, CH.F.C., CHS Ronald James Gilson Nubia C. Gomez CLU, CHS John Hirst Darren L. Howe CFP, CLU, CH.F.C., RHU Jordan N. Ingraham Kimberley A. Jensen CHS Rohini Kapoor CSA Alim Z. Kassam Brian R. Kilback CFP, CLU, CH.F.C. Wayne M. Kiryk RHU Karl J. Krokosinski Tony Kwan

Nina Wing Kam Lau-Choy Philip Lawrence CFP David Y. Lim CLU, CH.F.C. Adam C. Lind CFP Jayson G. Mallari Djebran Chalil Mehdawi CLU, CHS Gemma Mendoza CLU Maria Cristina Mendoza CLU, CHS Katina Michelis Shaundra Nancy Oelsner CHS Geoffrey M. Ollson CLU, CHS Steven Ollson CFP, CLU, CHS Sudeep Oommen CLU, CHS Craig W. Pelletier Matthew Pomeroy CHS Jason D. Poulton CFP Gregory D. Powell CFP, CHS, EPC Jerome B. Pusung CLU, CHS Robin J. Rankine CFP, CLU, CH.F.C. Bruce A. Rayment CLU, CHS Jarrett Robertson Adriana Lydia Rogic Darren A. Rosenberger CFP Darlynnda D. Ross CHS Jason E. Schnitzler Wesley Scott Bhagwant S. Sidhu CFP Joshua M. W. Simpson CFP

Sean S. Sparks Vishal Taneja CLU, CHS Greg N. Taylor CFP Eddy C. K. Tong CFP, CLU, CHS Jeff K. Tse CFP Glen WM Ungar CFP, CLU, CH.F.C. Jesse Van Dalfsen Keith R. Vincent CHS Jonathan Jason Werner CFP Scott Woodman CFP, CLU Shanshan Wu CLU, CHS Sonia Zy Wu CHS Xu (Leo) Liu Jamie M. Benn CFP, CLU, CHS ● Jessica Buley ● Herman Chan CFP, CHS ● Bradley P. Chesney ● Perminder Chohan ● William N. Clunas CFP, FMA, EPC ● Jeffrey T. Currie CFP, CHS ● David E. Feldberg CFP, CLU ● Gerard Feliciano ● Peter B. Gillespie ● Mathieu Jones ● Barbara Kwasnik ● Sam Eason Luong CHS ●

Craig Allan MacTavish CHS ● Dennis P. Mavrin ● Minetta McDonald CFP ● Dale W. Milne ● Stephanie Paille RHU ● Ioannis (John) Panago CHS ● Paul R. Pinel ● Anne-Sylvie Purcell ● Alfred E. Roissl CFP, EPC ● Sonny M. Sangemino ● Rajesh Sharma ● Shawn M. Smith ● Peter A. Stewart ● Terrance Thompson ● Jennifer A. Tweddle CFP, CLU, CHS, TEP ● Deborah G. Veska CHS ● Ryan C. Wieczor ● Kevin Wong ● Nicolas F. Zabaneh ● Sarah Decker ●

NATIONAL MANAGEMENT AWARD (NMA) WINNERS The National Management Award (NMA) honours achievement in agency management, particularly increases in production.

Stacy S. Arseneault CFP, CHS Jamie M. Benn CFP, CLU, CHS Chanchal Chakrabarti CLU, CHS Herman Chan CFP, CHS Bradley P. Chesney Perminder Chohan Sarah Decker Donald M Der CFP, CLU, CHS, CH.F.C. Mark E. Dickson David E. Feldberg CFP, CLU Joe Ferreyro CFP Peter B. Gillespie Ted D. Girard CFP, CLU, CHS

Nubia C. Gomez CLU, CH.F.C., RHU Rohini Kapoor CSA Brian R. Kilback CFP, CLU, CH.F.C. Barbara Kwasnik Darsey Lavigne CFP, FMA, FCSI Philip Lawrence CFP David Y. Lim CLU, CH.F.C. Michael Y. C. Liu Craig Allan MacTavish CHS Jayson G. Mallari Dale W. Milne Ioannis (John) Panago CHS Matthew Pomeroy CHS

