A Day In The Life Of An Advisor: The Value Of Sound Advice - #1 TFSA Horror

Now that I've just about gotten the 2017 income tax preparation season in the rear view mirror, I can get back to doing those things that are near and dear to my heart, like writing blog posts.  Not that I don't enjoy preparing my clients tax returns, I very much so.  Every year I am reminded, why it is  so important for me to be involved with my clients income tax filing, and the tremendous value I bring to the table.  As a matter of fact, I got the idea for this series from situations I have encountered over the last few months.

As someone who has worked in financial services practically all my working life, and been life and health insurance licenced for over thirty years, and approaching twenty-nine years for investment funds, I can say that I offer "cradle to the grave" financial services advice to my clients and their families.  Many people, perhaps I should say most people, don't fully understand what advisors do
for and on behalf of our clients and their families.

In this first "The value of sound advice" post, I'll share this situation:

PLEASE NOTE:  The name and some of the circumstances were changed to protect the privacy and identity of the client.

Susan is a lovely lady from Great Britain, a widow, who have lived in Canada since her early twenties.  She was referred to my by a friend of hers and fellow dance enthusiast and became a client in the late 1990's. She returned to her home country to be with family and friends she left behind so many years ago.  While she was gone, the Canadian Government introduced the Tax Free Savings Account (TFSA) but you have to be a resident for tax purposes to benefit from this account.  After just about a decade back home Susan started missing her Canadian lifestyle and so in 2012 she returned to Canada for good.  Susan has her RRIF account and non-registered funds invested through my dealer, and stopped in to catch up during her yearly visit while she lived abroad. Upon returning to Canada Susan quickly re-established her residency status and settled back in to her circle of friends and family here; resettlement included wiring her savings back to the local branch of her bank, one of the "big six".

Knowing that she was not entitled to TFSA contribution for the years she lived abroad, on a recent visit I discussed utilizing the TFSA to reduce the amount of taxable investment income she earned and probed her to find out if she had made any TFSA contributions at the bank. She didn't think so, but from my experience I want to be sure so she promised to looked over her papers and get back to me.  She left my office promising to call me with the information.  The next day I received a frantic call from Susan.  She had just picked up her mail and received a letter from the Canada Revenue Agency and they wanted close to $7,000 more in taxes.  She couldn't understand why as she had sent a cheque in for the amount she owed when her 2016 tax return was filed and the cheque was cashed.

I knew immediately what the problem was, but asked her to read the first part of the letter from the CRA.  Of course, it was about the TFSA over-contribution which included penalties, interest and also an additional tax due to non-resident status.  Susan was beside her self!  I asked her to bring all of her papers and statements from the bank so I can help her sort out the problem.  It didn't take long before I found the cause of this nightmare.  In 2015 she had some Term Deposits matured, and because she didn't have a TFSA at the time, the bank advisor plunked $41,000 in a TFSA without asking these vital questions:  From 2009 (the year the TFSA was introduced) to 2015 did you live outside of Canada? If yes, were you considered a "non-resident" for tax purposes? When did you return to Canada, and are you now a full-time resident? 

These are costly mistakes, and it made me wonder just how many people, in particular senior citizens, have been burdened with penalties for TFSA over-contributions that far exceed any money they have made in these accounts?  In the end, I helped Susan by drafting a letter to the CRA detailing the changes in residency status, providing proof with returning documents and copy of T1 tax return showing declaration of date returned; and also "begging for mercy" in interest charges due to ignorance and age.  She is waiting to for a response, fingers and toes crossed.

Stay tuned,

BEVERLEY ALLEN, FLMI

Beverley

Investment Fund Advisor & Life and Health Insurance Advisor
Desjardins Financial Security Investments Inc.
Desjardins Financial Security Independent Network
Ontario Central Region (OCR), GTA West Branch
5070 Dixie Road
Mississauga, On L4W 1C9

#MoneyTalkwithBevAllen #TheValueOfSoundAdvice #TFSA #overcontributionnightmare

Emotional Quotient: Do We Hear With Our Emotions?

Do people hear what they want to hear or do they hear what they feel?  The more I dig into the topic of emotional quotient the more fascinating it gets. As I observe my own responses and reactions I can't help but conclude that we interpret what we hear based on our internal wiring consciously or unconsciously.

Here is an example of hearing how we feel at work. Jack is not feeling particularly good about where he's at in life.  He lives at home with his mother and even though he has a great career and his mother thinks very highly of him, Jack reacts negatively to even a small reminder like , "Jack, your cab is waiting", with "you don't have to tell me, I know, I'm not a child".  A simple "thanks for the reminder" or just "thanks" would have been appropriate.  In Don Miguel Ruiz's  book, The Four Agreements, the second agreement is "do not take anything personally" but unless we are emotionally whole we do take everything personally. That's why when someone say some things or asks certain questions we automatically launch into a tirade or get in a defensive mode even  before the person is done talking.

