Should You Invest With A Robo Advisor?

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Today, we’re talking about Robo Advisors and why I think you should NOT have one. Clearly, I’m a little biased here. I guess, some would say they are my competition.

You’ve seen the commercials, right? They’re out there saying computers better at this than everyone else. I’d like to ask you a couple of questions:

-Do you really want to be that individual, that human being who’s being block traded his entire portfolio along with everyone else in the entire country at the exact same time?

-Are you first in line or your last in line, what kind of pricing are you getting there?

-Do you really want an algorithm deciding what you should own and in which accounts?

-Do you really think it makes the most sense to have a questionnaire decide the future of your entire life?

-Do you really think that this algorithm and this computer can give you the advice that you need on tax planning, on financial planning, on corporate succession, on philanthropic giving and on business succession?

These are questions that I’d personally like to get an actual human being’s advice. The robo-advisors are useful If you have 5K or 10K, you’ve put that aside and you’re convinced that this algorithm is the best thing for you.

However, if you got actual assets and you’ve accumulated some wealth in your life, you know that in order to get the right advice, you actually need to talk to human beings.

The Robo-Advisors build these portfolios and they’re the same for everyone. These custom portfolios that they have across every platform have underperformed. You can check study after study. They’ve underperformed. They’re not timing the market and the robo-advisors are not able to take advantage of opportunities in the market. They’re not able to structure the alternatives, not able to do anything principal protected and they never look at private debt of any kind.

These Artificial Intelligence Advisors are modeled by the institutions that own them; banks and wealth management firms. These institutions come up with a specific recommendation for individual investors, which is generally in the best interest of the company that owns that robo program or that algorithm.

Now, do you think it’s a fully biased opinion? I’ll tell you what, I’ve asked you a lot of rhetorical questions and if you’re not sure what the answer to those are, maybe you are best to be with a Robo Advisor. Nevertheless, if you want top level advice, you need to be with a Portfolio Manager. Robo Advisors serve a purpose. They’re really good for the introductory investor and folks that would like to invest their first 5K and that don’t really need any other advice. On the other hand, if you actually have wealth, this is not the solution to your investment goals and needs.

If you’d like to schedule a call with Rob and discuss your investment portfolio options, just click the button below and we’d be happy to help.

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Manitoba Tax Rates 2019 – Combined Federal & Provincial

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Individual Tax and Corporate Tax Rates

When we provide advice to clients, it is important to understand your tax rate so that we can provide you with the best personalized guidance. This information can help us determine whether your contributions should go into your TFSA (Tax Free Savings Account) or your RRSP (Registered Retirement Savings Plan) during your earning years. Alternatively, we will consider how we can maximize your current tax bracket in retirement by drawing down your assets in the most efficient manner.

  • How does your CPP (Canadian Pension Plan) / OAS (Old Age Security) amounts factor into your retirement cash flow needs?
  • How can you avoid or minimize the effect of OAS claw back?
  • When should you start taking your CPP and how will it affect your income needs over time?

Through our comprehensive planning process we address these questions and more. As always, reach out to us with any questions. We are here to help.

View Manitoba Tax Rates for 2019 (PDF)Free Consultation

What’s an IPP (Individual Pension Plan) and who is it for?

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Today, we’re chatting about the IPP, also known as the Individual Pension Plan. It’s truly a fantastic way for business owners to pull out a lot more tax-free money from their respective corporation.

We’ve all heard of an RRSP, right? You contribute to an account, get a tax deduction personally and it effectively reduces your income. Now the thing with business owners, is that they’re limited. If you are indeed a business owner, the IPP could potentially be for you.

Now it’s not for everyone. Obviously, you need to own a business and have spare cash flow. Ideally, you need to be above 40 years of age and have a high income (high taxable T4 income). The higher your income, the more IPP contribution room you will get.

Why does the IPP work for high networth business owners? Once the individual creates the individual pension plan, he or she is effectively replacing their RRSP with that IPP account and it now becomes a new account. This account then gets funded by your corporation or your business account.

This is a fantastic a way for the business to pull out more money than they would if they were just doing the RRSP contribution. Some examples can run anywhere from one and a half times to even twice as more RRSP contribution room through the IPP.