Gregory D. Powell CFP, CHS, EPC Robin J. Rankine CFP, CLU, CH.F.C. Bruce A. Rayment CLU, CHS Jarrett Robertson Alfred E. Roissl CFP, EPC Darren A. Rosenberger CFP Sonny M. Sangemino Bhagwant S. Sidhu CFP Joshua M.W. Simpson CFP Shawn M. Smith Sean S. Sparks Jeff K Tse CFP Blanche Tse CFP, CLU, CHS, EPC

Brett Tucker CHS Glen WM Ungar CFP, CLU, CH.F.C. Jesse Van Dalfsen Deborah G. Veska CHS Keith R. Vincent CHS Kevin Wong Scott Woodman CFP, CLU Sonia Zy Wu CHS

AGENCY ACHIEVEMENT AWARD (AAA) WINNERS The Agency Achievement Award (AAA) represents the very pinnacle of management excellence among GAMA International Canada members. ● AAA Gold Award Winners Chanchal Chakrabarti CLU, CHS Ted D. Girard CFP, CLU, CHS Barbara Kwasnik Darsey Lavigne CFP, FMA, FCSI David Y. Lim CLU, CH.F.C. Jayson G. Mallari Sean S. Sparks Blanche Tse CFP, CLU, CHS, EPC Brett Tucker CHS Jesse Van Dalfsen Deborah G. Veska CHS Nicolas F. Zabaneh Stacy S. Arseneault CFP, CHS ● Jamie M. Benn CFP, CLU, CHS ● Darin D. Calderwood CFP ● Herman Chan CFP, CHS ● Bradley P. Chesney ● Perminder Chohan ●

Donald M. Der CFP, CLU, CHS, CH.F.C. ● Mark E. Dickson ● Bruce W. Dube CHS, EPC ● David E. Feldberg CFP, CLU ● Joe Ferreyro CFP ● Thomas Gaymer ● Brian N. Gebbie CFP ● Peter B. Gillespie ● Nubia C. Gomez CLU, CHS ● Darren L. Howe CFP, CLU, CH.F.C., RHU ● Mathieu Jones ● Rohini Kapoor CSA ● Brian R. Kilback CFP, CLU, CH.F.C. ● Kris B. Kubin ● Tony Kwan ● Philip Lawrence CFP ● Adeline Chu-Chun Lin CFP, CLU, CHS ●

Craig Allan MacTavish CHS ● Dennis P. Mavrin ● John B. McCallum CFP, CHS ● Izumi Miki McGruer CFP, CLU, CH.F.C., CHS ● Dale W. Milne ● Geoffrey M Ollson CLU, CHS ● Ioannis (John) Panago CHS ● Jarnael J. Payer ● Matthew Pomeroy CHS ● Gregory D. Powell CFP, CHS, EPC ● Adam J. Powell ● Robin J. Rankine CFP, CLU, CH.F.C. ● Bruce A. Rayment CLU, CHS ● Mark W. Roberts CFP, CLU ● Alfred E. Roissl CFP, EPC ● Darren A. Rosenberger CFP ● Sonny M. Sangemino ● Jason E. Schnitzler ●

Learn more at gamacanada.com

Bhagwant S. Sidhu CFP ● Joshua M. W. Simpson CFP ● Shawn M. Smith ● Jeff K. Tse CFP ● Glen WM Ungar CFP, CLU, CH.F.C. ● Bradley D. Unraw CFP, CHS ● Keith R. Vincent CHS ● Kevin Wong ● Scott Woodman CFP, CLU ● Sonia Zy Wu CHS ● Sarah Decker ●

ESTATE DILEMMAS

BY KEVIN WARK

Prized Possessions How taxes are calculated for personal-use property in an estate

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any of your clients will own valuable personal items, such as vintage cars, collectibles, and fine jewellery. One might assume that such possessions will pass on death to family members or other beneficiaries without tax consequences. However, as is the case with other capital property, on death there will be a deemed disposition of these items at their fair market value (subject to the spousal rollover) and any gains will be included in the final tax return.

