iA Securities & HollisWealth* are now iA Private Wealth

We are excited to introduce our new company name, iA Private Wealth. The new name is designed to better reflect the essence of what our advisors do – provide holistic wealth management solutions tailored to the unique needs and goals of investors across Canada.

Please take a few moments to browse our newly redesigned and updated website to learn about the many benefits of working with an iA Private Wealth Investment Advisor.

*Refers solely to the Investment Industry Regulatory Organization of Canada licensed advisors within HollisWealth.

Insights

Our articles, videos and webcasts can help you expand your knowledge of wealth management and stay up to date on the markets and economy.
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Weekly Macro & Market Update

Video duration 9:03

By iA Private Wealth, May 17th, 2024

Tune in weekly for insight and perspective on the macro and market landscape with iA Investment Management chief strategist and senior economist Sébastien Mc Mahon.

Watch Sébastien’s previous weekly updates on YouTube.

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Monthly Market Snapshot

10 min read

By iA Private Wealth, May 14, 2024

James Gauthier and his research team walk through the highlights of last month’s market and economic data.

Read the report (PDF)

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Succession Planning for Your Family Business

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By iA Private Wealth, May 8, 2024

If you’re like most entrepreneurs, your family business isn’t just a job – it’s your passion. That’s why you’ve invested so much time and effort into growing your business. Now that retirement is on the horizon (or no longer an abstract, way-in-the-future thought), you’re turning your attention to next steps. More specifically, it’s time for a succession plan.

Succession planning is complex and the transition process could take years. Let’s look at some key considerations so you can begin strategizing now and construct a plan that’s right for you, your family and your company.

All in the family

For a minute, we’ll put aside the business aspect of succession planning and focus on the family aspect. Mixing work and loved ones can be tricky, especially when it comes to naming a successor to the family enterprise. Among the next generation, who gets the inside track to lead your business? Is it, by default, the oldest child? The one who exhibits the best leadership skills? The one who’s most interested in your business or is in a certain role that lends itself to taking over?

There’s no automatic “right answer” since all family and business situations are different. What’s universal, however, is the need to give everyone their say and then, once you’ve arrived at a decision, communicate it clearly and logically. You might not achieve consensus – and some feelings could get hurt – but you’ll earn respect for transparency. While family harmony is desirable, of course, you’re also wearing a business owner’s hat and must ensure the continued strength and viability of your company.

Going outside the family

Don’t assume a family member will take over the business. Maybe none of the next generation works in your business, is interested in leading it, or is qualified to take over. Another option is for a current employee to lead the company. Once you’ve identified a good candidate, be sure to let them know – in as much detail as possible – what the leadership role entails. Again, explain this decision to your family and encourage questions. Every step of the way, open communication can align everyone’s interests and expectations, and helps minimize conflict.

Regardless of whether the leader-to-be is a family member or other employee, build a comprehensive, goals-based development plan to position them for success. Document the key responsibilities you face (both regularly and ad hoc), and train the future leader to handle those duties. Be open minded and seek input on where they see potential for improvement in organizational processes, business culture, company structure and avenues for growth. Everyone has different perspectives, and fresh insights could take the business to the next level.

Navigating finances

The financial side of succession planning can get complicated if you have more than one child, each with varying degrees of involvement in the company. If the family business spans generations and also involves extended family (e.g., cousins, nieces, nephews), the complexity increases. The owner(s) must determine the best – and most fair – way to transition the business and allocate assets. When selling to a third party, will family members remain involved in the business? If so, in what capacity?

Whether the business is sold to family members or a third party, your selling price should reflect fair market value. For many owners, their business represents their largest investment and biggest source of retirement income. Don’t shortchange yourself by discounting the sale price – even if selling to your own children.

Given the challenges of succession planning, it’s typically wise to consult regularly with your advisor and related professionals, such as a lawyer, business exit strategist, and tax and estate specialist.

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    What Are the Financial Implications of Divorce?

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    By iA Private Wealth, May 1, 2024

    Any way you look at it, divorce is challenging. Aside from the emotional strain of ending a marriage – especially if you have kids – your finances could be affected significantly. Let’s look at four common steps that can help safeguard your wealth.

    1. Get a good grasp of your financial situation. Many people have an idea of their overall finances, but when divorcing you should examine bank and investment accounts, credit cards, mortgage statements, loans, lines of credit, etc. to know where you stand financially. Of particular importance is scrutinizing joint accounts ahead of divvying assets. Consider an agreement with your soon-to-be ex (who, for simplicity’s sake, we’ll refer to as “ex”) to continue paying joint expenses, but to avoid new borrowing charges pertaining only to one of you. If either has co-signed a loan or line of credit, request the financial institution remove the co-signer and rework this debt so the appropriate party is solely responsible.

      If you don’t have your own savings or chequing account, arrange for it. Also obtain a credit report to find out your current score. Link to your individual account any direct deposits beyond what you need to meet your share of expenses in the joint account. Regarding credit cards and loans, neither divorcing partner should deal with creditors or be liable for debt they didn’t incur. If you and your ex can pay off joint account balances, agree to close those accounts. Everyone’s heard stories of vindictive exes racking up large bills, so monitor your accounts to keep your assets protected.

