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When is the best time to take CPP?

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Piggy bank with word CPP. Canada Pension Plan concept.

Without knowing how long we will live, there’s really no right or wrong answer on the best time to start taking Canada Pension Plan (CPP) benefits; there is no one-size-fits-all solution. What worked for your neighbour or your co-worker may not be the best decision for you. Canadians are fortunate to have the flexibility of selecting their CPP start date; but with 120 months to choose from between ages 60 and 70, that decision can be daunting. There are a variety of factors to consider and discuss with your financial planner before applying for CPP.

Here are 4 factors to take into consideration before you make the decision

1. How CPP payments are calculated

The trade-off for receiving CPP early is that your benefits will be reduced. The reduction for collecting your CPP benefits before your 65th birthday is 0.6% per month or 7.2% per year. If you begin receiving CPP benefits at age 60, you’re looking at a permanent reduction of 36%.

Those who delay their CPP past age 65 are rewarded for their decision to wait in the form of an increased pension. The increase is 0.7% per month for every month that you collect CPP benefits after your 65th birthday; totaling 8.4% per year. If you hold off on receiving CPP until age 70, the permanent increase is 42%

If you are unsure of the estimated amount of CPP you will receive, you can request a statement through your My Service Canada Account.

2. How much CPP you will receive at different ages

As of November 5, 2019, the average monthly amount received by new beneficiaries was $664.41 at age 65. Let’s compare how this amount would look if CPP were taken at age 60, 65, or 70:

Comparison of CPP payments taken at ages 60, 65, and 70

You may have heard reference to the breakeven age – the age at which the benefits received would be equal when taken at different ages. Electing to take CPP early means that you receive more payments, but at a lower amount throughout your lifetime. If you choose to begin receiving the reduced CPP payments at age 60, by age 74 you will have received the same accumulated benefits as you would have had you waited until age 65. This is the breakeven age. After this point, it is more beneficial to have taken CPP later. Simply put, if you expect to live past age 74, your accumulated benefits will be higher if you wait until age 65. The breakeven age for taking your CPP at age 65 compared to age 70 is approximately 82 years old.

Bearing in mind only this math, it’s hard to argue against delaying CPP until age 70. The payment at age 70 is a 122% increase from the payment at age 60. By age 90, you’ve received over $75,000 more than someone who began receiving CPP benefits at age 60. So why do more Canadians take CPP at 60 than at 70?

3. Your specific circumstances 

Although the math is quite convincing, there’s more to the decision than the numbers.

One of the biggest uncertainties surrounding when to take CPP is life expectancy. As of 2017, the life expectancy for Canadians at age 65 is 20.8 years. Delaying your pension and receiving an increased benefit into your eighties is enticing but that’s assuming you live a long, healthy life.  And although CPP does offer a survivor benefit for the surviving spouse, the benefit is quite modest with an average CPP Survivor’s Pension for those 65 and older of $302.01 per month as of November 5, 2019. If you are healthy and anticipate living into your eighties, delaying your CPP will maximize your lifetime benefits.  But for many Canadians, receiving a reduced pension is a fair trade-off for the peace of mind of receiving benefits

Another factor to consider is your cash flow needs in retirement. Perhaps you plan on traveling more in the early years of retirement or want to enjoy yourself while you’re young and healthy and find yourself needing more cash flow in earlier years. When you contemplate taking your CPP, it is important to have a clear picture of your retirement income and expenses and determine if gaps exist. Without adequate sources of retirement income, those delaying may find themselves rapidly depleting their retirement savings. If receiving CPP is necessary for you to meet your current spending needs, you may have no choice but to apply for early CPP.

There are many factors that may influence your decision on when to take CPP, including your marital status.  This decision is not isolated but made in the context of your life plan.

4. Tax implications 

If the success of your retirement cash flow plan is not dependent on receiving CPP, but you plan to take it early and invest it for peace of mind, be sure to consider the trade-offs. CPP income is taxable so you will be investing after-tax income. Unless you have contribution room available in your registered accounts, the income and growth earned on the investment will be taxable as well. This, coupled with investment fees charged, makes it difficult to beat the 7.2% you could earn annually by delaying another year before age 65.