However, special rules in the Income Tax Act govern “personal-use property” (items used primarily for the personal use and enjoyment of the person), which require special consideration as part of the estate planning process. Let’s review these tax rules and other important planning considerations.

TAXATION OF PERSONALUSE PROPERTY Under the rules governing personal-use property, the cost base to each property is deemed to be the greater of its cost and $1,000. As well, the proceeds received on the disposition of such property is deemed to be the greater of $1,000 and the actual proceeds. Thus, on death there will be no capital gain or loss if both the cost of the property and its fair market value is less than $1,000. In addition, only capital gains (and not capital losses) will be recognized on a disposition (including a deemed disposition on death).

For example, let’s say that Rita’s parents gave her a gold ring upon her graduation, which was worth $500 at that time. Rita recently passed away and has gifted this ring to her daughter under her will. Assuming the ring has a current value of $4,000, the capital gain on death will be $3,000, not $3,500.

There is also a special rule that governs “sets” of property. Where there are different items in a set, the entire set will be consid28 FORUM OCTOBER 2018

ered to be one property. Thus, it will not be possible to claim a $1,000 cost base for each item in the set, assuming the cost of each item was less than $1,000. This could result in a significantly higher tax bill for those classic hockey card and comic book collectors!

LISTED PERSONAL PROPERTY Additional rules apply to certain types of personal-use property that are more likely to appreciate over time. These are referred to as “listed personal property” and include the following: • Prints, etchings, drawings, paintings, and similar works of art; • Jewellery, stamps, and coins • Rare books or manuscripts While capital gains are calculated in a similar manner as other types of personal-use property, capital losses are available to be applied against capital gains realized on the sale of other listed personal properties. For example, if a $10,000 capital loss is realized on the deemed disposition of a painting upon death, this loss can be used to offset capital gains arising from the disposition of other listed personal property arising on death.

ESTATE PLANNING IDEAS FOR PERSONAL- USE PROPERTY Below are some planning ideas and suggestions for those clients who own appreciated personal property that they plan to gift under their will: • Maintain records to establish the original purchase price of the property as well as “improvements” (for example, an addition to a cottage).

• As part of the process of determining potential tax liabilities on death, a formal valuation of collectibles and more expensive jewellery should be conducted.

• Depending on the province where the person lives, the fair market value of

personal-use assets will be subject to probate fees/taxes. Where these assets have a significant value, it may be possible to establish a second will to govern those assets and avoid the need to probate that will.

• The client might consider donating part (or all) of a valuable collection to a charity under his or her will to minimize the tax bill on death. It is important to consult with the charity before finalizing these terms of the will to ensure the charity will accept the gift and provide an appropriate donation receipt.

• Discussions should take place between the client and family members as part of the will drafting process. It may make sense to provide a binding or non-binding memorandum listing who will receive specific personal possessions.

• Consideration should be given to purchasing life insurance to cover off any tax liability that may arise on death and/or equalize the value of gifts between family members.

• This is a good opportunity to review and update property insurance to ensure that valuables are fully insured against loss, fire, or theft.

• It may be wise for the client to take steps to ensure their most treasured valuables are properly stored and safeguarded against their “mysterious disappearance” before the executor can assume control of them.

When assisting individuals and business owners with their estate plans, special attention should be focused on what’s in their garage, on the walls (or in wine cellars), and in their safety deposit boxes. The value of those assets, combined with a client’s desire to keep such items in the family, creates special planning issues and opportunities.

KEVIN WARK, LLB, CLU, TEP, is managing partner, Integrated Estate Solutions, and tax consultant, CALU. He’s also the author of The Essential Canadian Guide to Estate Planning (2nd ed.) and The Essential Canadian Guide to Income Splitting.

He can be reached at kwark@integratedestate.ca.

PROSPECTING PURSUITS

BY BRYCE SANDERS

Unhidden Millionaires

Do you appear more well off than your clients?