To be a good leader we need to be a good listener first.  To be a good listener who responds rather than reacts we need to be emotionally whole, healed of the "sores" and "parasites" as +Don Miguel Ruiz so wonderfully illustrates in another of his books The Mastery Of Love. As everybody's friend +John C. Maxwell say, leaders develop daily not in a day.

The day to start is today, to be aware is priceless. 

 BEVERLEY ALLEN, FLMI

Beverley

Investment Fund Advisor & Life and Health Insurance Advisor
Desjardins Financial Security Investments Inc.
Desjardins Financial Security Independent Network
Ontario Central Region (OCR), GTA West Branch
5070 Dixie Road
Mississauga, On L4W 1C9

#MoneyTalkwithBevAllen

Leadership Done Wrong

Here is something I know for sure:  Leadership is not just about winning.  If this has not yet become apparent to Mr. Donald J. Trump and his team at the White House they are in bigger trouble than I thought.  Since winning the 2016 Presidential election in the United States Of America which he was expected to lose, Mr. Trump has squandered the opportunity to galvanize opposing factions of a bitterly contested election and take advantage of his new found hero status to really make America greater than it has ever been.  His campaign had the right message and tapped into the right vein of America's discontent, I did not agree with nor condone the tactics and methodology but he won and that is 'yuge". He needed to switch hats and step up his leadership game and he didn't do that.

I am predicting that his campaign and presidency will be the most examined case study by leadership gurus, intellectuals, students of politics and human behaviour enthusiasts like myself for a very, very long time.  I had the good fortune of completing the +John Maxwell Team Certification program last August and having studied +John C. Maxwell acclaimed book, The 21 Irrefutable Laws Of Leadership, hear is how I break down what I have observed about Mr. Trump's leadership so far.

CHARACTER
Character matters a lot! Most of us grew up hearing often, at home, church and school the importance of building a good character. Parents and teachers have always told us "show us your friends and we will know what type of person you are" and "birds of a feather flock together".  Apart from the outrageous statements he made at the beginning of his candidacy, the first thing I noticed following the election was the character of the people Mr. Trump surrounded himself with.  John Maxwell says it best "leaders develop daily not in a day" so it is highly unlikely that Mr. Trump will change his character or develop new leadership style any time during his presidency since he appears to have great resistance to personal growth.  I believe it was +Mark Cuban who said he liked Mr. Trump until he realized that Mr. Trump had no desire to learn.  Personally, I knew of Mr. Trump since he was always in the news but didn't know much about him.  I loved The Apprentice, it's a great concept so I watched religiously in the early days.  I stopped watching when Mr. Trump started belittling people.  I thought that there are many great leaders out there that I can learn from, I do not need to watch someone who calls himself a successful businessman insult and degrade people on television.

THE LAW OF THE INNER CIRCLE
There is a law that governs the universe that says like attract like, so in order to be great one has to consciously choose people to compliment and strengthen one's own talents and personality.  John Maxwell said this about The Law Of The Inner Circle: "A leader's potential is determined by those closest to him."  Stop here and think about the people in Mr. Trump's inner circle.  "What makes the difference is the leader's inner circle."  By picking only people who think the same way as himself and who appear to have questionable character and dubious past conducts, Mr. Trump has unintentionally endangered his administration.  Instead of having people in his administration  to help him stay focused  and steer him in the right direction, those chosen to work in his administration have become bogged down with scandals, infighting and information leaks.

THE LAW OF THE BUY-IN
Having won the general election, immediately Mr. Trump and his team should have moved to get the rest of the country who didn't vote for him, and even those residents not eligible to vote, to buy into his vision.  He didn't do that, him and his team decided only to "play to his base" and so now his presidency has been marked by protests and opposition from day one.

THE LAW OF RESPECT
In the chapter on the law of respect John writes:  "When people respect you as a person, they admire you.  When they respect you as a friend, they love you.  When they respect you as a leader, they follow you."   When we respect ourselves, we conduct ourselves in a respectful manner. It is quite apparent that on many levels Mr. Trump doesn't respect himself and has displayed the same lack of respect to people he doesn't like, those who disagree with him and as a newly minted politician, those who do not support him.  As an outside observer, it is clear that he does not hold that much respect for the Office Of The President Of The United States Of America either.  Actions speak louder than words, so he can say that he does respect the office as loudly as he can, but I will believe what he does.  Actions come out of the innermost being, where the hidden thoughts are.  The hidden thoughts are the unspoken words and hard held beliefs which manifest into action, and nobody can deny that.

Closing thought on respect from John's book:  "Dictators and autocratic leaders rely on violence and intimidation to get people to do what they want.  That's not really leadership.  In contrast,  good leaders rely on respect...... When leaders show respect for others - especially for people who have less power or a lower position than theirs - they gain respect from others."

