Leadership & Money: Money Moxie - Money Mindset

Hello, here's my new #blogpost.  Looking forward to your comments and feedbacks.

Leadership & Money: Money Moxie - Money Mindset: Mindset is the single most important determinant of success or failure on the road to wealth accumulation and the creation of generation...

Money Moxie - Money Mindset

Mindset is the single most important determinant of success or failure on the road to wealth accumulation and the creation of generational wealth.  What exactly is mindset?  Dictionary.com defines mindset as "a fixed mental attitude or disposition that predetermines a person's responses to and interpretation of situations".  This is pretty clear and accurate definition as it relates to all things money.  Mindset is "hard wired" way of thinking based of beliefs and experiences accumulated through family upbringing, life experiences, religious and spiritual beliefs plus our own fears, desires and expectations based on how we interpret the world around us.  Much of the hard wiring is on an unconscious level so we are not even aware of how these unconscious beliefs affects our decisions.

I have encountered some distinct patterns and mindsets during the course of my career in the financial services business and as a keen student in the school of life.  Take life insurance for instance; I have had highly intelligent and educated prospective clients say that they do not believe in life insurance and yet they understood life insurance as what it is - a tool where by you make arrangement for a sum of money you have not yet accumulated (and in many cases may not accumulate over a lifetime) to be paid out to the beneficiary or beneficiaries upon the death of the insured person.  Clearly any responsible person who does not have a trust fund set up for them, no longer lives in a village where family members take care of each other, who has created financial obligations (a family, debt) should have at least sufficient life insurance to take care of their funeral expenses and other financial obligations.  It would not take long in a casual chat about life insurance before the story where someone in the family - a parent, or grandparent "got taken to the cleaners" or lost money through an insurance company or an insurance agent, usually many many years ago before the insurance industry became the highly regulated and before systems now common place were even invented.  Ditto for investing in the stock markets.  A bad experience in the family repeated often creates a mindset that says only the bank is safe, or only the very rich can afford to invest in the stock markets.  The sad thing is that the negative experience sometimes has no resemblance whatsoever to the current reality and yet is is used as a block or hindrance to making beneficial decisions today.  In 1997 I ran into an old school mate who was living in New York.  I had not seen him for over twenty years.  Getting reacquainted we had many conversations about different aspects of life.  In one such discussion he told me that he would never buy a house in New York.  I was puzzled by this statement as he had a family and they were living a a rented house but his wife wanted them to have their own home and this became a bone of contention in their marriage.  After sharing my philosophy on home ownership and how it could be worthwhile for them if thy got a multi-family property I could see light bulbs popping.  Did not hear from my friend for about six months after that.  One morning my phone rang and upon answering I heard his voice, he sound very upbeat, even excited.  After exchanging pleasantries he went on to tell me that he and his wife had purchased a home and how happy that had made her.  The property was a triplex so the family occupied one unit while the other two were rented out.  From what I know, they still own the home.  Given they way real New York estate has gone in the last twenty years it worked out very well for them.  Mindsets can change, especially if it is a position taken without proper information and or out of fear.

Driving around you sometimes see bumper stickers that read "I AM SPENDING MY CHILDREN'S INHERITANCE".  This is good for a few kicks and giggle, but a mindset like this will stop some people from planning for when they will no longer be around.  If they have assets it is  lawyers, accountants and the government who become their most significant beneficiaries.  Quite often this mindset is an excuse to explain away an embarrassing financial reality or poor spending habits.

Some stances on money are not hard wired but are born out of bitterness and disappointments from children and other family members.  People do feel let down after making tremendous sacrifice  and the hurt and disappointment and feelings of being let down cause them to make decisions that are detrimental to their own future as well as that of future generations.  Take for example this lady I will call Velma (not her real name), she was so hurt by the behaviour of one of her daughters that her share as a beneficiary on the life insurance was kept at a very small percentage until finally the relationship was repaired.  Velma was so happy about being able to see her grandchildren from this daughter she went and had her will redone and changed her beneficiary designations to leave a more equitable share of her estate for this daughter.    I call these types of situation "soft wiring" or situational mindset.