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here Are the Customers’ Yachts? is the catchy title of Fred Schwed Jr.’s book, but it also brings up an uncomfortable issue. Sometimes clients think their advisor is getting rich at their expense. Although you might have a friendly relationship, it can cool if you appear to be richer than your clients.

Yet this seems to be a contradiction. Don’t I want to share the same interests as my clients? It’s a way of getting into their world and getting to know them. Don’t I want them to think of me as a friend and peer, not just a service provider? Where’s the balance?

In short, clients want you to fit into their world, just not be doing better than them.

When the stock market is doing well and everyone is making money, your clients probably don’t mind the fee-based income that flows in your direction. When the market hits an air pocket and clients see significant paper losses, they are more sensitive to fees they are paying. This can hit home if the advisor is announcing new ways they have found to spend their income while clients consider tightening their belts.

HUMILITY IS A VIRTUE Here are a few ways you can still be part of the conversation, without bragging: 1. The Grand Vacation. You’ve been planning your 10th wedding anniversary celebration for months. Everything’s been paid for in advance. Clients know about it and are happy for you. Then the market tanks.

Their vacation plans are put on hold while yours are on automatic pilot.

Approach: They will ask about your trip.

Share the details in the context of the great deal you secured because you did plenty of research and shopped around.

Why it works: You didn’t take a $10,000 vacation, you took a $3,000 vacation that was on sale at 70 per cent off. Wealthy people

love getting deals. Many prefer to let someone else do the work. They will discreetly ask where you found the deal.

2. The Grand Restaurant. You’ve been to a great restaurant recently. The meal was delicious and well presented. Your client is a foodie too. You are dying to tell them about it. Draw them out instead.

Strategy: This time, keep your mouth shut. When you next run into each other, ask what new places they have tried. When they mention a famous one, take a sincere interest. You’ve always wanted to go there. Is it as expensive as you’ve heard? Did they think there was value for money?

Why it works: Many people like talking about themselves. This puts them on stage.

They were treated like royalty. Sure, it was expensive, but sometimes you just need to treat yourself. “You should really give it a try.

You won’t be disappointed…”

net worth statement. You probably know some advisors who buy or lease exotic cars.

Your client wonders why you have a better car than they do.

Strategy: Buy the two- or three-yearold version of the car that’s just come off someone’s lease. When clients admire it or comment on it, highlight the fact it’s a used, three-year-old model. But doesn’t it look great?

Why it works: Your client probably drives a new car. Yours is used. They depreciate it in their mind. “It’s not as expensive as I thought.” They secretly wonder if their next car should be a used car just off lease.

5. The Grand School. Tuition can be a crushing expense. Your client sends their children to private school. You do the same.

They struggle. They wonder how you can afford it.

Strategy: Parents want to give their children the best start in life possible. They will sacrifice to make this happen. In some cultures, children are the parents’ retirement plan. The parents raise them, the kids move out, the children build their careers, the parents move in during their golden years.

You highlight the logic of giving your children the best education possible.

Why it works: Your client buys into the same logic. Education is the best investment you can make for your children. They sacrifice to make it happen. They now assume you are doing the same.

3. The Grand House. Your client lives in a great neighbourhood. They have a big house. You’ve bought a similar one nearby.

The stock market tanked. If you brag, they will wonder where you got the money. Oh yeah, from them.

Strategy: You’ve just moved in, but stuff needs to be done. You need someone to mow the grass. You need window coverings.

Ask your client for their advice concerning low-cost service providers.

Why it works: Your client sees you are a person who watches the bottom line and counts their pennies. Alternatively, they might look down on Ikea and refer you to a friend in the design business. They feel they are doing both you and their friend a favour by connecting you.

6. The Grand Clothing and Jewellery.

You own designer gear. You’ve got decent jewellery. Clients think your disposable income is off the charts.

Strategy: During the Great Recession, conspicuous consumption went out. It’s fine to wear well-made tailored clothing, but it should whisper wealth, not shout it. Save the designer bags and flashy jewellery for times when clients won’t be around.

Why it works: Wealthy people know good clothing properly maintained can last almost forever. If you must wear jewellery, try to stick with inherited items. Now you can legitimately say: “It’s a family piece. I couldn’t afford to buy this today.”