Summing it all up

Chart summing up considerations for when to take CPP

Most of us contribute to the Canada Pension Plan (CPP) our entire working career, so it’s no surprise that the decision on when to begin receiving CPP benefits is one of the more difficult decisions that we make regarding our retirement.  Although the standard age to start CPP is 65, benefits can be received as early as age 60 and as late as age 70; allowing for a 10-year span to choose a start date. And once that decision is made, you are locked in for life. We take all these factors into consideration in relation to your financial life plan and can look at the bottom line in terms of dollars and cents to help you determine when to start. When you’re ready, you can apply for CPP benefits online.

Meet the Denmarks: Why are your values and life vision so important in the financial life planning process?

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April & Conrad pulled up to The Forks on a beautiful sunny day, ready for their first financial life planning meeting with Fraser & Partners. It had been a long time since they had last visited The Forks – so much had changed! They decided to take some time after their meeting to visit The Common for a bite to eat and a flight of beer before browsing the new shops.

They made their way to Johnston Terminal and up to the office on the 3rd floor where they were warmly greeted. They were a little early and fidgeted on their phones in the reception area while wondering what to expect. April and Conrad were uncomfortable talking about money. They had broached the subject before, and it had never ended well.

A few days prior to the meeting, Fraser & Partners had been in touch and requested they visit the website and fill out the Values worksheet. April and Conrad each did this independent of the other and had not discussed their results. They were curious to see each other’s responses and how their values would be used in the development of their plan.

The Denmark family on a holiday at the beach

We created the Denmark family to demonstrate financial life planning strategies without impacting the privacy of our clients. Although scenarios may be based on actual life events experienced by current clients, all information is 100% fictional.

Before the meeting began, April and Conrad were introduced to the entire team. This was a different environment. It was explained that Fraser & Partners works in planning teams that leverage the skills of each team member in a collaborative environment. The team applies varied perspectives, knowledge, and creativity to each client’s financial life plan. This was an interesting concept for Conrad and April, as they had only ever dealt with the bank. This was nowhere near the same process.

The Denmarks’ lead planner (we’ll call her June) explained that the purpose of the first planning session was to clarify their life priorities, build their vision and prepare for the next steps. Conrad secretly wondered when they were going to get to the numbers…

Seated in the meeting room overlooking the Red River, June began; “Let’s start by reviewing your values to determine what is important to you.” June presented the results on the monitor in the meeting room. The Denmarks were fascinated to see how their chosen values differed, but they were not surprised to see “family” listed as a top value for both of them.

April’s Values

Graphic representation of April's values

Conrad’s Values

Graphic representation of Conrad's values

April couldn’t help but blurt out “Conrad, I didn’t know how important security is to you. Are you worried about our finances?” Conrad squeezed his chin as he tends to do when feeling stressed and said “Yes, I have to admit the business scares me. When you come home venting about slow sales on a large order of inventory, I have a secret panic attack, wondering about all the ‘what if’s’. What if you can’t get rid of the stock and are stuck with the inventory loan to pay off – where will the money come from? Our house?” April had no idea of the impact the business was having on Conrad. She responded “You have nothing to worry about – I’m just getting things off my chest. I wish I had known this was causing you stress. I wouldn’t be bringing it home to you…” April had tears in her eyes.