Releasing Negative Mindsets & Money Blockers

"You cannot change your destination overnight but you can change your direction." Jim Rohn

Thought patterns more deeply ingrained because of generational baggage and trauma are more challenging to shift or overcome but it is certainly possible.  "I want to be more successful with my money and at life, where do I start?"  First comes awareness, by reading this you are connecting with the writing and becoming conscious of the need to look at what needs to change.  You most definitely will be getting little ah ha moments.  Keep going, the more you pay attention, the more frequently they come.  The good thing is once you see, you cannot "unsee", and if you build a strong desire the information and opportunities you need will find their way to you.  I strongly suggest you get a personal coach, and depending on your family history and life experience you may be wise to also seek professional counselling.  Trying to move forward without dealing with your "blockers" would be like trying to swim against the current during a storm.

I could not write about money mindset without talking about the influence of our religious beliefs on how we view and deal with money.  Because I am a Christian I know the damages that "wrong believing" taught and practiced  in many church denominations can do.  I experienced this first hand, and I see it with other practicing Christians in my business and hear about it through other personal encounters.  I was a young Christian mother, around thirty two years old, going through a difficult time in life.  I have always been a believer, raised in a Christian home, but my mother was a pragmatic Christian.  She was not one of those women who saw church attendance as being more important that caring for her young children.  I was baptized in the Apostolic faith, which was new to me,  and found some of their practises much too rigid and impractical in a changing world but I wanted to be a good church member so I followed along.  Some of the older members were exceptionally hard on the young women, even those with young children.  I remember once arriving at church and being accosted and chastised by an Evangelist that I was "running down money" because I was absent from the mid-week services.  I never discussed my personal business with this lady, she know nothing about me.  I was going through so much at the time, having two young children and a husband who was not cooperating or pulling his share of the family responsibilities.  That experience left me so hurt me that it took me a while to get over it, but I never forget it.  Not long after that I moved from the city to the suburbs and never returned to that church, having been back only once for a funeral.  Yes, even the church that should be a place of refuge sometimes pile on more hurt and damage than the outside world.

Small changes add up and pay huge dividends.  For me leaving the city for a nice suburban town in a lovely family oriented neighbourhood was the first of many significant moves that I made on my journey through the the second phase of my life.  Act II, as I call it,  was all about raising my children to be successful adults, surving and thriving in self-employment and coming out at the other end sane and healthy.  By making intentional changes to steer your life in the direction of your dreams you will reinvent yourself without even realizing it!  You have to be prepared to make shifts in your belief system and do things that you may not otherwise be prepared to do though, otherwise it will not happen for you.

Here are some books that have helped me that you may want to read.
1) Ageless Body, Timeless Mind by Deepak Chopra.
2) Intentional Living by John C. Maxwell.
3) The 15 Invaluable Laws Of Growth by John C. Maxwell.
4) How Successful People Think by John C. Maxwell.

In case you are wondering, yes, I love John Maxwell's work!  He is the number one leadership expert and I do believe he leads by example.  He also happens to be an ordained minister.

Good reading,

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

#MoneyTalk #MoneyTalkwithBevAllen #TheValueOfSoundAdvice  #MoneyMoxie #MoneyMindset #RetirementReadiness 

Money Moxie - The Power Of Patience

So much has been written about persistence, but patience, not as much.  Yet patience is the wrapping around PERSISTENCE and FAITH that binds them together and make them work.  Patience is the missing component in the formula for success at everything we undertake, and with investing and financial planning PATIENCE is vital.

 As a matter of fact, from my thirty years plus experience as an Insurance Advisor & Investment Fund Advisor, I see where many people who desire financial security or to leave a legacy for their heirs and loved ones stumble and fall because of lack of patience.  Sometimes it's a lack of faith as well as patience but mostly  patience.  We believe the event of retirement is too far away to think about it now, let alone start planning for the day when we would "pack it all in" and take life easy or do something entirely different.  The prospect of paying for a life insurance policy for forty or fifty years is a turn off for many, because they cannot see the value of making such a commitment to ensure a legacy to their loved ones, even when we see and hear about people dying from various causes every single day!  Yet time marches on.  Some are lucky enough to realize this in time to be able to take action, others reach a place of regret once they realize that time passed them by and they did not head advice or take action on the desires of their heart.

