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Making sense of rates of return

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Financial Services has an abundance of acronyms and glossary terms that can be downright confusing. Even something as seemingly straightforward as the rate of return isn’t without a certain level of complexity.

The most important consideration is how you intend to use the information.

  1. Are you assessing the performance of the portfolio manager?
  2. Are you evaluating your personal rate of return?
  3. Are you most interested in long-term performance, looking for shorter-term buying opportunities, or assessing whether it’s time to take some profits?

There are two commonly used methods for measuring the rate of return of a portfolio: time-weighted vs money-weighted. Both are informative depending on your purpose.

When you look at the profile of a specific investment fund, you are seeing the time-weighted return. We often use data provided by independent research firms such as Morningstar and Fundata to evaluate funds (managed portfolios).

When you look at your own portfolio summary, you are seeing the money-weighted return. We always report net of fees so it is the true measure of your investment performance taking into consideration related costs.

See the following examples to understand the differences if you’d like to delve further.


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Determining which portfolio managers you want to have managing your money and when you want to invest are informed by these types of calculations.

Hope this is helpful if you are puzzled by different rate of return calculations. If you have any questions, you can always call us.


*Graphics adapted from CI Investments’ “Making Sense of Your Investment Performance”

The Compliance Conundrum

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You’ve all experienced coming in for an appointment and having to sign a ream of papers. Or, one of us contacting you because we need you to sign this or that. Try not to get frustrated with the process. We ourselves work at not getting frustrated with it daily. There is a reason for all the paper and it is a good one.

Our mutual fund dealer FundEX Investments Inc. oversees all of our investment transactions and ensures that we are operating in line with provincial securities commissions and the MFDA (Mutual Fund Dealers Association of Canada). The purpose of all the regulation in the industry is to keep you safe from investment schemes and unscrupulous sorts. Although a few bad apples in the industry have resulted in stricter regulations (and in some cases, excessive) for all advisory firms, processes and procedures are necessary to ensure you are staying informed about your advisory services and investment transactions.

FundEX Compliance Related Documents

  • KYC (Know Your Client) Forms. The KYC is a document related to suitability. It gives us a framework within which to establish an investment profile. It must be renewed at least every 3 years and when a “material”/significant change has occurred. This keeps us informed of any changes that may need to be made to your investment portfolio. If your KYC is out of date we are not able to perform a trade on your behalf.
  • Address Change Form. Please contact us when you decide to move or change any of your contact information. We can update our database with your new information and then generate an address change form that must be signed and submitted to FundEX to update your investment account. Your investment account will not be updated without the form.
  • Client Copies. We are required to send you copies of the paperwork generated from completing an investment trade or any other transaction for you. At times, this can mean a lot of paper and may even seem daunting, but it is important that you review the paper and call us with any questions before filing it in your cabinet or recycling bin.

FundEX Investment Transactions

  • Fund Facts. We are required to send you these regulatory documents before you decide on making an investment in a specific holding that you do not currently have in your portfolio. Fund Facts are the industry’s way of communicating key information about mutual funds to investors in easy to understand language. You may receive Fund Facts as an attachment in an email, as an email notification to check your WealthView account or in person.
  • Investment Instructions. In many cases our clients have given us Limited Authorization to sign investment instructions on their behalf. You control the decisions that are made and we can act only on your instructions. When meeting to discuss your investment strategy, sometimes the specific transactions are not finalized during the meeting. Further research may be required before the specific transactions can be determined. When this happens, your advisor will either send you an email to confirm your authorization or contact you by telephone. If instructions apply to both you and your spouse, it is required that we obtain confirmation from each of you before we can place your trades.

Fraser & Partners Letter of Engagement (LOE)

  • Signing an LOE with Fraser & Partners means we’ve had a candid discussion and agreed to the following:
    • The services we are providing for you.
    • Expectations for both parties to ensure a successful life planning engagement.
    • Fees and a compensation model that works for you.
    • The best way to communicate.
    • Opt in our out of our digital communications.

