Feb full

CIBC Wood Gundy is a division of CIBC World Markets Inc, a subsidiary of CIBC and member of the Canadian Investor Protection Fund, an investment industry regulatory organization of Canada, Wade Kozak is an investment advisor and portfolio manager with CIBC Wood Gundy in Calgary. The views of Wade Kozak do not necessarily reflect those of CIBC World Markets Inc. If you are currently a CIBC Wood Gundy client, please contact your investment advisor.

Welcome to another edition of Talk to the Experts on 770 CHQR. I'm Randy Sharman. Joining me today via Skype is Wade Kozak from the Kozak Financial Group CIBC Wood Gundy. The website is kozakfinancialgroup.ca. More importantly, that phone number to call Wade with your questions or concerns, (403) 260-0568. Hello, Mr. Kozak.

How are you doing, Randy?

I'm doing well, thank you. It's almost three weeks until spring, so I can't wait till spring. Not that I'm counting the days, but I am.

It's we've got a bit of a cold front came through here, but earlier this week, it was certainly feeling like spring, wasn't it?

For sure. Let's talk. You always are watching the markets a lot. So what have you noticed in the last few weeks since we last spoke, which was about a month ago, I believe?

Yeah. February has been an interesting month and the whole lot has happened here. In general for the month, equity markets have actually performed very, very well. Very pleased with how the stocks have done this month, despite the little bit of weakness we saw right towards the end of February. And we've actually seen a lot of upsettedness, if you will, in the financial markets, just in the final days of February. A lot of it having to do with interest rates actually creeping a little bit higher. So one of the one of the big stories, I think recently is that Canada bond rates, longer term, US bond rates are finally creeping higher. And just as an example of that five year Canada's roundabout the middle of January, we're actually below 0.5%. And they've been there for quite some time right now. The five year Canada bond rate is hovering, I think, just under 0.9%. So it's not quite a double. And in fact, that rate had come down in the last trading day of February and it almost touched a full one percentage point earlier this past week. The 10 year Canada bond rate for about a month and a half ago was 0.7, and that actually has doubled to about 1.4, which is a little bit stunning if you think about it, like the 10 year Canada bond rate has actually doubled in about the last month and the 30 year bond rate gone from 1.25 to 1.85. There is there's a few reasons for that. There is some fear that the that inflation is going to rear its ugly head. And so we're seeing interest rates creeping a little bit higher and that's taken some steam out of the stock market because as that yield gets higher, obviously it offers more competition for the stock market and it's causing a bit of wonkiness. Now, I don't anticipate that the interest rates are actually going to careen to much higher than this. I mean, we'll see interest rates are tougher to predict than the stock market, quite frankly, but mainly because the kind of stimulus the government has been adding through Covid is more very temporary stimulus. It isn't it isn't long lasting five year new deal, giant capital plans kind of stimulus. And so wouldn't surprise me, if we don't see the interest rates rise too much further and that will protect the stock market a little bit. But quite frankly, rates had gotten so low. I'm actually kind of happy to see them go a little bit higher. There's there is some 10 year investment grade corporate bonds that I can now get that are darn close to 3%, whereas a month ago I was hard pressed to get even 2%.

Well, I remember last time we talked, the phrase you used was holding your nose, investing in a stock because the bond, because the interest rate was so low and it was that way for so long. So now you're seeing the interest rates, as you mentioned, creeping up a bit, which is is that considered good news then, is what I'm hearing from you?

Well, I'm considering a good news because what we've actually seen the yield curve steepen quite a bit and a steep yield curve tends to be a predictor of a stronger economy. So if we look back a full year, so a full year ago, we were just sort of waking up that something significant was going on and that there might be a global pandemic that was emerging. And we were it was exactly a year ago, markets were basically just peaking out. They had rolled over right at the end of February, but I think they peaked out right around February 23rd of 2020. And if you think back then, the yield curve was actually slightly inverted and we would have been talking about here on the radio about how that inverted yield curve, where their short rates were actually a little bit higher than the long rates, generally was a predictor for a recession. And there was some concern that the economy was going to roll over, that we were going to see some negative GDP numbers and we might be in in line for a recession. Now, you know, we went through certainly some very terrible quarters of GDP due to Covid. But right now we've had the exact opposite situation where that yield curve is actually steeper than we've seen it in quite some time. And so that I take that to be actually pretty good news for the economy. We're also seeing the commodities doing very well. Recently, the price of copper has surged higher. Copper prices are generally a very good predictor of where the economy is going. And as the price of copper rallies, that tends to mean that the economy is heading in the right direction and is going to do quite well. So if we have the economy doing well, we have the GDP doing well, then we will have corporate profits doing reasonably well. And so hopefully that actually spells some good quarters for corporate profits and the stock market.

Let's remind our listeners about the importance of bonds in your portfolio as as you like to use it as sort of to balance things out.

The bonds serve a purpose of being guaranteed assets in the portfolio where somebody is guaranteeing your principal amount to you, whether it's a government bond or a corporate bond. There is some level of guarantee in that particular investment where, as we know on the stock market side of the account, no one's guaranteeing anything. There is no there's no future principal guarantee. There's no income guarantee. We can certainly invest as wisely as we can to have a properly balanced portfolio, but it's still not a bond. And the bonds will always be less volatile than the stock market side of the account. So it's important to have some bonds in the account to act as an anchor and act as a reserve in the overall portfolio that if we do see weak stock markets, you have some money coming due in the bonds to take advantage of to buy into the stock market a little bit. Or if you're a retired person who's pulling money out of your accounts each year, you want to be able to make a choice each year of do I take this money out of the stock market side of the account because that side of the account has done very well. Or maybe the stock market hasn't done very well and you have a bond maturing. You can take that withdrawal out of instead. So it's important there to give you choices and have an overall balance in the account and quite frankly, keep you sane, like if you were 100% invested in the stock market in a retirement portfolio. And if we think back to March of 2020 and the great big sell off we saw due to Covid, that tends to make your blood run pretty cold. Or if you think back to the 2008, 2009 financial crisis and the kind of weakness we saw in the stock market there, if every last dollar you have save for retirement is in the stock market, it can very easily drive you around the band a little bit. Watching that volatility and having that bond portion of the account where, you know, that principle is guaranteed can keep you thin from being driven around the band and sort of keep you sane and that investment portfolio and make it such that your investment portfolio isn't a source of stress because it shouldn't be a source of stress. It's your pension plan.

Well, exactly. I think it's important to point out that you are talking retirement portfolios. Is there a different way to look at, though, if it's a retirement portfolio versus a normal portfolio, you might hold when you're, I don't know, say, 30 years old or something?

It's I guess that that's a that's a point of contention, right? And everybody's going to have a different opinion on that. I think that even a 30 year old who's saving for retirement for some long term goal should have a piece of their overall investments in that fixed income side of the account. The main reason being is that if there is a big sell off in the stock market and you don't have any free loose cash to go and invest, it's nice to have those bonds in the investment account that you can say, OK, let's go and sell some of those bonds because they haven't dropped. Let's put that into the stock market. And that way you have the ability to take advantage of that weakness. If you're one hundred percent invested in stocks and you don't have any extra cash to go in to go and invest, then when that selloff comes, you don't have any ability to take advantage of it.

Good point. We have lots to talk about. We're going to talk about growth versus value. It is RSP season, as well as any season is RSP season, but we're going to talk about RSPs in retirement and fraud. Different types of frauds that are out there. So lots to talk about with Wade Kozak from the Kozak Financial Group CIBC Wood Gundy. Their website is kozakfinancialgroup.ca. And the phone numbers (403) 260-0568. And we'll continue chatting with Wade when Talk to the Experts continues on 770 CHQR.

This is Talk to the Experts on 770 CHQR. I'm Randy Sharman, today via Skype we're talking with Wade Kozak from the Kozak Financial Group CIBC Wood Gundy. kozakfinancialgroup.ca is the website, and the phone number if you want to write it down, (403) 260-0568. Wade, we were kind of, we always like to open up talking about the markets. Any other last notes or things you want to finish up? Um, before we move on,

I just want to talk about some of the action we saw at the end of February again. We saw some signs there of rotation. There were a couple of days towards the end of February where the highest flying mega cap growth stocks, tech stocks were actually very weak. And where the money was flowing into were the blue chip dividend paying stocks. What what I would call perhaps the value stocks. And we started seeing a little bit of evidence of that rotation occurring of money, money flowing out of that part of the market that's been the hottest recently and flowing into the side of the market that hasn't been as hot, but there's a lot better value struck there. And I want to point out that even with these slightly higher interest rates that are available right now, we can still get far, far better cash yields from the blue chip, dividend paying stocks, bank stocks, telephone, utilities, electric utilities. It's actually pretty easy to get an overall average dividend yield right now of four and three quarter percent or better, which is still far higher than I can get even on a 10 year investment grade corporate bond. And I think that there is a lot of opportunity and I think some of the best value is available right now in that part of the market. So I just wanted to bring that to people's attention that and if we do see that steeper yield curve, which we have, that spells good news for bank profits as well. And so, like we saw actually banks announce their quarterly earnings this past week, almost all of them exceeded expectations. And we actually saw Canadian bank stocks surge a little bit higher, especially Monday, Tuesday, Wednesday, which was nice to see.

Mm hmm. Let's move on to RSPs. It is RSP season, why do they call it that anyways? I would think you can buy RSPs anytime, but what do they consider at this time of year, RSP season?

You can it's the reason they consider it that kind of hearkens back decades when when whoever put the RSP contributions and the registered plan system in place, they gave you the ability to have the first sixty days of the new calendar year to make a contribution that's still applied to the previous tax year. So you could get a sense of what your overall income was for a tax year and then choose how much you wanted to contribute. And back in the day, people took that essentially as kind of permission to not make contributions all year long and to save up and make their entire contribution in January or February of the following calendar year. So traditionally, a lot of RSP contributions get made in January or February, hence the term RSP season. I think these days it's not it's not as much of that goes on. More and more people do make those contributions throughout the entire year or make them early in the year for that particular tax year. A lot of our clients do. But still there there are people who kind of wait until that last moment. So I'll point out that Monday, following the airing of this show is the final day of 2021 where you can make an RSP contribution and it's in time to be applied to the previous tax year of 2020. So don't be waiting any longer than Monday to make that RSP contribution.

Let's talk about RSPs in retirement now. Is there a difference once I'm retired? I suppose there's two ways of looking at it, I want to use my RSPs or can I still invest in RSPs?

Once you once you no longer have earned income. So once you're no longer gainfully employed and all of your income is coming from pensions and investment income, you don't you aren't going to accumulate any more RSP contribution room. So so typically people aren't making RSP contributions once they stop working. If you have rental properties and rental income, that still counts as earned income, that contributes to your RRSP contribution room. But normally, I would advise a client that once they've retired, their income typically has dropped to some base level and it's probably not going to be lower than that ever again during their lifetime. And it doesn't really make sense to make an RSP contribution if you're just going to withdraw it in the next year at the exact same tax rate. So everybody's tax circumstances are different. And so absolutely take that into consideration. But normally, after your working years and once you're out of those high tax brackets, that no longer makes sense to make contributions. Also, once you turn 71. In the year you turn 71, you have to turn your RSPs into a RRIF. And you are not able to have an RSP following December 31st of the calendar year you turn 71. So it's essentially impossible to make an RSP contribution to your own RSP after December 31st of the year you turn 71. If you have a younger spouse, you can still make a spousal contribution to their RSP. Again, I can't think of many circumstances where that would make sense, but there are some, I'm sure. But so RSPs are an accumulation phase and then eventually in retirement you're going to start drawing money out of these accounts. And at that point in time you would want to convert them into a Registered Retirement Income Fund or a RRIF to draw that money out.

So how easy is that done? If I'm a do it yourself or kind of a person, is that easily done or do you need someone like yourself that can walk you through that process and help you out?

It can be somewhat complex, especially with locked in RSPs. Like when a person is approaching that age 71 and they start looking at and especially if they have RSPs all over the place. So if you have RSPs at this bank and a few GICs at that bank and a few investments at this other institution, you'll have to go around to every single one of those institutions and prepare all of the paperwork in order to go and convert that RSP into RRIF. Which, you know, isn't necessarily a lot of fun. And a lot of people sometimes spend those last few years consolidating their RSPs into just one or two institutions to make it easier on themselves when they finally do convert them into RRIFs. The locked in plans had another level of complexity because you have a one time opportunity to unlock up to half of the locked in RSP into a regular RSP and there's a lot of complex paperwork to go and fill out. If you have a spouse, you have to have a spouse sign off on it, depending on the province of registration of that pension plan that that locked in plan came from, you might need notarized signatures and some of the paperwork to go and do that unlocking. And it's also important that you do that unlocking because you only have that one opportunity to get it done upon that conversion. And so having having a professional help you through that process, absolutely at that stage can be useful. But that isn't to say that somebody who isn't really, really interested in it and really on top of it certainly couldn't handle it doing it themselves either.

If I do if I do not contribute to an RSP say for a few years, for whatever reasons, you know, life gets in the way and I just don't have the money. But that accumulates, doesn't it, over time. My contribution limit?

