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How the RichHow the RichManage Their FinancesManage Their Finances
Presented by:Presented by:Kurt RosentreterKurt Rosentreter Chartered AccountantChartered Accountant Senior Financial Advisor, Manulife Securities IncorporatedSenior Financial Advisor, Manulife Securities Incorporated Certified Financial Planner, Manulife Securities Insurance Certified Financial Planner, Manulife Securities Insurance Inc.Inc.
About Kurt RosentreterAbout Kurt Rosentreter• Chartered AccountantChartered Accountant
• Twenty years of experience in personal finance.Twenty years of experience in personal finance.
• Past co-founder of the national wealth management Past co-founder of the national wealth management practice at one of Canada’s big four accounting firms.practice at one of Canada’s big four accounting firms.
• National best selling personal finance author; six published National best selling personal finance author; six published books in Canada.books in Canada.
• More than 500 published articles and interviews for The More than 500 published articles and interviews for The Globe and Mail, National Post, CBC, Canada AM, Canadian Globe and Mail, National Post, CBC, Canada AM, Canadian Business and Maclean’s.Business and Maclean’s.
• Personal Finance Course Instructor, Ontario Institute of Personal Finance Course Instructor, Ontario Institute of Chartered AccountantsChartered Accountants
• Senior Financial Advisor, Manulife Securities Incorporated* Senior Financial Advisor, Manulife Securities Incorporated* in Toronto (*Member CIPF)in Toronto (*Member CIPF)
• Certified Financial Planner, Manulife Securities Insurance Certified Financial Planner, Manulife Securities Insurance Inc.Inc.
Complete a Draw Ballot!
•Draw for four books at the end of this 30 minute presentation
•Draw ballots available at front of room
•Drop in basket at front of room
•Only completely filled out ballots will be winners.
What is Wealth What is Wealth Management?Management?
• Definition of Wealth ManagementDefinition of Wealth Management– Process not a productProcess not a product– Many definitions in the marketplace…Many definitions in the marketplace…– What services are included?What services are included?– What fees are typical?What fees are typical?
• Conclusion: no standard in Canada yet.Conclusion: no standard in Canada yet.
Who are the Wealthy?Who are the Wealthy?
• Definition of a Wealthy personDefinition of a Wealthy person– Define by incomeDefine by income– Define by total assetsDefine by total assets
•Or family assetsOr family assets
– Define by future potentialDefine by future potential– Define by portfolio securitiesDefine by portfolio securities
•ConflictConflict
– Define by state of mindDefine by state of mind
Wealth Management Wealth Management ServicesServices• PrimaryPrimary
– Investment ManagementInvestment Management– BankingBanking– Cash managementCash management– Tax PlanningTax Planning– Legal advice Legal advice
• SecondarySecondary– Tax return preparationTax return preparation– Bill paymentBill payment– InsuranceInsurance– DebtDebt– Business servicesBusiness services– Charitable giving and legacy planningCharitable giving and legacy planning– Estate planningEstate planning– Children’s financial planningChildren’s financial planning– Real estate Real estate – Concierge servicesConcierge services
Wealth Management Wealth Management AdvisorsAdvisors• Wealthy FriendsWealthy Friends• Company CFOCompany CFO• AccountantAccountant• Tax accountant with int’l tax expertiseTax accountant with int’l tax expertise• Lawyer (estate, business, divorce, int’l law)Lawyer (estate, business, divorce, int’l law)• Book keeperBook keeper• Money Manager (broker, agent, counsellor, Money Manager (broker, agent, counsellor,
portfolio manager) Private Bankerportfolio manager) Private Banker• Insurance AgentInsurance Agent• Real estate agentReal estate agent
Wealth Management Wealth Management FeesFees• Four types:Four types:
– Hourly rate or flat feeHourly rate or flat fee– Investment advisory feesInvestment advisory fees– Investment commissionsInvestment commissions– Investment custodyInvestment custody– Insurance commissionsInsurance commissions– Fewer: petty administration fees (e.g. cheque Fewer: petty administration fees (e.g. cheque
charges, RRSP trustee fees, etc.)charges, RRSP trustee fees, etc.)
• Options: one fee for all or unbundled pay as Options: one fee for all or unbundled pay as you go fee approach.you go fee approach.