There are many aspects and many layers in the operation of a compliant advisory firm. In the above comments we are primarily referring to investment-related matters, but there are also strict regulations in place for insurance and income tax services, not to mention the professional requirements and practice standards applied to Certified Financial Planners.

When you hear from us that we need to update your account information, please don’t shoot the messenger! Having the details in order frees us up to focus on planning and implementation of your financial life plan.

Fun, Food – Fantastic 30th Anniversary!

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If you were able to make it to the morning or evening event on November 24th, we thank you. If you weren’t able to come, we thought we would bring some of the fun to you! The following photo gallery will take you on a tour of the event festivities.

First stop – greetings with Karrianne!

After signing in and receiving an activity ballot in the reception area, it was off to meet the team, tour the new office and have a snack.

Karrianne greeting guests in our new reception area.


‘ Putt with Jeff ‘

This activity proved harder than it looked! Golfers had 3 chances at a hole-in-one. There were plenty of laughs to be heard as golfers did their best to score well.

Jeff at his ‘Putt with Jeff’ activity station.


Time for a snack in the boardroom

Carrot cake, fruit and cheese in the morning and chocolate strawberry mousse cake, wood fired pizza and fresh vegetables in the evening made for scrumptious snacking in our new boardroom.

Morning snack in the boardroom.


Jan cutting the cake to kick-start the morning festivities. 30 years was quite a celebration!


Bean Bag Toss with Daniela!

Daniela headed up the Bean Bag Toss. This activity was a team favourite – we all gave it a try prior to the event!

Daniela managing the ‘Bean Bag Toss’ in the open team work area (advisor studios pictured behind her).


Tea with Oolong Mike in the morning!

We thought it would be fun to have a tea tasting during the morning event and it was! Oolong Mike was a great host. He became a fan of tea when he lived in China and travels there annually to shop for teas. In 2015, he completed his certification as a Tea Sommelier with the Tea and Herbal Association of Canada. He is full of knowledge and passionate about tea. We all enjoyed learning about the selections he served.

Oolong Mike preparing for the morning tea tasting in the kitchen. In the background, Jennifer is helping with set up.


Wine with James in the evening!

James headed up the wine station in the kitchen at the evening event. His personal favourite was the Castillo del Moro Tempranillo/Syrah.

James getting ready for the first wine tasters at the evening event in the kitchen.


Team Spencer joined us at the evening event

Team Spencer (the family team we’re sponsoring this curling season) popped by just prior to competing in the Sunova Bonspiel – they won! You can meet the team here.

Team Spencer, made up of skip Barb Spencer and her daughters (from left: Barb, Allyson, Holly and Katie Spencer) with Jan at the evening event.


Spin-to-Win with Jennifer!

Participants able to complete some of the activities on the ballot were eligible to ‘Spin-to-Win’ with Jennifer. We had some pretty great prizes!

The prize table in our team room (prizes from left: fragrance warmers, Merci chocolates, red and white wine, Pulse journals and various tea prizes.


Chat with Moby

Hopefully everyone had a chance to touch base with Moby before leaving in the morning or evening.

Moby in the reception area.


Getting to know the Pulse Gallery

Two local artists from the Pulse Gallery joined us to talk about the art they created for our office. Kathleen Crosby painted 3 pieces for our reception area and two of Cindy Dyson’s paintings fit perfectly in our open office area. Both artists, along with Lesly Dawyduk of The Pulse Gallery fielded questions about the paintings. They were a warm and wonderful addition to our team for the day!

Our neighbours, The Pulse Gallery, in Johnston Terminal at the Forks.


Surprise for Jan!

We included a printed insert with the 30th anniversary event invitation for Jan’s clients. We asked you to share what working with Fraser & Partners has meant to you because we couldn’t think of anything that would mean more to her.

Jan absolutely loves her book! Here are some photos that capture the moment.

Jan opening her gift from the team.