Yes. So if you're if you're accumulating contribution room and you're not actually using it, that contribution room builds up and that can sometimes come in handy. So you'll occasionally come across somebody who hasn't been super great about keeping up with their RSP contributions. Or maybe it didn't make sense for them to make an RSP contribution because their income wasn't super high. But then all of a sudden they have a special year. Maybe they get a layoff payout and they have a super high tax year where they have a lot more income. They normally would. Maybe you sell a rental property and there's a significant capital gain and your income is pushed up into a higher level. Maybe there's a stock option payout, but sometimes you have a circumstance where there's a particular calendar year where the income is significantly higher than any other year. And all of a sudden that unused RRSP contribution comes in a great deal of handy that you can use it to make a significant contribution, reduce your income drastically in that exceptional year where your income was quite high, and help smooth out your income over those years and basically pay less tax over time.

Lots of great advice. Wade Kozak is from the Kozak Financial Group, the website kozakfinancialgroup.ca. If you have questions, give them a call, (403) 260-0568. And we will continue with more great advice from Wade Kozak when Talk to the Experts continues on 770 CHQR.

You're listening to Talk to the Experts on 770 CHQR. I'm Randy Sharman, Wade Kozak joining me today via Skype. His website is kozakfinancialgroup.ca, and he is from the Kozak Financial Group CIBC Wood Gundy. The phone number is (403) 260-0568. Last segment we left off just talking about RSP season. Anything that you might want to add before we move on?

Yeah, I just want to point out that there are like retired people have have suffered a blow like everybody else here through Covid. With the lack of the ability to travel as much as you wanted to. And some retired clients are actually spending a lot less money right now than they normally would because they aren't they aren't spending those marginal dollars on travel, etc. Some are and they're spending money on like domestically, we're renovating their houses, etc., rather than on travel. But I've talked to some clients towards the end of 2020 who haven't needed to take as much money out of the accounts to spend on themselves because they they haven't been doing as much. And I pointed out to them that even if you weren't spending it on yourself, you might want to keep up those withdrawals coming from the registered plans, because the withdrawals you're taking from the registered plans in retirement are more about the tax efficient drawdown of those registered plans, the RSPs, because there is a tax liability attached to those plans and you want to take those out in as a tax efficient way as you possibly can. And so even if you weren't spending that money, it can make a lot of sense to withdraw that money from that registered plan and simply shifted across either into your tax free savings account or into your open investment account and use up those bottom tax brackets each year. And then eventually a year will come when hopefully we're back to traveling like we always were before. And though that money will be outside of those registered plans and you'll have more choices as to as to where you take the money from that you want to spend each year.

Hmm. Walk me through the process. I mean, we're talking a lot about RSPs and tax implications. It's a lot of information. And if people are listening and they're going, wow, how do I where do I begin? I guess it would just begin with a phone call. Just asking general questions, right?

Absolutely. Give us a call at 260-0568. I'd be happy to hear from anybody, get a thumbnail sketch of what your circumstances are. And I can certainly add, even if we don't end up doing business together, I can steer you in the right direction of of what you should be thinking about. And don't wait too long to think about it. You have to convert those RSPs to RRIFs at age 71, but you can convert them to reverse at any point before age 71 if it makes sense to do so. And it's not uncommon. I'll meet somebody whether they heard us here in the radio and call in or they're referred by an existing client who is maybe 67 years of age. They've been retired for ten years since they were 57. They haven't needed to take any withdrawals from the registered plans to fund their lifestyle. So they hadn't bothered doing it and their incomes were very low. They were paying very little tax. They just left the RSPs alone, but it would have been to their great benefit to have drawn money out of those RSPs through all of those ten years they were retired perhaps before they were collecting CPP or OAS income and paid very, very little tax on that money that they withdrew from the RSPs. But instead they waited. Now they are collecting CPP and OAS. They have clawback levels to worry about. The pensions have started so the incomes are higher. And maybe that if you take an extra withdrawal out of the RSP now, it actually bumps you up a tax bracket. It's really important to think forward. And from the moment that you no longer have employment income to report in your tax return, you should be taking a hard look at should I be taking withdrawals from these registered plans? Does it long term make sense for me to do so?

And that phone number again is (403) 260-0568, joining with Wade Kozak from the Kozak Financial Group. Let's talk a little bit about fraud. It seems to me that people in the retirement age bracket are the ones that are most subjected to emails and text messages and all these other things, telling them to invest here or spend your money here or beware of this.

Yes, and we're we're seeing I'm personally I'm seeing kind of a new surge of people attempting to defraud Canadians, like we're all familiar, I think now with the phone calls, you get threatening arrest from the RCMP unless you clear up some kind of a tax issue, although it obviously works since the fraudsters are still doing that. But there's especially with with Covid and some of our changes that we've made and how we behave, I think it's made people more vulnerable to different forms of fraud because one very one very common method. I a very common but but one method that I've seen and I've heard from clients that they've either been partially tricked by or are tricked by is that since we're we're buying many more things online than we were before, we're having all kinds of things now shipped to our house that we normally would have gone out to purchase. And these fraudsters will send blanket emails out to every single email address they can get their hands on, saying, oh, you made an order on Amazon. Click this link to confirm the delivery or we weren't able to deliver to you. So click this link to sort this out. And it's not a link to Amazon, it's a link to their their fraudster website. And they're attempting to go and collect information from you to go into fraud you. And it's it's very, very easy to go and fall for one of those, especially if two days before you had ordered something on Amazon. And so it's completely reasonable that you're getting this email saying there was an issue with delivery and we have to sort this out. And it's really easy then to be in a rush to go and get something done and click on something you shouldn't. I've also seen a surge in text message fraud where this wasn't so much a thing even a year ago. But now it's not uncommon to go and get a text message with a link in it. That's that is, again, some kind of a call to action. There's some issue with your your telephone banking click here to go and to go and fix it. And it's it's taking you to a fraudulent website. So I would just I would encourage all all listeners, all of our clients, all of our listeners, basically never, ever click on any kind of a link or open up any kind of a link that is sent to you through an email or SMS. And if there is a concern that there is something wrong with the delivery on your Amazon, go back to your to the device you use to place the order, log into your Amazon account and deal with it that way. And it and that way you aren't going to go to some nefarious website that's been set up attempting to trick you. Having said that, the the methods of attempting to defraud us are getting more and more sophisticated and and more and more ingenious. And it's it's taking a higher and higher level of distrust and skepticism to kind of keep ourselves safe.

It is easily done. I can recall just getting an email from Netflix saying, hey, your account couldn't go through, your payment, couldn't go through. And I almost fell for it. I just remember looking at the date, it was the middle of the month that I know that my payment went through at the beginning of the month. So I double checked with my bank just online and sure enough, the payment went through. But it's very easy and they're not necessarily asking for money or anything like that. What they want is access. And once you link, you click on those links and you put in your your information. That's what they're looking for right?

Yeah. They're looking to get social insurance numbers and dates of birth or credit card numbers, you know, from from those sorts of methods. The obviously the the more aggressive methods are the phone calls where they're attempting to get you to clear up some fictitious issue by buying iTunes gift cards and reading them off the code numbers on them or something like that. I mean, that that's got that's got to be like a gigantic red flag to anybody. And I don't know of anybody personally who's who's fallen for that plan, but obviously people do. Otherwise they wouldn't be doing it.

For sure. And then if people do get caught, they're embarrassed to say it, which makes it all the worse because no one wants to admit that they've been caught on one of those scams.

It's we often have clients calling once if a client does get partially caught up in that, but they kind of go partway down that path and then then they realize that this is not correct. And so they sort of they back away from it. It's not uncommon that we get a phone call, not at a panic, but just utter concern that, hey, I. Let this just be on the lookout, if anything, you know, if anybody reaches out regarding the accounts or anything like that, and I don't know if this offers any level of comfort to our clients who are listening or anybody else, but I can say definitively that I've been doing this for 27 years. We deal with over six hundred families and over a billion dollars invested with us. Not a single dollar has ever left a Wood Gundy account that that we are monitoring that wasn't supposed to that wasn't at the client's actual actual request. And there's lots and lots of security measures on our end to make sure that that never, ever happens. And it's also nice to know that there's a great big bank and a big institution there sort of standing behind us that, you know, obviously has deep pockets and and helps keep everybody safe.

He is Wade Kozak from the Kozak Financial Group CIBC Wood Gundy. The website is kozakfinancialgroup.ca. And the phone number, if you have questions, concerns, any of that sort, want to set up a meeting, (403) 260-0568. We'll continue with more when Talk to the Experts continues on 770 CHQR.

Welcome back to Talk to the Experts on 770 CHQR. I'm Randy Sharman chatting with Wade Kozak today from the Kozak Financial Group CIBC Wood Gundy, kozakfinancialgroup.ca is the website. The phone number, (403) 260-0568. We've talked a lot about RSPs and RSP season, which kind of leads into tax season. If we didn't have a tax season, we wouldn't have an RSP season. Let's talk about some of the different types of investments and investments that you you talk, you talk about and you offer and the effectiveness on on the taxes.

I just wanted to I just wanted to mention that we talked a lot about RSPs in this show and the RSP tax deduction. And I just want to point out that any client typically has a suite of different accounts. They'll be the RSP accounts, they'll be the non registered accounts. They'll be the tax free savings accounts. Sometimes there is a corporate holding company with significant assets in it, and sometimes there is a trust account that can make sense in certain situations. And all of these accounts have a certain tax profile that makes different types of investment income more appropriate to be held in it. Or more to that point, if you have a properly balanced portfolio and you own some bonds that are generating interest, you own some Canadian stocks that are better paying Canadian eligible dividends, you own some US stocks that are paying US dividends. Perhaps you have some investments that are just designed for the growth. Those different investments all combine to make a total investment portfolio. That makes sense when you look at it in entirety, but often certain individual portions of that overall investment portfolio, it makes a lot more sense to hold them in one particular account or another. So for instance, 4% of interest versus 4% of eligible dividend, you would prefer to hold the interest bearing investment inside of a registered plan inside of an RSP where you're not going to have that interest show up in a T-slip, and you're better off having that eligible dividend income show up in a T-slip where you get the benefit of the dividend tax credit. My point is that you don't necessarily want all of those accounts to look identical to look basically like little clones of each other. And you're often better off to have different particular investments of a certain profile in each of the individual accounts as much as you can to make up that overall investment portfolio. And it's not uncommon that we're actually able to save a client, a four or even a five digit number in taxes just based on segmenting the account, the exact same asset allocation, but segmenting it in those proper accounts for the most tax efficiency is possible. It's also behooves us when we look at how all those accounts work together to look for opportunities. And here at tax time, it's it's kind of too late now for 2020, with the exception of making an RSP contribution or possibly declaring yourself a dividend in your privately held corporation, pretty much everything's in the bag for 2020. So it's now just a matter of reporting. But there are different things that a client can do to help improve their tax situation. Sometimes, it can be as simple as a spousal loan, which if you're not familiar with what that is, if there are uneven incomes between one spouse and another, you can use a spousal loan and non registered investments to push a bunch of investment income onto the lower income earning spouse. And sometimes I've seen situations where we've been able to do that, such that it saves a five digit number in taxes each and every year, that you have that spousal loan outstanding. There's also other more complex methods. If if you're if you actually help your children out significantly and you send your adult children money to go and help them live their lifestyles, but you're just sort of handing it to them, you can perhaps set up a trust where that income is actually distributed to the children on a T3 slip, rather than just through your own after tax money. And you end up being able to use their tax returns and all of their tax brackets as well as your own. And and we are experts at sort of sussing out where those opportunities lie for any individual family and if there are opportunities there that we can go and find to go and save taxes. Absolutely. We we bring those to people's attention.

Well, for sure. I'm just thinking all those accounts and strategies would give me a headache if I had to go through all that So all the more reason to hire someone like yourself to do all of that so I can enjoy the everyday living of retirement. That's why you're there, right?

That's why we're here. And that's you know, that's not to say that there aren't people out there who are who are very capable of handling all of this on on their own. Because there absolutely are. But there's also a lot of people out there who have no interest in handling it on their own. And if and if they aren't paying a lot of attention, they might not be taking advantage of all of these opportunities simply because they don't know they're there. You don't know what you don't know. And that that's somebody who we absolutely can help.

Mm hmm. Well, that was going to be my next question. How involved are your clients on average with their portfolios? I suppose it just depends on the individual.

It very greatly depends on the individual and their level of interest. We have clients who are who are very sharp and pencil keeping track of everything right alongside us. And quite frankly, they're completely capable of doing it themselves. They just like the they like the idea of having that professional looking over their shoulder and making sure it's done properly. Or in some cases, one spouse is very capable of doing it themselves. But they know that they're the other spouse has no interest and they want to know somebody is there that they trust to handle this in a way that they approve of, to take care of their spouse or something ever happens to them. So you have have those situations and you also have situations of people who, you know, they're living their lives. They're they're retired. They want to travel. They want to go and do their own things. And they don't want to be bogged down by the details of of what of what we're doing for them. And they basically leave it completely in our hands. And quite frankly, some of those families, I almost have to twist their arm to get them to pay attention to it twice a year, to go and do the review and look through everything and see how everything's done. Because they just they really have no interest in it. People who know me, know I'm pretty handy, and I can actually do a lot of things on my own. But when it comes to doing stuff in my vehicles, I have like I could change my own oil, I could change the brakes in my own car. I have that ability and I have the tools to do it. I just have no interest in doing it. And I'm quite willing to go and let somebody else go and do that. There's other stuff I do around the house, though, to do with electrical and plumbing that I actually have a lot of interest in doing and I take a lot of pride in doing myself. And so people are like that about their finances too.

I suppose I would be in the category of I'm really lazy, so if I can find someone else to do anything, I'll let them do it. We only have about a minute or so. Any last thoughts or any last advice?