I was at the Creflo & Taffi Dollar Change Experience Day at the Roy Thompson Hall in Toronto back in August.  Dr. Dollar was teaching a message on Grace which got my attention and I have been meditating on it since. That lesson birthed something in me! He taught us that according to the scriptures, we already have faith.  "Every man has been given a measure of FAITH", and we need only "FAITH the size of a MUSTARD SEED" to move mountains.  Creflo Dollar said what we need to do is have FAITH long enough until what we are believing for comes about. We stop believing, and give up, sometimes just when the answer was around the corner, citing many scriptures as well as modern day examples of patience at work.   In other words, we do not have enough PATIENCE to wait until our plans come into fruition.  Not so surprising as we live in the days of instant gratification, fame without the sweat, and the throw away society.  There is no gratification with impatience, none!

Once we become aware of our own deficit in patience, we cannot  "unsee" it.  As we work on growing our patience brain and emotional muscles, we begin to observe others who are strong in this area of life, and on the flip side, those who lack patience stand out a great deal more.  Yesterday,
Tuesday September 4th, 2018, being the first working day after the Labour Day,  was one of those days where my patience muscles were tried and I got to observe the consequences of impatience.  It seems like so many people made the decision that they were going to act on lingering "stuff" yesterday.  I had an out of town client passing through who decided to stop to inquire about a pending issue.  I had to call the company involved, and of course, the call queqe was long, Mr. Impatience was getting anxious, his wife sat quietly beside him, reassuring him, "dear we are here already, might as well wait and get this over with" she said.  I could see the grimace starting to appearing on his face.  Feeling empathy for him, I said "let's give it a few more minute, after that the best thing I could do is send an email and wait for the answer".  I would update you at that time I told him.  He squirmished a little in the chair and then decided they would leave.  No sooner he was out the door I got connected to a customer service representative who apologized for the wait and mentioned how busy the phones have been in the afternoon.

Just prior to Mr. Impatience's arrival I had delivered a life insurance claim cheque to a beneficiary.  The process for handling the claim required a few extra steps because of where and how the insured had died.  I had explained all this when helping with the initial forms but I reassured her to just follow the steps to the conclusion.  She did not listen at first, trying to take short cuts, and of course screaming at the me and the insurance company!  I was nice but firm.  If you just provide the information that is asked of you, whether you think it is relevant or not, things will move along much faster, I assured her.  Once she did what was required, the process worked as was expected, I came back to work from the long weekend to find her benefit cheque, including interest earned on the proceeds during the time waiting for settlement!  Huge lesson for Ms. Impatience, and I got to be the observer.  In the end I learned that payment was made without one of the initially stated requirement which was a big relief and benefit to the beneficiary as it would have cost money as well as a longer wait if the company insisted on it.