First look at what is inside!

Realizing just how special this gift is thanks to the stories submitted.

Congratulations on 30 years Jan!


“And how will you be paying?”

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Black Monday Headlines The New Your Times

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October 19th marked the thirtieth year since that famous day in 1987, when the US S&P 500 Index declined over 20% in one day. It’s known as Black Monday. I was just starting my career in financial services. I remember the news coverage and the total panic. This definitely wasn’t what I had signed up for, but it was a valuable lesson in the power of investor psychology.

If you want to learn more about that prominent day in the history of investing, see the New York Times article by Robert Schiller who studied investors’ behaviour following Black Monday. (Schiller won a Nobel Memorial Prize in Economic Sciences in 2013.)

Much has changed in finance in those thirty years since Black Monday.

We now have financial technology (FinTech) automating and accelerating the pace of money flows in the capital markets. There are thousands of publicly traded individual securities and managed portfolios (mutual funds, segregated funds, private investment pools, exchange traded funds), and a plethora of other hybrid investment vehicles that are competing for your attention.

FinTech has literally transformed our day-to-day banking experience. Remember when you saw your first automated banking machine? Pay bills online, take a picture of a cheque and send it electronically to your bank account? Really?? Now these activities are commonplace, part of our banking routine.

If you take a look at the industry updates we’ve posted this year (we only post a few of those most relevant), you can see that FinTech along with regulatory reform are causing enormous disruption in the financial services sector. With the invention of cryptocurrencies FinTech promises even more dramatic change aheadThese virtual currencies have the potential to replace the currencies of individual countries — and the banking system as we know it!

BitcoinThe first such digital currency was Bitcoin, invented in 2008 as a global means of payment. Transactions are done through peer to peer networks without the need of a bank, making it the first decentralized digital currency. In spite of the graphic, this isn’t a physical coin that you can put in your pocket. Bitcoin is virtual.

Speculators have been captivated by this innovation. With high volatility in the price of a Bitcoin (in USD up this year from $967.07 on Jan 1 to $6,400 Oct 31/17), you can imagine that fortunes have been made and lost already trading on this financial technology. Bitcoin could become the cyber equivalent of gold. It could also be a perfect example of a FinTech mania and go the way of the tulip bulbs in Holland (Tulip Mania).

Maybe other competing cryptocurrencies will prevail – Ethereum, or Dream, or Ripple… We’ll keep you posted on developments. For now Bitcoin is in the lead.

“And how will you be paying?” Someday, maybe sooner than you think, your reply just might be … “in Bitcoin please”.

As we move into the final weeks of 2017, take the time to review your current financial picture. Make sure everything is organized before year-end. Even if it’s not bitcoin, you’ll need some kind of coin to keep ahead of your taxes and everything else that goes into the business of life.

If you have any questions on your overall life plan, your portfolio or tax position, please call us. We’d be glad to hear from you.

What’s in a move?

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When the managers of Johnston Terminal let us know they were moving us upstairs to make way for more retail space on the 2nd floor, we were a little shocked. Suite 250 has been our home since the Johnston Terminal opened in 1992, over 25 years. We had just started to undertake long overdue renovations including building a kitchen, replacing the carpet and updating some of our furniture.

Once we were able to tour the empty 3rd floor space, we started warming up to the idea. All new and designed for our current and planned needs, this move would enable us to achieve objectives we wouldn’t have been able to reach in our 2nd floor space. Things were looking up – until we had a thought…

How would we get our beloved boardroom table up to the third floor!?!

Weighing in at an estimated 500lbs, 5′ wide x 10′ long, our boardroom table is no lightweight.

The contractors and management came up with a plan and it was a big one. The following presentation tells the story of our table and it’s gargantuan move.



As construction projects go, there have been delays along the way but we finally made it!

We are now located on the 3rd floor in Johnston Terminal in Suite 350.

Just one floor up from where it all began.