So how does that work? You set up the Individual Pension Plan. Once it’s structured, there is a rollover. All the RRSP assets move into this IPP account. The business will then also fund it, usually using a formula. It’s calculated by an accounting or an actuarial firm. They calculate it and then you’ll start with a huge lump sum and in turn, it will become an expense for the corporation.

What I find neat is that you can then reduce your actual profits for the Corp and you can also potentially even reduce your tax bracket for the corporation while doing so. To recap, you take the money out of the corp., you then put it into a personal account. No matter what happens with the corporation, whether you sell it someday and move on or hand it down to the next generation, you will have that bucket of assets that effectively should be twice or even three times as large as an RRSP.

That IPP will then fund your retirement for the rest of your life. You could also add other important and connected people. You could add a spouse to an IPP, a partner and/or your kids if they are working for the company.

This is a unique investment option. Very few people know about the IPP. A lot of people would be a perfect fit for an IPP. They just don’t know about it or they’ve never heard about it.

There is a lot of moving parts in the IPP. It’s not simple, but the ballpark main factors are:

  • Are you 40 or older?
  • Are you in a high-income tax bracket?
  • Do you have a corp. and does the corp. have spare and disposable income?

If you answered yes to all those questions and if you want to retire wealthier, you should consider the IPP.

If you’d like to schedule a call with Rob and discuss further on Individual Pension Plans or anything related to your portfolio management, just click the button below and we’d be happy to help.

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What are Alternative Asset Classes?

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Today we’re talking about alternative asset classes and how and why they should be in your portfolio. An alternative asset class is not a stock and it’s not a bond. It’s something completely alternative. Historically in the CPP (Canadian Pension Plan) and historically in all of these endowment funds, the largest ones in North America used to have nothing but stocks and bonds. Then something started happening in the 80s. Harvard, MIT, the CPP started adding alternatives. They would buy actual private equity. They would buy companies and would look at private real estate. Most of them would look at infrastructure, look at private debt and anything to get an alternative asset class. The key is to have it uncorrelated to the performance of the stock market.

Why does that matter? Because when you’re getting crushed in your portfolio on your stocks like 2018, you want to be able to have a portion of your portfolio that actually has gains that made money and that didn’t fall with the rest of the portfolio.

This is the reason why we love to have alternatives. We consistently build them and the investment portfolios have consistently outperformed because of our alternatives. For the alts, I’ll give you a few examples:

  • An easy one is private REITS or limited partnerships and real estate.  Those have very low volatility, very little movement in the actual asset class performance and the shares are fairly stable. They pay a consistent cash flow. They are very tax efficient and over time they had consistent growth; the 13% to 15% range. Therefore, if we can add that to a portfolio when the markets are up or when the markets are down, that’s a phenomenal asset class to own and does wonders for risk adjusted returns.
  • Another example would be private debt. Private debt is essentially owning the mortgage on a building, on a property and/or on the development. We’re able to get 7% – 8% on private debt using first mortgages. That is something that I want to own for my clients because it’s defensive. It’s got a core structure that is generally very conservative in nature. It pays monthly income and my clients have security on their assets. It’s a fantastic replacement for a portion of a fixed income portfolio with consistent cash flow.
  • Third example are structured notes, principle protected notes or equity linked notes. We love these alternatives because we can structure them specifically for clients. I’ll give you a very straight and simple example: We take an underlying asset class and then we tie it to a bank style bond. Basically, it’s a bond issued by a bank that guarantees the future capital. The capital is guaranteed for clients. They also get to perform and participate in the upside of the market. Typically, if the market is up 10 percent per year, clients get that benefit while having the full principal protected. Notes are an alternative asset class that has grown immensely in the last few years and if you’re not participating in this type of asset class, you really should consider it. It’s a no brainer in my opinion. It does wonders for the risk adjusted returns in portfolios.
  • Finally, there is private equity. There’s a lot of private equity deals that are structured and these would be considered like a hedge fund type investments. Not all hedge funds are created equal. Many of them are extremely risky and it’s not something we want to do. We like to focus on the conservative hedge funds that have private equity. We also want to work with those that we trust, those with strong management that provide exceptional work.