Do Wealthy People Do Wealthy People Need A Financial Plan?Need A Financial Plan?• Definition of a financial planDefinition of a financial plan• Reasons they don’t…Reasons they don’t…• Reasons they do: Reasons they do:
– Better financial decisions through Better financial decisions through integrated planningintegrated planning
– Less time on financesLess time on finances– Lower fees through synergiesLower fees through synergies– Better overall control / management of Better overall control / management of
the big picturethe big picture– Better coordinated advisor teamBetter coordinated advisor team
Elements of a Financial PlanElements of a Financial Plan
One integrated plan.More effective results.Time savings.Cost savings.
Pre-retirement Financial Plan
Career Compensation & Benefits Planning
Tax Return Preparation & Tax Planning
Estate Planning & Estate Wind-up Services
Use of Debt
Legal Risk Management
Personal Insurance Strategies
Post Retirement Income Design
Elder Care
Real Estate Strategies
Children
Financial Planning
Philanthropic and Legacy Planning
Personal Investment Program
High Net Worth High Net Worth Financial StrategiesFinancial Strategies
Which are Which are notnot High Net Worth Investment High Net Worth Investment Solutions?Solutions?• Purchasing mutual funds and GICs at the bank counterPurchasing mutual funds and GICs at the bank counter• Purchasing mutual funds with a mutual fund agentPurchasing mutual funds with a mutual fund agent• Trading your own stocks in a discount brokerage Trading your own stocks in a discount brokerage
account (depends on the person)account (depends on the person)• Purchasing segregated funds with an insurance agentPurchasing segregated funds with an insurance agent• Purchasing hybrid products with a financial planner Purchasing hybrid products with a financial planner
(income plus, PPN’s, closed end products, labour (income plus, PPN’s, closed end products, labour funds)funds)
• Purchasing a mutual fund wrap program with a mutual Purchasing a mutual fund wrap program with a mutual fund agent.fund agent.
These are retail, mass market products.These are retail, mass market products.
Once you reach $500,000 of savings, the door opens to Once you reach $500,000 of savings, the door opens to new solutions suited to high net worth. new solutions suited to high net worth.
Investment Wealth and Investment Wealth and ChoicesChoices• Below $200,000 of savingsBelow $200,000 of savings
• Products: Mutual funds purchased no load; Exchange Products: Mutual funds purchased no load; Exchange traded funds (ETFs); Stock dabbler onlytraded funds (ETFs); Stock dabbler only
• How to buy: On your own; Stock broker, bank counter How to buy: On your own; Stock broker, bank counter staff.staff.
• $200,000 to $1 Million$200,000 to $1 Million• Products: Blended solution of mutual funds (F series only), Products: Blended solution of mutual funds (F series only),
ETFs, individual stocks and bondsETFs, individual stocks and bonds• How to buy: IMA wrap program; Stock broker, Portfolio How to buy: IMA wrap program; Stock broker, Portfolio
Manager, on your ownManager, on your own
• $ 2 Million or more$ 2 Million or more• Products: Individual stocks and bonds; occasional F series Products: Individual stocks and bonds; occasional F series
fund for global equity or specialized mandates, ETFsfund for global equity or specialized mandates, ETFs• How to buy: IMA wrap program; Portfolio Manager directly How to buy: IMA wrap program; Portfolio Manager directly
(2 at least); Stock broker; on your own. (2 at least); Stock broker; on your own.
Investing Planning Strategies Of The Rich
• Six Dimensions of Tax Smart Investing:– Relevant for Taxable Savings (not rrsps)
•Taxation of people matters•Taxation of assets matters•Taxation of income matters•Holding period of the asset matters•Domestic or a foreign asset matters•Legal ownership of the asset matters.