June interjected “This is a difficult but important conversation to have. We’re going to address these issues throughout the planning process. We won’t jump ahead to solutions just yet, there is a lot of value taking this one step at a time.” April immediately felt at ease, but Conrad was still wondering about those numbers…

June went on to explain how the system aggregates their responses to arrive at a number of core family values which become the foundation of their life plan. “When you are clear on what is most important to you, you are inspired to take actions that move you toward your life vision,” said June. Conrad couldn’t help but ask “but what about the numbers? Where do they come into play?” June explained that these core values would help them make decisions about the numbers later. June offered an example:

“Let’s say there is a significant amount of extra income available to your household one month due to booming sales in April’s business. You have the choice of reinvesting the money into the business, contributing to your RRSP, saving more for the kids in your RESP or buying a new car. You and April need to decide what to do. You call us and we run the numbers so that you can see the short and long-term impact of each decision. You can then refer to what is most important to you – your shared values and the vision you have created for your life – to make an informed decision. Your top aggregate values are family, health, and achievements”

April and Conrad smiled – they both felt this accurately represented what is most meaningful to them and Conrad finally understood the impact of this exercise, not only on their financial plan but also their whole life. “I’m in!” exclaimed Conrad.

Aggregate Values

Graphic representation of Conrad and April's aggregate or shared values

“Great!” said June, “Now let’s build your vision and identify where you are currently and what you expect to have and do in the future. As we step through the process, we use a planning tool that has different graphics to help you visualize aspects of your life. Some represent what you have and do now, such as your home and cottage. Others will reflect what you expect to have or do in the future, such as a renovation or a winter vacation.” April and Conrad found themselves energized by the interactive vision building process. They added university for Jordan and Lily and a possible kitchen renovation in 5 years. Although April and Conrad had discussed plans for their future, they had never had the opportunity to design a model of their life.

Model of Conrad and April's vision in planning tool

During the conversation, April excitedly exclaimed that her vision was to retire at age 60 and travel frequently in the first few years of retirement. This was news to Conrad, who envisioned them both working until age 65 and enjoying a quiet retirement at home.

“With my father’s recent heart attack, I’ve started thinking more about what’s important to me. Although I love the challenge of running my own business, I don’t want to work forever. I’d like to make sure I travel while I’m still healthy” expressed April. Conrad rebutted “I can’t see that working. We’ve got a lot of expenses to pay for.” June suggested they not limit any of the possibilities at this point. “Go ahead and think big. Conrad, be sure to add things you’ve always wanted as well. You’re building a shared vision but that doesn’t mean you can’t make provision for individual wants or needs. We’ll deal with the ‘how’ later.” Conrad thought for a moment and then stated, “I really want a pontoon boat!” They all chuckled at Conrad’s excitement and added it to the vision.

After completing their vision, June explained the next step: “Conrad, we’re finally going to get to those numbers. As a follow-up to this discussion, we’ll be requesting that you complete a questionnaire and collect relevant documents. For the next stage of the process, we need to focus on the facts – your current financial picture. April, we’ll need some financial data on your business as well so that we can integrate your business and personal plan. We try to provide tools to make this data collection as painless as possible, but it will take some time and effort on your part. Will you be able to get the information back to us within the timeframe?” April looked over at Conrad and he smiled, “I’ll pull together all the financial information on our household. Just let me know what you need, and I’ll get on it right away.” April agreed to send the business information as well.

As the Denmarks sat at The Common in The Forks Market, they talked about their first planning session and how they felt about it. Conrad started “Well that was unexpected! I had no idea the meeting was going to go that way. I feel good about it though – how about you?” April responded, “I feel good about it too. I know we’re used to jumping ahead but talking about our values and vision is something we’ve never done in that way before – we got a lot on the table. I get the difference between financial planning and financial life planning now. This is exactly what we need!”

The next installment of The Denmarks will focus on the numbers to identify their current financial picture.

 

Would you like to participate in the Denmarks’ story?

Answer the quiz at the end of each post and your name will be added to a prize draw. The first draw will happen this December 2019. The person with the highest cumulative score will win the grand prize!

Answer 3 quick questions for 15 points

Meet the Denmarks: When do you need a financial advisor?

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We created the Denmark family to demonstrate financial life planning strategies without impacting the privacy of our clients. Although scenarios may be based on actual life events experienced by current clients, all information is 100% fictional.

Conrad and April met in 1998 at the University of Manitoba where Conrad was studying Computer Science and April was working on her Bachelor of Commerce degree. They married in 2002 with plans to start a family when their careers were better established, and April’s business was up and running.