If you are planning a move anytime soon and/or renovations, here are some tips we learned along the way:

  • Decluttering ahead of time makes the transition much easier. Although it can seem like a huge job to go through everything, breaking it up into manageable pieces over time and sharing the workload makes it doable.
  • If you are planning renovations get a completion date and be prepared for delays (4 – 5 months in our case). The little things add up: materials on back order, trades unavailable, permits delayed and many other glitches in the process can arise.
  • Even with the help of a contractor and designer, planning for a renovation takes a lot of time and effort. From designing the floor plan to choosing the finishes, there are many considerations that can add to the overall time frame.
  • In our case, the renovation budget wasn’t ours to manage, but in your case, it will be a key factor. Make sure you have thought through your finances carefully to determine a budget with contingency built in.
  • Preparing a move plan well in advance is helpful to determine what goes to the new space and what needs to be sold, donated or discarded. Planning ahead also provides time to detach from the comfort of familiar things that aren’t helpful and don’t really matter anymore.


The Pendulum Swings

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Whether you’re heartened or disheartened by the election of Donald Trump as President of the United States, one thing is clear – the pendulum has swung hard to the right. It’s not easy to sift through the conflicting policy statements to discern what the Trump anti-establishment, pro-business position actually is. He was elected on promises of –

  • big tax cuts (in corporate, personal, estate, and capital gains),
  • deregulation of health care, energy, and financial services,
  • renegotiation of trade agreements, and
  • fiscal stimulus (federal support for infrastructure projects).

Actions taken to date suggest a change agenda that extends far beyond the borders of the U.S.

How Canadians will be affected remains to be seen. The fear of a trade war with the United States has been lessened by the apparently cordial meeting this week between “Joe” Trudeau and Trump.

The financial markets have responded enthusiastically to the election of Trump, in spite of social and geopolitical concerns. The markets have been on a sugar high with the prospect of massive tax reforms, deregulation, and infrastructure spending. It’s great to get a surge in the markets, but remember the role of diversification in achieving solid, risk-adjusted returns over the long-term. For a reality check note the following guidelines published by the Financial Planning Standards Council (FPSC) in 2016 in terms of portfolio performance expectations over the long haul.

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To view the full FPSC Projection Assumption Guidelines report, click here.

Change is in the Air

While the U.S. Administration has promised to lighten the regulatory burden on financial services, sweeping reforms here in Canada are geared toward tightening the regulations. These are some of the major changes we’re seeing.

1. Consolidation within the investment industry and within the product offerings of those investment firms.

A recent example of this trend is the sale of Scotiabank’s subsidiary, HollisWealth, to IA Financial Group. IA Financial is also the parent company of our dealer, FundEX Investments Inc. Through a series of acquisitions IA Financial has become prominent in wealth management in Canada with close to $800 billion of assets under administration (including $11 billion that advisors associated with FundEX oversee on their clients’ behalf).

It’s important to have a broad array of investment choices, but with over 53,000 investments tracked on the Fundata research platform it’s clear we have way more than we need. Some consolidation is certainly welcome.

2. Lower fees on managed portfolios, including all types of mutual funds, segregated funds, exchange-traded funds, private investment pools, private wealth programs.

Competition is increasing. Investment firms are tightening their belts. To obtain a competitive edge they are rationalizing their offerings and launching new “preferred” pricing options, private investment pools, and private wealth programs — all more or less synonymous with lower management fees.

3. Better packaging of information for investors on investment risk, returns and costs  

For each of their fund offerings, investment firms are now required annually to publish a concise, easily understood document called Fund Facts. You may have already received some of these documents.

4. Transparency on the cost of advice and service 

On your December 2016 statements you will see additional information regarding the fees you paid to FundEX and Fraser & Partners for advice and service. We welcome the greater transparency on fees.

There is a debate in the industry over how advisors should be compensated – embedded fees (bundled within the cost of the investment) versus fee-for-service (FFS) (unbundled from the specific investments held in your portfolio). Rather than restrict the choices investors have when it comes to method of payment, I’d prefer to see the regulators raise the bar in terms of practice standards and let investors find the service that’s right for them.