4. The Grand Car. In some parts of the country, your car is considered your rolling

BRYCE SANDERS is president of Perceptive Business Solutions Inc. His book, Captivating the Wealthy Investor, can be found on Amazon.

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LEADERSHIP & GROWTH

BY PETE GILLESPIE

Finding new advisors helps with succession planning

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he average age of advisors is around 55, so succession planning is more necessary than ever. When done properly, a good strategy improves new advisor productivity, client retention, and the value of your book of business.

That’s where recruiting comes in. We find the best source of candidate introductions is existing advisors. Successful advisors recognize the qualities and traits that are needed to deliver value in today’s economy. When they see those attributes in another professional, they are open to having a career discussion with the potential candidate. Targeted recruiting helps us maintain the high value of advisors, improves their productivity, and enhances our cultures as we share core priorities.

Retention should also be top of mind when it comes to recruiting. It’s not typically a lack of competence or belief or fulfillment that leads new advisors to leave our career, but rather a shortage of people to see, and a lack of revenue.

As an industry, when we are aware of these conditions, we are better able to connect recruiting efforts with succession planning. A new associate who joins and is able to grow with an established advisor stands a better chance at long-term success.

Senior advisors also feel more confident that their clients will be well looked after in the future.

Focused recruiting helps reduce the fear for a senior advisor who is thinking about retirement. Often, the emotional factor inherent in leaving full-time work and the overall mission of our business presents a stumbling block. Many top producers examine the financial outcome of retirement, but not nearly as many consider the qualitative

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aspects. When senior advisors develop a successor, they can see first-hand how well their clients are being attended to, and that can increase their confidence and reaffirm that they are doing the right thing.

At the other end of the equation, younger associates afforded a successor role gain a clearer vision of their own career and how it fits into the bigger picture of the company and of their clients’ lives. For solo producers, this business can be lonely. When newer advisors have a guide, they benefit from greater empathy, accountability, and shared purpose.

CLIENT PERSPECTIVE Clients are also better off when a senior advisor develops a newer associate. It is always comforting to know that a trusted partner will continue on with the development and execution of their plans. The newer partner, often younger, can also be an effective liaison to the next generation of clients. The

PETE GILLESPIE is president of the GAMA International Canada Board and director, practice development, with Freedom 55 Financial in Toronto.

GAMA International Canada, a conference of Advocis, provides professional development and networking opportunities for leaders in the financial services industry. For more information, visit www.gamacanada.com.

Would you like to receive a PDF of this article or others in this issue? Please email the editor at dgage@advocis.ca.

PHOTO: ISTOCKPHOTO

Recruiting and Retaining

multi-generational approach enhances client relationships and significantly improves asset and account retention.

Integrating mentorship into the early stages of a new advisor’s career allows potential advisors to gauge the pros and cons of the career and the opportunity.

Coaching the senior advisor when it comes to recruiting, selection, and retention includes two elements: identifying the ideal junior associate, and fostering a plan that allows the mentor to be in control while divesting of the business.

Clients are also comforted to see the advisor has a succession plan, which means they are more willing to commit to the advisors’ services long-term. When advisors demonstrate that they actually subscribe to their own recommendations (i.e., succession planning for business owners), clients have greater confidence that their advisor is aware of, and sympathetic to, their issues and goals.

A solid recruiting focus, concentrating on key success traits and following an objective process, helps us identify and develop the next generation of advisors. By giving our senior advisors solid tools and avenues for succession planning, we afford them the opportunity to plan for successful transitions. No matter where they are in their careers, their next steps should be dealt with decency and alacrity. This is simply easier if we have a coordinated system in place.

Successful recruiting and succession planning do not happen by chance. Combining solid recruiting efforts with meaningful succession planning discussions improves retention and lays a path for our future success. Our clients benefit, our advisors can fulfill their purpose, and our industry is the better for it.