Oh, just the last thoughts. Oh that the the T5s are pretty much all out there for the 2020 tax season. We're now waiting on the T3 slips that have to come out for our clients who happen to be listening. We're preparing the gain loss reports and making all the necessary adjustments for return of capital where necessary. And those will all be ready for the normal times. Covid isn't going to go and slow us down on that at all. And if anybody listening does have any interest or have any questions, by all means, reach out to me at the office at 260-0568. I'd be happy to talk to you.

It is always so much fun chatting with you. I do learn a ton of things. Wade Kozak is from the Kozak Financial Group CIBC Wood Gundy. The website is kozakfinancialgroup.ca, and that phone number once again write it down (403) 260-0568. And you've been listening to Talk to the Experts on 770 CHQR.

Jan Full

CIBC Wood Gundy is a division of CIBC World Markets Inc, a subsidiary of CIBC and member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. Wade Kozak is an investment advisor and portfolio manager with CIBC Wood Gundy in Calgary. The views of Wade Kozak do not necessarily reflect those of CIBC World Markets Inc. Stephen Hunter is an investment advisor with CIBC Wood Gundy in Calgary. The views of Stephen Hunter do not necessarily reflect those of CIBC World Markets Inc. If you are currently a CIBC Wood Gundy client, please contact your investment advisor.

Welcome to another edition of Talk to the Experts on 770 CHQR. I'm Randy Sharman. Today, no stranger to talk to the experts he has Wade Kozak, really doesn't need much of an introduction, but we'll give him one anyway. Kozak Financial Group CIBC Wood Gundy. Their website kozakfinancialgroup.ca. More importantly, the phone number to call with your questions. (403) 260-0568. Hello Mr. Kozak, how long you been doing this now? Like I say, you know no stranger to Talk to the Experts. Don't need an introduction. Been doing this for a long time, I think.

I think I think we started doing the Talk to the Experts show about a year after I started it Wood Gundy and I started at Wood Gundy, I think, about 26 or 27 years ago. So it's it's been a quarter century Randy.

Before Skype.

Long before Skype. Yes. And here we are recording on Skype today.

Who would have thunk it? Twenty six years ago, you know, one day down the road. Anyways, I digress. Usually we like to talk about the markets. You kind of give a little bit of a market update for those who have never tuned in. So let's start there.

Or just kind of what's gone on here since we were I think we were on I think we were here talking to our listeners back in December.

Yeah, mid December, yup.

Not much has changed since then. Like the market has actually continued to improve. January to date has been great, notwithstanding the little decline we saw the markets take on Friday, yesterday. So the markets have actually continued to improve, continue to do well despite the Keystone News, which everybody in Alberta or most people in Alberta, I'm sure not happy to hear about that news. So but a global investor is actually doing very well here so far, month to date in January. What also has stayed the same is just how miserably low interest rates are are. Our constant listeners will know that we talk about investing in a portfolio of bonds. And I have to say, even as somebody who's been doing this for as long as I have, it's awful difficult to hold my nose enough and buy 10 year bonds that are only yielding 2%, especially when you can pick up some excellent quality blue chip dividend paying stocks with dividend yields of 5% plus. So the bonds still serve a very important role in the portfolio in that they are guaranteed and they have guaranteed maturity dates. But these days you look at the portfolio and you'll wonder just how much of your portfolio should you be allocating to something with that low of a yield?

Expand on the bonds for a minute. Now, why is that important? I think last time we discussed that back in mid-December, the whole idea of a balance and I think you also said the same thing about the bonds and the interest rates back in December. So not much has changed there. But why is it important when you have when you're looking at your portfolio?

Honestly, it's to give yourself choices, so as a retired person, if you are drawing money out of your account on an ongoing basis and maybe you need to time to time take a slightly larger sum out of the account to fund some larger ticket purchase or or expense. You want to make sure that you have choices of do I take this money out of the stock market side of the portfolio or do I take it out of the bond market side of the portfolio? Because the bonds just take along doing what they're doing. You can always access the bonds, the stocks. Sometimes you look at them and say, well, I really don't want to sell any of those right now. And if you want to make a withdrawal, you better have some bonds available to go and take the money from instead. So really, it's to have those choices. Or for a person who's gradually drawing down their retirement savings, who intends to shrink their overall savings pool through their retirement and attempt to have their last check written to the undertaker bounce, if you will. That person is is having to attack a little bit of their principal each year to gradually shrink the accounts over the years. And again, as you shrink the principal each year, it's nice to have a choice of well, that was a really good year for the stock market. So let's take that extra money out of the stock market side of the account or. Well, that wasn't a very good year for the stock market. So let's take this money out of the bond market side of the account. So it's important to have that balance and give yourself choices. And that's what the bonds do for you.

I want to ask you a little bit about goals, because that kind of sets into what was on my mind about that before you retire. I would think safe to say that most people and I'm just going to assume that I have goals of retirement. And so they sock away X amount of dollars. They put away money here and there, or they have their company retirement plan, whatever the case may be. But once you're retired, have you reached your goal or should there be goals after retirement? And you mentioned that when you wanted to write your last check, that would bounce to the undertaker. So what are some of the things that people should be looking at once they're retired?

Well, there absolutely should still be goals in once you're retired, because there is kind of a constant checkup that you have to take with your retirement portfolio to make sure that you're on track. If a person retires at the age of, say, 55, it's altogether possible that that investment portfolio has to run out for 40 years and be able to provide for a deposit into your bank account for a full 40 year period, which likely is longer than you were working, quite frankly. So, absolutely, there is planning and goals involved and and frequent checkups to make sure that everything is going as it should. One of the goals you should have is your annual spend goal. Like what? What is that target that you think year and a half to retire or pull out of the accounts each year to maintain your lifestyle and just double check to make sure that how much am I pulling out of these accounts? Is it going ahead of my plan or behind my plan to make sure that you stay on track over that long of a period of time? Usually someone who's retiring over that long of a period of time doesn't want to touch their principal. They don't want that last check to the undertaker to bounce because you have to have it last 40 years. And so one of the constant checks we do with our clients as we as we do our reviews is take a look at the accounts and determine despite the withdrawals, let's make sure the accounts are at least maintaining their value if they aren't even growing a little bit over time. So you have to have you have to have constant checks and have those goals of where you want to see these accounts to be at various checkpoints along the way.

And, of course, that's your job. That's what you do, is help people reach those goals, even define some of those goals, right?

Yeah. It's when you do a financial plan, sometimes you can target in right down to the lump sum cost of replacing a vehicle every X number of years into your plan and actually put those numbers in there to make sure that it all still works out. And that financial plan sort of exists and through retirement, not just heading up into retirement.

And we always talk about retirement, but I don't think we ever define retirement because I think everybody has their own idea of what retirement is. Right, like to me, like retirement is I don't think I would ever stop working. I would just sort of work on my own terms just for the simple fact I need something to do. Right. But that may not be retirement for somebody else. Maybe they just completely stop working. And I know they do nothing for whatever. Right. But what what is your definition of retirement?

I think it's close. Or to yours, I think it's closer to that financial freedom to choose what you spend your time on to, to choose the projects you might want to work on and not be financially forced into maintaining whatever whatever job it is that you did that was lucrative enough for you to save to be able to retire. So you want to again, I guess choices is a good word to use that you want to have choices as to what you do with your time and where you spend your energy. I can't think of a single person, of my clients or anybody else who retired and did nothing.

Mm hmm.

Now, whatever they did, it might not be for monetary gain, like it could be volunteering, it could be doing all kinds of different things. But, you know, if you're going to retire and do nothing, that probably isn't very healthy. And there's a whole different Talk of the Experts show we can talk about that on. Most people, in fact, almost everybody that I know who retires ends up having new goals and new things that occupy their time that they get passionate about and projects they take on. Sometimes it takes a year to make that transition and figure out what that's going to be. But almost everybody ends up coming back to me in a year as I do their review. And the comment they have is I don't know how I got time to work before, my my day is so full. Our our listeners can, I'm hoping they're nodding their head along with that. But that that's the experience that that that I have or that I can share, that I see my clients having and people that I know having.

Mm hmm. We are chatting with Wade Kozak, Kozak Financial Group. Their website is kozakfinancialgroup.ca. (403) 260-0568 is the phone number to contact Wade. We'll talk a little bit more about retirement and how to get your ducks in a row and planning for those goals and other questions about retirement with Wade when Talk to the Experts continues on 770 CHQR.

You're listening to talk to the experts on 770 CHQR, ah, I'm Randy Sharman. With me today is Wade Kozak from the Kozak Financial Group, CIBC Wood Gundy. kozakfinancialgroup.ca is the website and the phone number is (403) 260-0568. Before we left on our break there, we was talking about just the definition of retirement, what your ideas, retirement, what my idea of retirement is. But when people are looking at retirement, let's back up maybe five or ten years, how should they be sort of, you know, maneuvering themselves? So when that day hits, they can give you a call and things are a lot smoother.

So this often when people approach us, it's when they're that five or ten years away from retirement and they can kind of see it looming on the horizon, coming to greet them. And I'm not, panic is too strong of a word, but sometimes there's a there's a, you know, a moment of introspection and you take a look at sort of what you've done to prepare financially for retirement. And there's a lot of questions as to, well is this enough? And what do I have to do over the next five or ten years to prepare? And they'll they'll come in and they'll they'll show me their investment portfolio. And you can kind of see that it's a bit of a hodgepodge of this year they bought this particular investment because that was sort of flavor of the day and the hot ticket that year. And the next year they bought this other investment because that was kind of flavor of that day. And it's this mixture of things that doesn't necessarily work well together or there's no real cohesive, strong plan as to how this is supposed to work to generate that regular withdrawal one day to replace their their paycheck. And that's that's when our message tends to resonate well with with somebody out there who's looking at that portfolio. And then they hear us on the radio and they think, yeah, that sounds kind of intelligent. Maybe I should find out more about that. And that that tends to be when we meet them. And so we will encourage will encourage that that client to sort of give us give us as much information as they can as far as target retirement dates and expectations of how much it's going to take deposited into their bank account each month to go and keep them retired. And sometimes that's the toughest question to answer, Randy. If people, it's very difficult to get a handle on exactly what it is you're spending, especially if it's not something you're paying attention to every single day.

Mm hmm.

So there is an exercise you have to go through, and this is something that I can't do for anybody. They have to figure out what is our burn rate. And what I mean by that is how much does it take flowing into the bank account each month to maintain their lifestyle that they're accustomed to? Because that's kind of a starting point that we have to build on to work backwards and figure out, OK. So what does that investment portfolio have to look like on retirement date to provide that? And that's really the cornerstone of what it takes to start building that picture.

And you do want to be doing this a few years out, at least I would think it's not like I want to call you tomorrow and say, hey, Wade, I'm going to retire. And I have no idea and I have no idea how much money I have or how much I should have. And my job is done tomorrow because I've retired.

That that happens, right? I've met people like that who really they're so focused on what they're doing and other things and and they just don't find their investment accounts and their retirement savings that interesting. And so they don't really think about it too much. And I have met people and in fact, I talked to one on Friday who was sort of sheepishly confessed to me that, you know, I really don't pay much attention to any of this as they are sort of sorting through different papers to try to figure out just exactly how much they had because they didn't know. And that's that's not uncommon. And that's our job, to help those people sort through that, build a comprehensive picture of what things look like right now and then help build the plan to show them what things should look like in order for them to be able to use those financial assets to provide a cash flow for themselves. So that's not uncommon at all. And honestly, that's what we do right in the same way that. I can change the oil in my car, but I don't have a whole lot of interest in doing it and so I get somebody else to do it. People often don't have a lot of interest in this day to day, but it's very important that it gets done and it gets done well.

Mm hmm. Well, I would I would venture to guess that the vast majority of people are in that category have no idea. It's just something that they get a statement every six months or quarterly or something, and then they throw it aside and then suddenly or maybe there are even these days forced into retirement due to downsizing or something like that. And now suddenly they're forced into it. And financially, they may be OK. They just don't know that yet. Right?

Right. And that's, again, often a common scenario. I think the statistics show that only one third of people actually choose their retirement date. Two thirds of people have their retirement date foisted upon them by circumstances, whether it's a layoff or whether it's a health issue or whether it's a health issue of a parent, that they have to take time to go and sort out. But their retirement date is actually dictated to them by some outside force. And that's one of the reasons it's so important to have a handle on this and have those investment accounts looking like a pension plan so that it's ready on a moment's notice, should it be called into action to start sending a withdrawal up to the bank account.

Mm hmm. So I have made the call or I'm going to make the call the Wade Kozak. What what questions should be on my mind that I should be asking you or that that get asked to you more often than not?

