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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 If your KYC is out of date we are not able to perform a trade on your behalf.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!

 

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.

 

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: www.invesco.ca

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!

 

Cyber security at Fraser & Partners

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Zero in, nail it down and make sure you’re on track.

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What a celebration!

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Saturday, December 6th we held a holiday celebration and marked the semi-retirement of advisor Don Ross. We had a great turn out and loads of fun!

Guests were invited to have their picture taken in the ‘photo booth’ where photographer Janessa (Janessa Meaghen Photography & Videography) snapped pictures with or without elf hats (*see our team example to your right). Guests were asked to complete a special quiz about Don – intended to be a gentle roast – and entries were included in a draw for a grand prize. Those in attendance were asked to pick from a basket of Christmas decorations filled with special soaps (hand-made by our very own Jennifer Ostrowski). Buried in the decorations was a note for the lucky winners who were invited to choose a prize right on the spot.

The wine and cheese catered by Fenton’s Wine Merchants located here at The Forks was delicious. The kids enjoyed sweet treats and gifts from Santa!

Thank you to all who attended! For those who could not join us, we hope to see you at the next Fraser & Partners event!

 

CRA wants to know more about your foreign property

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Go-To Tax Envelope for 2014Now is a great time to start organizing your 2014 tax information. Refer to your ‘Go-To Tax Envelope for 2014’ with the general income tax checklist on the front that identifies paperwork you’ll need to gather for submitting your taxes. Or, click here to visit the income tax checklist right here on our website. There have been some changes to the reporting requirements since the 2014 checklist was printed (on the Go-To Tax Envelope).

The T1135 is a form that is now required by CRA for reporting on foreign property. The form is meant to crack down on tax payers who are avoiding or under reporting their offshore income. It is a supplement to the T3 (Statement of Trust Income Allocations and Designations) and T5 (Statement of Investment Income) slips.

Are you required to submit a T1135?

The form applies to Canadians who own foreign property with a total cost amount of more than $100,000 at any time in a given year including:

  • foreign bank accounts, shares of foreign companies other than foreign affiliates, shares of Canadian corporations held outside Canada;
  • debts owed by non-residents (including government and corporate bonds), debentures, mortgages and notes receivable;
  • interests in certain non-resident trusts;
  • interests or units in offshore investment funds; if you have Canadian mutual or segregated funds investing outside of Canada on your behalf, in most cases the tax reporting is done by the investment firm.
  • real estate situated outside Canada, other than personal-use property or property used in business; rental property needs to be reported
  • and other tangible and intangible property such as patents and copyrights situated or deposited outside Canada.

What information is collected on the T1135?

  • Names of specific foreign (financial services) institutions
  • Countries where offshore assets are located
  • Foreign income earned on those assets
  • Maximum cost amount of those assets during the year
  • Month-end values of your holdings for tax reporting

Don’t forget to include this information when you package your 2014 tax materials.