AdvocisNews ASSOCIATION UPDATES AND EVENTS

REGULATORY AFFAIRS CSA RELEASES NEXT ITERATION OF REFORMS TO REGISTRANT REGULATION

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imultaneous with the release of its decision to preserve certain forms of embedded commissions (discussed in last month’s Regulatory Affairs update), the Canadian Securities Administrators released its revised set of reforms to registrant regulation (the Targeted Reforms). These Targeted Reforms reflect the CSA’s latest thinking since their previous proposal in 2016.

The Targeted Reforms propose changes to rules regarding Know Your Client (KYC), Know Your Product (KYP), suitability, and conflicts of interest. Notably, the CSA is no longer calling for a blanket regulatory bestinterest standard. But in the discussion on conflicts of interest, the Targeted Reforms require that firms and advisors put the interests of clients ahead of their own. All conflicts of interest must be addressed, not only those that are material, although non-material conflicts of interest may be addressed

proportionately to the risk posed. From our perspective, it is unclear how this “best-interest” obligation will be applied, including how it will be different from the previously proposed (and then abandoned) statutory and regulatory best-interest duties.

On KYC, registrants will be required to collect certain specific client information at the time of account opening and update that information either upon the occurrence of certain triggering events, when the advisor knows or ought to know of significant changes in the client’s situation, or at minimum in certain intervals, ranging from 12 to 36 months.

KYP requirements will be explicitly codified to ensure that firms understand the securities they sell and how they compare to similar securities on the market, and that they monitor and reassess their offerings in light of certain changes to the security.

Advisors will be required to take reasonable steps to understand the securities available through their firm, including the impact of costs associated with acquiring and holding the security.

On suitability, the Targeted Reforms expect that registrants will put their clients’ interests first when making a suitability

determination. Before an advisor opens an account, takes an investment action on behalf of, or makes a recommendation to a client, that advisor must determine that the product is suitable on a portfolio level for the client. Again, the CSA highlights the importance of cost considerations in assessing suitability, including the availability of lower-cost alternatives. There are a number of listed triggering events that would require a reassessment of suitability.

The Targeted Reforms propose to restrict referral arrangements to situations where both parties are registrants, and the fee must not continue for more than 36 months or exceed 25 per cent of the fees or commissions collected. The amount charged to the client must not increase due to the existence of the referral arrangement, and the client must receive information about the referral arrangement in writing.

Advocis has set up working groups amongst members of the Investment Subcommittee to explore the Targeted Reforms in detail, develop policy options, and make recommendations to the board of directors. Upon the board’s approval of a policy direction, Advocis staff will draft our response to the CSA, which is due on October 19.

ROOKIE ADVISORS GAIN KNOWLEDGE FROM TOP PRODUCERS

you give to clients, and ultimately add value to your practice. She also spoke about the importance of networking with your peers, who are always willing to share their successes. he Advocis Toronto Chapter recently As well, John Lysack, professional develophosted a “Thrive in Five: What Can ment chair for the Toronto Advocis Chapter, Advocis Do for You?” event. This event supspoke about the importance of mentorship. ports newly licensed advisors who are either Due to the influx of new advisors starting in Jaclyn Nemethy in their first or second year in the business. the industry each year, those who have found The Toronto Chapter also leveraged the event to highlight mentors have become more successful in their business and some of the benefits of becoming a member of Advocis — are more likely to remain in the industry. Advocis Toronto advocacy, designations, continuing education, and networking. offers new member events, such as Under 5 After 5, and Jaclyn Nemethy, membership chair for the Toronto Advocis programing throughout the year to create opportunity to connect with successful advisors who have been in the industry Chapter, spoke about the importance of working toward and for many years. achieving designations, and how it will add value to the advice

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AdvocisNews

Mitch LePage, chair for Cystic Fibrosis Canada, speaking about the life-saving effects of charitable giving at Advocis’s 2018 Leadership Conference in Toronto.

CHAPTER NEWS PROFESSIONAL DEVELOPMENT FOR FINANCIAL ASSISTANTS

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dvocis Durham launched programming for financial advisor assistants. This programming provides skill development in various areas to benefit a practice, as well as insights into industry changes. Assistants leave with fresh ideas to support their practice as well as a new network of contacts they can call on if they are in need of some help or advice.

