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  • Adventures In Fractional Ownership
    the annual maintenance fee was 2 350 By 2010 the maintenance fee had increased to 3 729 inclusive of HST The increases were based on the increasing cost of propane electricity taxes and cleaning plus a one time extra levy on pet friendly units because they require more upkeep In addition over the last few years common facilities such as a club house a boathouse with a deck over the water and a fitness room were added We are shareholders in resort holders association which owns all of the cottages other common buildings and the 20 acre property on which they are situated Currently intervals in new units the same size as ours are selling for more than 100 000 Owners can sell their interval but to date the few re sales have been primarily to existing owners All interval owners belong to The Registry Collection and deposit intervals for points which can be used to purchase a week or more at other properties in Canada the United States Mexico and other international destinations Owners can also privately rent weeks they cannot use Defray Maintenance Costs Over the last five years we have used our fixed summer week every year but we have never used up the other four weeks However we have gone up for long weekends and we have usually been able to defray the maintenance costs by renting out one or two weeks a year Several years ago we deposited a week for points and spent a fall week at a lovely bungalow development in Hilton Head SC With the benefit of five years of hindsight here are some of the things you should consider before signing on the dotted line Location Fractional ownership is fairly new concept There are about half a dozen examples in Ontario that I am aware of It takes us about two and a half hours to drive to the cottage and we would not have been interested if it was much further away Management We took a chance and bought from the plans We have been very pleased with the overall management and maintenance of our unit and the surrounding property The developers have been financially prudent and have not forged ahead with additional phases until existing stock has been sold Financing Because there are multiple owners you cannot finance your interval using a mortgage on the property If you do not have cash you will need to raise funds from another source such as your home equity or a line of credit Furthermore you will be responsible for the maintenance costs each year whether or not you fully utilize your interval and these costs will go up over time Arrival Departure Our week goes from Sunday to Sunday The downside is if we can t stay for a whole week we can never fully take advantage of a holiday long weekend For example if a holiday weekend includes a Monday we can arrive no earlier than Sunday and we have

    Original URL path: http://privatewealthmagazine.ca/adventures_fractional_ownership.html (2016-04-26)
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  • The FIT FACTOR
    he was planning to get his employees behind him to support and execute a major change in strategy How s the depth of talent in your organization I asked Do you have the people you need to successfully execute your strategy We went through his company s organizational structure I asked more questions about the people in each position By the time we were finished Stephen let out a sigh Wow I ve got a bigger mess than I thought he said I ve been looking at the business and the people but I ve never looked closely at what is needed in each job to succeed Obviously I m going to have to review many positions and change some people if I expect to achieve real change Stephen s problem is all too common in organizations today Stephen had been ignoring fit He had not defined success position by position He had not determined whether the person in each position fit his unit s requirements for success Some companies get it right General Electric under Jack Welch s leadership for example as well as Isadore Sharp s Four Seasons Hotels and Resorts where employee retention an average of 15 years for employees and 22 years for management tells the tale But the majority of organizations have much work to do Most are filled with capable people with plenty of talent but who are in the wrong jobs within the organization Sustained success is not possible for a company with too many wrong fits Putting people in the right positions is an ongoing process in business Companies aren t ever going to reach perfection but it s important for them to try CEOs need to understand that getting the right fit the right people in the right positions in the right parts of the company is good for everyone Who Is Needed The first question for management relates to the job not the person Before you ask questions about any particular person in any particular job or a new person being recruited you have to decide what success looks like in the position given the goals of the CEO board and senior leadership I m not talking about a standard job description here I m talking about a description of success It s not primarily about what a person will do lead head up be responsible for but what the outcomes must be one million in sales 10 per cent growth 10 per cent increase in throughput I always ask What are the skills and personality type of the person that is needed to generate the outcomes in this particular job This is part of a broader examination of growth strategy and human capital and how they mesh in a corporation After management has defined what success looks like in different positions it should examine the profiles of the people in those positions evaluating them on the basis of the skills characteristics and experience required These profiles must be done