The challenge in relying on practice standards lies in the difficulty of measuring success in a financial advisory relationship. Our work is not just transactional. We don’t simply meet with you and pitch the product that’s the flavour of the month.

  1. We strive to get to know you as a whole person – your values, stage of life, family, time horizon, risk tolerance, personal financial resources, tax, hopes and dreams, your mindset about money and resilience in the face of change.
  2. We bring our knowledge, expertise, and vigilance regarding regulatory, market analysis and product analysis, so that you get the best possible benefit from what’s available to you along the way.

From my perspective, advising is values-based and personal. It isn’t just a few calculators thrown up on the monitor to determine your financial destiny. It is the human element intertwined with technical expertise that matters. We may not always be popular because we’re not always going to tell you what you want to hear. You can depend on us to voice what is real and also to explore a range of possibilities from a place of understanding.

We’re gradually transitioning to a fee-for-service model, which represents an unbundling of the cost of investment advice from the specific investments in your portfolio. There are pros and cons to FFS. It won’t be worthwhile for all of our clients to make the change, but it’s an option for everyone.

Key benefits in using a fee-for-service structure:  
1) tax treatment – the fees on open/non-registered portfolios are tax-deductible (all or in part, depending on the situation);
2) the fee-for-service fund versions in most cases are somewhat less expensive and you can enjoy a small saving on the cost of portfolio management – click here to view an actual comparison;
3) no real or perceived conflict of interest;
4) fees can be negotiated directly between the advisor and the investor (within limits placed by the firm).

Other things to think about: 
1) tax laws can change – the carrying charges for investment advice are going to be scrutinized (remember when you could deduct safety deposit fees?);
2) there is ample research to demonstrate that financial planning pays off; clients may look at the cost of the advice without considering the benefits gained from the relationship with an independent advisory team;
3) clients could end up paying more when the fees are negotiable than when they are fixed and embedded;
4) some investors may no longer have access to an independent advisory service; it may not be financially viable for the advisor to work with clients who have small amounts to invest.

The following table compares embedded fees vs fee-for-service (FFS) with an unbundled advisory fee (assuming 1% in this example) on a $100,000 investment. We compared 4 of Fraser & Partners top mutual fund holdings with different characteristics to illustrate cost differences based on the type of fund.

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“When the winds of change blow, some people build walls and others build windmills.” ~Chinese proverb

In an environment of accelerating change some things stay the same – including our dedication to helping you navigate the complexities of life along the way.

Let us know if you have any questions or concerns.

New Rules for Corporate Class Mutual Funds and How They Affect You

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New Deadline on Changes to Taxation on Corporate ClassAt the beginning of the year, we hosted round table discussions to help you set your planning agenda for 2016. We discussed income tax changes being implemented by the federal Department of Finance and the potential impact on investment planning.

With the change in tax rules, it is more important than ever to think strategically about the type of income you will earn on your investments and to then position your portfolio accordingly. Initially, the government intended to change the tax treatment of corporate class mutual funds effective September 30, 2016. They have since extended the deadline to January 1, 2017 – a welcome reprieve in a year of many changes in the financial sector. 

Tax Treatment of Income Earned on Your Investments

You are aware that interest, dividends, and capital gains all receive different tax treatments. Interest earned in non-registered accounts is treated the same as employment income. For example, if your combined federal and provincial marginal tax rate is 37.90%, you pay 37.90% tax on all interest earned.

Capital gains are treated differently. A capital gain happens when you sell or transfer capital property, such as stocks, mutual funds or real estate at a price higher than you paid. For example, if you bought $10,000 of units of Investment Fund A and sold those units two years later for $15,000, you have a capital gain of $5,000. Although there are a few exceptions, in most cases this gain is taxable, but you only have to declare for tax purposes only 50% of the actual gain. In this case, you pay tax on the $2,500, not the entire $5,000. The result is you pay less tax on capital gains than on interest.