“The biggest value point for this type of event is we’re educating and empowering the key person or people that help an advisor bring their practice to life. By offering practical skills and sharing expertise from other successful assistants and administrators, we not only invest in the career of the assistant themselves, but we are investing back into the practices of our own members,” says Sarah Smith, VP, Advocis Durham.

At the inaugural session of the chapter’s new Assistant’s Academy, Kirk McMillan, president, Advocis Durham, presented a session on the changing face of regulation in Canada and reviewed compliance requirements such as CRM2 and more. Social media consultant Nina Taver shared tips on how financial advisors can use social media for their business; raise their visibility; and engage with potential clients, including using live demonstrations of key platforms and their business advertising and analytics tools.

“Our focus on the types of skills and tools we offer is enhancing a practice — what best practices can we share, what tools can we offer, which will help practices become more efficient, tap or support growth opportunities, and enable advisors through their support staff, to deliver even more value and impact to their clients,” says McMillan.

Advocis Windsor at the Poor Boy Luncheon for Cystic Fibrosis Windsor Essex-Kent Chapter, where they fed more than 300 people and raised more than $6,000.

ADVOCIS RAISES MONEY FOR CF

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Presenters Kirk McMillan, president of Advocis Durham, and Nina Taver, social media specialist.

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ystic Fibrosis (CF) is one of the most common fatal genetic diseases affecting children and young adults in Canada. But thanks to the help of financial advisors and Advocis members across the country, we’ve been able to give hope back to hundreds of families living with CF. 2018 marked the 33rd year of friendship between Cystic Fibrosis Canada and Advocis, and just this year Advocis members pushed the total donation to more than $5 million. From Poor Boy Luncheons in Windsor and Durham to golf tournaments in Ottawa and Regina, and dozens of other events across the country, charitable efforts and donations from volunteers in our industry have funded critical research into CF. These efforts have provided families treatment options closer to home, and given Canadians living with CF one of the highest median survival rates in the world.

ADVANCING FINANCIAL LITERACY

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dvocis chapters were honoured to welcome Jane Rooney as the keynote speaker for the recent chapter leadership conference. Rooney, Canada’s Financial Literacy Leader and national representative on the International Network on Financial Education, spoke about the impact financial stress has on Canadians and the role financial advisors play when it comes to increasing confidence and knowledge about personal finances.

Rooney also helped Advocis recognize volunteers, thanking everyone for their continued support of financial literacy activities. Many chapters participate in community and school programs, including rallying local members to volunteer for Junior Achievement. The Advocis Kingston chapter helped form the network’s first financial literacy network with

Jane Rooney, Canada’s Financial Literacy Leader, joined by Greg Pollock, Advocis CEO and president (left) and William Britton, financial literacy chair of the Chapter Leadership Council.

its community partners in the Kingston Financial Literacy Partnership (KFLP), a cooperative that works together to develop financial literacy symposiums for area high-school students.

Financial Literacy Month activities will take place again throughout November. Last year, Advocis launched an initiative with chapter social media support. MyMoneySmarts™ — Build your financial savvy. Shape your future™ focused on educating Canadians about how money, credit and debt management, saving, spending, and investing all work together.

Interested members are encouraged to contact their local chapter for information on local opportunities.

SYMPOSIUM 2018: LEAN IN TO THE FUTURE. REGISTER NOW!

IN MEMORIAM

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he 10th edition of Symposium will take place on Tuesday November 20 at the Ritz-Carlton Hotel in Toronto. Symposium 2018 will feature such speakers as Michael Hyatt, tech entrepreneur and celebrated “Dragon” on CBC’s Next Gen Den, and Chuck Grace, Canadian financial services industry veteran. Don’t miss out on the opportunity to listen and learn from regulators and company executives as we continue to move forward toward the future with confidence. To view a copy of the day’s agenda and to register go to www.advocis.ca/symposium2018.

Dennis Edwin Gowan 1957–2018

t is with great sadness that we announce the passing of Dennis Edwin Gowan on June 1.