Tax Planning Strategies Of The Rich
• Focus on tax planning – see beyond your tax return• Sophisticated accountants as advisors• Using good debt and eliminating bad debt• Holding companies for U.S. assets & and to avoid
Canadian probate fees on death• Pay investment Fees, not investment commissions• Income splitting with family
•Business Owners not employees• Maximizing tax writeoffs
•Business owners not employees• Tax shelters• Offshore business ventures and investing
Estate Planning Strategies Of The Rich
• Usually get advance planning done properly
• Two Wills– No do-it-yourself Wills
• Family Trusts• Intervivos• Testamentary
• Family are not used as Executors or Trustees
• Foundations to leave a legacy
• Life insurance to provide liquidity in estate
Career Choices Of The Rich
Primary:• Business Owners
• Not employees working for someone else• Own one business through generations and through thick and
thin– E.g. Warren Buffett approach
• Growth industry and growth company• They own the business but don’t work in it
Secondary:• Senior executives of public companies
– Company stock and stock options
Third:• Some careers: dentists, lawyers
How The RichSelect Their Financial
AdvisorsGeneral:• Professionals, not sales people• Specialists in high net worth issues and solutions• International expertise, not just local • Arms length business relationship not clouded by
personalities and friendshipsInvestments:• Relationship free of limited product choice, hidden
fees and poor service / communication• Asset 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.
SummarySummary
• No standard rule about what wealth No standard rule about what wealth management is.management is.
• Comparison shopping is best way to find Comparison shopping is best way to find out what you want.out what you want.
• Industry continues to evolve fast – Industry continues to evolve fast – products, services and people are products, services and people are changing. changing.
• Your life long advisors may no longer be Your life long advisors may no longer be suitable to help the wealthier you. suitable to help the wealthier you.
Thank You.Thank You.
Kurt RosentreterKurt Rosentreter,,Senior Financial Advisor & Certified Financial PlannerSenior Financial Advisor & Certified Financial PlannerCA, CFP, CLU, TEP,FMA, FCSI, CIMA, CIMCA, CFP, CLU, TEP,FMA, FCSI, CIMA, CIMManulife Securities Incorporated; Manulife Securities Incorporated; Manulife Securities Insurance Inc., Manulife Securities Insurance Inc., Phone 416-628-5770 Ext 238Phone 416-628-5770 Ext [email protected]@manulifesecurities.ca
www.kurtismycfo.com Kurt’s books are available in bookstores across Canada.Kurt’s books are available in bookstores across Canada.
DisclaimersDisclaimersManulife Securities Incorporated is registered as an Investment Dealer, or its Manulife Securities Incorporated is registered as an Investment Dealer, or its
equivalent, with the provincial securities commissions and as such our equivalent, with the provincial securities commissions and as such our Advisors are entitled to sell mutual funds, stocks, bonds and other securities as 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 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 services or products to you through their own business. As a member of the Investment Industry Regulatory Organization of Canada ("IIROC"), Manulife Investment Industry Regulatory Organization of Canada ("IIROC"), Manulife Securities Incorporated is obligated to disclose to you that you may be dealing Securities Incorporated is obligated to disclose to you that you may be dealing with companies other than Manulife Securities Incorporated when purchasing with companies other than Manulife Securities Incorporated when purchasing services or products from your Associate (remuneration to your Associate may services or products from your Associate (remuneration to your Associate may also come from various sources depending on the services or products also come from various sources depending on the services or products purchased). For example, your Associate may offer any one or more of the 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 following through a separate business, which would not be the responsibility of Manulife Securities Incorporated: * Income Tax Preparation; * Insurance: Life, Manulife Securities Incorporated: * Income Tax Preparation; * Insurance: Life, Accident, Sickness, Disability, General. Please be sure that you have a clear Accident, Sickness, Disability, General. Please be sure that you have a clear understanding of which company you are dealing with for each of your understanding of which company you are dealing with for each of your services and products. Your Associate would be happy to provide any services and products. Your Associate would be happy to provide any clarification you require. clarification you require.
Insurance products and services are offered through Manulife Securities Insurance Insurance products and services are offered through Manulife Securities Insurance Inc. (a licensed life insurance agency and affiliate of Manulife Securities) by Inc. (a licensed life insurance agency and affiliate of Manulife Securities) by Manulife Securities Advisors licensed as life agents.Manulife Securities Advisors licensed as life agents.
The opinions expressed are those of the author and may not necessarily reflect The opinions expressed are those of the author and may not necessarily reflect those of Manulife Securities Incorporated and/or Manulife Securities Insurance those of Manulife Securities Incorporated and/or Manulife Securities Insurance IncInc..