We’re able to focus on those four asset classes that have either way less volatility, no correlation to the market and that can provide cash flow or can provide capital protection. They do amazing work for you and your portfolio, and this is the reason why we love the asset classes. I highly suggest that you consider having these in your portfolio.

If you’d like to schedule a call with me and discuss further on Alternatives or anything related to your portfolio management, just click the button below and I’d be happy to help.

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Health and Wealth Forum 2019

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Message from Rob posted on Social Media – “Thanks to everyone who braved the frigid weather to come to our Health & Wealth Forum this past Sunday. I always enjoy hosting this annual event with my sister at her gym CrossFit Winnipeg. Not only is it informative, but the audience got a glimpse of how Tania and I used to resolve debates when we were younger. All jokes aside, Health & Wealth go hand-in-hand and this event is a great reminder about the importance of balancing both in life. What are you doing to optimize and balance your Health & Wealth?”

Insurance – To Fit Your Life

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Many of our clients are unaware that we are able to look after their life insurance needs, just as we deal with their investment transactions. But who better than us to act as a starting point for your protection requirements? We are already familiar with your financial and personal circumstances, and are well-positioned to extend that knowledge to insurance recommendations.

Insurance today can work well in conjunction with traditional investment programs to take advantage of certain features of insurance and tax rules. The range of innovative financial solutions which insurance can provide can be surprising. Whether it makes sense for you depends on your personal circumstances. It will take an analysis of your situation by an insurance professional working in conjunction with me, your investment advisor.

Life Insurance

Generally speaking, life insurance policies provide protection for the dependents of the insured, so that the income needs of the dependents can be covered for a reasonable period if the insured should die unexpectedly. There are many ways this coverage can be obtained, including:

• Term Insurance — This is the logical first choice for many young people, for example: Relatively inexpensive, especially for the young, it is easy to tailor a term insurance strategy for specific protection for a given time period.

• Whole Life — A permanent type of coverage, whole life can assist in building assets while continuing to provide life protection. Whole life can also be viewed as an excellent fixed income alternative due to its low volatility and consistent returns.

• Universal Life — Another form of permanent coverage, Universal Life insurance combines a flexible with an investment component.

Disability Protection

Insurance agents primary task today is to provide for the possibility that income will be interrupted by illness or accident.

• Disability Insurance — The insured does not die, but can no longer
work at his or her usual profession. Disability coverage provides income support to meet ongoing obligations. Disability insurance in some form may be offered by employers as part of their benefits packages. However, superior individual plans are available.

• Critical Illness Insurance — Critical illness insurance pays out a lump sum benefit upon being diagnosed with certain serious illnesses such as cancer. An extra-cost feature that may be considered is a “return of premium” where monies paid into a policy can be returned if the insured remains healthy over the life of the policy.

Estate and Tax Planning

Potential tax liabilities are often a catalyst to buying insurance. Here are some typical situations where insurance may be of assistance:

• Providing a substantial bequest to charity. A life insurance policy with the charity named as beneficiary may be a simple way of achieving your philanthropic goal without impacting significantly on bequests to others.

• Offsetting tax on Registered. Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs). An insurance policy to cover potential tax liabilities may maximize wealth transfer to beneficiaries other than your spouse.

• Offsetting tax on illiquid assets. If you own a cottage or other vacation property that you wish to see
remain in your family, an insurance policy to cover tax and other costs upon your death may make sense. Similarly, a private corporation might use insurance to ensure funds are available for tax demands that may arise on the death of the owner.


Contact us today at 204-259-2859

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New Year = New Tax Changes

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For those who are not yet aware of the new limits and tax changes for 2019, here’s a short summary below for your reference.