Wow, this is such a powerful little book, read it twice and now that I had to go back to correctly reference the quotes, I will start reading it again.  Certainly worth drilling the principles contained in the leadership laws down until they become second nature. 

Personal note:  This blog post is not intended to promote John's book.  I am simply putting my thoughts in writing and the book just happens to be fantastic reference material.

Have a superb Saturday,


BEVERLEY ALLEN, FLMI

Beverley

Investment Fund Advisor & Life and Health Insurance Advisor
Desjardins Financial Security Investments Inc.
Desjardins Financial Security Independent Network
Ontario Central Region (OCR), GTA West Branch
5070 Dixie Road
Mississauga, On L4W 1C9

#MoneyTalkwithBevAllen

The Power Of Perspective

"You can tell a woman she has a face that would stop a clock, or you can tell her when I look at you time stands still", said my fellow Jamaican, the magnificent motivational speaker, the late Bobby Charlton.  If there is power in words, then there is even more power in thoughts as thought precede  words. How we look at anything (perspective) impacts how we feel, and that affects everything else in our lives. 

A poignant lesson I learned from +Byron Katie about ten years ago is this, "just because you think something doesn't mean you have to believe it". I was going through a very rough spot dealing with critical challenges that would make or break me.  A coach I hired to help be break through and get to my next level shared Ms. Katie's video with me and boy oh boy, did it ever change the way I view the thoughts that float across my mind! In the video, Ms. Katie told the story of a young woman who wasn't trusting of her spouse and would build elaborate stories around her thoughts which caused huge problems in her relationship.  That's right, you do not have to believe everything that comes across your mind. What we need to do is hold those thoughts that causes distress up to the light of truth and call out the lies when we see them.  Yet we all fail to do this or have failed to don this at some point.  A common example I  come across is parents freaking out and thinking the worst if they haven't heard from a child or if their spouse is late getting home from work. Once we go there, our mind just take the story and run with it, building a great production with full graphics - kid laying in a ditch dead or spouse cavorting with another woman!  It is incredible where our minds will take us if we do not learn the art of taming it.

It is definitely true that you cannot change the past, or some circumstances, but you can always change the way you see things. I know this for sure, because I have proven it over and over again.  I will give you a few examples to put things in perspective, pun intended.

After the Y2K (anybody remember that) and post 9/11 stock market melt downs I was very discouraged and I had choices.  I could stay with the negative news, become defeated and find another career as what happened to many advisors, or I could change my perspective.  I changed my perspective, I changed the way I positioned my self with my clients and prospective clients and it worked out very well for the clients and me.  As a result of this change I became more straightforward with clients made it clear up front that I would not take on any client who is only chasing returns - that is a recipe for disaster, in my opinion.  I also changed the way I view my role as an insurance and investment funds advisor.  The truth is people are overwhelmed with jobs, family and community involvements and just do not want to take the time to deal with learning a lot about the financial markets, taxes and so forth.  Rather than getting upset or annoyed when I have to explain the same thing the 100th time, I started telling my colleagues that as long as people remain people, in that they would rather somebody else do for them what they could easily do for themselves, I will always have a job.  It is not that they can not do it, it is not that they are not smart enough, it is just that they do not want to do it and they are willing to pay me to do the work for them, what is wrong with that?  It is a win-win, that's the power of perspective!

Then came the great crash of 2008, now how do I deal with that?  More than any time before a level headed advisor was what clients needed.  My then 21 year old son, soon to graduate from Wilfrid Laurier University came home one evening and saw the tired look on my face, he hugged me and said "mom, how are you going to position your clients for the long stock market growth ahead?  That is what you need to be doing for your clients right now!"  As the great leader +John C. Maxwell say "If you have a pulse you need encouragement."  I spend all day every day encouraging people and was so appreciative of this coming from my young son, it meant the world to me to hear those words.

I continue to apply the POWER of PERSPECTIVE in my life everyday in every area of my life.  My doing so, I gain understanding and I am more compassionate.  I am more in tune with my thoughts and therefore I am able to change they way I feel and change situations and outcomes.  That is real POWER. Everybody have this power, put it to work and watch what happens, you will be amazed.

Have a #Powerful #Perspective filled weekend.


BEVERLEY ALLEN, FLMI

Beverley

Investment Fund Advisor & Life and Health Insurance Advisor
Desjardins Financial Security Investments Inc.
Desjardins Financial Security Independent Network
Ontario Central Region (OCR), GTA West Branch
5070 Dixie Road
Mississauga, On L4W 1C9

#MoneyTalkwithBevAllen

P.S.  You can find out more about Byron Katie at www.thework.com and follow her on twitter @ByronKatie.