5 steps you can take to help your aging parents manage their finances

5 steps you can take to help your aging parents manage their finances

Source: Marc Sherman and Jason Heath | FP

Here are five proactive steps you can take to help your parents manage their finances as they age:

  1. Consolidate accounts – If your parents have multiple bank and investment accounts, try to reduce the number of accounts and institutions. They will likely benefit from lower fees and a more integrated approach.
  1. Review statements – If they’re comfortable sharing their financial details, your parents might be able to set you up to receive copies of their statements. If their advisers are aware that you are looking over their shoulder, it adds an additional level of oversight. You can also look for signs of financial abuse, such as large transactions.
  1. Prepare a financial data organizer – Summarize accounts and advisers, details of any life insurance policies, if they have safety deposit boxes and where to find important legal documents and account passwords.
  1. Hire a financial planner – It could be helpful for your parents to know if they are likely to outlive their money. Conversely, it could be helpful for you to know if they may need some level of financial support. Strategically, a financial planner may be able to identify investment, tax or estate strategies to help preserve your parents’ wealth.
  1. Review their estate plan – It is important to ensure that wills, powers of attorney, personal directives, and similar documents are up-to-date before it is too late. Even if they are in good standing, it is also important to walk through what would actually happen with assets on death, based on beneficiary designations and joint ownership, as not all assets may pass through the estate and be addressed by a will. Proactive measures can also be taken to reduce income tax and probate fees that could be into the tens of thousands for even a modest estate.

Remember that just because someone is losing or has lost mental acuity, it does not mean that they cannot make or contribute to financial decisions. Even someone who has dementia can still express their wishes. So be sure to balance the risks of no oversight with the mistake of overstepping boundaries that are hard to establish when it comes to children getting involved in their parents’ finances.

What to know when shopping for financial advice in a sea of titles and credentials

By David Hodges


TORONTO _ Choosing a financial adviser is a big decision, yet few investors realize that in most provinces there’s a lack of specific, harmonized regulation of professionals who provide that type of service.

An expert panel set up by the Ontario government has made several recommendations to deal with major concerns, including the myriad of confusing titles and credentials and the lack of an explicit obligation to act in a client’s best interest.

However, that hasn’t stopped investors from increasingly relying on financial advisory services.

A 2016 study by the Canadian Securities Administrators found that 56 per cent of respondents were working with an adviser, up from 43 per cent a decade earlier.

For those considering working with an adviser, experts recommend taking these steps before making a choice:

Check registration

Marian Passmore, director of policy for investor advocacy group FAIR Canada, says securities regulators will only register firms and individuals if they are properly qualified. So check an adviser’s registrations.

“A lot of people don’t do that,” Passmore says. “If they had done so, they may have not lost their money.”

A good place to start, says Passmore, is the CSA’s AreTheyRegistered.ca site, which allows you to search for any licensed investment adviser. Keep in mind, however, that insurance and financial planners won’t be on that site unless they’re also licensed investment advisers.

The CSA website also allows you to see if your licensed adviser has ever been disciplined for misconduct.


Ask about products and services offered

Not all advisers offer the same products and services and not all have the same expertise, so it’s important for consumers to understand the differences.

For instance, most investment advisers are licensed by either the Mutual Fund Dealers Association or the Investment Industry Regulatory Organization of Canada. But while most MFDA-licensed advisers deal only in mutual funds, IIROC advisers can also offer other products including stocks and exchange-traded funds.

In the case of financial planning services whether that’s to reduce taxes, save for a big purchase or to retire in comfort there are dozens of designations and investors will likely have a hard time distinguishing between them.

“IIROC has over 30 credentials that people have but that doesn’t really tell you how difficult or onerous those credentials are,” says Passmore.

The certified planner certification is a reputable designation for those who want a combination of sound investment advice and financial planning know-how, says Ken Kivenko, an investor advocate who is also chairman of the Small Investor Protection Association’s advisory committee.

“They can go beyond the straight investing phase,” Kivenko says. “They do holistic plans.”


Assess the cost of advice

Because advisers can be paid by salary, commission, a flat fee or a combination of methods, it’s important to make sure you understand how your adviser is paid, how much their services will cost, and how this may affect the advice you’re given.

For instance, many advisers are paid a commission for every product they sell, which may influence an adviser to recommend one investment over another, according to the CSA.

But keeping fees and other investment-related costs low has been proven to be one of the best and easiest ways to help your savings grow.

A fund with low fees, such as indexed mutual funds and exchange-traded funds, has an automatic head start over higher-cost rivals for returns and compounded over years the advantage can grow even more powerful.