  • Maximum RRSP (Registered Retirement Savings Plan) Contribution Limit  – $26,500 (2019), $26,230 (2018) – Deadline March 1st for the 2018 tax year
  • TFSA (Tax Free Savings Account) Contribution Limit – $6000 (2019) Total Lifetime – $63,500
  • YMPE (Yearly Maximum Pensionable Earnings) – $57,400
  • EI (Employment Insurance) Limit – $53,100 (EI Premiums have gone down by approximately 2.40% from 2018)
  • LCGE (Lifetime Capital Gains Exemption) for QSBC (Qualified Small Business Corporation) – $866,912
  • OAS (Old Age Security) Claw Back Thresholds – $77,580 to $125,696
  • CPP (Canadian Pension Plan) Premiums have gone up – 5.10% for employees and 10.20% for self-employed (Will reach 5.95% / 11.90% in 2023) – Increase will go towards future CPP enhancements

Small Business Corporate Changes: 

  • Small Business Income Limit Increase – $500,000 Manitoba has increased the limit from $450,000
  • Small Business Tax Rate – 9% – Federal rate reduction on the first $500,000 of active business income 
  • Passive Income Limit of $50,000 – This now comes into effect, that every dollar of passive income earned over $50,000 corporately will reduce the access to the SBL by $5.

This is a simplified list of some of the tax changes for 2019, there are other changes to tax limits and credits amounts. Now is a great time to look at sheltering additional income to try to work around passive income changes.

Written by Adam Buss, CFP, RRC, FCSI, CLU – Wealth & Estate Planning Specialist

Improving Your Investing Behaviour

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Has volatility in the marketplace got you down? Here are some worthwhile considerations on how to improve one’s investing behaviour:

Remember your time horizon. Staying invested and sticking to a well-thought-out plan is the key to longer term investing success. This means avoiding the temptation to engage in market timing. Nobody has ever been able to consistently predict what the markets will do next. Volatility is inevitable in the short term, but, as history has shown, its effects smooth out over time.

Pay less attention to the financial headlines. It is easy to become preoccupied with the daily financial headlines. In the worst of times, the media can sensationalize the doom and gloom, which may feed speculation and cause poor decision making. Conversely, the media may create unfounded hype. Informed decision making should not be based on isolated headlines of the day, but rather solid data, thoughtful evaluation and consideration of your own personal goals and objectives.

Avoid succumbing to emotions. As the old saying goes, the market is driven by two emotions: greed and fear. During good times, greed often entices investors to enter the market but often at premium prices. During difficult times, many investors will sit on the sidelines out of fear and overlook bargains that may exist, or, worse, liquidate their portfolios
at the market bottom. Keeping focus on your investment plan’s objectives can help during times of emotion. Working towards measurable goals within your plan will help to maintain perspective.

Revisit your plan. Change is inevitable! Financial markets are constantly changing and the prospects of specific companies, industries, or even entire asset classes that may be attractive today may not be as attractive tomorrow. When reviewing your portfolio, diversification should be a broad goal to ensure a healthy portfolio balance and minimize the impact of adverse change.

Over time, your personal needs may also change. As such, your holdings should be adjusted periodically. Don’t forget that your objective is to produce solid returns over time, and not to own particular securities forever.

Keep tax considerations in mind. They can make a difference to the bottom line, especially during times in which high returns may be difficult to achieve. Don’t forget to use tax-deferral and tax-free vehicles (such as Registered Retirement Savings Plans and Tax-Free Savings Accounts), to their fullest extent. Consider the tax status of different forms of investments when you review your portfolio allocation. Dividends enjoy the benefit of the dividend tax credit (for qualifying taxable Canadian corporations). The tax advantage can be significant. As an example, an investor in a tax bracket with 46.41 percent tax on interest income and 29.54 percent on dividend income would need approximately $1.31 of interest income to equal $1.00 of dividend income before taxes are paid. Capital gains are taxed at even lower rates.

At the same time, don’t let tax considerations control your decision making! We’ve seen situations in which investors who are reluctant to sell a holding because taxes will be triggered, overlook important factors such as the changing fundamentals of the security or the need to maintain portfolio balance.

Emotions and Our Investing Decisions

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It’s no surprise that human emotions can often have an impact on investing. Understanding the psychology behind why we make certain decisions can provide some perspective as we pursue the task of wealth building.

It’s no surprise that human emotions can often have an impact on investing. Understanding the psychology behind why we make certain decisions can provide some perspective as we pursue the task of wealth building.