I guess more I guess more often than not, the questions that people come in with are are the the size of the team and the scope of the team and how much service they can expect to receive. How much contact they can expect to receive from us. And we have very formalized processes for for dealing with all of our clients and reviewing the accounts. I think I think more so it comes down to the philosophy, though, of how we invest for our clients. We have a very strict methodology of how we invest retirement assets for our clients in a way that we know is going to work out, regardless of whether the economy does well or poorly in the next year, regardless of whether or not the stock market does well in the next year. Because just imagine for a second somebody who saved up their own pension plan because they they had to they weren't part of a pension plan and they retired on February 1 of 2020. And you know, the 2019 was a great year for the stock market. Everything's looking really good. They set it all up that they're going to start taking a certain withdrawal out of these investment accounts and to help pay for their retirement expenses. And then, boom, March comes around. Markets drop with the with the Covid news and the fear about GDP. And suddenly there is tons and tons of fear that's just palpable in the air. You can cut it with a knife. And you just stopped working two months ago and you see your investment portfolio take this very steep drop that can be debilitating and actually cause people to have health issues. It can cause them to worry so much. And so it's really important that that retirement investment portfolio is designed to send out that cash flow to the bank account through thick and thin. And despite shocks to the market like we saw in March of 2020, like we saw in the financial crisis of 2008, like we saw in the Asian flu crisis of 1998, like we saw in 1987, like these things happen with a certain amount of regularity. And if you're going to be retired for potentially 30 or 40 years, it's going to happen several times while you're retired. And so you better be prepared for that. And the investment portfolio better be designed to withstand that. And be able to send out that income into your bank account without fail, because when you were working, it was more of a academic process that, oh, look, the accounts are down. Not very happy about that. I'm going to go back to work and get to you earning money and continue saving. But it doesn't really have an impact. But if you're retired and you're relying on those accounts for that regular withdrawal into your bank account and you see the accounts take that kind of a tumble, you better have a strong plan in place that you understand how it's going to work. That gives you the confidence that yeah, this is no big deal. We knew this was going to happen eventually. We're going to weather through this and we have a plan such that that cash flow is going to continue into the bank account. We don't have to start taking the withdrawals and not be able to afford groceries.

All the more reason to be giving you a call because you want to have someone that can give you that peace of mind and give you that advice. (403) 260-0568 is the number to call Wade Koazk from the Kozak Financial Group, CIBC Wood Gundy. You can check out their website, kozakfinancialgroup.ca. We'll chat with Wade Kozak. More from Talk to the Experts when it continues on 770 CHQR.

This is Talk to the Experts on 770 CHQR. Our I'm Randy Sharman today. We've got to wait Kozak, not in studio. Usually I say in studio, but via Skype these days from the Kozak Financial Group, CIBC Wood Gundy. kozakfinancialgroup.ca is the website. The phone number if you have questions (403) 260-0568 or for sure, if you want to set up a meeting, it doesn't cost anything to set up a meeting, does it, Wade?

No consultations to fill out whether or not it's a good match or are completely free of charge. And we always flesh out in greater detail exactly what those investment portfolios would look like, exactly what that investment income might look like in that first meeting.

What do I need to bring? Again, let's continue with our discussion on that first meeting and when I decide to call you, I would assume that some of these documents, these statements are that easy to get or do I really need them a consultation at the start?

You don't necessarily need the statements, but you need at least a listing of. So so typically we'll start that meeting and I'll say, OK, like, there's there's two ways to run this. Either I go first or you go first, Mr. Prospective Client. And what I'm looking for there is basically a thumbnail sketch of their financial picture, which they all share with me. And I'll ask some some questions to sort of fill in some blanks to get a sense of exactly where they're at financially, where they hope to be, kind of what the path they took to get there and what some of their experiences have been. Because really, to a certain extent, we're a collection of our past experiences and how what they've experienced in the past and why they're looking to make a change. And then with that information, I can very clearly provide a pretty dialed in picture of what we would be providing for them. And what the value would be they would be getting from that and the kind of goals that I think they should be setting. Sometimes there's some homework of missing bits of information that we have to collect to go and build the complete picture. But if you just come in with kind of that that overall financial picture of here's roughly how much I have in RSPs, here's roughly how much I have TFSAs, in Ron registered investment accounts, in the corporate account that I'm consulting through. Here's how all of those investments look and roughly the overall balance we have right now between the stock market and fixed income and and go from there. And that's generally enough to get started with so that we can give a very clear picture. One thing the client wants to look for in that first initial meeting, whether it's with me or anybody else out there, is people, you know, once they get to that age, they're pretty good at sussing out of is this a sales pitch or is there substance here? And you want to you don't want to feel like it's a raw, raw sales pitch of somebody promising you all kinds of ridiculous things that sound wonderful, but you know deep in your subconscious brain aren't really deliverable. And if and if that's the message you're getting, then that's probably not somebody you should be dealing with. But if the message they're giving you has more substance to it of what they'll be providing and how they intend to get you to the goals that you have, then then you can feel more comfortable. But you have to have a certain sense of, is this sales pitch or is this substance?

Mm hmm. And of course, this is how you make a living, there is a built in fees attached to that. Explain that because, you know, there are other companies out there that the do it yourself kind of thing that that advertise the fact that, you know, that you can save money on your retirement by doing yourself. Explain the process now.

So when you're setting up the accounts, typically we work on what's like a discretionary fee basis, meaning that there is no transaction cost to any individual transaction. So all the transactions occur without any friction. And that means you can make big transactions, small transactions and the same in the same way without any kind of worry. How we charge on the accounts is is a fee based on the value of the account. And typically on the fixed income side of the account, we don't like seeing a charge any greater than 0.5%. So about a half a percent per year, which quite frankly, I could put up against any of those low cost providers, et cetera, and we'd actually come out looking pretty good. On the equity side, it's a little bit more expensive and it depends on the size of the equity portfolio. But typically on a on a normal balanced portfolio for a client, generally, their overall cost of running the account is somewhere between 0.7 and 1.1%, depending on the size of the account and how aggressive they are on the equity side versus the fixed income side. Which again, I can look anybody in the eye and tell them that and not be embarrassed. I think it's I think it's a very fair amount that that works well for both of us.

Mm hmm. Exactly. I know this is going to sound like a silly question, but what's the difference between someone who's single and approaching retirement and someone who's married approaching retirement, other than the obvious that one has a spouse and the other one doesn't?

There is a difference, and it actually can be quite significant. So. Once again, married people have an advantage here in that they have two tax returns to split their household retirement income between. That, even if even if over the years there was one major breadwinner who did most of the savings, the investment income, the retirement withdrawals, the RIFF income can be split between two different tax returns. And typically a couple ends up paying significantly less tax than a single retired person with the same assets to invest. So much so that it's actually part of our our planning process when when a couple is first retired and suddenly all of the income they have to declare is really just the investment income and the RIFF withdrawals and all of their financial assets. We take great care to maximize the withdrawals we're taking from those registered plans to use up those bottom tax brackets while there are still two taxpayers to split it between, because often after a person is retired, the single greatest tax event in their lives is going to be when one of those partners ceases to be with us. And suddenly all of that retirement income is now only showing up on one tax return. And typically the average tax rate significantly jumps. And it's it stands to reason that we should attempt to use up those tax brackets as good as we can while we still have to taxpayers in front of us to make those withdrawals. So it is pretty significant that there's also the disadvantage of a single person has that typically there's just one income to base all their savings on and their cost of living is generally higher. It still costs them the same to buy a house and run a house and do all of those things. And so it's sometimes harder for a single person to carve out that amount of savings. They should have to go and hit their financial goals. So there are there are major differences and most of them have to come down to tax.

And I did use the example of, you know, I'm retiring tomorrow, whether it's forced or chosen, but I don't want people to get the idea that just call you the day that they're retiring. You want to plan ahead before retirement day. So it is a good idea to call, you know, 5, 10 years, even 20 years out. Is it?

A hundred percent, yeah, it's so most of the clients that that we meet are typically 5 to 10 years from their retirement date when we meet them for the first time. And they're there suddenly again, I don't want to use the word panicking. That's the too strong. But they're certainly thinking a lot more about, OK, what's it going to take? And like I can see retirement move, like it was always this sort of very abstract concept until you're like 5 or 10 years away. And then it's like, holy mackerel, it's just around the corner. I better start thinking about this. And sometimes there's a little bit of a, you know, calming down that I have to do when I talk to that person for the first time and they say, oh, my God, I don't have nearly enough and I've only got ten more years to save. And I have to tell them, like, look, it's don't panic. Most people save the bulk of their retirement assets in those ten years prior to retirement, because if you think about it, those are the years that your house is paid off. If you have kids, you've paid to get them through university and they're launched on their own and paying for themselves. You have no debt. You're making more money than you ever have before because you're kind of at the peak years of your career and you have more free cash flow now than you ever have before. Because the mortgage payments gone. The kids are through university. But but you're making more money than you ever were before. And so most people end up saving the bulk of their retirement assets in those final ten years before retirement.

Well, that's good news. Wade Kozak is from the Kozak Financial Group, CIBC Wood Gundy. (403) 260-0568 if you want to set up an appointment, no obligation. kozakfinancialgroup.ca is the website. And we've got more to learn about retirement from Wade Kozak when Talk to the Experts continues on 770 CHQR.

Welcome back to Talk to the Experts on 770 CHQR. I'm Randy Sharman. Via Skype, joining us today is Wade Kozak from the Kozak Financial Group CIBC Wood Gundy. (403) 260-0568. kozakfinancialgroup.ca is the website. We did mention previously in our segments here about people being forced into retirement. I mean, I think you mentioned two thirds of the people that come and see you have been forced by some reason into retirement. I'm going to give you this scenario. Somebody's been laid off. They get a lump sum payment out and they're really close to retirement. They can probably do it, but they have this lump of money they're not quite sure to do and get them over the hump into that retirement phase. What should they be doing? After they call you of course.

There are some you're some time sensitive stuff in there, too, Randy. When you're when your employer comes to you and offers you a package, essentially. Normally, like, you often want to have to review that package and see if you're happy with it or see if you want to try to press a little more to negotiate on it. But a certain portion of that can often be rolled directly into your RRSP. And so it's not shown as income in that one giant lump sum in that particular tax year. Sometimes you have to ask for it, but you can defer a portion of it to the next tax year. And that could actually be a huge boon to you that rather than if you can defer one hundred thousand of it to the next tax year when your income is going to be far lower, that can that can save you a lot of tax dollars. So there's a few things to consider there. And there is often going to be some pension choices you have to make that you were in their defined contribution pension plan or their defined benefit pension plan. And they're now going to mail you a statement saying, here are your choices. You can take the commuted value and move it into a lockdown plan. And this portion is taxed. Or you can take this monthly pension. And there's a whole lot of choices and a whole lot of stuff to go through and a whole lot of paperwork that you've probably never seen before that has to be filled out and dealt with. That's something that we can help all of our clients with, as they're going through that process to make sure it all goes very smoothly and to make sure that you're not missing anything obvious that that should be done, since this might not be something you've ever done before, quite frankly. So, yeah, there's there's a lot of moving parts in that. I've met city workers and firefighters who are showing a seven digit number as the commuted value of their total pension plan, but a full quarter of it can't be transferred into a locked in retirement account. It has to be taken as taxable income, if they take the commuted value. And perhaps some of them have never actually invested a dollar before in their lives, like they've never bought a stock or a bond or anything and have no experience with that. And they're now having to make a choice of do I handle this all on my own as as an investment or do I take this monthly pension? And I'll say to you right now that in those cases where you've had very little experience of investing money in your own, usually taking the monthly pension is the best option. And if you want to judge my sincerity in that, you can carefully work out how much how much of a fee I make if you don't become my client and take the pension. Because imagine a person who's never had any experience running their own accounts and suddenly they have a two million dollar account, that, you know, back in June as the market was rallying, suddenly it backed up 10% and that account might have been down one hundred and fifty thousand dollars in value. And like that person who's had no experience before investing might make a panic decision and end up hurting themselves in the long run just because they're somewhat inexperienced and have never dealt with an account this size. So there's lots of there's lots of psychological little tricks that you might play in yourself and going through those decisions. And you need somebody you can trust to to help you make that decision of how do you handle this lump sum of money and what should you do?

Wow. That's a scenario in itself is enough to get me to pick up the phone. (403) 260-0568 if you have questions, or want to set up a meeting with Wade Kozak from the Kozak Financial Group, CIBC Wood Gundy. We did mention taxes throughout the show today. It is becoming tax time of my looking on the calendar is correct. This is a busy time for you?

It is. And I'll just say saying, Randy, I hope that we can record this in the studio again one day when I can actually and I can actually see you across the desk. And I'm not staring at my laptop screen as I talk into it.

It's not really fair. People should know I can see you, but you can't see me. That's just the way the computers are set up in our studio. They don't have a camera. That's all. There's nothing personal.

I'm staring at my own face and my laptop screen talking to myself, which is which is a little distracting sometimes.

Back to my question. Taxation, it's tax time.

Yeah. So we're in January. There are a few things people should be thinking about. One of the more obscure things is if you have a spousal loan outstanding, you have until the end of January to make the interest payment for 2020. And if you don't make that interest payment by January 31st, it can spell bad things for you or for your spouse alone in the tax savings you're making there. So that's something that's very important to get done. Something else, it's less obscure. But if you have an education plan for your children and one of your children is attending university, even it's even if it's virtually and remotely, you should look at making an RESP withdrawal for them. And getting the paperwork for your kids that you need for that proof of enrollment to go and facilitate making that withdrawal. If your kids are like my kids when they were in university, getting that proof of enrollment can sometimes be like pulling teeth. But let's you want to get that withdrawal done every single year that you have that student there and get that grant money out and taxed in their hands. Elsewise, like 2020 is now in the bag tax wise, except for the RRSP contribution room. So if you haven't made your 2020 RRSP contribution already, you should be digging out your notice of assessment and determining how much contribution room you have and then sussing out how much income you're going to be showing in 2020. And then making a determination of should you be making a contribution and if so, how much. And that's something that we can help all of our clients with. Or if you're one of the early birds, you can now make the contribution here for 2021 if you know how much you want to make for 2021. So those are the those are the timely things right now. TFSA I'll also mention, every Canadian eighteen years of age or older again has their six thousand dollars of new TFSA contribution room for 2021. So honestly, for the past three weeks, that's one of the things we've been spending a lot of our time doing at our office, is touching base with with lots and lots of clients and squaring away those TFSA contributions.

