All posts by Financial Independence Hub

Opinion: Morneau rings death knell for entrepreneurial spirit in name of “fairness”

Finance Minister Bill Morneau

By Trevor Parry

Special to the Financial Independence Hub

Liberals are majestic creatures, always knowing what is better for the masses, and careful never to swallow a dose of their own medicine.  One can conjure up the Hogwartsian image of the Little Prince and “Red” Billy Morneau stumbling hand and hand through the torch-lit catacombs of the Department of Finance, where, to their great joy, hidden behind the cobweb-covered portrait of Alan MacEachen they find a secret passage to Chamber of the Knights of the Just Society.

For it can only be a long forgotten cell of Birkenstock-wearing discredited ideologues, clutching fervently to their well-worn copies of the Carter Commission Report that have vomited forth Tuesday’s discussion paper decrying the apparent abuses perpetrated by the shareholders of private corporations.

Mr. Trudeau likely can’t spell dividend, and Mr. Morneau dare not ask his father how his tuition to the LSE (coincidentally, founded by the Fabian Socialist Society) might have been funded. For these two, along with a good portion of the Liberal caucus, are completely unaware of the sacrifices that are made to create a successful business, or create a professional carreer, and who frankly shake hands with the Holy Spirit of Hypocrisy on a daily basis.

Entrepreneurialism is a plague to Liberals

No, to the Liberal Party of Canada entrepreneurialism is a plague to be eradicated, replaced by a compliant corporate oligopoly working in symbiosis with a burgeoning civil service, and of course legions of ravenous consultants.

The  Department of Finance Paper seeks to target corporate tax planning strategies that have been in place for over 30  years. Paying dividends to adult children, parents and other family members in lower tax brackets, often as a measure of generosity or as a means to pay for higher education (something Mr. Trudeau aspired to but could not achieve), multiplication of the capital gains exemption to preserve a life’s work, and realizing deferral as a means to create capital are apparently at odds with the omniscient and ubiquitous Liberal goal of “fairness.”

Tax fairness should be holding all to the lowest possible measure of taxation, not subjecting everyone to the highest. For in Trudeau’s lexicon fairness is synonymous with mediocrity.    For it is an unassailable lesson of history that the fundamental precondition for the creation of economic dynamism is the creation of surplus savings and capital by the entrepreneurial class. The tax strategies that Mr. Morneau and his Office of the Five Year Plan (formerly known as the Department of Finance) targeted on Tuesday had in some tiny measure allowed for that.

In Liberal Canada economic results must be ordained, not by a higher power, or by the ability or drive of the individual but by a collection of over-entitled, mentally ossified Liberal politburo. By every measure possible; some of which arguably violate the Charter of Rights and Freedoms, in that they directly and unabashedly discriminate against familial relationships, anyone who dare exceed the rigid definition of “middle class” (which for most of the country is “lower” middle class at best) will be assaulted by the great level of an over-50% tax rate. The product of this fairness will be the corpulent rewarding of Liberal sacred cows without even the pretence of accountability.

Continue Reading…

Canadian ETF growth continues in 2017 but still early innings

Source: Strategic Insight data as of December 31 of each year. As of April 30th for 2017.

By Atul Tiwari 

Special to the Financial Independence Hub

With summer in full swing, along with warmer weather and blooming gardens, it got me thinking about cycles in investing. In particular ETFs, which have been taking root in Canada over the past few years.

When Vanguard entered the Canadian market in December 2011, we were one of only eight ETF providers. Our own evolution illustrates how much has changed in just over five years: We started with six index-based ETFs and currently offer a lineup of 33 ETFs, including four actively managed equity factor-based ETFs launched in June 2016.

Industry-wide more than 500 ETFs now vie for the attention of investors and advisors. And it’s not just products that have proliferated; new ETF providers enter the industry every month. More than $130 billion in Canada-domiciled ETF assets is now divided among 24 ETF providers. And there’s room to grow. ETFs make up only 8% of Canadian investable assets while capturing 25% of industry flows for the first quarter.1

Investors have clearly grown more comfortable adding ETFs to their portfolios. While I’m not one to make predictions about whether the pace of expansion will continue, I do see three trends that tend to favour it.

1.)  Greater fee transparency

Thanks to the second phase of Canada’s Client Relationship Model reforms (CRM2), investors are starting to see — in dollar terms on their account statements — what they’re paying their advisory firms. Canadian regulators are also considering a potential ban on embedded trailing commissions. This will surely generate discussion and shine an even brighter light on investment fees.

No less an expert than billionaire investor Warren Buffett extolled the long-term benefits of low-cost investing in his 2016 letter to Berkshire Hathaway shareholders. Cost plays a critical role in total investment return. The less investors pay in fees, the more of the potential returns they can keep. This is true whether you are investing in an ETF, mutual fund or any other investment vehicle.

2.)  Fee-based advisors are on the rise

Driven partly by regulatory changes and heightened awareness of investment fees, many financial advisors are moving to fee-based business practices. We favour this transition as we believe it better aligns advisors with the needs of investors and creates full transparency. Continue Reading…

Is Life Insurance the ultimate in financial #adulting?

By Mark Hardy, TD Insurance

Millennials have plenty on their plate when it comes to financial #adulting. From paying off student debt and managing day-to-day expenses to buying a house and starting a family, the new financial responsibilities can seem daunting.