I could write about patience as it relates to investing without sharing the contrast to these two investors with you.  Mona was downsized from her company the same year as Lindsay (not their real names).  They had transferred their severance pays and pension funds to our firm, myself being the advisor.   They commenced taking income from their retirement funds in the same year (1998) and things were working rather smoothly for both of them.  Lindsay, having a bigger portfolio and was being pursued by some "hot shot" brokers, was more demanding.  Of course, each time he met with another broker he would call and we would go over every recommendation, compare and when he would realize that he already got what the "hot shot" brokers were selling.  Mona is a Christian lady, who is typical individual who listens, asks questions, weighs the answers and then make decisions and trust.  Lindsay was also a Christian who TRUSTS, but PATIENCE was not his strong suite.  Then 9/11 hit, everybody who was exposed to the financial markets "lost" money after 9/11 and the subsequent financial crisis.  During the turbulence, I did the usual due diligence of meeting with clients, going over what they had invested in, and all that.  Mona stayed put, riding out the downturns and things worked out beautifully for her.  I was preparing for her annual review meeting last week and couldn't help but gasped when I looked deeply at the number - her net investment, the amount withdrawn (the cumulative income payments) and current account value.  After drawing maximum  income permitted under a Locked-In Retirement Income Fund for approximately 20 years, her account value was still over 66% of initial investment.  She has such a heart of GRATITUDE, and does not shy about praying for guidance for her advisor.  Lindsay, on the other hand, demanded his money be moved around according to what others were saying and doing, and even though his account recovered the losses of both the 9/11 and Corporate Crisis market downturns he started making large withdrawals which undermined the purpose of the accounts and eventually transferred out to the bank.  Based on what I have learned (still in touch with him) things did not go nearly as well for him as for Mona.  The moral of this story is, because you are a Christian does not mean you automatically have patience, does not mean you will always make the right decisions.  There are essential principles of life which the Christian has to learn just like the non-christian.  Life is a journey and we all have the opportunity to learn and grow.

Since I am a person of faith I close with these quotes from the Bible scriptures:

Proverbs 28:20 (KJV)- A faithful man shall abound with blessings: but he that maketh hast to be rich shall not be innocent.

2 Peter 1:6 - (NIT) And to knowledge self-control; and to self-control, patient endurance, and patient endurance with godliness,👪👫👩👨😇✌👏👏👏

May you grow in patience, by GRACE, through FAITH,

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

#MoneyTalk #MoneyTalkwithBevAllen #TheValueOfSoundAdvice  #MoneyMoxie #ThePowerOfPatience #Patience

Money Moxie - Retirement Readiness

#MoneyMoxie - #RetirementReadiness

moxie[mok-see]See more synonyms on Thesaurus.com noun; Slang.
1. vigor; verve; pep.
2. courage and aggressiveness; nerve.
3. skill; know-how
🔑💯

We can all learn something from a Guru!

There are millions of individuals who are in the 50+ age group who are not retirement ready.  I belong to this cohort and had to literally pull myself up by the bootstraps to be in a position where the prospect of living off government pensions in retirement has almost evaporated.  This happened over the last eight years.  For this reason, I have decided to focus on this group as it is a natural fit and I am well equipped to make a difference at a time when it makes a difference so that those who buy-in can have a different outcome.

I was having a conversation with some other difference makers today about this very issue. Fifty-plus age group is the most vulnerable in the job market and any set back in health or employment (God forbid if it's both) can completely derail retirement plans.  In this age group, it is most important to focus on health - mind, body and spirit; on wealth and on personal growth. I have a network of individuals in the health and personal growth area.  I am the go-to person with regards to your wealth.

To start off, if you are in this age group and you have not thought seriously about your retirement this is a matter of urgency!  You cannot afford to wait, you must invest time to thinking about your life now, and if you should be given the privilege of living to see retirement what you want that time in your life to look and feel like.  I suggest you write out a "life plan" and create a vision board (my friends now do a vision book because it is easier to carry around and work with).

Here's my 2015 vision book

Once you have done this, the next step is to take stock your finances and consult with a reputable financial professional. Your advisor should be somebody who take a holistic approach to financial planning and have a good understanding of taxation in your jurisdiction, and depending on your circumstances, refer you to a tax professional.  Holistic planning takes into consideration and addresses where necessary, the various tentacles of wealth planning - Retirement - Health - Investment Management/Advice - Legacy.  Legally lowering your tax burden while you are alive and taxation at death is essential to the success of your financial plan.