The Top 10 Tips For Spring Cleaning Your Finances

Excerpted article was written, by

Wade Stayzer is Meridian’s Vice President, Sales & Service

Taking time this spring to get your house and finances in order will benefit you and your family in the long run. Following are 10 tips for spring cleaning your finances.

1. Take Stock. Now’s the time to take a long hard look at your where your money resides, and what it’s doing for you. Ask yourselves the following questions and make sure you’re able to find the answers: What do I have? Where are my investments? What investments are making money for me and my family, and what ones are not? How are my funds dispersed? At the end of the day, you want to make sure that you’re getting the most “bang” for your buck so make sure to find out all of the details regarding your money so that you can determine if there needs to be any changes made.

2. Review Your Budget. Do you have a budget and if so, do you stick to it every week? If the answer is “no,” you’re not alone. If the answer is “yes,” it’s always good to prioritize the time required to find out where your money is going to every month. How family dollars are being spent is a key part of getting your finances in order.

3. Credit Where Credit is Due. Do you know what’s on your credit report? Did you know that one incorrect or negative item can make a considerable difference in how much money a bank could lend you, or whether you get a preferred rate on a loan or credit card? Order your credit report and get down to business — is everything correct? Are there mistakes? Are outstanding items still appearing, e.g. bankruptcy, etc.? Find out what’s said about you financially and make sure that there are no costly mistakes listed.

4. Commit to Saving More. It may seem difficult to do but taking stock of the amount of money being saved per year then committing to saving just a little bit more will make the world of difference to your finances of the future. Double check the amount of money in your emergency fund and/or savings account and commit to increasing it by a small percentage per year. An incidental amount that won’t be missed in the short term can make a considerable difference towards your long-term retirement funds.

5. Automate. If you haven’t already, get online and automate your monthly payments, wherever possible. Doing so will saves you the worry about paying your bills on time and will allows you to keep track of your debits and credits easily.

6. Pay it Down. Make a plan to reduce or eliminate your debt altogether for the coming year. This will need to be done by taking a long hard look at how money is spent and coming up with a plan for how you can effectively pay off money owed while still saving. Though it may seem counter-intuitive at first, it is possible, and will ultimately result in your having more disposable income to reinvest.

7. Better Safe Than Sorry. Do you have a place for your important documents? Outside of your home, are there backup documents elsewhere, such as in a safety deposit box or digital backups in a Cloud-based account? If not, it’s important to do so right away as we can never be sure of when a situation may occur where important information is, unfortunately, lost or destroyed. Having a back up plan doesn’t have to be complicated. Options for doing so include giving copies of important information to a trusted friend or family member to store in another location, or providing copies to your lawyer.

8. It Will Be Done. They say that there is nothing certain in life but death and taxes, and this is found to be no more true than when a loved on dies. As part of your financial spring cleaning, make sure to get your will in order so that there are no surprises or disputes in the event of an untimely death. Details regarding your kids’ guardianship, allocations of funds and related items should be clearly outlined in this important document.

9. Review Your Contracts. Take this time to review your supplier and vendor contracts such as your phone/TV and internet service providers. Take this time to review your contracts and ask your suppliers for a better rate or package.

10. Insure and Ensure Your Future. Do you understand all of the details of your insurance policy? How much are you paying, and what will you or your loved ones receive, in the event that insurance funds are required? Take this time of the year to review all policies, including Life Insurance, Home and Auto Insurance to confirm that you have the best policy and rates that suit your particular family situation.

Source: The Huffington Post

Be wary of saving in an RRSP at the expense of debt, financial experts say

Be wary of saving in an RRSP at the expense of debt, financial experts say

By Linda Nguyen


TORONTO _ When Patrick French was about 18 years old, he got a hot tip about a gold mining stock.

The problem was he was a student with no money, but he still wanted to cash in on the “can’t miss” opportunity for his RRSP.

So, he took out a $4,000 loan.

“I broke some fundamental rules for what was promised to be a brilliant idea,” said French, director of retirement and financial planning at investment firm Edward Jones.

“Within 12 months, the stock was effectively worthless. It was one of those things where at the time, it was a very expensive lesson invaluable really.”

Not only did French lose his investment, he lost his RRSP contribution room. He also now had more debt.

Today, French tells clients more often than not, it’s a bad idea to incur debt, or ignore debt, to invest in an RRSP.

“You have to believe that you can consistently earn a higher rate of return than you can by paying down the debt,” he said.

“That’s why regardless of your age, paying down your debt is always a good financial strategy.”

As the March 1 deadline looms for RRSP contributions this year, many Canadians will be thinking about how much they want or are able to contribute to their retirement savings.

French says there’s bad debt and good debt.

