Today's wealthy investors are usually very involved in their financial matters.
There is a tremendous amount of information available today on wealth management. Russ Alan Prince published, Wealth management, (Wealth Management Press 2003) and defines it as “ delivering a full range of investment, and advanced planning services and products to affluent people”. Russ describes advanced planning for the wealthy in four areas including “ Wealth Enhancement, Wealth Transfer, Asset Protection and Charitable Giving”.
Wealth enhancement deals with taxation. What the rich do well is learn the strategies to minimize tax such as the use of dividend and capital gains income, systematic withdrawal plans, asset swaps, trusts, tax shelters, and advanced strategies to defer taxation.
Wealth transfer is more than just writing out a will. Having joint meetings with your advisor and lawyer at the same time accomplishes more in less time. It is a team approach the rich strive for. Using estate planning strategies such as life insurance beneficiary designations, life insurance, and annuity contracts, spousal trusts and segregated funds can help accomplish wealth transfer and peace of mind.
Asset protection is defined as protecting your capital and safely knowing strategies for minimizing the risk of loss. These losses can include market risk as well as protection from creditors, ex-spouses or family members. The strategies can be directly related to the risk of a challenge from another party or a function of recognizing risk tolerance and matching your investments and portfolio asset allocation appropriately.
The fourth point is charitable giving. This can be more than just giving money. Several successful people in this great community donate their time and efforts to giving back. From a monetary point, clearly the rich want to give something back, sometimes with or without fanfare or prestige. Did you know that you can easily set up your own individual or family foundation? Strategies for charitable giving can include foundations, charitable tax planning, and charitable trusts. The rich do more planning and more one on one with their team of people to help them., Just as Lieutenant Columbo asks, “ oh, by the way, just one more question”.
Can you imagine that some companies have only 4-6 investment models?
Attempting to use a conservative/balanced/moderate/growth/ aggressive platform is the same as saying that every consumer fits neatly into just five models. We believe that's silly.
That’s why you should consider values and goals-based retirement planning.
Each goal has a specific investment mix and so you may have several different portfolio needs, all with specific risk tolerances. For example, say Fred and Wilma from Okotoks were retired and wanted money for large trips or cruises. They also need money available for their executor for their estate and also wanted to put some money away for their grandchildren. The rest is to use for income in their retirement, some of their money is in non-registered investments outside RRSPs and some money is inside RRSPs. They have four or five specific goals. All of these categories have specific investment risks and time horizons. To put them all in one big investment model just doesn’t cut it. Yet, why do so many companies do it that way?
Managed Asset Programs usually offer multiple investment portfolios — each featuring a very specific, highly detailed asset allocation model for specific needs and goals. But which portfolios are right for you? Each goal is customized to your unique needs.
Let’s say the investment portfolio for the grandchildren is higher risk and has a 15-year timeframe because of the age of the grandkids. Then you can build the investment for the specific goal, which is different from your own retirement income objectives, which may have some short-term needs and longer-term targets depending on your age.
There is no guarantee that a specific portfolio will meet that objective but having one portfolio for multiple objectives definitely brings more worry than goals-based retirement planning which is to build a few specific portfolios for each goal or need. Consider asking your investment professional to develop goals - based on retirement planning for your specific needs.
Is your financial house in order? Are you confident in your current financial plan? Do you even know what your retirement income plan is?
If not, learn more about our flat-fee & all-inclusive retirement planning services. Click here.
Book an introductory meeting in our calendar below and at this meeting, we'll help you get clarity around your values and goals, we'll complete a financial summary so that you can see where you are and where you want to be and how a written quality financial and investment plan will increase your probability of successfully reaching your retirement goals and living your ideal lifestyle.
Retirement Income, Investment & Tax Planning for those 55+
Willis J Langford BA, MA, CFP
Nancy Langford CRS
"Helping you get your financial house in order and enjoy a worry-free ideal retirement lifestyle"
