The First Meeting

We get to know each other, with no obligation on either side. You discuss your current situation, your immediate needs, your concerns, your passion, your long-term goals. You get to know me as well. If we both determine a potential fit, we will schedule another meeting.

The Proposal

Based on the information gathered on our first meeting, I will prepare a financial plan customized to your situation. The plan will incorporate where you’re at right now and what is required to get you to where you want to be. In addition to investment allocation, it will also include tax strategies that will help minimize your tax burden. I will present this to you and answer any of your questions and concerns.

The Implementation

Once you have fully understood and are satisfied with my recommendations, we will put the plan into action. We will prepare all the required paperwork to set up your accounts and transfer your assets, if it applies.

Monitoring and review

Though I am available to offer advice regarding your financial affairs throughout the year, I would require a meeting with you at least once a year to review your portfolio and ensure you are on track to meet your goals. As you experience changes in your life, I will recommend adjustments to ensure you remain on course.

RRSP

Registered Retirement Savings Plan. A retirement vehicle introduced by the Canadian government in 1957 (Registered Retirement Annuity) to encourage Canadians to save for their retirement. The account grows tax-free. Contributions are tax deductible up to a predetermined limit.

LIRA/LRSP

Locked-In Retirement Account/Locked-In Retirement Savings Plan. A type of retirement account that lets you transfer pension funds from previous employers. A LIRA is provincially regulated whereas an LRSP is under federal jurisdiction. Under these type of accounts, you make the decisions on where the funds are invested. Depending on the pension legislation governing the plan, the account is locked-in until at least 55 years old. Only under special circumstances can one withdraw money from a LIRA/LRSP.

RIF/LIF

Retirement Income Fund/Life Income Fund. When you turn 71, your RRSP or LIRA must be converted to a RIF/LIF or to an annuity. Accounts continue to grow tax-free within the RIF/LIF. The RIF requires you to withdraw a minimum amount per year, with no maximum. The LIF requires you to withdraw at least a minimum amount per year, you cannot withdraw more than the allowable maximum amount for the year. Withdrawals over the minimum amount are taxed at source using the prescribed withdrawal tax rates by the Canada Revenue Agency.

RESP

Registered Education Savings Plan. A type of account that helps parents save for their children’s education. The account receives a 20% government grant for qualifying contributions of up to $2,500 annually. Additional grants can be obtained depending on family circumstance and provincial programs. The account grows tax-free.

TFSA

Tax Free Savings Account. A savings program introduced by the Canadian government in 2009. Eligible Canadian residents can contribute up to their maximum contribution room each year. Income generated and withdrawals in the account are tax-free. Contributions to TFSA are not tax deductible.

Non-Registered

An investment account that can have multiple purposes depending on one’s goals and needs. This account can complement other registered accounts. There is no limit as to how much can be deposited. Earnings within the account is taxed and withdrawals are subject to capital gains.

What is a mutual fund?

It is an investment product with money pooled together by investors with a common goal and invested by a professional fund manager. Mutual Funds invests in stocks, bonds, or other securities. Investors own shares in the mutual fund, not in the securities where the fund is invested. Because you are pooling your money with other investors, you get to invest in an assortment of investments at a relatively low cost. You can open an investment account for as little as $100.

What are the costs of mutual funds?

Mutual fund costs can vary widely from fund to fund. You can find information about a mutual fund’s costs in the prospectus and/or the fund facts sheet. Generally, the main cost categories are Management Expense Ratio and Sales Charges.

What is Management Expense Ratio (MER)?

A management expense ratio (MER) is made up of management fees, operating fees and taxes charged to a fund during a given year expressed as an annual percentage of the fund’s total assets. Management fees include the fees paid to the manager for professionally managing the fund. They may also include the trailing commission paid to an advisor and their firm for ongoing advice and service. Operating fees include the fund’s day-to-day operating expenses. Each fund is also required to pay taxes on management fees and administration fees charged to the fund.

What are trailing commissions?

As mentioned above, management fees may also include trailing commissions. The manager pays portion of its management fee to the advisor and their firm that you deal with as a trailing commission for the ongoing advice and services they provide to you. It is an annual service commission that is set by the fund and usually ranges between 0.25% to 1%. It is paid to your advisor and their firm as long as you own the fund.