Just another one of the things that you do for your clients is help them with the taxation. We have a couple of minutes left. Any other thoughts that I may have missed over the last hour?

It looked like we've had a we've had a great run on stocks here through the through the fall for the US presidential election, through December and now into January. If you think back to the sell off that occurred in March. Since then, I think we've had while the market's been rallying, we've had three significant pullbacks, I think one in June, one in September and then one towards the end of October. And each one of those pullbacks probably was like between 8 and 10%. Where the markets backed up a little bit. Wouldn't surprise me if if we're due for a little bit of a pullback here again. I don't think it's anything that we should be panicked about. It's generally when the markets have a nice, steady rally like they've had for the last month and a half, you should expect a little bit of a backing up.

He is Wade Kozak and he is the expert, that's why you want to call him (403) 260-0568 set up an appointment, no obligation, doesn't cost anything. You can figure it all out. Kozak Financial Group, CIBC Would Gundy, their website, kozakfinancialgroup.ca. We always learn so much from you, Wade. Thank you so much.

I tried to be informative and happy New Year to you and your family, Randy, and look forward to talking to you next time.

And you've been listening to Talk to the Experts on 770 CHQR.

December complete

Welcome to another edition of Talk to the Experts on 770 CHQR, I am your host, Randy Sharman. And joining me today via Skype is Wade Kozak from the Kozak Financial Group, CIBC Wood Gundy. Hello, Mr. Kozak, how are you?

I'm great, Randy, how are you doing?

I'm well, thank you. I forgot to mention your website kozakfinancialgroup.ca and of course the phone number, which is very important for people to contact you (403) 260-0568. So last time we spoke, there was this thing going on called the U.S. election that hadn't occurred. So I'm assuming a lot of things have changed. We usually like to start our talk to the experts with you about the markets and what's been going on. I'm sure that's had an effect.

It's had it's had a definite significant effect. There's no question about it. If you recall when we were here, I think it was October 24th.

Something like that.

We were we were on on the show last. But yeah, we were a little ahead of the US election. There was a lot of insecurity and concern. I feel that a lot of phone calls during honestly during the months of September and October from clients who were posing the question to me, should we be getting out of the stock market in advance of this US election and the Gong Show, it looks like it's going to be because, you know, perhaps there's going to be a lot of volatility in the markets, could get crushed, et cetera, et cetera. And as usual, the advice we gave was to maintain the balance, but hold the investments that you do, knowing that those are good companies that make profit, regardless of who's president or how this turns out. And once again, it was proven that that not taking gigantic steps to try to avoid something that that you're perceiving in the future is generally the right thing to do, because post US election, the markets have just exploded around the world, quite frankly. And the month of November, 2020 there's one more day, yet to go on Monday. And we don't know what that holds, but to date, the month of November, 2020 is one of the best months I've ever seen in my career in the stock market.

Wow.

Pretty much across the board, the big markets around the world are up about 12% in that one month alone, which is honestly not a bad year. Pretty good year.

I would think so. I feel like I missed the boat.

It's now I don't think that necessarily is the case. And, you know, traditionally in November and December are both relatively good months. You know, there's no guarantee of that, of course. But they call it the Santa Claus rally for a reason. But it's nice to see the markets responding that way and having a bright spot to share with people amidst, you know, the depressing weirdness we have going on in the world right now and the the new lockdown measures that Kenny is imposed on us and, you know, not being able to share our homes with our friends, et cetera, and facing this over the winter months, you know, it's kind of gets me down a little bit. I don't know, but everybody else out there. But it's a nice bright spot amid all of that.

Mm hmm. Well, and going back to your point about the markets before the US election and all the speculation around that and what really happened, that just falls on the on your philosophy of just staying the course because you don't want to get into that guessing game, right?

That's right. And what we're really seeing here, which I'm kind of excited about, is a little bit of a rotation. So during the month of October, that rotation started in a fairly weak way, where on days that those stay at home stocks, the the great big technology companies that have done very well through the Covid lockdown's, et cetera, which have driven a lot of the market rally that we've seen here in North America since March. Whenever those stocks were kind of weak during October and especially in November, the stocks that were very strong were those blue chip dividend payer that the typical value stocks. And we start we started seeing that rotation in October, but it really took hold in November with the announcement from Pfizer of the efficacy of their vaccine. And so here we are kind of dealing with one hand personally of we're still in  lockdowns, we're trying to get the Covid numbers down. There's a lot of concern about what this means for the economy over the next few months. But the markets are already looking 12 months, 18 months down the road. And so and that's why you sometimes get these weird dichotomies of unemployment numbers worse than the US. GDP is still creeping higher, but not at the same pace as it was sort of post the hard lockdown's in the spring. And yet the markets are exploding on and essentially the markets are exploding and doing very well because they're looking down at what those corporate profits might be 12 months and 18 months in the future. And that's why you have this kind of disconnect between what's happening right now today in our real lives. And what's happening in the stock market.

Hmm. Well, and what you're talking about is just part of the homework, for lack of a better word that you do for your clients so they don't have to do. You're watching this all the time. This is kind of your your forte. And so for your clients don't have to do that, right?

Yeah. You know that we're at the helm and we're we're making sure that the way the portfolios are constructed is rational, that it's not based on a bet that something's going to work out, that these portfolios are designed to get a reasonable rate of return in a pension plan like way and generate a certain amount of cash flow. That especially is useful to those retired clients who want to make a regular withdrawal and at all the pieces of all of those accounts, have to work together towards that common goal of of that collection of all those investments. And then which pieces of all of those of all of those investments are best suited to put in each of the accounts for tax efficiency reasons or anything else. But, yeah, that's that's our job to sort of make sure that that plan is rational and will work.

When you say pension plan kind of way to people, kind of forget that that you are talking about people's pensions. It's not like they can go back to work after they've been retired for 10 or 15 years. Some might be able to do that. But in the real world, this is kind of like the last shot at doing it right.

I like saying that you don't get a chance to go back and try again with your retirement portfolio. Like once you reach retirement, what you save there, that's it. And so many of us don't get to choose our retirement date. The retirement date is chosen for us either by a health issue or a layoff or something like that. And so you better be ready for it. And we take that very seriously that that these accounts have to be there and have to look like a pension plan. Especially in especially this year, there's there's a tendency to want to stray from that, because when you look at the market move, like I said, in North America since the end of March, about two thirds of the run we've seen in the stock market has come from only six or eight or 10 stocks. It's been a very, very narrow rally amongst a very small number of giant cap growth names, that has driven most of the stock market rally to this point. The last time I saw a stock market rally that was this narrowly focused on just a small number of stocks in a very small number of sectors. It was 1999 just in advance of the of the dotcom crash. Now, I'm not saying that's going to happen again. You know, things don't happen the exact same way twice ever. However, I'm seeing things happen that remind me of 1999 where people are literally having to make up new methods of valuing stocks so that the prices they're trading at can make some kind of sense. And you're hearing people say things like, well, price earnings ratios don't really matter anymore in this new world because of insert argument here. But quite frankly, those arguments generally come to knot whenever that's that's happened in the past. And you see stocks then that are priced for perfection. I think it was about, gosh, was it three or four weeks ago, Intel announced their earnings after the close and the earnings like they earned money. But it wasn't quite as much money as the market was expecting. And the next morning it opened down, I think 14%. That's the kind of thing that can happen when a stock is priced for perfection. And so those best those those growth names that have done the best since March, they're now trading at levels, in my opinion, that they better hit the top end of all of their growth targets over the next number of years or else they could be punished in the stock market a little bit. And you're seeing a lot of agreement with that opinion, with that rotation to value that we've seen during November where money has been exiting those stocks to a certain degree. And where has it been going? It's been going into those quite undervalued value, dividend paying stocks.

We're just getting underway, chatting with Wade Kozak from the Kozak Financial Group, the website kozakfinancialgroup.ca. And that important phone number (403) 260-0568. If you have questions, make sure you call that number. We're going to talk a little bit about interest rates and some of the other things that you do for your clients with Wade Kozak When Talk to the Experts continues on 770 CHQR. We left off talking a little bit about the markets and the effect the US election had on that and some of the other things. But I wanted to get into interest rates because it seems to me that depending on what side of the interest rate you're looking at, whether you're borrowing or whether you're investing, it can be a good thing or a bad thing. Am I right on this?

You're right. I mean, what's really triggered me to talk about it today is that the Bank of Canada, just before the weekend essentially came out and did something that they don't do very often. They came out and basically said, you know what, interest rates are going to stay really low for a really long time and just kind of get used to it. Normally, they're a little more circumspect and, you know, don't give you that clear of an idea of exactly what's going to happen. But it is clear away, as they could before the weekend, they let everybody know that rates are low. And if you want to if you're going to want to make any money on with your investments that interest rates are going to be going any higher any time soon. So maybe you should do something else with it. And I think that's sort of a wake up call to a lot of people. But we've honestly been seeing this for the last number of months. And I want to highlight a difference right now. So so right now you buy a 10 year investment grade corporate bond, and I'm talking like a good corporate name like Bell Canada or Telus or Brookfield Asset Management. About the best you can do on a 10 year bond is around two point one percent. And our constant listeners will know that we've always been those people who say, here's your balanced portfolio, here's your bonds. You buy a one through 10 year ladder. Every year those bonds come due, You just go and buy the new 10 year term. Don't worry about what the interest rates are. It all comes out in the wash. You'll get the average rate over the next 10 years. But even for someone like me who's been following that mantra for a 27 career, I bulk a little bit at locking up money for 10 years at a 2.1% rate, especially when if I buy the common stock of that very same company that's issued the bond. Telus or a Bell Canada, I can get a dividend yield currently that's between five and Bell Canada's around 5.8% Right now. So two and a half times, sometimes nearly triple the rate that I can get on income from that bond. Now, the bond is guaranteed, but it's really hard to imagine a world where if you put a hundred thousand dollars into each of those investments, one hundred thousand dollars into the bond, a hundred thousand dollars into the common stock paying that dividend rate. Wait for 10 years, it's hard to imagine the world where after 10 years, that bond investment is the better performing investment. And that spread between those two different yields is as large as is larger than I've ever seen it in my entire career. And that leads me to think that those blue chip dividend paying stocks right now are actually representing pretty good value, at least better value than that bond. I don't know necessarily whether that's because the stocks are cheap or whether it's because the bonds are expensive or maybe a little bit of each. But on a on a valuation basis, I find those stocks are actually a little bit better valued. And I think an investor today could be serving themselves well by still maintaining that latter, but leaning a little bit heavier towards those dividend paying stocks for that cash flow. And the reason I say you have to maintain that bond ladder is that the bonds serve more of a purpose than just the fantastic rate of return you hopefully can get on them. They also moderate the volatility in your investment account, in your retirement plan or in your pension plan, even in a year when interest rates are rising dramatically. Those bonds won't drop in value in nearly as much as the stocks could drop in an in an ugly year in the stock market. And so it's still moderates the volatility. It still gives you some guaranteed money maturing. And if you have to make a withdrawal that year and you have to make a choice of do I sell some stocks or do I use some of this bond that's maturing, you want to have that choice. So you need some of those bonds maturing. So you still need them. But at this rate where the valuations lie, I think maybe you don't need quite as many of them.

When you talk about a 10 year letter, so to speak, are you talking I'm imagining that like a, like a ladder. When you're on the bottom rung and you're cashing out that bond, you're going to take that money that you're cashing out and buy another bond to go to the top of the ladder. Am I sort of getting the gist of what you're talking about?

That's exactly right. Lots of people out there who who invest on their own will build a GIC ladder and go to the bank and simply buy a five year GIC every year. And after five years, they have money coming due every single year in the form of that GIC and rolling it forward. And you're only ever buying a five year GIC. We do the same thing except on a 10 or possibly an 11 year bond ladder, typically where we're buying government and corporate bonds, always go out to that 10 year date such that clients have money coming due every single year and have access to some of their capital in a guaranteed way every single year.

And it's not just about the interest rate, as you explain. When you say two percent, people might go, oh, my gosh, I can get a better rate somewhere else. But it's not all about that because as you mentioned, if you needed some cash flow, you're not dipping into your stocks. You have some available. And and it's sort of more of a stabilizing factor.

Exactly. It's a stabilizing factor that moderates the volatility in your pension plan, because the whole point to a pension plan is to give you comfort that you're going to be taken care of through your retirement years. Your pension plan should not be a source of stress that you're looking at it and worrying about what might happen or what will happen in the stock market. You should be able to look at your pension plan and have it give you a sense of comfort that look at this, it's going to generate this withdrawal for me every single year, regardless of what happens in the economy, regardless of what happens in the stock market, I'll be able to make that withdrawal with confidence every single year. And I would invite everybody out there who's listening that if you don't have that confidence, when you look at your investment portfolio to give us a call at 260-0568, and I'd be happy to walk through with you on the telephone right now, not necessarily in person, exactly how we might set up a portfolio for you so it looks more like a pension plan and be a source of comfort and not stress.

Is that what a lot of people start with that starting point, right there is what you're just talking about. The kind of go, oh, my goodness, I don't know what I'm doing here, I better make that phone call.