In the chart below, you can see that if you are a Manitoba resident and your taxable income in 2016 will be between $67,000 and $90,563, it will be more tax efficient if you earn capital gains (18.95% marginal tax) rather than eligible Canadian dividends (20.53% marginal tax).


Manitoba Personal Income Tax Brackets and Tax Rates

For investors who use mutual funds, one way to reduce the tax burden is to invest non-registered money in investment funds that are held within a corporate class structure. Mutual funds can be organized as trusts or corporations.

Historically, corporate class mutual funds have had two main benefits:

  1. Less investment income to be reported annually as taxable income. This is because corporate class funds usually reinvest their interest and dividend income or use this income to pay fund expenses.
  2. No capital gain or loss triggered as a result of switches between different fund classes within the corporation. For example, if you have money invested in class A units of Corporate Fund X, at this time you can switch some or all of that money to class B units of Corporate Fund X without triggering a taxable gain or loss.

If you would like more information about capital gains and how they are calculated, visit CRA’s website:

Changes to Tax Treatment of Corporate Class Mutual Funds

The federal government has decided switching between different classes within the same mutual fund corporation will now be considered a taxable event. If you have a gain in class A fund, and you want to rebalance your portfolio by moving some of this money to class B, you will have to declare that capital gain.

Originally, this change was to take effect in October 2016. The federal government has moved the date to January 1, 2017. The old rules still apply for the remainder of this year.

There will only be two exceptions to this new rule. If the change in class happens because the fund itself restructures and converts all class A shares to class B, there is no tax implication for the investor. Also, if you move from the same class of fund but into a different series, there is no tax implication. The difference between one series and the next is usually the fee structure. The government won’t penalize investors for trying to have the exact same funds at a lower fee.

According to the Globe and Mail, “Approximately $120 billion of industry assets under management (AUM) are in corporate class funds, representing 10% of total mutual fund assets in Canada.” Therefore, many people will be affected by this change.

Review Your Non-Registered Investments with Your Advisor Before December 31, 2016

While corporate class funds still offer the advantage of using interest or dividends to offset fund expenses, you won’t be able to rebalance your portfolio free of tax implications come 2017. It will be critical for you and your advisor to review your non-registered investment funds so you can make appropriate changes before the new legislation comes into effect. In light of this change, you will need to think more strategically about how to construct your non-registered portfolio and how to manage it tax efficiently.

We’ve been working hard over the past few months to evaluate the great number of changes that investment firms have been making in their offerings. In studying these trends we’ve been able to confirm strategies that will enable you to position well for the years ahead. If you have non-registered investments, please contact us to schedule an appointment before the end of the year.

How does the 2016 federal budget affect you?

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Budget 2016

Typically when I read a budget, like most financial types, I just want to get past the political commentary and get to the bottom line. I want to know emerging trends. I want to know what’s changing, who’s paying more taxes, who’s paying less this time around. I want to see what individuals, families and small businesses can do to optimize their tax positions (i.e. pay their fair share and no more).

But a federal budget is about much more than the amount of tax we pay. It presents a plan for the use of finite resources. It speaks to the social fabric of our communities and how we define and pursue the lifestyle we want, individually and as a nation. As you read through the highlights, take a few minutes to ponder the potential impact (beneficial or detrimental) on your own situation.

Let’s start with the easy stuff – the actual items in the budget. During our “Clarity in 2016” Round Tables at the beginning of the year, we discussed a number of the proposed federal budget changes so that you would have a head start in planning your financial agenda for the year. As expected the federal government delivered on those proposals when they tabled their first budget on March 22, 2016. (The budget has to be debated before becoming law, but with a majority government, it is expected to be passed without substantive amendments.)

