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Category Archives: Odette’s Financial Brief

Odette Morin

Important Announcement: Odette & Terry will retire on June 30, 2017

Dear client,

It is with great excitement but also heavy hearts that we announce our retirement.  After 28 years in the industry, we will be retiring full time on June 30, 2017.  The good news is that Anthony Sabti, our valuable employee for 8 years, whom you know, will be our successor and will be acquiring You First Financial.

It was of outmost importance to us to find a suitable replacement to service your account and deliver the same level of thorough financial, tax and investment planning advice that you have been accustomed to.  We had interviewed several potential successors but none compared to Anthony.

Anthony has been with us since 2009.  He expressed an interest in taking over the business early on and has been trained by us for the potential event for 8 years now.  He is the best successor not only because he holds, like us, the Certified Financial Planner designation and all the required investment and insurance licences but more importantly, he is a high integrity individual who clearly shows that he cares about our clients and wants to do what is best for them.  He has been a natural extension of who we are and clearly shares the You First core values.

Anthony has a great analytical mind.  He has been following investment managers, selecting the investments for our fund line up every year, and preparing recommendations on your account for the past 8 years. He has worked closely with myself on financial, tax and retirement planning and tax preparation and research with Terry. He has demonstrated that he is ready and fully capable to take charge. Please note as well however, that we will be providing assistance to Anthony on request for a period of four years to ensure a smooth transition in handling client files.

Not only does Anthony have the credentials and competence to succeed us but he enthusiastically goes above the call of duty in all client relations. In the end, we wanted a professional successor that cared, who we could recommend with trust and confidence.  In fact, we believe in Anthony’s ability so much that he will become our own long-term investment advisor as we will no longer have access to the investment research financial advisors have access to and frankly, we will be too busy enjoying our retirement.

Anthony has vowed to keep You First exactly the same, from the annual review process to the year-end review meetings, right down to the Lindt piece of chocolate!

You First will remain in the same location with the same current staff.  The only change is that you will be meeting with Anthony, assisted by Frank, Sandrine and JoAnne Provost who has recently rejoined the team.

I will very much miss our meetings.  We thank you from the bottom of our hearts for the trust you have put in us in handling your hard earned money. Our success depended on your confidence and we will be forever grateful for that. We are sad but delighted to leave you in such good hands.

We will remain available to meet and speak with you until June 30, 2017.

Kind regards,

Odette & Terry

Odette Morin

Highlights to the 2017 Liberal Government 2nd federal budget

Finance Minister Bill Morneau delivered the Liberal Government’s 2nd annual budget today called the “Innovation Budget”. Here are the key budget highlights:
 
  • The biggest and most welcome news for investors is that no changes were made to the capital gains tax, stock options or dividends inclusion. There were fears that the Liberal government was going to increase the taxation of capital investment gains but they decided to hold off on any tax hikes for now.
  • No major new taxes.
  • 2% tax increase on alcohol and tobacco.
  • Public transit tax credit is cancelled. Instead, the government will invest $20 billion over 11 years – to improve transit systems and encourage usage across Canada.
  • Cancellation of Canada Savings Bonds.
 New programs introduced
 
  • The budget follows through on promises to let parents take their Employment Insurance parental leave benefits over 18 months rather than 12, giving them the choice of taking the existing 55 per cent benefit rate over a year or 33 per cent over a year and a half. They also propose letting women start their maternity leave 12 weeks before their due dates rather than eight weeks prior.
  • On assistance for families, the government will be pledging $7 billion for affordable child care over 10 years to create up to 40,000 more spaces.
  • The government also plans to devote $6 billion over 10 years for home care and $5 billion over 10 years for mental health initiatives through individual deals with the provinces and territories.
  • $691.3 milions will be spent over five years to expand the caregiver benefit for Canadians supporting critically ill and injured family members.
  • Military spending will also be bumped at a cost of $8.5 billion in capital spending for nearly two decades down the road.
  • $395.5 millions over three years to expand the youth employment strategy.
  • $279.8 million over five years for the Temporary Foreign Workers Program.
  • $57.8 million for mental health for federal inmates.
  • $50 million over two years for teaching initiatives to help children learn to code.
  • $27.5 million for programs to help newcomers get foreign credentials.
  • The government is committing money for skills, innovation and jobs, with $594 million set aside for this year, rising to $1.4 billion by 2021-22.
  • The most expensive item of this budget is spending on infrastructure and social programs, including $20.1 billion promised over 11 years for public transit.
  • $3.6 million over three years to create an LGBTQ secretariat at the Privy Council Office to advance human rights
  • $523.9 million over five years to prevent tax evasion and improve compliance. The budget forecasts the government will make an additional $2.5 billion over five years from those measures to catch fraud and tax evaders.
The federal deficit is projected to be $28.5 billion for the 2017-18 year, compared to $23 billion this year – both higher than projected in the fall. The budget offers no timeframe of when the government will balance the books. The budget predicts the economy will grow slightly this year, keeping the ratio of federal debt to GDP fairly flat, at 31.6 per cent in this year compared to 31.5 per cent last year.
 