Yes, sometimes they usually do some sort of catalyst behind the phone call that something's occurred that's either shaken their confidence in their current advisor or they've come to realize as they start getting closer to retirement that their investment portfolio looks more like a like a series of bets. It's not uncommon to meet somebody and you look at their investment portfolio and you can almost you can almost see the exact time line that every year they made a contribution. And whatever was the flavor of the day that year, that's what ended up getting purchased. And you get this mishmash collection of all kinds of these different investments that don't really make a whole lot of sense in aggregate when you look at it all combined. And they're starting to come to realize that there isn't a cohesive, logical plan of how this is going to turn into a monthly check being deposited into their bank account in retirement. And when a person comes to that realization, suddenly our message that we have about we're all about the income, that cash flow is king. Make sure that cash is arriving to fund that withdrawal so that you're not relying on the stock market to go up to to fund your retirement withdrawals. Suddenly, that message resonates a great deal. And that leads to that phone call.

And that phone call starts by where or with this number (403) 260-0568. Again, the website kozakfinancialgroup.ca. We are chatting with Wade Kozak from the Kozak Financial Group, CIBC Wood Gundy. We talked a little bit about interest rates in the markets. That's just a few of the things that you offer your clients. So we'll get into some of the other things that you do. I use I made the note here about paperwork. There's lots of paperwork that goes along with the things that you do and you handle that and a lot more. So we'll continue chatting with Wade Kozak from the Kozak Financial Group, CIBC Wood Gundy. Again, that phone (403) 260-0568 and Talk to the Experts continues on 770 CHQR after this. We talked about interest rates and the markets and some of the things that you offer your clients. Let's talk about some of the other things you do. It's not just about dollars and cents, although that's a big part of it.

It is. You know, and honestly, we kind of get caught up on that, especially when we're we're talking here on the radio and talk to the experts, because everybody's most interested in the financial management side of things, the investment selection process and all of that sort of thing. But that that amounts to about a quarter of what we do for our clients. And so there's a whole lot more we do. I mean, you mentioned paperwork and that's, you know, absolutely. Obviously, we handle all the paperwork with these things. But kind of beyond that, there are certain functions that the average client will only ever have to do once in their life. So I'm talking about rolling over an RSP into a RIFF or more complicated, rolling over a LIRA into a locked in retirement account from a pension plan into a life income fund and the complications behind the one time unlocking opportunity you have. And so the average client out there, they only have to do this once. They don't really think about these things a lot. And they're sometimes pretty complicated. And you have choices to make, especially in the case of those those locked in plans that you only get to make once. And this is something that we do every day, right. For all kinds of clients. And we could kind of break it down in very simple terms that for your circumstance, this is the absolute best way to handle it. And here's why. And the clients then get the benefit of our decades and decades of experience, of doing this over and over again and knowing the ins and outs of all of this paperwork and how to get it done. Naomi on our team is probably going to shoot daggers at me on Monday for talking about this. But it's it's also difficult sometimes to deal with transfer agents if anybody out there who's listening has ever dealt with a perhaps a parent who passed away and they had some stock certificates sitting in the safety deposit box, and then they were left with the job of having the name changed on those stock certificates from mom or dad into their estate or to a beneficiary. They'll know the absolute difficult, near impossible process it is to go and deal with the transfer agents who are not very customer service friendly because that's not their job. And it's it's not infrequently that our clients will come to us after having tried to handle this process and say, like, look, I just can't get this done. And at least we understand the process that has to happen and, and know exactly how to sort of deal with that transfer agent to get those processes done, which are very difficult even for us to deal with the transfer agent. But these are those are just two examples of the administrative side of what we do for our clients. That can be a little bit daunting if if you're doing it yourself or don't have a very, very good understanding and good knowledge of all this. And it's really handy to have somebody who can walk you through it and give you all the benefit of the experience that we've had over decades of doing this over and over and over again.

Mm hmm. So if someone does have a financial advisor now and they're not really happy with them, how do they make that leap? I can't imagine calling you up saying, you know, hey, Wade, I heard you on the radio, but I have a financial adviser. Or does that happen more often than not?

It does it typically there's some there's some kind of a an event, right, whether it's a loss of trust or something happens that causes that person to say, you know what, I'm not happy here. I want to make this move. And then it's then it's an interview process where they generally sit down with with two or three or four different potential people to deal with and see who has the best fit with them. And, you know, I'm used to I used to sort of those those meetings where we are describing our process and how it might work for them. It's you know, but it's a fairly painless interview process. And and from there, the account transfer process also can be quite simple. It's just simply a matter of opening up accounts at the new advisor's office. In this case, it would be with us at CIBC, Wood Gundy, and we would open up the RSPs, the TFSAs, the joint non registered accounts, perhaps a corporate account, whatever accounts we needed to, to kind of mirror their existing accounts and then transfer everything across in kind. Those securities would come across as the existing securities there are, typically the the institution you're transferring from charges use some sort of transfer out fee, which we offer to cover. So it actually doesn't cost anything to go and move those accounts across. And then once all of those assets assets are across, then we sit down again and discuss and agree on a plan to how are we going to set these accounts up and to be that pension plan that those clients now want to set up.

When you're talking about this administrative work, is that just part of the whole package?

It is. And it's just, you know, that that account administration that we provide, which I just gave two examples of, that amounts to about another quarter of what we do. So that and the financial management, the management of the assets and the and the investments makes up about a half of what we do. We've spent a lot of time talking on the Talk and the Experts show here about some of the tax efficiency processes that we help our clients through. And that's probably another 20% of what we do for our clients is looking at their circumstances and determining is it possible we can save you $20,000 a year on taxes with a spousal loan? Is it possible that there are ways we can structure your accounts that make them far more tax efficient? Are you taking full advantage for a retired person of the particular tax bracket you're in without bumping you into a clawback position so that we can, in the most efficient way possible, gradually drain your RSPs through your retirement. Like there all of that math. And that's there's a big part of that happening right now, this time of year, making sure those RSP withdrawals are done, et cetera. That makes up about 20 percent of what we do. And we then I guess we do we do spend a lot of time talking about that here, here on the show as well.

When I when I mentioned the full package, though, what I was kind of getting at is you're not nickel and diming your your clients like you're not sending them a bill after you do all the the administrative things and those extras, right?

That's all inclusive of of the of what we charge our clients to deal with us. I would say on a on an average million dollar balanced portfolio, our average client is probably paying us somewhere between one and 1.1% to go and run those assets. That's a number that I can look anybody in the eye and not feel embarrassed about on a million dollar account. If if you're being charged more than that per year, I think you probably should examine exactly what value you're getting for that number. And if you're unhappy with that value, by all means, give us a call at (403) 260-0568.

Mm hmm. And there's also the non-monetary part of retirement that we have talked about. Previously on Talk to the Experts with you. We only have about a minute in this segment, so maybe we can sort of introduce what that is all about and then, you know, carry on in the next segment about it.

Sure. So anybody who's good at math and has been following along, we've added up the 25% of the time spent in financial management. 25% in the account administration and about 20% of our time spent on the tax efficiency of how these accounts are structured. There's about 30% less left that in a category that we call counseling. And so we'll get into that after the break.

Sounds good. He is Wade Kozak from the Kozak Financial Group, CIBC Wood Gundy. Their website, kozakfinancialgroup.ca. Or give them a call (403) 260-0568. And we'll chat with Wade after this on Talk to the Experts on 770 CHQR. We left off with the cliffhanger about counseling, which I think I call the non-monetary side of looking after your clients in retirement, because there's so many things, I think anyway, that people come to that have nothing to do with investments. It's just everyday living in retirement. Right?

And and just circumstances that can be weird so that that client counseling part that makes up about 30% of what we do for our clients, I think adds a lot of value to the services we provide. So I'm thinking about clients who are retired. They're looking at their financial plan. They're looking at how this is going to work. They've never been retired before. And so their experience is fairly limited as to how this is going to work out. Maybe they have friends who've retired and they can they can ask their friends for anecdotal kind of advice and how things have gone. But over over the last 27 years, we've helped countless clients across this threshold. And I have clients today who are still retired, who were retired when I when I started in this business 27 years ago, quite frankly. And so we've seen those clients through every possible stage of retirement. And we can give them the wisdom that, you know, when those early years of retirement, the expenses can be a little bit higher because you're checking off those bucket list of things you want to do. But then in general, it tends to trend down to some kind of nominal line that maybe you were expecting to spend in retirement. And then at some point, even that level of retirement activity and travelers curtailed, sometimes due to a health issue or sometimes due to a health issue of a parent that keeps it closer to home. Or this past year, global pandemic has kept us closer to home. And and we can give clients kind of a clearer picture of exactly what each of these stages of retirement might look like and give them some comfort that they're not going to run out of money over that timeframe, because we have so much experience of seeing people through every single one of these stages. Another example that I would put into that counseling category is it's not uncommon that I'll get a call from a client who now has adult children and wants to help one of them out with the house down payment. And we can walk them through the various ways of doing that and the pros and cons, pitfalls that we've seen happen that people have fallen into and perhaps a better ways of doing that so as not to expose a significant chunk of assets to loss through a divorce or something like that. And we can give people some pretty good advice through all of the experiences we've had of how to structure this in a fair way and in a way that protects everybody involved. Another example of the counseling side is honestly, just the other day I was talking to a couple who were clients who suddenly were thrust into dealing with mom and dad's money because one of them had passed and the remaining parent really wasn't up to handling it themselves and basically finding kind of a bit of a mess. And and I could point out some pitfalls of the way that they're that the remaining parents sort of had things set up. In this particular case, the parent had made their principal residence and an open investment account joint with two of the children, but not with the third child, not because the third child was supposed to be excluded just because they weren't handy when all of this was done. And it was done out of an interest in avoiding probate in the province they reside. But I could point out to the to the clients that, you know, without some clear direction to those other two siblings, this could end up in a very uneven distribution of assets upon that final parent's death. And forget the financial side, all of the angst and family disharmony that might cause and that I've seen happen over the years. And we could give them some advice on perhaps better ways of achieving the same goal, but still having the estate outcome that the parent wanted. And those are those are just a few examples of things that sort of fit into that client counseling side. And even from the point of view and I think we've talked about this in the radio, too, is that it's not uncommon we'll deal with we'll deal with a young adult child of an existing client. And sometimes the tendency there is to think this person is young. They have a long time horizon, they should be taking lots of risk, but we have the experience to know that what a 21 year old who's still living at home with a chunk of money they have probably has a shorter time horizon than their than their 55 year old parents, because they're probably going to want this money back out inside of five or seven years for a house down payment or some other large, large capital purchase. And honestly, that's exactly what I've seen happen almost every single time to to those young adults who have money and perhaps they don't have that time horizon that they think they do. And we can we can offer our wisdom and our advice of all of these circumstances, not because we're we're brilliant, but because we've seen them all before. And we have those years of experience of seeing some of these circumstances again and again and again and again. And we can help you walk through the best way of handling some of these.

How often do you meet with your clients over a year?

Well, over this past year, meeting in person has been has been rare, but it has happened. I mean, I think the last time I met you in person, Randy was back in February or March. But we have we have kind of a hard and fast rule for every client that we want to do a six month review. So at least every six months, our our clients are having a right now a telephone or a Microsoft Teams meeting scheduled where we review the portfolio, we review the goals, we make sure the asset allocation is on target. We make sure there haven't been any questions that have come up that have been unanswered. And then in between those six month reviews, there's there's usually significant points of contact also whether it be when a tax free savings account contribution is made or making sure that the RSP contributions are made or double checking the notices of assessment to make sure that the the tax brackets had been used up the way we want to. But in our computer, it's kind of like even if everything else fails, it's going to be at minimum, those two, six month reviews to go and review with the client.

And of course, if your clients have questions, obviously they can call you at any time and and ask those questions.

Of course. Yeah. And like everybody else in Canada and the world, our work circumstances have changed a little bit right now. We have about half of us working from home in any given day and about half of us in the office. There are some things that have to be done in the office for security purposes. And so we do need some people there. But I have to say, like even when we're in the office, we aren't kind of schmoozing around with each other too much, where we're staying in our offices and trying to be separated from each other as much as possible. And the reason we're doing that half and half is so that if one half of us for some reason comes in close contact and we aren't able to be in the office, the other half of us can step in and be there. And let's hope that doesn't happen and we have to test that.

We still have a couple of minutes here. But let's look ahead to December. And of course, whenever we look at December, I always think it's getting close to tax time or you should start thinking about it, right?

Absolutely. Like this. You don't want to wait till tax time, which, you know, which is kind of march to think about taxes, because there are certain things that you have to do now before the end of the year that can significantly affect your taxes. So I want to point out that right now there is some there is some speculation and expectation that we see a capital gains inclusion rate increase announced from CRA. This this expectation and this fear, I tend to get phone calls about it every year. This time of year of, well, what if the government does this? But this year, I think there was like perhaps a higher likelihood since the government might have to do something to fund the firehose of money they've been spraying around. And that and it increased in the capital gains inclusion rate would be something that is probably more politically palatable than anything else. And so it's probably the first well, they're going to go to. So you want to be careful like triggering gains just because of that, especially if it's in a security that you might not want to sell anyways for the next five or seven or ten years. Maybe you don't want to trigger the gains and pay a bunch of tax now on a gain that you have no intention of triggering over the next five or seven or ten years anyways. So keep that in mind. But that's something we want to think about right now. You also want to look at this time of year at the capital gains you already have triggered for the year and determine whether or not you want to if you have any losses in the account, take losses to offset that gain and perhaps not pay as much tax in 2020. Another deadline that's coming up is the education plan contribution deadline. Unlike registered retirement savings plans where they give you those first sixty days into the next year to make that contribution, RESP contributions have to be made by the end of the calendar year. So if you haven't done that yet and collected your grant money, now is perhaps the time to go and do it. And especially for retired people, now's the time to do a quick and dirty on your taxes for 2020. How much income are you going to have to show from your various pensions, from your RIFF withdrawals from your investment income. And should you be taking out a larger RIFF withdrawal to use up the bottom tax brackets? Could that be something that it's in your best interest to do? Because that has to be done before the end of the calendar year.