As typical of many budgets, there was a little something for everyone. Major highlights included:

  • Adjustment of Federal income tax rates – the rate on taxable income between $45,000 and $90,000 was reduced from 22% to 20% and on amounts over $200,000 the rate was increased from 29% to 33%. (These rates are only the federal portion – each province sets its own income tax rates.) The intent is to improve the financial security of middle income families. Higher income earners have to pay more.
  • $2.9 billion over five years to address climate change and air pollution issues.
  • $120 Billion over the next 10 years allocated to Infrastructure spending, particularly transit, waste, water and housing ($11.9 billion during the first 5 years).
  • Several initiatives to increase funding for Indigenous Peoples to encourage education, improvements for water and housing, as well as specific funding of an Inquiry for Missing and Murdered Indigenous Women.

To clarify what affects you directly and how it will impact your financial picture, review the following specific budget items:

For Families

  • The Canada Child Benefit aims to simplify by providing one single monthly payment to each family.
  • Both the Children’s Fitness Tax Credit and the Children’s Arts Tax Credit are being reduced to half for 2016 and will be completely eliminated as of 2017.
  • Monthly tax-free benefits for families will be increased to a maximum of $6,400 per year per child and clawed back completely if the household income exceeds $190,000.
  • Visit the Canada Child Benefit Calculator to illustrate how these changes may impact you.

Child Benefits for One Child Under 6, 2016-17 Benefit Year

For Seniors

  • Pension income splitting continues.
  • Guaranteed Income Supplement (GIS) is increased by 10% to almost $1,000 per year, and can now be split between couples.
  • OAS eligibility has been changed back from age 67 to age 65.
  • A Seniors-Price-Index will be developed to ensure that the value of benefits will not be eroded by inflation.

For Students

  • Canada Student Grant amounts increase from the current maximum of $2,000 to $3,000 per student, depending on family income.
  • Student loan repayment does not start until income reaches $25,000/year.
  • Co-op placements for students will be supported by $73 million in programs this year.

For Veterans and Their Families

  • Veteran Affairs Canada will re-open up to nine offices.
  • The majority of income support and benefits will be linked to inflation.
  • Direct payments, disability pensions, and duration increase.

For Investors  

  • As of October 1, 2016 the ability to make tax-free switches in Mutual Fund Corporations will be eliminated. This applies to non-registered investments only and is designed “to ensure the appropriate recognition of capital gains”. Currently you can switch units of one mutual fund “class” to another without triggering a capital gain. (Tax-free switches in respect of management fees or expenses – such as series A to series F of the same mutual fund – will not trigger tax.)
  • The Labour-Sponsored Venture Capital Corporations (LSVCC) federal tax credit will be restored to 15% for 2016 and beyond. Golden Opportunities, a Saskatchewan-based Labour-Sponsored Fund, is one we have been working with. For Manitobans the total tax credit in 2016 for this investment will be back to 30%.
  • For those who want to save on taxes at all costs, the mineral exploration tax credit has been extended for another year to March 31, 2017. This means that flow-through share offerings will continue to be eligible for significant tax benefits. (Flow-through share offerings are high risk ventures for higher income earners.)

For Those Affected by Unemployment

  • It will become easier to qualify for Employment Insurance, depending on where you live.The waiting period has been reduced from two weeks to one, effective January 1, 2017. The maximum benefit period has been extended to 70 weeks.
  • The contingency fund has been increased to $6 Billion for this budget (up from $3 Billion), providing the ability to adjust, if necessary, or return the funds if not used.

For Small Business

  • While the promise of increased economic activity and a better-equipped labour force is good news, there were no special tax provisions for small business. Federal tax rates will remain at 10.5% for Canadian corporations that qualify as small businesses.

For more information, visit the Budget 2016 website.

Have fun with some “futurecasting” as you consider how the trends reflected in this budget might affect your personal and financial life. If you attended the Clarity Round Table, you might use the Planning Agenda 2016 included in your workshop materials to record your discoveries. Contact your advisor for further discussion.

Home is where the heart is… but what about the money?