April came from a family of entrepreneurs and dreamed of becoming a business owner at a young age. Her family motto has always been “You have to spend money to make money!”. During University she developed an award-winning business plan as a course project to open a socially responsible retail store. After graduation, she was up and running quickly thanks to love money from her parents. But, with student loans to pay off, she and Conrad were working hard to reduce their debt. April draws an annual salary of $75,000 while she continues to grow the business and work on a franchising model.

Conrad’s family had a completely different outlook. His blue-collar parents were savers who shopped with cash. Mr. Denmark often recited his philosophy: “Keep track of your nickels and the dollars will take care of themselves”. Conrad found employment soon after graduation with an emerging technology consulting firm as a computer systems analyst. He currently makes an annual salary of $80,000, receives profit sharing income and has a group benefits plan. He also contributes monthly to a group RRSP. With April being so focused on her business, Conrad has been the manager of the day-to-day household finances and he manages them with an eagle eye on expenses.

On December 12, 2004, April and Conrad welcomed their daughter Jordan into the world. Two years later, on January 15, 2006, they celebrated a New Year with their daughter Lily. Becoming parents was a game-changer for the couple. They had less time and more responsibility. In spite of their busy schedules, they managed to progress in their careers while striving for family balance.

Like many Canadians, life had been so busy and focused on the day-to-day that April and Conrad hadn’t put a lot of consideration into the future. Unfortunately, their attention shifted sharply on March 12, 2019, when April’s father experienced a major heart attack. Life screeched to a halt, April took some time away from the business to help her parents, and the couple had lengthy conversations around the kitchen table over what the future may hold. They agreed they needed some outside perspective on their situation and started asking friends for referrals to a financial advisor. They were directed to Fraser & Partners by close friends who were already clients.

April pulled out her laptop and Googled us to learn a bit more before she made an appointment. After reading about the team and services offered, April noticed a questionnaire on the home page titled “Is Financial Life Planning for me?”.  Although Conrad diligently managed the household expenses, the couple had never sat down and discussed their finances for the long-term. They knew they wanted to retire comfortably and help Jordon and Lily pay for university but there was no actual plan in place.

April read on; creating a satisfying & fulfilling vision of life and discovering how to achieve it sounded appealing, but would they be a good fit? April decided to complete the online questionnaire and find out. Over dinner that night, April mentioned to Conrad that she had filled out the “Is Financial Life Planning for Me?” questionnaire. Intrigued and eager to start the process, Conrad completed the online form that night as well.

The next day, April received a phone call from our office. After discussing the Denmarks situation, the life aligned planning process and the results of the questionnaire everyone agreed this would be a great fit. April’s schedule was jam-packed with visiting her parents and meetings, but the Denmarks knew that this was a priority. An in-person meeting was scheduled for the following week.

In preparation for the meeting, Conrad had pulled out his file containing the family’s current investment statements and expenses spreadsheets. But when a meeting agenda was emailed to the Denmarks prior to the meeting, he was surprised to see there was no mention of bringing statements on the agenda. Instead, they were asked to visit the Vision Toolkit online and each complete the Values Worksheet. Analytical by nature, Conrad was unsure about meeting to discuss a financial plan without considering numbers but knew that they needed a plan in place.

Both April and Conrad were excited to get started!

The next installment of The Denmarks will identify April and Conrad’s values and how we’ll help them to build their vision.

 

Would you like to participate in the Denmarks’ story?

Answer the quiz at the end of each post and your name will be added to a prize draw. The first draw will happen this December 2019. The person with the highest cumulative score will win the grand prize!

Answer 3 quick questions for 15 points

The TFSA is Growing Up!

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This year, the Tax-Free Savings Account (TFSA) celebrates its tenth anniversary. First introduced in the 2008 Federal Budget by then Minister of Finance, Jim Flaherty, the TFSA was made available to Canadian residents over the age of 18 on January 1st, 2009. This was a timely introduction, allowing Canadians a flexible registered savings vehicle following the 2007 financial crisis. Compared to its more mature counterpart, the RRSP, the TFSA is still relatively new and often misunderstood. To celebrate its tenth year, we’ve compiled some facts about the TFSA.