    2. Update policies and beneficiaries. Divorce may change your insurance needs. For instance, if you become critically ill or disabled and need assistance paying bills, you may require more coverage as an individual compared to having a spouse’s income to cover expenses. Similarly, assess your life insurance needs as an independent policyholder and ensure you’ve got adequate coverage. Permanent life policies often have cash value, so if one exists, include the cash value when dividing joint assets.

      It’s also crucial to review beneficiaries named on financial accounts and registered plans like RRSPs, TFSAs, RRIFs and workplace pensions, and amend accordingly. If you’ve named your ex as beneficiary in your will or as holding certain powers of attorney, you’ll probably want to change that. An estate professional can help you implement planning changes brought about by divorce. If you’re on your ex’s workplace benefits plan (or vice versa), a divorce might lead to rethinking benefits to ensure adequate coverage persists.

    3. Deal with the family home. This one may have emotional repercussions as well. Discuss whether one of you wants to remain in your home and has the financial ability to do so. Both partners could be making mortgage payments, so the absence of one income may make the existing mortgage unmanageable, requiring renegotiated financing for the ex who’s staying put. You may choose to sell the family home and split the proceeds, or the remaining homeowner can buy out the other’s share for the amount of equity they’ve invested into it. If young children are involved, keeping them in the family home could help reduce the disruption in their lives that a divorce inevitably causes.

    4. Work closely with your investment advisor. Getting professional advice is especially valuable in divorce. An advisor can help identify your assets and liabilities, and calculate your personal net worth. They can also adjust your budget and wealth plan based on new life circumstances, including recalculating the money earmarked for retirement and revising your goals to put you in the best possible position for financial success. If you need to save and/or invest more (or in a different manner) to achieve your long-term objectives, an investment advisor can work with you to make it happen. Your income may also be impacted by child or spousal support, whether you’re paying or receiving. It’s practical and comforting to assemble a team (e.g., investment advisor, tax consultant, estate planner, divorce lawyer, accountant) that can help you get through a divorce with financial independence and a sense of clarity moving forward.

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    HBP or FHSA: Which One Should You Use?

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    By iA Private Wealth, April 19, 2024

    While many people want to purchase a home, it’s become a greater challenge in today’s economic environment. Consumers are financially stretched by high inflation that’s lifted the price of food, fuel and just about everything else. On top of that, central banks have raised interest rates to help control inflation, leading to soaring mortgage rates. Never mind that real estate valuations – while largely off their           peak – remain high, especially in large urban centres. What’s a prospective homebuyer to do?

    In addition to sensible actions like watching your spending and trying to put away more of your earnings, the federal government also helps Canadians pursue home ownership via two targeted programs: the Home Buyers’ Plan (HBP) and Tax-Free First Home Savings Account (FHSA).

    How the HBP works

    This plan lets you withdraw, on a tax-free basis, up to $60,000 from your Registered Retirement Savings Plan (RRSP) to purchase your first home. Essentially, it’s an interest-free loan from your own RRSP to help you buy a home. You’re allowed to withdraw funds from more than one RRSP, to a cumulative total of $60,000, provided you’re the owner of each account. The institution(s) that issued your RRSP(s) won’t withhold tax on the money you withdraw. You should also note that certain RRSPs, such as locked-in or group RRSPs, may not qualify for the HBP.

    HBP withdrawals must be paid back to your RRSP account in annual minimum amounts over a 15-year period, beginning the second calendar year after the withdrawal. In April 2024, the government extended this two-year grace period to five years for withdrawals made between January 1, 2022 and December 31, 2025. Note, you may repay more than the minimum in a given year, or repay the entire amount at any time prior to the end of the 15-year period. If you fail to repay the full amount within the allotted time, your outstanding balance is considered taxable income.

    How the FHSA works

    This plan was introduced in the 2022 Federal Budget, and now that the legal and administrative details have been addressed, financial institutions are rolling it out. The FHSA is a registered account for Canadians aged 18+ who haven’t owned a home ever or, at a minimum, in the past four calendar years. It allows eligible Canadians to contribute up to $8,000 annually on a tax-deductible basis, to a lifetime limit of $40,000. If you contribute less than the maximum in a given year, the unused contribution room (up to $8,000) may be carried forward to the following year.

    When you withdraw funds to buy a home, this amount is not taxable (including any income earned in the account). If you don’t withdraw all your FHSA funds to buy a home within 15 years, you must close the account. You can transfer the remaining assets, tax free, to an RRSP or RRIF; otherwise, withdrawal of residual FHSA funds will be taxable. As with many registered accounts, you may invest in various types of securities in your FHSA, such as stocks, bonds, mutual funds and ETFs. Your Investment Advisor can help determine which securities best suit your time horizon, risk tolerance and financial objectives.

    How do you decide?

    While the HBP and FHSA may have their own features and distinct rules, both plans can help accelerate the home ownership process. An HBP is valuable if you don’t have much cash available, since you’re withdrawing from your established and funded RRSP. An FHSA is valuable if you can contribute a significant amount of cash, since it’ll lower your taxable income and withdrawals are tax free. The good news is, you don’t need to decide. If you wish (and have money readily available), you may use both the HBP and FHSA to assist with funding the purchase of a first home.