Sources: CTV News, BNN, CBC & Globe & Mail.
Odette Morin

Fee Disclosure & The Value Of Advice

by Odette & Terry

 The other day, we opened our investment statement and it showed us how much of an investment fee we paid.   Though we know that we always paid for investment management and advice, it was still a change to see the dollar figure versus the previously reported percentage of assets.  It’s the same fee that had always applied to our accounts in the past, but now we see it as a dollar figure rather than a percentage that was simply deducted.

This full disclosure of the actual fees is part of the evolution of the mutual fund industry. Whether a fee is imbedded in a percentage or outlined in a separate dollar figure, the key question is, am I getting value for my money.  A lower fee does not necessarily mean a bigger return and a higher fee does not necessarily mean a lower return.

A recent research study shows that households with financial advisors have more than 4 times the assets of households without a financial advisor and as well, households with advisors save at twice the rate of non-advised households (source: “New Evidence On The Value of Financial Advice 2012” by Dr. John Cockerline, PH.D., Investment Funds Institute of Canada and former Director of Research at the Toronto Stock Exchange).

A few months ago, we wrote a detailed Infokit on the subject of fees.  In a nut shell, there are two sets of fees that Canadian Investors pay in investment funds; the management fee paid to the investment company which is typically 0.80% to 1.5%, and the advisory fee you pay to us and FundEX for advice and service.  This fee ranges from 0.50% to 1%.  The more money invested you have, the lesser the fee. Read the two information bulletin here.

FundEX bulletin “Understanding Mutual Fund Fees” and

Our detailed infokit About Investment Fees & Disclosure 

So, what do you get for these two fees?

The investment company fee is used to pay the investment managers, analysts, traders, statements, tax slips and client services.  The advisory fee is used to pay for investment mix selection, asset allocation, investment trades, financial planning which includes tax, retirement and estate planning.

Please remember that we are very sensitive to MERs. Frank and Anthony are very much on the look out to find ways to reduces fees. We are paid on your account value. So the less management fees you pay, the better it is for us as well.

We welcome the new fee transparency because it puts pressure on investment companies to reduce their MERs. You can expect to see a downward trend going forward. The infokit also shows that at You First/FundEX, we tend to charge less and do a lot more with regards to planning and advice.

We feel that our job is to make sure that your retirement cash flow analysis is on target. We want to make sure that your money will last until age 90. We try to get the highest possible rate of return of course and lower fees but want to make sure that your retirement assets are safe and you can enjoy a stress-free retirement.

Please contact us if you have any questions or concerns about this subject or any other aspect of your plan.

(i) Ontario Securities Commission Investor Advisory Panel 2013

(ii) Canadian Investors Perception of Mutual funds and the Mutual Fund Industry, Pollara, 2014.

Odette Morin

BC Government 2017 Budget Highlights

The BC Government delivered its 2017 budget this week. The biggest change is the Medical Service Premiums which will be reduced by half for families with annual income below $120k.
For your convenience, here are the key measures that may be of interest to your investors:
  • Medical Services Plan premiums will be reduced by 50% for households with an annual net income of up to $120,000. A typical family is expected to save $900 per year;
  • The small business corporate income tax rate will be reduced to 2 per cent from 2.5 percent, and accordingly the dividend tax credit for ineligible dividends decreased. This has a knock-on effect on the combined tax rate for investment income earned by Canadian-controlled private companies and paid out to shareholders;
  • The threshold for first time home buyer’s program exemption from property transfer tax will be increased from $475,000 to $500,000; and
  • A number of tax credits will be introduced or extended, including tax credits for volunteer firefighters and search and rescue volunteers and individuals with school-aged children for back-to-school expenses.
For more on budget highlights, please refer to the BC government’s summary at this link, or the detailed materials here.

 

Odette Morin
Odette Morin

Contact us early to make your RRSP contribution!

RRSP is upon us and soon you will get an email from Anthony or Frank asking you whether you plan to make an RRSP contribution this year.  You should make arrangements early even if you don’t want to make the contribution right away simply because we will have more time to figure out what is best for you.

Here is what we will ask you to optimize your planning and maximize your tax saving now and at retirement.

  1. How much of a contribution do you want to make?  Of course, you should at least make enough of a contribution to meet your annual saving goal as calculated at your last annual review meeting or ask us and we will figure this out with you.
  2. Do you have the RRSP deduction room? If we do your taxes, we will know what your 2016 RRSP deduction limit is.  If not, you can sign a CRA authorization form to allow us to view your tax information online.
  3. If you have a spouse, we will need to know your spouse’s income as well as yours. We need this information to assess and determine if it is best to direct the contribution to a regular RRSP or a Spousal RRSP.
  4. We will also look at both your retirement savings total and try to equalize the accounts to be able to split income at retirement and save taxes.
  5. We will also ask whether your 2017 income is likely to be much greater than 2016’s income.  If this is the case, you can still make the contribution now but may be best to carry it forward to 2017 tax return.
  6. We will also make sure that you make your RRSP Homebuyers plan repayment if you have a repayment to make.
  7. Finally, if you plan to use some of your RRSP to buy a home, we will put these funds in a “short term” RRSP saving fund to avoid any fees and market losses.

Contact us early to get the most of your RRSP planning! Contact email hidden; JavaScript is required or email hidden; JavaScript is required