The TK Advisor -TK Financial Group Ottawa Blog about Life Insurance, Critical Illness Insurance, Wealth Management and Estate Planning

Insurance Industry is shrinking !

We as consumers have a big problem , there are less and less insurance companies offering services in Canada . Why ? They are being bought out by the giant conglomerates like Manulife , Great West Life and Sun Life . A newly released report states that these 3 companies control 90 percent of the insurance industry in Canada . Choices of insurers dwindling is hurting you the consumer . Let's say you are dealing with a independent provider of products from a number of insurers  ,like our firm , we routinely apply to at least 3 insurers if we see that the possibility of getting a fair offer may be jeopardized due to various reasons we have experienced with clients in the past . Should we apply to Canada Life and Great West Life ? They are in fact owned by the same conglomerate as the one that owns London Life and Investors . What is the chance that Canada Life will give us a better offer on your coverage then Great West life if you are a impaired risk . Yeas Canada life has a Astra program which is beneficial to clients who have a minor impairment but we will not be getting a better offer from Great West Life . Choice of coverage from a number of insurers is the best option for you the client so take advantage of working with advisor's like us . Several years a go we approached 12 insurers to secure coverage for a business client whose bank loan dependent on his securing a life policy . Very stressful when you get told , " if I do not get this million dollar policy I will not get a loan for 10 million dollars " .

Problem in our industry , prospective clients do not know if they are dealing with a adviser who is truly representing a number of insurers or mostly one company .

 

RRSP Investing During Volatile Markets

As the RRSP season approaches most Canadians are wondering how to invest their contributions and what strategy to implement.  Unfortunately, most spend more time planning their dinner than their investment strategy. The question is not whether the market is volatile or will resources continue on their current growth the question is: what is my plan and how has the current volatility affected my long-term strategy?

With a plan you are able to make logical decisions and not react to short-term news or events. It will provide you with the required rate of return and risk tolerance that will meet your retirement income and objectives. Ask yourself if your current investment mix has performed accordingly and appropriately compared to its peers and objectives.  Will they provide you with the required rate of return and risk reduction to meet your long-term objectives? You will not know if you do not have a plan to compare it to.

An investment and retirement plan will allow you to avoid making the mistakes that most Canadians make.  They include:

1. Comparing their portfolio with indexes – It is important to realize that indexes become skewed over time.  When drastic changes happen in a short time frame the index does not have the capability to react efficiently to these changes.  Should you compare a well-balanced portfolio to an index that could be represented with a 40%+ weighting in resources and energy?
2. Not maintaining an appropriate risk tolerance – It is easy to let your risk tolerance drift when the markets are performing well or to change your risk tolerance when specific sectors are currently outperforming.  Everyone accepts or agrees with volatility when the markets are in an upswing and forget this tolerance when the markets go down.
3. Selling during a down market- The absolute worst time to sell is when the market is down.  If your risk tolerance has changed or your objectives have changed then it is appropriate to make adjustments to your portfolio. Do not sell solely based on the fact that the market is down.
4. Focus on the cost of an investment – an investor should focus on the net rate of return of an investment and not the cost or Management Expense Ratio (MER).  If fund ABC costs 2.5% and nets you a ROR of 7% and fund DEF costs 1.8% and nets you a ROR of 6.5%, which fund would you pick?
5. React to news, media, or neighbours- Let your plan dictate your investment decisions as the news and media only report the negative and are fixated on the fear factor, and your neighbours only tell you about their successes. Understanding investment fundamentals and implementing them are two very different things.

So for this RRSP season your first step should be to create a retirement plan.  This is followed by maximizing your RRSP contribution in order to receive your tax break.  One effective strategy is to invest your lump sum contribution into a money market fund or cash and systematically re-invest a specific amount on a bi-weekly or monthly basis to take advantage of the market volatility.

If you are contemplating a change to your investments make sure it is for the right reasons fundamentally and not just based on a perceived lack of rate of return. A discussion with your financial advisor is paramount.  If you do not have a financial advisor, please contact one of our advisors at TK Wealth Management at (613) 728-7030 and we would be more than happy to answer any questions you may have. 

Will Planning

Will is a very important instrument that you should have . If you are a business owner , a business will should also be given serious consideration to save on probate fees . I have met a number of business owners who have not gotten around to completing their will . I recently was introduced to a successful business man who when told about a need for wills suggested to me that he would go to the Grand and Toy to get a will kit . After a brief conversation with him , he realized that his corporate lawyer should be consulted as there are business assets in Canada as well as in US . Working with business owners for over 27 years some things just do not change , they forget to properly take care of themselves and their families . I have been asked on a number of occasions if I am a lawyer by people that do not know me and they are a surprised that as a insurance specialist I would have a wide range of knowledge . No I am not a lawyer  , just a professional in the financial services industry that has decided that I will provide much more then a product to our clients . I can introduce you to lawyers who I know are specialists in will planning  .Take the time and consult a lawyer who will take time to explain the provisions of will planning as it relates to you and a lawyer who will not instruct his assistant to print out a standard will for you to sign . In Ottawa , we have a number of legal firms that will do fabulous work for you and ask your friends to refer you a lawyer that is experienced . Every insurance agent is not a specialist as every lawyer is not in will planning .

Business owners beware !

Should you be doing business with reputable firms in our community ? Absolutely ! I am absolutely amazed how many times businesses will go outside our community to buy a product or services . Ottawa has some of the brightest and capable people who lead local firms. We as a community need to look at who supports this community with charitable donation , taxes and involvement in the community . These businesses should be supported by people who live in this city . We all want better roads , schools , hospitals ,community centers , sporting facilities but  many forget that community dollars are needed to build them. By promoting local business , you are leaving more dollars which can be spent here and in fact come back to you in form of services . Support Ottawa Business Community !