An example of bad debt is credit card debt, which often carries an interest rate of 20 per cent. Mortgage debt, on the other hand, could be considered good debt, if interest rates continue to stay at current historic lows.

As a general rule, it’s a good idea to tackle bad debt first because any tax savings you may receive from an RRSP contribution will likely not exceed the interest costs a credit card company charges.

Financial adviser Sara Zollo believes in a slightly different school of thought. She encourages her clients not to neglect their retirement savings just because they have debt.

“One of the biggest mistakes you can do is ignore your savings and just pay down the debt,” said Zollo, who works at Sun Life Financial Canada.

“It is a good idea to do a combination of both and to look at each individual situation and decide what ratio goes to debt repayment and what ratio goes to savings.”

Even putting aside as little as $20 a month is enough to help kick-start an RRSP.

“I can’t tell you how many times clients are surprised with how much money they have put away by the end of the year,” she said.

Zollo says putting money away in an RRSP may also be advantageous for those in a high income tax bracket because it creates a deduction on the amount of taxes that are owed.

“If you can minimize taxes paid down today, you have more money today,” she said. “With the refund, you can put that towards your debt, and then you’ve done both saved in your RRSP and paid down some of your debt.”

But like with any major financial decision, Zollo says it’s best to consult with a professional first.

“A written annual financial plan can look at budgeting, tax planning, retirement planning, kid’s education planning, protecting your savings and proper insurance,” she said.

Retirement planning? Couples, mind the age gap

By Arielle O’Shea

An age difference in your relationship doesn’t just mean your favourite bands are from different decades.

As you approach retirement together, that age gap becomes a factor in decisions about when you retire and when you take Social Security, and in planning how much money you need to save and how it should be invested.


Especially if the younger partner is a woman, an age difference can mean you need your money to last longer. Women outlive men on average, which adds additional years to retirement.

As a couple, your retirement time horizon should be computed from the longest life expectancy of the two of you, says Kathleen Hastings, a certified financial planner with FBB Capital Partners in Bethesda, Maryland.

According to Social Security’s life expectancy calculator , a woman who is 45 years old today and reaches full retirement age at 67, can expect to live an additional 21 years, to age 88. A man who is 50 today and lives to 67 is expected to live an additional 18 years, to age 85.

But as a couple, they may need to draw on their retirement savings from the time he turns 67 to the time she turns 88, a significantly longer span of 26 years _ and many financial planners would add a few years to that projection as extra insurance.


To plan for those extra years in retirement, mixed-age couples should save more, work longer and invest with an eye toward the longer life expectancy in the relationship, says David Hunter, a certified financial planner with Horizons Wealth Management in Asheville, North Carolina.

“The older someone gets, the more conservative they tend to be,” Hunter says. “But when you’re coming at it from two different ages, if the older person can stomach the volatility, you should probably invest with the younger person’s time horizon in mind. You’re trying to prepare your assets to be around for that second individual.”

Couples tend to want to retire together, which can tempt a younger partner to take early retirement in order to align with the older partner’s retirement plans.

But doing so could result in several financial drags on the couple, Hastings says. The early retiree could end up with a shortened timeline of Social Security contributions, and miss out on years of contributions to a 401(k) or other workplace retirement plan.

“Someone has to make sacrifices to make up for that loss of income, and you either do that by working longer or saving more,” Hastings says.

If retiring at the same time is important to you, consider whether the older partner can work longer to meet the younger one at his or her full retirement age, or use a retirement calculator to figure out how much more you’ll need to save to accommodate those extra years of distributions rather than contributions.


Allocating your investments with the younger partner in mind means you’ll take a more aggressive approach, which should allow your money to continue to grow and last longer. But distributions are required from tax-deferred retirement accounts _ like traditional 401(k)s and IRAs _ beginning at age 70 1/2.

If you’re married, your age difference spans more than 10 years and the younger spouse is the sole beneficiary, the amount of that required minimum distribution will be calculated using the IRS’ Joint Life and Last Survivor Expectancy Table . This allows the account holder to draw less than he or she would if using the table for the standard RMD calculation. That can leave more of your money to grow tax-deferred, assuming you want or need to draw only the minimum required.

You should also consider how to make the most of other sources of income. If the older spouse can put off claiming Social Security until age 70, for example, that person will maximize his or her monthly benefit, as well as survivor benefits for the younger spouse. Pension elections can be set to joint and survivor benefits, which will allow a surviving spouse to continue to receive benefits once the pension owner dies.

All of this requires planning, so as with all things retirement, the earlier you get a road map in place, the better, Hastings says. “People often don’t think about this until it’s too late.”


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