Daily Archives: July 1, 2018

Sounds silly, doesn’t it? Well, today’s biggest estate planning issue is what we call the Beneficiary Lottery. This is the solution that many people default to by trying to avoid conflict or not dealing with estate issues. In a nutshell, when wills are made they are done per individual, not jointly. At any time, either party can change their will without informing the other. In addition to this, when one party has passed the surviving person can make any changes to their will, as they see fit.

The vast majority of our clients understand that financial services do not come for free. This is why our business exists. Not all Canadians have the time nor the inclination to manage their financial affairs. Therefore, they delegate that responsibility to financial professionals like ourselves.

The costs associated with these services should be clearly stated and understood by each and every client. Unfortunately, most investors can’t articulate how they are charged or how their financial professional is compensated. For instance, our office charges a percentage of assets managed. No commissions and no trailing fees. Regardless of the amount of activity in an account, our clients know their fee rate is static.

I think it would help if clients first understood what value they are deriving by working with their financial professional. Is it savings of their time? The promise of strong returns? The simple disinterest of doing it themselves?

Whatever the reason, there is an intrinsic value attributed to it, and that will differ for every client.

At The McClelland Financial Group, our value is in our ability to manage clients’ financial affairs in a worry-free manner. Our clients choose to work with us because they know that our objective advice will keep them on their plan for financial success. Guiding our clients from making investment timing mistakes can save percentage points of returns over the long term, thus covering our fee.

The above slide illustrates the performance of the S&P/TSX composite over the last 30 years. It also illustrates how a client’s account would have performed if they missed a number of the best performance days over the last 30 years (10,950 days). Over that length of time, I think it is safe to say that a Canadian investor could miss 25 days (0.2% of the days) if left to their own devices. This would be an opportunity loss of 3.4% versus the S&P/TSX composite. A client would limit the opportunity loss to that of their fee working with us.

Our clients attach a high value to the discipline, objectivity and relationships that we provide. For those that do not, our office will not be a good fit. However, we know that we can help any Canadian family who see value in what we do.

Carlo Cansino,
FMA, FCSI, CFP
Senior Financial Advisor

The McClelland Financial Group
of Assante Capital Management Ltd.

Sounds silly, doesn’t it? Well, today’s biggest estate planning issue is what we call the Beneficiary Lottery. This is the solution that many people default to by trying to avoid conflict or not dealing with estate issues. In a nutshell, when wills are made they are done per individual, not jointly. At any time, either party can change their will without informing the other. In addition to this, when one party has passed the surviving person can make any changes to their will, as they see fit.

In most cases, a married couple leaves all their personal assets to their surviving spouse. If the spouse is deceased, then the assets go to the children. Each spouse typically has a will that mirrors the other’s.

This works perfectly as long as after the first spouse dies, the surviving spouse does not get his/her will changed or remarries. Upon remarriage the previous will is now invalid. It no longer matters that the original intention was for all the money to go to the children. On top of that, the surviving spouse now has the authority to direct the money however they see fit. If issues arose with one child, they can make amendments to their own will, as they deem necessary. It is important to note that, upon death of the first spouse, all assets will go to the surviving spouse. Nothing is directed to the children (unless indicated in the deceased’s will).

This is where the Beneficiary Lottery becomes relevant — Second Marriages with children involved. Here’s the scenario:

Surviving spouses, with children, marry one another. Now a mixed marriage, with step-children, is created. If they use the same will template (i.e. if alive, then leave all assets to spouse; if spouse deceased, then leave all assets to children), then an unintentional disaster can occur. As long as the partner is alive when the first passes, they have no obligation to pass the money onto the deceased partner’s children. If the surviving partner becomes less involved in their step-children’s lives, they can be intentionally left out, with all the money left to the surviving partner’s children. So now the final recipient of the money is no longer based on wishes, it is now a lottery of who dies first.

Is there a solution? Absolutely! A spousal trust can solve these issues. They provide the spouse the opportunity to leave instructions for their assets after they are gone. It makes sense, so why doesn’t everyone do this? Number one, there are costs to set them up. However, the most common reason is due to the awkwardness of the conversation. How do you say to your new spouse “I don’t trust you after I die!”? All emotion aside, it should not be a matter of trust but a matter of protection. In this business we have seen the most well-intentioned estate instructions fail miserably due to improper planning. We are here to speak to you on this. Ask Chelsey, Carlo, Rob or myself about how this could affect your situation. It is always worth a discussion.

Michael Connon,
B.Sc, CFP®
Senior Financial Planner,
Co-Branch Manager
Certification in Estate Planning and Trust Strategies

The McClelland Financial Group
of Assante Capital Management Ltd.

After 23 years in the financial industry and over 15 years with The McClelland Financial Group Carole Ash is transitioning from her Management position as Team Leader into partial retirement. In her new role as a Consultant she will continue to be a valuable resource during this transition period. You will still see Carole in the office 3 days a week going forward. She is looking forward to spending more time with family and pursuing other interests ( Hint, Hint – See pic above from Barcelona, Summer 2018).

Socheata Chea will take on the new role as Team Leader. Socheata has been with The McClelland Financial Group for 16 Years and shares a great passion for the company and our impact on the industry. Socheata was promoted from Service Manager to Team Leader for her outstanding work ethic and strong ability to develop strategies, motivate, and inspire the team to improve business processes. She has successfully completed her Branch Managers Course in 2015 and more recently a postgraduate certificate in Project Management from the University of Toronto.

Patrizia Palmisano-Evangelou will be The McClelland Financial Group’s New Service Manager. Patrizia is a Registered Representative and has been a member of the team for over 10 years. Patrizia earned a Bachelor of Commerce degree from Ryerson University and has a comprehensive background in business and the service industry.

 

After graduating with a Bachelor of Business Administration from the Schulich School of Business at York University, Brian Hong joined our service team in January of 2018. As a service associate, Brian is currently responsible for assisting the Advisors prepare for their weekly meetings with the clients and completing back-office processes. Brian is also enrolled in the Canadian Securities institute completing his Canadian Securities designation