As private assets become more common in investment portfolios, estate experts say these alternative investments create unique challenges for executors. Private equity, private credit and other alternative investments can be challenging as estate assets, says Holly LeValliant, estate and trust consultant with the Davis Group at ScotiaMcLeod in Toronto. “To start with, there is often a lack of liquidity,” she says. Jamie Sturgeon reports.
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Globe Advisor brings you expert financial tools, in-depth analysis and advice to help you grow your clients’ portfolios. A section produced by The Globe and Mail, a Canadian national media organization.
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As the rising cost of higher education puts college and university out of reach for more young Canadians, too many are underusing RESPs, writes Damon Murchison at IG Wealth Management. “Through an RESP, advisors can take the guesswork out of the future, helping clients prepare for their children’s higher education in a gradual, smart and strategic manner,” Mr. Murchison writes. Here’s why advisors should recommend the savings vehicles to clients.
Maximizing the full potential of RESPs can help offset the rising cost of higher education
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Nothing is certain except death and taxes. With upward of $1-trillion in assets passing between Canadian estates and beneficiaries this decade, the significant tax implications require careful planning. “The wealth plan is the best way to determine what tax consequences exist,” says Tannis Dawson with Napper Wealth Management Group at TD Wealth Private Investment Advice in Winnipeg. Jamie Sturgeon reports on maximizing asset values while minimizing taxation.
For tax-efficient wealth transfers, plan early and revisit often
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With interest rates falling and demand outpacing supply, Dennis Mitchell, CEO and CIO of Starlight Capital in Toronto, believes now is a good time to buy real estate assets, specifically subsectors such as residential, multi-family and industrial. He says Starlight Capital seeks to buy strong businesses for its funds that generate strong, recurring free cash flow from a portfolio of “irreplaceable assets run by management teams that behave like owners and treat us like partners.” To that end, Mr. Mitchell shared three REITs he likes and a stock he sold recently.
Three REITs worth owning right now according to a real-estate-focused money manager
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Investment professionals worldwide who were surveyed for a CFA Institute study last year said certain practices in private markets could be improved and some additional regulation might help. The report’s author, Stephen Deane, CFA, who is the CFA Institute’s senior director, capital markets policy, in Washington, D.C., says the biggest concerns investors revealed in the survey “was the asymmetry of information, questions about the balance of negotiating power between the limited partners [which invest in private markets] and general partners [which are the firms that sponsor and manage private market funds], fees and expenses, and valuation.”
Private markets could benefit from stronger governance and disclosures, study finds
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John Kerr, 72, of Stittsville, Ont., retired in January 2016 at 64 after working for 41 years as a financial advisor in the investment industry. Although he loved working with his clients and team, he grew tired of the increasing paperwork and stress. He felt four decades was a good run. Retirement was very difficult for Mr. Kerr at first as his wife of almost 30 years filed for divorce just before his retirement. “I think the two biggest concerns for seniors are loneliness and outliving their money,” he says. “Retired people also need something meaningful to do with their time. I need to stay busy. I’m a schedule guy. I spend most of my time in retirement volunteering and helping others, which meets my socialization needs. I provide free financial counselling to refugees and other people with low incomes and volunteer twice a week at the nearby Mission Thrift Store.”
This former financial advisor overcame some ‘dark days’ early in retirement
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The market selloff earlier this month makes it official – weak economic news is back to being bad news for investors. When bond yields were falling and inflation was improving earlier this year, the stock market reacted positively, says Craig Basinger, chief market strategist at Purpose Investments Inc. in Toronto. But that good news has turned into bad news as the market responds to the economy “slowing down a lot faster than people expected – which, all of a sudden, isn’t good news,” he says. Markets are a “social environment” made up of individuals. While markets can handle bits of bad news and continue to rise, “when those bad news pieces start to pile up and get bigger and bigger, then it starts to weigh down the sentiment. And I think that’s what we’ve been wrestling with for the last little while.”
As the R-word resurfaces, bad economic news is bad for investors once again
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One issue under consideration is whether annuities – which can only be held in RRSPs, RRIFs and RDSPs – should continue to be qualified investments. But the Canadian Life and Health Insurance Association Inc. (CLHIA) made the case that annuities be added as a qualified investment for TFSAs. “Balances in TFSAs continue to grow and are being used increasingly as a source of savings to support retirement needs,” CLHIA’s submission to Finance Canada / Finances Canada states. “However, the liquidity requirement of the TFSA rules prevents holding payout annuities within TFSAs. Canadian retirees or those approaching retirement should […] have the flexibility to secure their retirement through a guaranteed lifetime income from their funds in TFSAs if they feel it is appropriate for them.”
Industry associations make case for annuities, crypto funds as qualified investments
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Julie Shipley-Strickland, principal, founder and senior wealth advisor with Julie Shipley-Strickland Wealth & Risk Management at Wellington-Altus Private Wealth Inc. in Calgary, decided to take her former mentor’s saying, “Slow down to speed up,” to heart two years ago. That year, as she formed a new partnership with a colleague, she made changes to her service offering, shifting her focus to working with more business-owner clients and providing superior service. The idea, she says, is “being aligned with who you want to work with and growing their assets within what you’re managing already. It’s a little bit going against the grain.”
Why paring back services can help your practice grow
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Draft legislation released this week offers relief to business owners worried about managing their capital dividend accounts (CDAs) this year after changes to the capital gains inclusion rate, and also addresses issues around loss carrybacks in estate planning. The government introduced rules in June that included a complex “blended” formula to calculate the inclusion rate if a corporation realized gains this year both before and after June 25, creating problems for business owners who wanted to pay out their capital dividend on a pre-June 25 sale. “What the department has done in the legislation is essentially turn off that blending rule so that you can indeed pay out the 50 per cent exempt gain before any further gains are realized,” says Brian Ernewein, senior advisor at KPMG Canada’s national tax centre. Here’s what advisors need to know.
Feds’ draft legislation eases some concerns around capital dividend accounts, estate planning
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