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Saving label on money jar and wooden home blocks with investment property word cloud

If you are like many people, your home is important to you. It’s your space – where you relax and rejuvenate, where you create memories with family and friends. But what role should real estate (your home, rental or vacation property) play in your overall financial picture?

The following chart compares the growth of an investment in Canadian residential property and the growth of two well-known equity funds – Trimark Fund and Trimark Canadian Fund.

Real Esate Growth vs. Trimark Fund Chart

Click the chart for a larger view. *Source:

When you compare the growth of real estate – even in the hot markets of West Vancouver and Toronto North, it is not even close to the growth in value of the equity funds over the same period of time. That is true even when you take into account the relatively weak performance of the Trimark Canadian Fund over the past 10 years.

Trimark Fund Perfomance Feb 29-2016


As noted above the cost of property taxes and maintenance have not been considered, nor has the rental income or equivalent benefit to you if the property was your principal residence. Income tax has not been factored into the calculation.

The growth of the Trimark funds is reported after fees (portfolio management as well as service and advice) but before tax on the sale proceeds.

While real estate is considered a conservative component of a long-term life plan, it’s important to balance the lifestyle benefits of home ownership against the security that comes from a diversified investment strategy.

Stay tuned for our next blog in which we are going to explore this in more detail using various assumptions so that you can look at the bottom line after tax.

What is your strategy for giving?

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Santa Hat ResizedFacebook’s co-founder Mark Zuckerberg and wife Priscilla Chan recently announced they would donate 99% of their Facebook shares to charities over the course of their lives. Currently valued at 45 billion dollars, their hope is that their donations will create a better world for their newborn daughter.

At this time of year we tend to be in the mood to give, but the opportunities to donate can be overwhelming. Questions may arise such as:

  • What charities should I select?
  • How much should I give?
  • How can giving be built into my financial strategy?

In the spirit of the holidays, we’ve put together some resources to help navigate the options.

Choosing Charities

Revisit your values
When you began the life planning process with your advisor, you would have reviewed your values and probably narrowed them down to your top 3 to 5 priorities. Your values serve as a decision making framework while building your financial strategy and as you manage change along the way.

Here is an example – the core decision-making values of this couple are:

  1. Family – to contribute to family members.
  2. Health – to be healthy and lead a healthy lifestyle.
  3. Self-Realization – to realize the full potential of our skills and abilities.
  4. Enjoyment – to enjoy life and have fun.
  5. Wealth – to be able to afford opportunities.

When faced with multiple opportunities to give, you can reflect on what is most important to you and align with charities that support your personal values. If you haven’t explored your values yet, you can use this worksheet to do so.

If you have questions or concerns about a charity, conduct your due diligence. 
CRA has numerous resources to verify legitimacy and provide the financial details on registered charities. This video series provides guidance on how to use CRA’s resources.

Charity Intelligence Canada (CI) is a not-for-profit organization that conducts research and rates Canadian charities. Charities are assessed for accountability, transparency, need for funding and cost efficiency. By using their ratings you can make higher impact donations. According to CI there are over 86,000 registered charities in Canada and it is a 3 billion dollar industry. CI has over 600 profiles available for your review.

How Much to Give

In your financial strategy you will have identified how much to give. For quick calculations you can use CRA’s Charitable Donation Tax Calculator. If your contribution is to be tax deductible, the donation must be made to a registered charity. Search in the Charities Listings to verify the charitable status. You need to keep the official donation receipt and include it for tax preparation.

First-time donor’s super credit (FDSC)
CRA has a special credit available for first time donors. If you, your spouse or common-law partner have not claimed a charitable donation credit for any year after 2007, the credit may apply. Visit CRA’s FDSC page for more information.

Charitable Giving Strategies

Depending on your circumstances there are numerous charitable giving strategies that can be explored. If you could protect your family and have an impact on the community would that interest you?

If you have any questions contact your advisor. Otherwise, enjoy a season of giving!