A recent survey by TD revealed another gap in millennials’ financial picture: life insurance. The survey found more than half (55%) of millennials don’t have any life insurance, but more than a third have thought about it, especially when it comes to protecting their loved ones.

When prioritizing their financial “to-do” lists, things like paying down debt (25%) or saving for a home (21%) were most important, while life insurance came in dead last. For people starting a family – or those who already have young families or dependents – who don’t yet have life insurance, it’s important to bump it up the priority list because this is the time when financial obligations really start to increase.

The survey also found most millennials assume life insurance is best to cover one-time costs, like funeral expenses (68%), but many don’t realize it can assist with so much more. For instance, day-to-day living expenses like mortgage payments or student loans are areas where life insurance can help protect loved ones from financial pressures in the event of the unexpected. Bottom line, it’s an important part of a comprehensive financial plan.

Cost is a cup of coffee a day

Another survey finding cited cost (55%) as a top barrier to purchasing life insurance. In fact, the younger one is when buying life insurance, the less coverage will cost. And many may find it surprising that on average, the cost of life insurance breaks down to less than a cup of coffee a day over a 10-year period.

Finally, it’s important that first-time purchasers have a strong understanding of their options. To do that they’ll need to start with a complete list of financial obligations – like mortgages, debt, and whether theirs is a single or multiple-income household. With that information in pocket, they can check out online assessment resources, like the Right Fit Coverage Assessment tool, which will help calculate the type of coverage best fitted to their unique needs. And, they can also speak to an insurance advisor if they have more questions or need additional advice.

Remember, life insurance is a vital piece of the overall financial picture and will offer some peace of mind to loved ones.

Mark Hardy, Senior Manager of Direct Life & Health, TD Insurance is an insurance professional with more than 15 years of experience in the industry in a wide range of roles including Technology, Data, Strategy and Product Management. As Senior Manager of Direct Life & Health at TD Insurance, he is responsible for bringing life & health insurance solutions directly to Canadians. Mark has an MBA from the Rotman School of Business.


Life Insurance denied? Top reasons this could happen

By Lorne Marr, LSM Insurance

Special to the Financial Independence Hub

Life Insurance is designed to provide a financial safety net to the ones left behind in the unfortunate event of death. However, there may be instances when an insurance claim is denied. The best way to avoid this from happening is to follow the rules. Understand your policy and follow these simple rules to ensure your investment in your family’s future will be protected.

1.) Lying On Your Application

Leaving out certain items or fudging the truth a bit might sound harmless enough, but it could mean the difference between a payout and a denial when it comes time for your beneficiaries to collect. The application may seem large and some of the questions might sound like an invasion of privacy, but the insurance company is taking a big risk insuring you. They need as much information as possible in order to properly assess your situation.

Insurance companies can uncover any lies or secrets you may want to hide. Lying on your application is a breech of contract, which means your claim will be denied.

2.) Unintentionally Leaving Out Information

You are supposed to be completely honest when filling out an application. What if you unintentionally leave something out like a routine checkup? Even if your checkout came out clean, be leaving it out the insurance company might automatically assume you have something to hide.

Take your time when completing the application to ensure nothing is left out, no matter how minor it may seem. If you are unsure of an answer, find out. A simple call to your doctor will confirm the date of your last visit. By rushing or guessing, you could nullify your policy.

3.) Using an Under-qualified Agent

Most people will only need to complete one or two life insurance applications in their lifetime. Continue Reading…

A nation of financial illiterates?

By John Shmuel, Managing Editor,

Special to the Financial Independence Hub

Do you consider yourself financially literate?

When we posed that question to Canadians last month in an IPSOS survey, the overwhelming majority — 78% — said yes.

Canadians are clearly confident about their financial knowledge. But their actual knowledge, unfortunately, is lacking. When we followed up our initial question with a quiz, comprised of 15 intermediate questions about financial products, the majority of Canadians (57%) failed.

It should be noted that these weren’t simple questions. But they also weren’t questions that require special certification or an advanced knowledge of finance. One question asked whether there were financial institutions in Canada that offer free chequing accounts (there are). Another asked whether you needed a special license to buy stocks (you don’t).

Failure to know the answers to these questions shows that Canadians are confused about financial products. And financial institutions take advantage of that.

Let’s return to the question on chequing accounts. About 34% of those surveyed said they thought all banks charge you money to have a chequing account. Another 14% said they didn’t know the answer. With nearly half of Canadians not realizing free chequing accounts are an option, it’s no surprise many financial institutions continue to charge for them.

Then there is the issue of mortgages. Of our 15 questions, Canadians struggled with ones related to mortgages more than any other. For instance, we asked whether a mortgage term refers to the length of time you need to pay off your mortgage. 51% of Canadians answered incorrectly. Another 18% said they don’t know. (For those wondering amortization refers to the length of a mortgage, a term is how long variables such as your interest rate are in effect.)

So what?, you might say. What does a mortgage term have to do with being knowledgeable about finance?

It all comes down to empowerment. If you’re familiar with how a financial product works, you’re more likely to be confident in getting the best deal for that product. Knowing what a mortgage term is you probably know that you can negotiate mortgage rates, or that you can go online and see different rates from rival banks and brokerages. Continue Reading…