I always learn so much when I chat with you, sir. He is Wade Kozak from the Kozak Financial Group, CIBC Wood Gundy. If you have questions (403) 260-0568 is the phone number, or you check out their website, kozakfinancialgroup.ca. Pleasure chatting with you, Wade.

Good to be here. And we look forward to chatting with you again next time.

And you've been listening to Talk to the Experts on 770 CHQRR.

November Complete

Welcome to another edition of Talk to the Experts on 770 CHQR, I am your host, Randy Sharmin. And joining me today via Skype is Wade Kozak from the Kozak Financial Group CIBC Wood Gundy. Hello, Mr. Kozak. How are you?

I'm great, Randy. How are you doing?

I'm well, thank you. I forgot to mention your website, Kozak Financial Group.ca. And of course the phone number, which is very important for people to contact you 403-260-0568. So last time we spoke, there was this thing going on called the U.S. election that hadn't occurred. So I'm assuming a lot of things have changed. We usually like to start our talk to the experts with you about the markets and what's been going on. I'm sure that's had an effect.

It's had it's had a definite significant effect. There's no question about it, if you recall when we were here, I think it was October 24th.

Something like that.

We were we were on on the show last. But yeah, we were a little ahead of the US election. There was a lot of insecurity and concern. I feel that a lot of phone calls during honestly during the months of September and October from clients who were posing the question to me, should we be getting out of the stock market in advance of this US election? And The Gong Show, it looks like it's going to be because, you know, perhaps there's going to be a lot of volatility in the markets could get crushed, ec, etc. And as usual the advice we gave was to maintain the balance, but hold the investments that you do, knowing that those are good companies that make profit, regardless of who's president or how this turns out. And once again, it was proven that that not taking gigantic steps to try to avoid something that that you're perceiving in the future is generally the right thing to do, because post US election, the markets have just exploded around the world, quite frankly. And the month of November, 2020, there's one more day yet to go on Monday and we don't know what that holds. But to date, the month of November, 2020 is one of the best months I've ever seen in my career in the stock market.

Wow.

Pretty much across the board, the big markets around the world are up about 12 percent on that one month alone, which is honestly not a bad year. Pretty good year.

I would think so. I feel like I missed the boat.

It's now I don't think that necessarily is the case. And, you know, traditionally in November and December are both relatively good months. You know, there's no guarantee of that, of course. But they call it the Santa Claus rally for a reason. But it's nice to see the markets responding that way and having a bright spot to share with people amidst, you know, the depressing weirdness we have going on in the world right now and the the new lockdown measures that was imposed on us and, you know, not being able to share our homes with our friends, etc, and facing this over the winter months, you know, it's kind of gets me down a little bit. I don't know, but everybody else out there. But it's a nice bright spot amid all of that.

Mm hmm. Well, and going back to your point about the markets before the US election and all the speculation around that and what really happened, that just falls on the on your philosophy of just staying the course because you don't want to get into that guessing game, right?

That's right. And what we're really seeing here, which I'm kind of excited about, is a little bit of a rotation. So during the month of October, that rotation started in a fairly weak way, where on days that those stay at home stocks, the the great big technology companies that have done very well through the covid lockdown's, et cetera, which have driven a lot of the market rally that we've seen here in North America since March. Whenever those stocks were kind of weak during October and especially in November, the stocks that were very strong were those blue chip dividend payer that the typical value stocks. And we start we started seeing that rotation in October, but it really took hold in November with the announcement from Pfizer of the efficacy of their vaccine. And so here we are kind of dealing with one hand personally. Of course, we're still in lockdowns, we're trying to get the covid numbers down. There's a lot of concern about what this means for the economy over the next few months. But the markets are already looking 12 months, 18 months down the road. And so and that's why you sometimes get these weird dichotomies of unemployment numbers worse than the US. GDP is still creeping higher, but not at the same pace as it was sort of post the hard lockdown's in the spring. And yet the markets are exploding on and essentially the markets are exploding and doing very well because they're looking down at what those corporate profits might be 12 months and 18 months in the future. And that's why you have this kind of disconnect between what's happening right now, today in our real lives and what's happening in the stock market.

Hmm. Well, and what you're talking about is just part of the homework, for lack of a better word that you do for your clients so they don't have to do. You're watching this all the time. This is kind of your your forte. And so for your clients don't have to do that, right?

Yeah. You know that we're at the helm and we're we're making sure that the way the portfolios are constructed is rational, that it's not based on a bet that something's going to work out, that these portfolios are designed to get a reasonable rate of return in a pension plan like way and generate a certain amount of cash flow. That especially is useful to those retired clients who want to make a regular withdrawal. And all the pieces of all of those accounts have to work together towards that common goal of of that collection of all those investments. And then which pieces of all of those of all of those investments are best suited to put in each of the accounts for tax efficiency reasons or anything else. But, yeah, that's that's our job to sort of make sure that that plan is rational and will work.

When you say pension plan kind of way to people, kind of forget that that you are talking about people's pensions. It's not like they can go back to work after they've been retired for 10 or 15 years. Some might be able to do that. But in the real world, this is kind of like the last shot at doing it right.

I like saying that you don't get a chance to go back and try again with your retirement portfolio. Like once you reach retirement, what you save there, that's it. And so many of us don't get to choose our retirement date. The retirement date is chosen for us either by a health issue or a layoff or something like that. And so you better be ready for it. And we take that very seriously that that these accounts have to be there and have to look like a pension plan. Especially in especially this year, there's there's a tendency to want to stray from that, because when you look at the market move, like I said, in North America since the end of March, about two thirds of the run we've seen in the stock market has come from only six or eight or 10 stocks. It's been a very, very narrow rally amongst a very small number of giant cap growth names, that has driven most of the stock market rally to this point. The last time I saw a stock market rally that was this narrowly focused on just a small number of stocks in a very small number of sectors. It was 1999 just in advance of the of the dotcom crash. Now, I'm not saying that's going to happen again. You know, things don't happen the exact same way twice ever. However, I'm seeing things happen that remind me of 1999 where people are literally having to make up new methods of valuing stocks so that the prices they're trading at can make some kind of sense. And you're hearing people say things like, well, price earnings ratios don't really matter anymore in this new world because of insert argument here. But quite frankly, those arguments generally come to not whenever that's that's happened in the past. And you see stocks then that are priced for perfection. I think it was about, gosh, was it three or four weeks ago, Intel announced their earnings after the close and the earnings like they earned money. But it wasn't quite as much money as the market was expecting. And the next morning it opened down, I think 14 percent. That's the kind of thing that can happen when a stock is priced for perfection. And so those best those those growth names that have done the best since March, they're now trading at levels, in my opinion, that they better hit the top end of all of their growth targets over the next number of years or else they could be punished in the stock market a little bit. And you're seeing a lot of agreement with that opinion, with that rotation to value that we've seen during November where money has been exiting those stocks to a certain degree. And where has it been going? It's been going into those quite undervalued value, dividend paying stocks.

We're just getting underway. Chatting with Wade Kozak from the Kozak Financial Group, the website kozakfinancialgroup.ca and that important phone number 403-260-0568. If you have questions, make sure you call that number. We're going to talk a little bit about interest rates and some of the other things that you do for your clients with Wade Kozak when talked to the experts continues on 770 CHQR. We left off talking a little bit about the markets and the effect the US election had on that and some of the other things? But I wanted to get into interest rates because it seems to me that depending on what side of the interest rate you're looking at, whether you're borrowing or whether you're investing, it can be a good thing or a bad thing. Am I right on this?

You're right. I mean, what's really triggered me to talk about it today is that the Bank of Canada, just before the weekend essentially came out and did something that they don't do very often. They came out and basically said, you know what, interest rates are going to stay really low for a really long time and just kind of get used to it. Normally, they're a little more circumspect and, you know, don't give you that clear of an idea of exactly what's going to happen. But it is clear away, as they could before the weekend, they let everybody know that rates are low. And if you want to if you're going to want to make any money on with your investments that interest rates are going to be going any higher any time soon. So maybe you should do something else with it. And I think that's sort of a wake up call to a lot of people. But we've honestly been seeing this for the last number of months. And I want to highlight a difference right now. So so right now you buy a 10 year investment grade corporate bond, and I'm talking like a good corporate name like Bell Canada or Telus or Brookfield Asset Management. About the best you can do on a 10 year bond is around two point one percent. And our constant listeners will know that we've always been those people who say, here's your balanced portfolio, here's your bonds. You buy a one through 10 year ladder every year. Those bonds come due. You just go and buy the new 10 year term. Don't worry about what the interest rates are. It all comes out in the wash. You'll get the average rate over the next 10 years. But even for someone like me who's been following that mantra for a 27 career, I bulk a little bit at locking up money for ten years at a two point one percent rate, especially when, if I buy the common stock of that very same company that's issued the bond. Telus or Bell Canada. I can get a dividend yield currently that's between five and Bell Canada's around .8 % right now, so two and a half times, sometimes nearly triple the rate that I can get on income from that bond. Now, the bond is guaranteed, but it's really hard to imagine a world where if you put a hundred thousand dollars into each of those investments, one hundred thousand dollars into the bond, that one hundred thousand dollars into the common stock paying that dividend rate wait for 10 years, it's hard to imagine the world where after 10 years, that bond investment is the better performing investment. And that spread between those two different yields is as large as is larger than I've ever seen it in my entire career. And that leads me to think that those blue chip dividend paying stocks right now are actually representing pretty good value, at least better value than that bond. I don't know necessarily whether that's because the stocks are cheap or whether it's because the bonds are expensive or maybe a little bit of each. But on a on a valuation basis, I find those stocks are actually a little bit better valued. And I think an investor today could be serving themselves well by still maintaining that latter, but leaning a little bit heavier towards those dividend paying stocks for that cash flow. And the reason I say you have to maintain that bond ladder is that the bonds serve more of a purpose than just the fantastic rate of return you hopefully can get on them. They also moderate the volatility in your investment account, in your retirement plan or in your pension plan. Even in a year when interest rates are rising dramatically, those bonds won't drop in value in nearly as much as the stocks could drop in an in an ugly year in the stock market. And so it's still moderate's the volatility. It still gives you some guaranteed money maturing. And if you have to make a withdrawal that year and you have to make a choice of do I sell some stocks or do I use some of this bond that's maturing, you want to have that choice. So you need some of those bonds maturing. So you still need them. But at this rate where the valuations lie, I think maybe you don't need quite as many of them.

When you talk about a 10 year ladder, so to speak, are you talking I'm imagining that look like a ladder. When you're on the bottom rung and you're cashing out that bond, you're going to take that money that you're cashing out and buy another bond to go to the top of the ladder. Am I sort of getting the gist of what you're talking about?

That's exactly right. Lots of people out there who who invest on their own will build a GIC ladder and go to the bank and simply buy a five year GIC every year. And after five years, they have money coming due every single year in the form of that GIC and rolling it forward. And you're only ever buying a five year GIC. We do the same thing except on a 10 or possibly an 11 year bond ladder, typically where we're buying government and corporate bonds all go out to that 10 year date such that clients have money coming due every single year and have access to some of their capital in a guaranteed way every single year.

And it's not just about the interest rate, as you explain. When you say two percent, people might go, oh, my gosh, I can get a better rate somewhere else. But it's not all about that because as you mentioned, if you needed some cash flow, you're not dipping into your stocks. You have some available. And and it's sort of more of a stabilizing factor.

Exactly. It's a stabilizing factor that moderates the volatility in your pension plan, because the whole point to a pension plan is to give you comfort that you're going to be taken care of through your retirement years. Your pension plan should not be a source of stress that you're looking at it and worrying about what might happen or what will happen in the stock market. You should be able to look at your pension plan and have it give you a sense of comfort that look at this, it's going to generate this withdrawal for me every single year, regardless of what happens in the economy, regardless of what happens in the stock market, I'll be able to make that withdrawal with confidence every single year. And I would invite everybody out there who's listening that if you don't have that confidence, when you look at your investment portfolio to give us a call at 260-0568, and I'd be happy to walk through with you on the telephone right now, not necessarily in person, exactly how we might set up a portfolio for you so it looks more like a pension plan and be a source of comfort and not stress.

Is that what a lot of people start with that starting point right there is. You're just talking about the kind of go, oh, my goodness, I don't know what I'm doing here, I better make that phone call.

Yes, sometimes they usually do some sort of catalyst behind the phone call that something's occurred that's either shaken their confidence in their current advisor or they've come to realize as they start getting closer to retirement that their investment portfolio looks more like a like a series of bets. It's not uncommon to meet somebody and you look at their investment portfolio and you can almost you can almost see the exact time line that every year they made a contribution. And whatever was the flavor of the day that year, that's what ended up getting purchased. And you get this mishmash collection of all kinds of these different investments that don't really make a whole lot of sense in aggregate when you look at it all combined. And they're starting to come to realize that there isn't a cohesive, logical plan of how this is going to turn into a monthly check being deposited into their bank account in retirement. And when a person comes to that realization, suddenly our message that we have about we're all about the income, that cash flow is king. Make sure that cash is arriving to fund that withdrawal so that you're not relying on the stock market to go up to to fund your retirement withdrawals. Suddenly, that message resonates a great deal. And that leads to that phone call.