    Original URL path: http://privatewealthmagazine.ca/the_fit_factor.html (2016-04-26)
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  • RRSPs Overlooked As Personal Net Worth
    the tax on investment income is deferred until the year of withdrawal Over the long term the power of tax deferred compound growth is substantial Security As a business owner you know that your business can be affected by factors beyond your control such as an economic downturn An RRSP that holds conservative investments such as Guaranteed Investment Certificates GICs government bonds or Treasury bills is an effective way to offset the volatility of your business returns Flexibility The primary goal of an RRSP is retirement savings but it can also be used for other purposes For example under the Home Buyers Plan you and your spouse can withdraw up to 25 000 each tax free from your RRSPs to use as a down payment on your first home You have to pay the money back but your first payment isn t due until two years after the year of withdrawal Under the Lifelong Learning Plan you can withdraw RRSP funds to pay for education for yourself or your spousal partner Bargaining power With the strength of your RRSP behind you you re in a better position to hold out until you find the right buyer for your business Protection If you or your spouse experience unexpected health problems later in life you might need to exit your business sooner than you had planned perhaps at an unfavourable time to sell With the resource of your RRSP you d be in a better position to still achieve your desired retirement lifestyle Reliability At any time you can convert your RRSP to an annuity that will provide you with guaranteed income for life You must convert your RRSP to an annuity or Registered Retirement Income Fund RRIF by the end of the year you turn 71 For entrepreneurs who didn t contribute to their RRSP there are still a number of tax planning opportunities that can significantly help small business owners to achieve tax efficient long term savings says Cathy Pin commercial banking BMO Bank of Montreal Business owners can work with a tax expert to take advantage of the various tax saving strategies available to them Tax Strategies Tax strategies for long term savings include Income Tax Reductions By incorporating their business entrepreneurs will enable their business income to qualify for the small business tax reduction This can reduce the combined corporate tax rate on the first 500 000 of active business income to as low as 12 per cent The reduction may be available if your company qualifies as a Canada Controlled Private Corporation CCPC carrying on an active business in Canada Exemptions for Capital Gains Generally one of an entrepreneur s most significant assets is their ownership of small business shares When it is time to retire and the owner wishes to sell the business he she can qualify for a lifetime capital gains exemption of up to 750 000 Appropriate planning should be done with a tax professional to ensure that the entrepreneur has access to this

    Original URL path: http://privatewealthmagazine.ca/RRSP_overlooked_personal_net_worth.html (2016-04-26)
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  • Business Planning: An Entrepreneur's Key Success [Planning] Tool
    technical and will depend on the type of succession chosen They are also subjected to the vagaries of the Income Tax Act Successors can be family members employees or third parties Generally when the successors are family members estate freezing techniques are used as they allow family members to enter in the business with little or no investment and they stipulate amounts to be paid to the retiring owner providing him or her among other things with an adequate retirement income flow Alternatively when the successors are key employees strategies commonly used allow for the purchase of the business to be financed through the use of its profits as well as borrowings Finally if the successor is a third party you will need to weigh the pros and cons of selling either your assets or your shares One thing is certain whether or not you are ready to pass on the reigns it s important to put in place a corporate structure that will allow you the flexibility to reduce taxes if ever you do receive an offer for the business Certain tax measures allow for a business owner selling a business to receive tax savings of up to 180 000 but only if planned properly An effective business succession plan will allow you to maximize the use of available tax benefits remain competitive and maximize your after tax proceeds for your business Because succession often coincides with retirement planning for the succession of your business will provide you with retirement income and will allow you to foresee the financial and tax implications upon your death This will make it easier to plan for the use of your wealth during your retirement and for its transfer A shareholder agreement a buy sell agreement or strategies with life insurance will help

    Original URL path: http://privatewealthmagazine.ca/entrepreneur_key_success_tool.html (2016-04-26)
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  • Fee-only Financial Planning
    planner represents the client and only the client Objectivity is the name of the game which is important in a global financial market that can be fraught with conflicts of interest Fee only financial planning should not be confused with fee based investment management where an investor pays an annual fee to their investment advisor based on a percentage of their investments A fee based approach is simply a way to pay your investment advisor and even then there is a fierce debate as to whether or not this is in the best interest of the investor or the advisor Fee only financial planning fees are charged for comprehensive financial advice and are based solely on time They typically take the form of an annual fee ranging from 2 000 to 5 000 and upwards depending on the mandate and whether tax preparation is included In some cases the fees may be tax deductible They have nothing to do with a client s income or assets meaning every client is just as important as the next This is in stark contrast to most financial advice where higher fees are paid by clients with larger accounts and different compensation is paid to the advisor by different products It means fee only financial planning is accessible by anybody and everybody on a level playing field That said those with a high net worth probably have the most to gain from working with a fee only financial planner because the economies of scale are that much more compelling relative to the cost of the service In essence the return on investment can be that much greater Compared to the typical fees on a 1 million investment portfolio which typically range from 10 000 to 20 000 a year even at 5 000 a year fee only financial planning is a bargain No products are sold by a fee only financial planner or their company The advice and potential products are kept entirely separate so most clients who work with a fee only financial planner will also have a separate investment advisor and insurance agent No Integration Some people are reluctant to add another advisor to their repertoire They already meet with their investment advisor in February to make their RRSP contribution They meet with their accountant in April to get their income taxes completed They have an insurance agent who has arranged their insurance policies They have a lawyer who has updates their wills and powers of attorney from time to time The problem is even though these various professionals may be great at what they do individually collectively there is no integration of their recommendations Fee only financial planners are comprehensive advisors who can help you fit together all the different pieces of your financial puzzle They also have a short list of third party professionals who they can refer you to if you need to purchase a product as a result of their recommendations without accepting a kick back or commission