Let’s Chat Contributions

If you do not use your contribution room, any unused amounts will carry forward. As well, you can recontribute any withdrawals made in previous calendar years. Canadian residents are eligible to contribute to their TFSA’s the year that they turn 18. The annual contribution room is indexed to inflation and rounded to the nearest $500 (with the exception of a brief increase to $10,000 introduced by the Conservatives in 2015). Unlike the RRSP, there is no maximum age that you can contribute into your TFSA.

It’s important to know your unused contribution room as unlike RRSP’s, there is no allowable overcontribution amount. Any overcontribution is subject to a 1% monthly penalty tax until you have either withdrawn the excess or until the additional room becomes available in the new year. If you are unsure of your contribution room, you can check online using CRA’s My Account. You can create an account or login using your sign-in information for one of their sign-in partners.

Contributions to a TFSA can be made in cash or in-kind. If you are contributing in-kind, you may trigger a capital gain if your shares have increased in value. If you are transferring shares at a loss, you cannot claim the capital loss. We’d be happy to discuss contributing in-kind and any possible tax implications.

 What Happens When I Need Funds?

One of the TFSA’s greatest features is its flexibility surrounding withdrawals.  Withdrawals can be made at any time and without penalty.  Because your contributions were made with after-tax dollars, any withdrawals are tax-free and do not affect your income.  This makes it particularly attractive for those needing cash flow but concerned about OAS clawback levels.

Amounts withdrawn can be recontributed the following calendar year or later – regardless of whether the withdrawal was capital or growth.  For example, say you contributed $10,000 in your TFSA and you saw grow over time to $16,000.  You then decide to withdraw $6,000; which you not only earned tax-free but can withdraw tax-free as well.  And the following year, you can recontribute back the $6,000.

What’s new with the TFSA?

The TFSA allows for tax-free growth of investment income, but it does not grant the same privileges for business income.  For those trading frequently within their TFSA, the CRA may consider this the business of day trading – and expect to be paid tax on business income. Previously, if a TFSA was deemed to have earned business income, the trustee of a TFSA (the financial institution holding the TFSA) was jointly and severally liable with the TFSA for the tax owing.   However, the 2019 federal budget extended this liability to the TFSA holder as the TFSA holder is in the best position to know if their trading activities constitute a business.

This year, the CRA also clarified the tax advantage rule for registered accounts (including TFSA’s). This applies to advantages such as promotional incentives and gifts. For example, if a financial institution offers a bonus interest rate on new deposits into registered accounts during a certain period, this bonus interest is considered a return on investment; not a contribution. However, if a financial institution held a contest in which registered plan owners had a chance to win a prize (ie. Cash), the cash prize is not considered a return on investment and can only be contributed to the registered account subject to the contribution room.

Why should I contribute to my TFSA?

There are only so many opportunities to earn income tax-free and with 10 years of built-up contribution room, investing $63,500 tax-free is nothing to scoff about. As of 2016, Canadians had contributed $54,831,843,000 into their TFSA’s with a current market value of $232,896,180,000! (source). Over time, TFSA’s have become a key player in Canadian’s retirement plans.

Whether you are 18 years old and looking to save money for a few years to buy a home or you are 65 and worried about your income levels affecting your government benefits, the TFSA may be the investment vehicle for you.

Should you be applying for the Disability Tax Credit?

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Applying for the DTC could help you save on your tax bill

If you or someone you support suffers from a severe, prolonged impairment, the Government of Canada acknowledges you will be impacted by additional costs and may grant eligibility for a tax credit to reduce the amount of tax you pay. This credit is called the Disability Tax Credit (DTC). Eligibility for the DTC can also provide access to other federal, provincial/territorial programs such as the Registered Disability Savings Plan, the Working Income Tax Benefit and the Child Disability Benefit.