And that phone call starts by where or with this number 403-260-0568. Again, the website kozakfinancialgroup.ca. We are chatting with Wade Kozak from the Kozak Financial Group CIBC Wood Gundy. We talked a little bit about interest rates in the markets. That's just a few of the things that you offer your clients. So we'll get into some of the other things that you do. I use I made the note here about paperwork. There's lots of paperwork that goes along with the things that you do and you handle that and a lot more. So we'll continue chatting with Wade Kozak from the Kozak Financial Group CIBC Wood Gundy. Again, that phone number 403-260-0568 and talk to the experts continues on 770 CHQR after this. We talked about interest rates and the markets and some of the things that you offer your clients. Let's talk about some of the other things you do. It's not just about dollars and cents, although that's a big part of it.

It is. You know, and honestly, we kind of get caught up on that, especially when we're we're talking here on the radio and talk to the experts, because everybody's most interested in the financial management side of things, the investment selection process and all of that sort of thing. But that that amounts to about a quarter of what we do for our clients. And so there's a whole lot more we do. I mean, you mentioned paperwork and that's, you know, absolutely. Obviously, we handle all the paperwork with these things. But kind of beyond that, there are certain functions that the average client will only ever have to do once in their life. So I'm talking about rolling over an RSP into a riff or more complicated, rolling over a Lira in a locked in retirement account from a pension plan into a life income fund and the complications behind the one time unlocking opportunity you have. And so the average client out there, they only have to do this once. They don't really think about these things a lot. And they're sometimes pretty complicated. And you have choices to make, especially in the case of those those locked in plans that you only get to make once. And this is something that we do every day, right. For all kinds of clients. And we could kind of break it down in very simple terms that for your circumstance, this is the absolute best way to handle it. And here's why. And the clients then get the benefit of our decades and decades of experience, of doing this over and over again and knowing the ins and outs of all of this paperwork and how to get it done. Naomi on our team is probably going to shoot daggers at me on Monday for talking about this. But it's it's also difficult sometimes to deal with transfer agents if anybody out there who's listening has ever dealt with a perhaps a parent who passed away and they had some stock certificates sitting in the safety deposit box, and then they were left with the job of having the name changed on those stock certificates from mom or dad into their estate or to a beneficiary. They'll know the absolute difficult, near impossible process it is to go and deal with the transfer agents who are not very customer service friendly because that's not their job. And it's it's not infrequently that our clients will come to us after having tried to handle this process and say, like, look, I just can't get this done. And at least we understand the process that has to happen and, and know exactly how to sort of deal with that transfer agent to get those processes done, which are very difficult even for us to deal with the transfer agent. But these are those are just two examples of the administrative side of what we do for our clients. That can be a little bit daunting if if you're doing it yourself or don't have a very, very good understanding and good knowledge of all this. And it's really handy to have somebody who can walk you through it and give you all the benefit of the experience that we've had over decades of doing this over and over and over again.

Mm hmm. So if someone does have a financial advisor now, and they're not really happy with them, how do they make that leap? I can't imagine calling you up saying, you know, Hey, Wade, I heard you on the radio, but I have a financial advisor. Or does that happen more often than not?

It does it typically there's some there's some kind of a an event, right, whether it's a loss of trust or something happens that causes that person to say, you know what, I'm not happy here. I want to make this move. And then it's then it's an interview process where they generally sit down with with two or three or four different potential people to deal with and see who has the best fit with them. And, you know, I'm used to I used to sort of those those meetings where we are describing our process and how it might work for them. It's you know, but it's a fairly painless interview process. And and from there, the account transfer process also can be quite simple. It's just simply a matter of opening up accounts at the new advisor's office. In this case, it would be with us at CIBC, Wood Gundy, and we would open up the RSP, the TFSAs, the joint non registered accounts, perhaps a corporate account, whatever accounts we needed to, to kind of mirror their existing accounts and then transfer everything across in kind. Those securities would come across as the existing securities there are, typically the the institution you're transferring from charges use some sort of transfer fee, which we offer to cover. So it actually doesn't cost anything to go and move those accounts across. And then once all of those assets assets are across, then we sit down again and discuss and agree on a plan to how are we going to set these accounts up and to be that pension plan that those clients now want to set up.

When you're talking about this administrative work, is that just part of the whole package?

It is. And it's just, you know, that that account administration that we provide, which I just gave two examples of, that amounts to about another quarter of what we do. So that and the financial management, the management of the assets and the and the investments makes up about a half of what we do. We've spent a lot of time talking on the talk and the experts show here about some of the tax efficiency processes that we help our clients through. And that's probably another 20 percent of what we do for our clients is looking at their circumstances and determining is it possible we can save you twenty thousand dollars a year on taxes with a spousal loan? Is it possible that there are ways we can structure your accounts that make them far more tax efficient?Are you taking full advantage for a retired person of the particular tax bracket you're in without bumping you into a clawback position so that we can, in the most efficient way possible, gradually drain your RRSP through your retirement? Like all of that math, and that's there's a big part of that happening right now, this time of year, making sure those RSP withdrawals are done, et cetera. That makes up about 20 percent of what we do. And we then I guess we do we do spend a lot of time talking about that here, here on the show as well.

When I when I mentioned the full package, though, what I was kind of getting at is you're not nickel and diming your your clients like you're not selling people after you do all the the administrative things and those extras. Right.

That's all inclusive of of the of what we charge our clients to deal with us. I would say on a on an average million dollar balanced portfolio, our average client is probably paying us somewhere between one and 1.1% to go and run those assets. That's a number that I can look anybody in the eye and not feel embarrassed about on a million dollar account. If if you're being charged more than that per year, I think you probably should examine exactly what value you're getting for that number. And if you're unhappy with that value, by all means, give us a call at 403-260-0568.

Mm hmm. And there's also the non-monetary part of retirement that we have talked about. Previously on Talk to the Experts with you. We only have about a minute in this segment, so maybe we can sort of introduce what that is all about and then, you know, carry on in the next segment about it.

Sure. So anybody who's good at math and has been following along, we've added up the 25% of the time spent in financial management. 25% in the account administration and about 20% of our time spent on the tax efficiency of how these accounts are structured. There's about 30% less left that in a category that we call counseling. And so we'll get into that after the break.

Sounds good. He is Wade Kozak from the Kozak Financial Group CIBC Wood Gundy. Their website, kozakfinancialgroup.ca or give them a call. 403-260-0568 and we'll chat with Wade after this on talk to the experts on 770 CHQR. We left off with the cliffhanger about counseling, which I think I call the non-monetary side of looking after your clients in retirement, because there's so many things, I think anyway, that people come to that have nothing to do with investments. It's just everyday living in retirement. Right.

And and just circumstances that can be weird so that that client counseling part that makes up about 30% of what we do for our clients, I think adds a lot of value to the services we provide. So I'm thinking about clients who are retired. They're looking at their financial plan. They're looking at how this is going to work. They've never been retired before. And so their experience is fairly limited as to how this is going to work out. Maybe they have friends who've retired and they can they can ask their friends for anecdotal kind of advice and how things have gone. But over over the last 27 years, we've helped countless clients across this threshold. And I have clients today who are still retired, who were retired when I when I started in this business twenty seven years ago, quite frankly. And so we've seen those clients through every possible stage of retirement. And we can give them the wisdom that, you know, when those early years of retirement, the expenses can be a little bit higher because you're checking off those bucket list of things you want to do. But then in general, it tends to trend down to some kind of nominal line that maybe you were expecting to spend in retirement. And then at some point, even that level of retirement activity and travelers curtailed, sometimes due to a health issue or sometimes due to a health issue of a parent that keeps it closer to home. Or this past year, global pandemic has kept us closer to home. And and we can give clients kind of a clearer picture of exactly what each of these stages of retirement might look like and give them some comfort that they're not going to run out of money over that time frame because we have so much experience of seeing people through every single one of these stages. Another example that I would put into that counseling category is it's not uncommon that I'll get a call from a client who now has adult children and wants to help one of them out with the house down payment. And we can walk them through the various ways of doing that and the pros and cons pitfalls that we've seen happen that people have fallen into and perhaps some better ways of doing that so as not to expose a significant chunk of assets to loss through a divorce or something like that. And we can give people some pretty good advice through all of the experiences we've had of how to structure this in a fair way and in a way that protects everybody involved. Another example of the counseling side is honestly, just the other day I was talking to a couple who were clients who suddenly were thrust into dealing with mom and dad's money because one of them had passed and the remaining parent really wasn't up to handling it themselves and basically finding kind of a bit of a mess. And and I could point out some pitfalls of the way that they're that the remaining parents sort of had things set up. In this particular case, the parent had made their principal residence and an open investment account joint with two of the children, but not with the third child, not because the third child was supposed to be excluded just because they weren't handy when all of this was done and it was done out of an interest in avoiding probate in the province they reside. But I could point out to the to the clients that, you know, without some clear direction to those other two siblings, this could end up in a very uneven distribution of assets upon that final parent's death. And forget the financial side, all of the angst and family disharmony that might cause and that I've seen happen over the years. And we could give them some advice on perhaps better ways of achieving the same goal, but still having the estate outcome that the parent wanted. And those are those are just a few examples of things that sort of fit into that client counseling side. And even from the point of view and I think we've talked about this in the radio, too, is that it's not uncommon. We'll deal with we'll deal with a young adult child of an existing client. And sometimes the tendency there is to think this person is young. They have a long time horizon, they should be taking lots of risk, but we have the experience to know that what a 21 year old who's still living at home with a chunk of money they have probably has a shorter time horizon than their than their 55 year old parents, because they're probably going to want this money back out inside of five or seven years for a house down payment or some other large, large capital purchase. And honestly, that's exactly what I've seen happen almost every single time to to those young adults who have money and perhaps they don't have that time horizon that they think they do. And we can we can offer our wisdom and our advice of all of these circumstances, not because we're we're brilliant, but because we've seen them all before. And we have those years of experience of seeing some of these circumstances again and again and again and again. And we can help you walk through the best way of handling some of these.

How often do you meet with your clients or your.

Well, over this past year, meeting in person has been has been rare, but it has been I think the last time I met you in person, Randy, was back in February or March. But we have we have kind of a hard and fast rule for every client that we want to do a six month review. So at least every six months, our our clients are having a right now a telephone or a Microsoft teams meeting scheduled where we review the portfolio, we review the goals, we make sure the asset allocation is on target. We make sure there haven't been any questions that have come up that have been unanswered. And then in between those six month reviews, there's there's usually significant points of contact also whether it be when a tax free savings account contribution is made or making sure that the contributions are made or double checking the notices of assessment to make sure that the the tax brackets had been used up the way we want to. But in our computer, it's kind of like even if everything else fails, it's going to be at minimum, those two six month reviews to go and review with the client.

And of course, if your clients have questions, obviously they can call you at any time and and ask those questions.

Of course. Yeah. And like everybody else in Canada and the world, our work circumstances have changed a little bit right now. We have about half of us working from home in any given day and about half of us in the office. There are some things that have to be done in the office for security purposes. And so we do need some people there. But I have to say, like even when we're in the office, we aren't kind of schmoozing around with each other too much, where we're staying in our offices and trying to be separated from each other as much as possible. And the reason we're doing that half and half is so that if one half of us for some reason comes in close contact and we aren't able to be in the office, the other half of us can step in and be there. And let's hope that doesn't happen and we have to test that.

We still have a couple of minutes here. But let's look ahead to December. And of course, whenever we look at December, I always think it's getting close to tax time or you should start thinking about it, right?

Absolutely. Like this. You don't want to wait till tax time, which, you know, which is kind of march to think about taxes, because there are certain things that you have to do now before the end of the year that can significantly affect your taxes. So I want to point out that right now there is some there is some speculation and expectation that we see a capital gains inclusion rate increase announced from CRA, this this expectation and this fear, I tend to get phone calls about it every year, this time of year of, well, what if the government does this? But this year, I think there was like perhaps a higher likelihood since the government might have to do something to fund the firehose of money they've been spraying around. And that and it increased in the capital gains inclusion rate would be something that is probably more politically palatable than anything else. And so it's probably the first. Well, they're going to go to. So you want to be careful like triggering gains just because of that, especially if it's in a security that you might not want to sell anyways for the next five or seven or ten years. Maybe you don't want to trigger the gains and pay a bunch of tax now on a gain that you have no intention of triggering over the next five or seven or ten years anyways. So keep that in mind. But that's something we want to think about right now. You also want to look at this time of year, the capital gains you already have triggered for the year and determine whether or not you want to if you have any losses in the account, take losses to offset that gain and perhaps not pay as much tax in 2020. Another deadline that's coming up is the education plan contribution deadline, unlike registered retirement savings plans where they give you those first sixty days into the next year to make that contribution, RESP contributions have to be made by the end of the calendar year. So if you haven't done that yet and collected your grant money, now is perhaps the time to go and do it. And especially for retired people, now's the time to do a quick and dirty on your taxes for 2020. How much income are you going to have to show from your various pensions, from your riff withdrawals from your investment income? And should you be taking out a larger riff withdrawal to use up the bottom tax brackets? Could that be something that it's in your best interest to do? Because that has to be done before the end of the calendar year.

I always learn so much when I chat with you, sir. He is Wade Kozak from the Kozak Financial Group CIBC Wood Gundy. If you have questions 403-260-0568 is the phone number or you check out their website, kozakfinancialgroup.ca. Pleasure chatting with you, Wade.

Good to be here. And we look forward to chatting with you again next time.

And you've been listening to talk to the experts on 770 CHQR.