What are the sales charges?

You may incur sales charges when buying or redeeming a mutual fund. Sales charges are separate from the Management Expense Ratio (MER) and should not be mistaken for the trailing commissions that make up part of the management fee. There are four main types of sales charge options.

1. Front-end load (FEL) or initial sales charge (ISC). This is a negotiable sales charge generally ranging from 0% to 5% that is deducted from your initial investment and is paid to your advisor and their firm at the time of purchase.

2. Back-end load or deferred sales charge (DSC). You don’t pay a sales charge at the time of purchase. Instead, the advisor and their firm is paid generally 5% by the fund company. However, if you sell the fund before a certain date (usually five to seven years) you will pay an early redemption fee to the fund company. Generally you are allowed to redeem 10% of the fund annually at no cost. The redemption fee goes to the fund company as a reimbursement for the fee that the fund company paid the advisor when you initially bought the fund.

As of June 1, 2022, the deferred sales charge is banned. If you purchased a fund under the DSC option prior to June 1, 2022, the redemption fee schedule will still apply.

3. Low load or low sales charge (LSC). Similar to a DSC, you don’t pay a sales charge at the time of purchase. Instead, the fund company pays generally between 1% and 4 % to your advisor and their firm. The holding period to avoid any redemption fees is shorter and is typically three years and the redemption fees are also lower.

As of June 1, 2022, the low load or low sales charge is also banned. If you purchased a fund under the LSC option prior to June 1, 2022, the redemption fee schedule will still apply.

4. No load. Usually these funds are purchased from banks and there are no sales charges to buy or sell. Like all funds, you must compare the MER and performance of each fund before you make a decision.

Note: If you have a fee-based account, there is no sales charge when you buy and sell funds and no trailing commissions are paid to your advisor and the firm. Instead, you pay an annual fee, usually charged monthly, to your financial advisor and their firm. You may be able to negotiate this fee, which is often based on a percentage of the total assets your advisor manages for you.

You may be charged other fees in addition to the sales charges and MER discussed above. Please always read the fund facts sheet prior to investing.

Worldsource Financial Management Inc.

WFM is one of Canada’s largest independent mutual fund dealers. Its’ primary focus is to build financial prosperity by supporting professional advisors across Canada. WFM has over 600 independent mutual fund advisors serving over 100,000 investor clients.

WFM is a wholly owned subsidiary of Guardian Capital Group Limited. Founded in 1962, it manages over $20 billion in institutional assets and over $5 billion in assets under management for the retail intermediary channel.

How much do I need to retire on?

The answer to this is unique to each person’s circumstances. It is generally based on your needs and the retirement lifestyle that you want. Start with how you want to spend your retirement – travel, pursue hobbies, volunteer, work part-time or even take care of grandchildren. Next look at your current spending and see how those expenses would change when you retire. Other factors that need to be considered are – the age you would like to retire, estimated length of your retirement, inflation, unexpected expenses.

Are mutual funds guaranteed?

No, they are not. As with any investments, there are risks to investing in mutual funds. The value of your account might fluctuate over the course of time. The extent will depend on what the mutual fund invests in. Equity funds have the potential to earn a higher return than fixed income funds however it is also more volatile. It is important to determine the level of risk you are comfortable with before investing. Knowing what the intended purpose of the investments are and the length of time you expect to hold the investments helps in determining the risk that you can take.

Why do I need a financial advisor?

A lot of people lack the time, discipline and expertise to manage their finances. A financial advisor can not only help in creating a financial plan but also ensure that you keep on track. Whether it’s saving for a home, a child’s education or retirement, a financial advisor can provide ongoing support and guidance to help you reach your goals.

What is a Certified Financial Planner (CFP) professional?

It’s a professional certification for financial planners. To become CFP certified, financial professionals must complete a rigorous education program, pass two national exams and have three years of qualifying work experience. In addition, they must keep their knowledge current by completing a set amount of continuing education courses every year to remain certified. More importantly, they must adhere to a code of ethics that puts their clients’ interests first.