Hear is a caveat - some advisors are "text book" advisors, they follow a text book idea that people should to this at this age and that at this other age etc; we know that from a practical point of view, that life is not like that - which is a major factor in why so many "baby boomers" are unprepared for retirement.  You will be better served by an advisor who knows how to help you navigate the ups and downs of life and not make you feel like crap or a failure for not having met the text book picture of where you should be on the retirement ready scale.  Here's an example:  I started over financially in 1997 when I purchased a home for me and my two children following a divorce.  I firmly believe in the stability of home ownership, plus, because interest rates had come down to an all time low, the payment for a nice three bedroom home in a very lovely neighbourhood was less than what it would cost for rent!  Because I started over, the equity in the home funded my contribution to children's post secondary education.  I am a believer in higher education, and the stats are there to back me up.  After my son graduated I sold the house and move to the city, deciding to rent an apartment until I figured out what I want to do.  My car lease had come due just shortly after that so I decided to buy out the lease.  Because I no longer owned a home, and didn't have much left over after the sale of the house, the look on the bank loan advisor's face when I did my application said everything she was thinking!  I was 53 at the time and was already feeling crappy about my situation.  I know where my "investments" to that point were - in my children, which was most important to me. But the amount of positive self-talk it took to regain my equilibrium after I left the institution was tremendous.  Anyhow, I did get the car loan to buy out my car lease and made the decision I needed to get back in another home because for "poor people", once you have a down payment, that's the best way to lay a foundation to wealth, pun intended.  

That plan has worked out very well for me, but it has not been without a lot of sacrifice.  Sacrifice is required in order to move forward in the direction of your goals.  On sacrifice, +Bob Proctor said it best, "giving up something of a lower value to get something of a higher value".  The higher value involved in giving up time, effort and some of today's pleasures is PEACE OF MIND and securing a "livable" income in your retirement years.

I would be honoured if you joined me on the journey to retirement readiness!

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

#MoneyTalk #MoneyTalkwithBevAllen #TheValueOfSoundAdvice  #MoneyMoxie #RetirementReadiness 

#MoneyMoxie - The Half Year Money Check Up

moxie[mok-see]See more synonyms on Thesaurus.com noun; Slang.
1. vigor; verve; pep.
2. courage and aggressiveness; nerve.
3. skill; know-how
🔑💯

We can all learn something from this Guru!

Today is tax filing deadline for individual taxpayers with self-employment income, that is sole proprietors.  This includes individuals with rental income, even if that is only renting out a portion of your home.  I  filed the last self-employed client's tax return yesterday, yipeeee!

Now that the 2018 tax filing season is officially over today, it's a good time to step back and do a review of your tax situation so you know what moves to make to better your outcome for 2018.  And while your at it, why not do a half-year check up to see where you stand with the money goals you set for this year? Let's face it, you work hard for that money, doesn't it make sense to take some time to plan to get the most out of what you work hard for?

Your tax return is the document that gives you the greatest insight into your financial situation as it reveals how much you earned from employment, business activities, investments and you can determine how much you had left to spend and save/invest.  My favourite advisor Coach & Speaker, the late Bobby Charlton coined this gem,  "the only money you can spend is what the government allows you to keep", so making maximum use of opportunities given in our tax code to lower your tax payable is paramount to your future financial success.    My saying is this, whatever you do, it's a sacrifice, so do the thing that will give you the best outcome in terms of your accumulation goals and financial security in the long run!

A good place to start with your check up is your budget.  You know how much you earned last year, you know how much tax you paid and how much you had left, now look at your spending and see what changes and adjustments you need to make.  Here is some help, courtesy of your Canadian Government.  Yes, your Goverment has a vested interest in your financial success because it means less demand on the social benefits later.

Planning your household budget - Canada.ca

Hear are some other areas that you can look at after reviewing your tax return:

- How much interest or other investment income did you report? Could you change how your investments/savings are allocated to reduce your income tax payable?

I have seen  many cases where taxpayers had tax free savings room but did not take steps to consolidate savings and investment accounts to reduce the taxable investment income they receive.  Also, having  fewer small investment accounts generating T3 and T5 tax slips could reduce the cost of preparing your annual tax return.

- Do you have joint accounts with others that is "messing up" their income tax and benefits return and is there another way to handle this?

- Are you using your Tax Free Savings Account (TFSA) and Registered Retiremement Savings Plan (RRSP) to give you the benefit they were intended to?