Dennis has been a member of the Advocis Greater Hamilton Chapter for more than 10 years. During this time, Dennis received his CLU in 2015. He was the beloved husband of Karen and loving father of Leonard (Rebecca), Christopher, and Steven. Dennis’s legacy is sure to live on through his lasting memories with his family, friends, and colleagues.

OCTOBER 2018 FORUM 33

FINAL WORD

Learning from Our Past

BY AL JONES

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PHOTO: LUIS MORA

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e began as LUAC, the Life advisors. The model calls for the finanUnderwriters Association cial advisor title to be regulated and for of Canada, in 1906 with titleholders’ mandatory membership in 351 members in 21 chapa recognized professional association. ters. The insurance industry was comThis would assure consumers that all petitive and had no common regulatitleholders are duly qualified to provide tions, standards of conduct, designafinancial advice and are accountable to tions, or support networks for advisors. the highest standards of ethical conduct.

LUAC offered political representation A key component of the way forward is for the industry and an opportunity to to increase Advocis’s membership standiscuss products and proper protocol dards, and to offer continued support and learning opportunities for new adviwith other advisors. Members could foster countrywide networks with sors looking to define or evolve their colleagues who quickly became friends. approach to financial advice and build A community of advisors was born. their businesses.

LUAC developed a code of conduct The new Advocis membership As our profession and and gave association members a clear requirements will come into effect association evolve, it is January 1, 2019. All new members will professional motto, Non Solis Nobis or “Not for Ourselves Alone.” This motto be required to earn a recognized desigimportant to look back represented the core of the insurance nation within their first three years of at our past and why business and the role of the association membership. This minimum standard within the lives of its members. of education for advisors offers qualifiAdvocis, the Financial cation assurance to clients and the genFor George Allen, the association’s Advisors Association of eral public. The Professional Financial first president, it was clear that the success of the association would be deterAdvisor designation (PFA) has been Canada, was founded. mined by the public’s understanding of developed to fill an existing gap for how advisors establish and maintain newer advisors. financial wellness for their clients. Allen said, “In the constant An advisor’s first 10 years in the business can be precariand untiring education of the public and the legislators, lies ous. When LUAC began, opportunities for mentorship and safety.” We achieve that by working as members of our comjob shadowing eased advisors into the field. Now, finding a munity, with members of our community, and by commitseasoned advisor with time to mentor a newer advisor is significantly harder. But targeted training can go a long way to ting to our own ongoing education. Although it is the relationship with your client that builds your book of business, bridge the gap. As William Ralph Inge once said, “The aim relationships with colleagues are the ones that foster profesof education is the knowledge not of facts but of values,” and sional growth. That’s why association membership was and I believe that to be true. The PFA provides practical knowlis so valuable; it offers community to a profession that can edge to newly licensed advisors who may lack the experience be quite isolating at times. and guidance that help make the first years in business go We have experienced waves of change over the past few smoothly. years with regulation, taxation, technology, and professionThe job of a financial advisor is a tough one. But it also offers opportunities for a deeply satisfying, professional alization. But through our client and community conneccareer. Advisors deserve to be recognized as professionals, tions, the important advocacy efforts we lead, and our comand we are willing to make the necessary changes to make mitment to professionalism, we handle industry change with that happen. Non Solis Nobis continues to be the basis for our grace and confidence. As we move forward and work to define approach to professional development, evolving regulations, our roles as professionals in the Canadian financial services and our work in communities across the country. industry, we cannot undervalue our history and the core values that drove our membership.

All of this brings us to our belief that a clearly defined AL JONES, CFP, CLU, ICD.D, ACCUD, is chair of Advocis. He can be reached at al.jones@freedom55financial.com.

Professions Model is the way forward for Canada’s financial

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Dividend Factor ETFs and Mutual Funds

fidelity.ca/ETFs Ask your Fidelity representative.

Commissions, trailing commissions, management fees, brokerage fees and expenses may be associated with investments in mutual funds and ETFs. Please read the mutual fund or ETF’s prospectus, which contains detailed investment information, before investing. Mutual funds and ETFs are not guaranteed. Their values change frequently. Past performance may not be repeated.

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