Who is eligible?

The person applying for the DTC must meet at least one of the following criteria (source: CRA):

  • be blind
  • be markedly restricted in at least one of the basic activities of daily living
  • be significantly restricted in two or more or the basic activities of daily living (can include a vision impairment)
  • need life-sustaining therapy

In addition, the person’s impairment must meet all of the following criteria:

  • be prolonged, which means the impairment has lasted, or is expected to last for a continuous period of at least 12 months
  • be present all or substantially all the time (at least 90% of the time)
Maximum disability amounts are as of February 2018 source: CRA

How to apply

To apply for the credit, your medical practitioner must fill in Form T2201, Disability Tax Credit Certificate. If the medical practitioner charges fees for this service, you may be able to claim them as medical expenses on your tax return.

Before you visit the medical practitioner, you will fill in Part A of the form. In Section 3 you will be asked if you want CRA to adjust your tax returns and you can answer “yes”. If you are approved for the DTC and you selected yes in Section 3, Canada Revenue Agency will apply the credit to all years that apply for up to the 10 previous years. 

Keep us posted

If you think the DTC applies to you, let us know right away. We’ll be able to advise you on how to get started and what impact the credit will have on you.

Planning it out is good for your wealth and your health!

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You may have seen the quote “success is where preparation and opportunity meet.” Does this statement ring true or false to you?

Some people are risk takers and love the thrill of heading out on a trip with no plan in place. These travellers experience surprises at every corner and are exhilarated by solving problems on the fly. But how big a risk are adventure seekers really willing to take when, let’s say, their nest egg is on the line? And what does the element of ‘not knowing’ really do to a person’s well-being?

There are other people who plan out every detail in an extreme effort to control the environment around them. Unrealistic? Yes indeed! Although planning is a solid step in the right direction for managing unforeseen circumstances, living your life is important too. How does squashing goals and dreams to stay on plan affect a person’s well-being?

Now add one of each of these types of people into a relationship, or two of the same type of people and see what happens – it can get messy.

The process of financial life planning balances these approaches and provides perspective on what makes you, and if applicable, your partner tick.

Why is financial life planning good for your health?

According to the Mayo Clinic, “Stress that’s left unchecked can contribute to many health problems, such as high blood pressure, heart disease, obesity and diabetes.” We know that some stress is actually good for us, but prolonged stress can take its toll on our emotional and physical well-being.

The Financial Planning Standards Council (FPSC) conducted follow-up research in May of 2018 to a 2014 survey of Canadians (excluding Quebec) and found relatively similar results:

  • 4 in 10 Canadians rank money as their most significant source of stress ahead of personal health, work and relationships.
  • 51% reported being embarrassed about their lack of control over finances.
  • 48% lose sleep over financial worries (51% of which were women, 44% men).
  • 83% of Canadians have at least one financial regret.

Let’s add relationships to the equation. An Ipsos Reid Poll conducted on behalf of BDO found that “Six in ten (59%) Canadians in a relationship – whether living separately, common law, or married – say they wish they could change their partner’s financial habits. ” The report goes on to highlight 1 in 3 Canadians in a relationship rarely or never discuss finances. Do you see the elephant in the room?

How about finances and life transitions – there is nothing like retiring without a clear income stream, or losing your job without an emergency fund to turn up the stress level in your life.

The FPSC conducted a 3-year longitudinal study ending in August of 2012 to determine the emotional and financial well-being of Canadians who work with a Certified Financial Planner and have a financial plan in place. They found that 73% of respondents agree that “financial planning has helped me have greater peace of mind”.

Financial life planning addresses:

  • you – your values, your behaviour and attitudes about money
  • if applicable, your partner’s values, behaviour and attitudes about money
  • the reality of the situation (everything on the table)
  • a plan that works for everyone involved
  • ongoing check-ins, tune ups and adjustments to address life transitions

It doesn’t take a very big leap to see that planning it out is good for your health!

The Compliance Conundrum

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Click image to enlarge

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 or 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.