    Original URL path: http://privatewealthmagazine.ca/fee_only_financial_planning.html (2016-04-26)
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  • The Only Relevant Investment Benchmark
    tailored to their true tolerance for investment risk The Old School Approach To Portfolio Construction A few decades ago most investment managers structured client portfolios by using such a goals based or asset liability approach to managing client wealth The general performance of the markets had nothing to do with how they structured their clients portfolios Market Indices Proliferation With the many technology advances over the past few decades that enabled the development of so many global capital markets indices the investment industry and by extension investor clients have become obsessed with beating the indices instead of simply meeting each client s unique set of investment objectives Risky Behaviours Such relative investment return seeking behaviour drives investors and their advisors to source securities and investment managers who assume heightened levels of investment risk in order to beat the index or in many cases we see firing investment managers when they ve had a few quarters of relative underperformance despite the fact that their philosophies and processes remain intact and replacing them with managers who have recently demonstrated outperformance numbers This is many times the equivalent of buying high and selling low which is never a recipe for investment success Good versus Bad Investment Outcomes The outcome of such relative investment thinking is that if investors meet exceed a given benchmark ie TSX S P etc then they should be happy while if their investment portfolio underperforms a given benchmark then they should be unhappy To challenge this thinking I frequently present clients with the following two investment performance scenarios and ask them which scenario they d prefer Scenario 1 You have a consumption requirement of 100 000 in three years from now and your investment counsellor structures a portfolio that meets this requirement but the portfolio underperforms a given market index by one per cent Scenario 2 You have a consumption requirement of 100 000 in three years from now and your investment counsellor structures a portfolio that does not meet this requirement but the portfolio outperforms a given market index by one per cent As everyone s financial reality is a cash flow world income and expenses everyone that I ve presented these scenarios to has indicated their preference for Scenario 1 Reality Hurts The unfortunate reality though is that so many clients nowadays have been lured into the relative investment performance game by the global investment industry and paid the price of not meeting their future consumption requirements Actual examples of this today include Pension plans who have seriously unfunded liabilities because their portfolios were designed to perpetually chase relative returns instead of focusing on matching their assets to future pension obligations Foundations who have had to cut their spending policies because their asset bases and subsequently income generating capabilities were impaired due to their focus on finding investment managers who consistently beat the indices Families across Canada who have had to defer retirement because they were chasing relative returns instead of focusing on the accumulation of a

    Original URL path: http://privatewealthmagazine.ca/relevant_investment_benchmark.html (2016-04-26)
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  • Driving Female Talent Development Through Mentoring
    at the CEO or senior executive level 62 per cent of men versus 52 per cent of women Beyond Advancement Beyond advancement there are many benefits associated with having a senior level mentor An executive has more life experience to share and is able to provide in depth counsel on topics such as integrity professionalism and work life balance As a mentor he she can also provide guidance on how to leverage networks increase recognition from key decision makers and seek out a fulfilling career path Recognizing the need to close the gap between men and women who are seeking the support of an executive level mentor the Women s Executive Network WXN connects hundreds of high potential women with Canada s top female executives Since 2003 WXN has been celebrating and honouring women who are proven achievers in the private public and not for profit sectors through the Canada s Most Powerful Women Top 100 awards In 2007 the WXN created the WXN Wisdom Top 100 Mentoring program which matches the next generation of female leaders with the Top 100 award winners now a group of 520 outstanding women for one on one mentoring This program also provides more than 20 hours of professional development through WXN s education partners SFU Business and Laurier School of Business and Economics and from other prominent business professionals These sessions focus on leadership development and provide participants with additional tools to help them utilize the time with their mentor effectively ensuring tangible results Too often women will wait for someone to offer help instead of going out there and asking for it Women need to be more proactive in their careers in building their networks or in seizing an opportunity for development says Stacey Allerton Firth vice president human resources Ford Motor

    Original URL path: http://privatewealthmagazine.ca/driving_female_talent_development_mentoring.html (2016-04-26)
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  • The Regulatory Bug
    and Alberta both provinces having expressed the importance of their physical proximity to local industries It is also true that financial industry supervision is a solid money maker for provincial governments with an active investment community In Great Britain the Bank of England has taken over regulation of the banks from a quasi self regulatory body SRO The EU has made efforts to impose more stringent capital requirements on banks in member countries and to get member countries to agree to meet deficit targets by 2013 There will also be new regulations to standardize the financial reporting of EU members More recently the regulation bug has spread beyond the financial sector The U S is setting new rules for off shore drilling for hydrocarbons especially pertaining to deep drilling Apparently the Minerals Management Service a government department has a history of doing everything it could to accommodate the petroleum companies Like a very weak SRP it did not enforce the rules if companies complained of inconvenience Sadly in response to industry protests it shelved the implementation of a new set of regulations that likely would have at least mitigated the BP spill Not A Panacea Unfortunately new regulations are not a panacea Some have argued that we do not need new rules only capable honest and intelligent people to enforce the rules we already have A cynic might respond it is easier to write new regulations From the private sector point of view the immediate problem with new regulations is uncertainty about the substance of the rules and even more uncertainty as to how they will be applied A second concern is the added cost Invariably there is an inflationary impact of new regulations It is axiomatic among the legal profession that any new regulatory legislation provides additional work for

    Original URL path: http://privatewealthmagazine.ca/regulatory_bug.html (2016-04-26)
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