Now too complex for Michèle
THE SITUATION
Michèle is a 42-year-old single mother. This IT manager for a large Canadian bank had managed her savings expertly for at least 10 years. With good knowledge of financial markets, she opened her accounts in 2010 with her employer’s discount brokerage subsidiary.
Without advice or support, she still managed to grow her savings and her earnings almost exponentially. Initially, she invested $125,000 and then maximized her RRSP, RESP and TFSA each year. Sensing the rise of social networks and the electrification of transportation, she bet on a few star titles and now has total assets exceeding 3 million Canadian dollars.
Humbly, she admits to having been very lucky. But now, her assets in American stock securities are causing her tax headaches and, according to her, she has less and less time to monitor the ups and downs of the markets.
Now a 3-time millionaire, she wants to protect what she has acquired and is now aiming for “less spectacular” growth.
Objectives
- Review your portfolio distribution with a growth profile
- Invest TFSA assets boldly
- Actively manage various accounts
- Implement tools to limit future tax impacts
- Establish remuneration for fee-based advice at a reasonable rate
- Establish a complete financial* and succession plan
The key figures
Assets
- Current account: $31,000
- Sisters Island Condo: $643,000
- Car: $47,000
- TFSA: $690,000
- RRSP: $345,000
- RESP: $145,000
- Cash account: $1,604,000
Liabilities
- Credit card: (8,100)
- Mortgage: (53,000)
NET WORTH: $3,443,900
Our solutions and results
After some conversations, it was agreed to hold on to a few stocks that had accumulated a large unrealized capital gain. Then, we reorganized all the accounts by taking positions in carefully selected private management mandates. In addition to respecting its investor profile, we paid constant attention to the possible tax impact of the securities chosen.
In the case of the non-registered account, deferred capital gain and eligible Canadian dividends were preferred. We agreed to invest the TFSA in sector ETFs and a few promising individual stocks.
The consulting fee structure proposed to Michèle is very simple and above all results in a sharing of risks and profits. If performance is growing, she will become richer and her planner will also see an increase in her remuneration. If the value of its capital decreases, the fees paid will also decline.
Michèle wants to semi-retire at age 52. Backed by figures, our advanced financial planning* has concluded that it has the means. With an annual cost of living of $80,000, his assets combined with his future savings and his returns ensure that he can receive funds up to the age of 95 without worry. In addition, his assets are sufficient to offer an inheritance of more than $2 million net to his daughter Mathilde.
The peace of mind that this close support gives him has greatly calmed his small and big anxieties about his financial future. Knowing that she is well surrounded by trusted professionals, she notes that she has gained more than 3 hours per week of quality time, which she can devote to her daughter.