Richard Thaler, a University of Chicago professor, is one of the pioneers of behavioural economics, a field that studies how emotional factors can affect economic decision making. Neuroeconomics explains that we are not biologically wired to make the best financial decisions because the part of our brain that tells us to act rationally can easily be overtaken by powerful emotional impulses. Thaler points out that people tend to be in one of two emotional states: hot or cold. Irrational decisions tend to be made when we are in our hot state. This may explain why we make certain choices: when we aren’t hungry (cold state) we might choose a healthy salad. But once dinner rolls around and we are hungry (hot state), we may select a big bowl of pasta instead. We often overestimate the self-control that is necessary in a hot state.

Likewise, our brains can react the same way when we are investing. Some examples? We may be fixated on a particular sell-price target and refuse to sell a losing position — called anchoring — even though new information changes the target. Or, we may be led into herd behaviour, mimicking the actions of a larger group, even when we would not necessarily make the same decision on our own. This may be one reason why investors sometimes fall into the trap of buying high and selling low. Behavioural finance can also help to explain other peculiarities of human behaviour, such as why we may overlook the importance of saving or why we don’t always put away enough for retirement, even though we know how important it is.

How can we use this knowledge to improve our own investing ways? Being aware of our emotions can help to better regulate them. Those who study behavioural economics claim that many of the world’s best investors have mastered the art of treating their own feelings as reverse indicators. Excitement becomes a cue that it’s time to consider selling, while fear tells them it might be time to buy. Equally important, decisions should be made before entering into potentially emotional situations. This may include sticking to a financial plan during difficult times, refusing to succumb to emotions when the media gets heated or avoiding the urge to procrastinate when updating power of attorney or estate plan documents.

How Investment Advisors Help

Human emotion can be one of the investor’s worst enemies. According to one study that attempted to quantify the impact of human emotion, between 45 and 55 percent of an average investor’s underperformance can be attributed to psychological factors.*

As advisors, one of our more important roles is to help remove the emotion from investing. We encourage a disciplined approach that emphasizes quality, patience and participation to serve investors over the longer term. We implement risk mitigation techniques to help support portfolios throughout any market period, which may include rebalancing to a certain asset mix, limiting the size of any one holding and maintaining quality criteria for assets.

We are here to provide support and keep you on course, so that human emotion doesn’t impact your investing ways.

Source: *Dalbar, Quantitative Analysis of Investor Behaviour, 2013.


Estate Planning: A Snowbird Checklist

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Heading south this winter? Winter is the time of year when many Canadians plan their escapes from the cold and head to warm weather destinations. While many planning efforts are focused on setting up tee times, updating travel insurance and protecting houses before leaving, one important consideration should be making sure your estate plan is in good order.


If you are a snowbird, here is a short list of some estate planning considerations to address before you leave for your warmer destination:

  • Have a valid and updated will and powers of attorney. Those empowered by the documents should know where they are stored should something happen to you while you are away.
  • Keep an updated list of all of the institutions where you have assets or that provide professional services to you (i.e., banks, accountants, lawyers, insurance brokers, etc.) and a contact person at each company.
  • If you own property outside of Canada, you may need to seek legal advice to determine if you need a separate will and powers of attorney for that country. If so, ensure that your foreign will and powers of attorney are properly integrated with your Canadian documents.
  • Consult an accountant to plan around any potential income or estate tax liabilities relating to the ownership of foreign property.
  • Keep track of the number of days you spend away as you may be deemed a resident for tax purposes in another jurisdiction if you spend more than 182 days per calendar year outside of Canada.

To help give you further peace of mind before you depart, consider completing the following as part of your ‘to-do’ list:

  • Make a list of all your investments, bank accounts, credit and banking cards so you have a clear picture of your overall financial status before leaving.
  • Leave copies of important documents with a trusted individual back at home for safekeeping.
  • Provide instructions to your financial institution regarding term deposits and Guaranteed Investment Certificates (GICs) renewal.
  • Pre-arrange Registered Retirement Income Fund (RRIF) deposits for a steady stream of income while away.
  • Pre-arrange re-occurring bill payments through online banking or by automatic withdrawal to ensure timely payments.
  • Set up direct deposit for your government allowances such as Canada Pension Plan (CPP) and Quebec Pension Plan (QPP); GST credits; Old Age Security (OAS) to avoid missing out on income.

Contact us today at 204-259-2859

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