Presentation on theme: "2:30pm How the Rich Manage Their Finances"— Presentation transcript:
1 2:30pm How the Rich Manage Their Finances Presented by:Kurt RosentreterChartered AccountantSenior Financial Advisor, Manulife Securities IncorporatedCertified Financial Planner, Manulife Securities Insurance Inc.
2 About Kurt Rosentreter Chartered AccountantTwenty years of experience in personal finance.Past co-founder of the national wealth management practice at one of Canada’s big four accounting firms.National best selling personal finance author; six published books in Canada.More than 500 published articles and interviews for The Globe and Mail, National Post, CBC, Canada AM, Canadian Business and Maclean’s.Personal Finance Course Instructor, Ontario Institute of Chartered AccountantsSenior Financial Advisor, Manulife Securities Incorporated* in Toronto (*Member CIPF)Certified Financial Planner, Manulife Securities Insurance Inc.
3 Complete a Draw Ballot!Draw for four books at the end of this 30 minute presentationDraw ballots available at front of roomDrop in basket at front of roomOnly completely filled out ballots will be winners.
4 What is Wealth Management? Definition of Wealth ManagementProcess not a productMany definitions in the marketplace…What services are included?What fees are typical?Conclusion: no standard in Canada yet.
5 Who are the Wealthy? Definition of a Wealthy person Define by income Define by total assetsOr family assetsDefine by future potentialDefine by portfolio securitiesConflictDefine by state of mind
8 Wealth Management Fees Four types:Hourly rate or flat feeInvestment advisory feesInvestment commissionsInvestment custodyInsurance commissionsFewer: petty administration fees (e.g. cheque charges, RRSP trustee fees, etc.)Options: one fee for all or unbundled pay as you go fee approach.
9 Do Wealthy People Need A Financial Plan? Definition of a financial planReasons they don’t…Reasons they do:Better financial decisions through integrated planningLess time on financesLower fees through synergiesBetter overall control / management of the big pictureBetter coordinated advisor team
10 Elements of a Financial Plan One integrated plan.More effective results.Time savings.Cost savings.Pre-retirement Financial PlanCareer Compensation & Benefits PlanningTax Return Preparation & Tax PlanningEstate Planning & Estate Wind-up ServicesUse of DebtLegal Risk ManagementPersonal Insurance StrategiesPost Retirement Income DesignElder CareReal Estate StrategiesChildrenFinancial PlanningPhilanthropic and Legacy PlanningPersonal Investment Program
12 Which are not High Net Worth Investment Solutions? Purchasing mutual funds and GICs at the bank counterPurchasing mutual funds with a mutual fund agentTrading your own stocks in a discount brokerage account (depends on the person)Purchasing segregated funds with an insurance agentPurchasing hybrid products with a financial planner (income plus, PPN’s, closed end products, labour funds)Purchasing a mutual fund wrap program with a mutual fund agent.These are retail, mass market products.Once you reach $500,000 of savings, the door opens to new solutions suited to high net worth.
13 Investment Wealth and Choices Below $200,000 of savingsProducts: Mutual funds purchased no load; Exchange traded funds (ETFs); Stock dabbler onlyHow to buy: On your own; Stock broker, bank counter staff.$200,000 to $1 MillionProducts: Blended solution of mutual funds (F series only), ETFs, individual stocks and bondsHow to buy: IMA wrap program; Stock broker, Portfolio Manager, on your own$ 2 Million or moreProducts: Individual stocks and bonds; occasional F series fund for global equity or specialized mandates, ETFsHow to buy: IMA wrap program; Portfolio Manager directly (2 at least); Stock broker; on your own.
14 Investing Planning Strategies Of The Rich Six Dimensions of Tax Smart Investing:Relevant for Taxable Savings (not rrsps)Taxation of people mattersTaxation of assets mattersTaxation of income mattersHolding period of the asset mattersDomestic or a foreign asset mattersLegal ownership of the asset matters.
15 Tax Planning Strategies Of The Rich Focus on tax planning – see beyond your tax returnSophisticated accountants as advisorsUsing good debt and eliminating bad debtHolding companies for U.S. assets & and to avoid Canadian probate fees on deathPay investment Fees, not investment commissionsIncome splitting with familyBusiness Owners not employeesMaximizing tax writeoffsBusiness owners not employeesTax sheltersOffshore business ventures and investing
16 Estate Planning Strategies Of The Rich Usually get advance planning done properlyTwo WillsNo do-it-yourself WillsFamily TrustsIntervivosTestamentaryFamily are not used as Executors or TrusteesFoundations to leave a legacyLife insurance to provide liquidity in estate
17 Career Choices Of The Rich Primary:Business OwnersNot employees working for someone elseOwn one business through generations and through thick and thinE.g. Warren Buffett approachGrowth industry and growth companyThey own the business but don’t work in itSecondary:Senior executives of public companiesCompany stock and stock optionsThird:Some careers: dentists, lawyers
18 How The Rich Select Their Financial Advisors General:Professionals, not sales peopleSpecialists in high net worth issues and solutionsInternational expertise, not just localArms length business relationship not clouded by personalities and friendshipsInvestments:Relationship free of limited product choice, hidden fees and poor service / communicationAsset based fees, not commissionsFinancial Planning:Four key documents from the advisor: engagement letter, written financial plan, written investment plan, written annual investment portfolio analysis.Key: evolution of advisors as you evolve / grow.
19 Summary No standard rule about what wealth management is. Comparison shopping is best way to find out what you want.Industry continues to evolve fast – products, services and people are changing.Your life long advisors may no longer be suitable to help the wealthier you.
20 Please Complete the Draw Ballot and win a best selling book Please Complete the Draw Ballot and win a best selling book! Draw ballots at the front of the room. Ballot must be completely filled out to win.
21 Thank You. Kurt Rosentreter, Senior Financial Advisor & Certified Financial PlannerCA, CFP, CLU, TEP,FMA, FCSI, CIMA, CIMManulife Securities Incorporated;Manulife Securities Insurance Inc.,Phone Ext 238Kurt’s books are available in bookstores across Canada.
22 DisclaimersManulife Securities Incorporated is registered as an Investment Dealer, or its equivalent, with the provincial securities commissions and as such our Advisors are entitled to sell mutual funds, stocks, bonds and other securities as permitted under our registration. They may also be able to provide other services or products to you through their own business. As a member of the Investment Industry Regulatory Organization of Canada ("IIROC"), Manulife Securities Incorporated is obligated to disclose to you that you may be dealing with companies other than Manulife Securities Incorporated when purchasing services or products from your Associate (remuneration to your Associate may also come from various sources depending on the services or products purchased). For example, your Associate may offer any one or more of the following through a separate business, which would not be the responsibility of Manulife Securities Incorporated: * Income Tax Preparation; * Insurance: Life, Accident, Sickness, Disability, General. Please be sure that you have a clear understanding of which company you are dealing with for each of your services and products. Your Associate would be happy to provide any clarification you require.Insurance products and services are offered through Manulife Securities Insurance Inc. (a licensed life insurance agency and affiliate of Manulife Securities) by Manulife Securities Advisors licensed as life agents.The opinions expressed are those of the author and may not necessarily reflect those of Manulife Securities Incorporated and/or Manulife Securities Insurance Inc.