Whenever I hear these statements about the TFSA or RRSP I know right away that a) there is no strategy; b) they do not understand the purpose of the TFSA or RRSP;  c) this is a spender, and the TFSA and or the RRSP is probably not the best type of account for them.

"It's my money, I should be able to get it when I want."
 "Why do I have to pay tax/penalty, it's my money."
"I am spending my money now, I don't know how long I'm going to live so may as well enjoy it now."

Here's the question - do you want to have #MoneyMoxie?  let me know  your thoughts in the comment section below.

Do you have #MoneyMoxie?  Share your tips in the comment section, I am always learning, and there are many people who can learn from you.

Let us grow together,



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

#MoneyTalk #MoneyTalkwithBevAllen #TheValueOfSoundAdvice  #MoneyMoxie

Willful Ignorance Carries A High Price Tag

What is willful ignorance?  I come across this subtle chronic and sometimes  debilitating condition almost daily.  It manifests as avoidance, frustration, blame shifting and just plain refusal to take ownership and responsibility for delays, setbacks and other challenges that come as a result of not taking action or not taking charge of situations in a timely manner.  This behaviour is very costly, both in terms of actual dollars and lost opportunities.  I know, because I have been both the observer and the guilty party to this. 

Willful ignorance is also very selfish.  How you might ask?  The most common example of this I come across is people not taking the time to read a message or letter they received and call, sometimes complaining, only to find out this answer was right there, plain and simple - oops!
Costly? You bet!  I came across a situation recently where someone was requested proof of their charitable donations from the Canada Revenue Agency (CRA), rather than taking the time to read the letter, the person just filed it away and when reassessed just paid the amount requested, $2300+ without so much as calling the CRA to find out why they were being asked to pay this money!  This person is neither wealthy nor uneducated - so I chalked it up to willful ignorance.  As I accidentally came across this and so  I was able to tell the individual what to do to get the money back.   But what if this  did not happen?  The government would get to keep an extra $2300+ and sadly,  the person could really use those funds.  I couldn't help but thinking how much extra money the government rakes in from people who do not bother to read their mail!

Since I am also a personal income tax return preparer, I come across tax receipts for things like medical expenses, professional dues and charitable donations that were issued and not claimed, but these receipts were kept and showed up at the most unlikely times, such as when looking for documents and statements for financial review.

Another area are I find willful ignorance showing up  all the time is with  completing forms, and therefore I try to be proactive and fill as much information on forms requested for my clients, be it for claims, redemptions/withdrawals from accounts because it saves myself and my team a huge amount of time on back and forth with emails and telephone calls.  There are examples to be had in every area of life, you get the idea.

What is the cause of this and how can we overcome or reduce the incidence?  It starts with awareness!  Observing ones reaction to request for information is intriguing.  What are the thoughts? Fear, frustration?  Do you hold the belief that everything is difficult?  People, institutions or the government are crooks?  The beliefs you hold will determine how you feel and the subsequent reaction.  Your reaction determines your move and how you interact with other parties, are you going to make it easy for people to help you or will they want to run and hide when they see your number show up when their phone rings?  I understand that we live in a society where everybody is busy and stressed and rush so one more thing to deal with sometimes just pushes us over the edge. After going down that rabbit hole enough times I decided to change how I look at the situations that cross my path and take a collaborative or congenial attitude and found it made all the difference.  I get help without asking.  I get cooperation and favour in the most unlikely of places.  It brings joy to people to help you because it makes them feel good!

Here's a poem I learned in primary school which will give you some insight into what direction to take.  I always remember this, because we do not need to know everything, sometimes we just need to know that we need help and where to find it.

He Who Knows

He who knows not and knows not he knows not: he is a fool - shun him
He who know not and knows he knows not: he is simple - teach him
He who knows and knows not he knows: he is asleep - wake him
He who knows and knows he knows: he is wise - follow him
                                                   - A Persian Proverb

Tremendous Thursday!

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

#MoneyTalk #MoneyTalkwithBevAllen #TheValueOfSoundAdvice #overcoming #willfulignorance

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

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