    Consult with your Investment Advisor to decide how best to use the HBP and/or FHSA to help buy your home, based on your tax situation and overall financial circumstances.

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      Tax Filing Checklist

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      By iA Private Wealth, March 14, 2024

      It’s tax season, and no matter how many times you’ve gone through the ritual of preparing your income tax return, our refresher will help get you organized and on track for what will hopefully be a smooth and painless experience.

      Reference materials

      It may help to have last year’s return handy as a guide to figuring out which slips and forms you may require for this year’s return, and which lines must be completed on those forms. Of course, circumstances can change but knowing what you needed last time is a good starting point for gathering info.

      Similarly, last year’s CRA Notice of Assessment could help. Each notice contains valuable info, such as your RRSP deduction limit for the next tax year, the amount of unused net capital losses that can be applied to reduce future taxable capital gains, and the correction of mistakes you might have made on your return. Finally, note any tax installments you paid over the year as well as any relevant correspondence you received from the CRA.

      Here’s a checklist to help gather your tax slips, forms and other required info that’ll be used when completing your income tax return.

      Federal tax slips

      • T3: Investment income (allocations, distributions) received during the tax year
      • T4: Employment income (also includes CPP/EI premiums paid, income tax deducted, pension adjustment amount, charitable donations made through payroll, etc.)
      • T4A: Pension, retirement, annuity and other income received
      • T4A(OAS): Old Age Security pension benefits
      • T4A(P): Canada Pension Plan benefits
      • T4E: Employment Insurance benefits
      • T4RIF: Income received from a RRIF
      • T4RSP: Income received from an RRSP
      • T5: Investment income (e.g., interest earned from bank accounts and GICs; corporate-class mutual fund distributions)
      • T2202: Tuition and related fees (or a TL11 form if you studied outside of Canada)
      • T5013: Statement of Partnership Income

      Receipts/documentation

      • RRSP receipts for contributions made in previous calendar year, up to first 60 days of current year
      • Investment-related expenses, including loans used for investing purposes
      • Child care and/or adoption expenses
      • Child support, alimony/spousal support payments
      • Medical expenses
      • Moving expenses
      • Charitable donations, political contributions
      • Professional or union dues not on your T4 slip
      • Digital news subscription fees
      • Business income and related expenses
      • Rental income and related expenses
      • Investment counsel fees and carrying charges
      • Documents pertaining to the sale of real estate 

      Work-from-home expenses

      Regarding the deduction for home office expenses that was introduced during COVID-19, some rules and conditions have changed. According to the CRA, eligible employees working from home in 2023 must use the detailed method to claim home office expenses. The temporary flat rate method no longer applies. Visit the Government of Canada website to learn more about eligible expenses and other important information concerning work-from-home expenses.

       

      Our checklist is a basic compilation of common slips, receipts and other documents you may need while completing your income tax return, but it isn’t exhaustive. Not all items will apply to you, and you might need additional info to file your return. We recommend consulting a qualified professional to help ensure you complete your return accurately and fully, claiming all deductions and credits for which you’re eligible.

       

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      Boost Your Retirement Savings with an RRSP

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      By iA Private Wealth, February 14, 2024

      For most Canadians, the Registered Retirement Savings Plan (RRSP) is foundational to long-term financial security. In this article we’ll look at the key features of RRSPs and the many benefits that make them so popular.

      How RRSPs work

      You can contribute to an RRSP from the first time you have qualifying earned income until December 31 of the year you turn 71. For any given tax year, you can make contributions during the calendar year or up to 60 days after that. As an example, for the 2024 tax year you can make contributions throughout 2024 or in the first 60 days of 2025.

      The maximum annual RRSP contribution is 18% of your earned income for the previous tax year, up to the allowable limit. For instance, the RRSP contribution limit for 2024 is $31,560, an increase from the 2023 tax year limit of $30,780. You’ll find the annual limits posted on the Government of Canada website.

      Also note the following:

      • If you don’t make the maximum contribution in a particular year, the unused room is carried forward indefinitely.
      • If you belong to a workplace pension plan, your pension adjustment (PA) will reduce the amount you’re allowed to contribute. The PA amount appears on your T4 tax slip.
      • Some employers offer full or partial contribution matching (e.g., if you contribute 4% of your salary to your pension, your employer might match with a 2% contribution). Check with your employer for details.
      • If you overcontribute to an RRSP by more than $2,000 (based on your CRA Notice of Assessment), you’ll face a penalty of 1% per month for as long as the excess amount remains in your account.
      • You can make a tax-free withdrawal from your RRSP for a down payment on your first home. The Home Buyers’ Plan (HBP) has specific rules and repayment terms, so speak with your advisor to see if it’s suitable for you.
      • If you’re going back to school full time, the Lifelong Learning Plan (LLP) lets you borrow up to $10,000 a year from your RRSP, to a plan maximum of $20,000. As with the HBP, you must adhere to the Government of Canada’s LLP rules and repayment terms.
      • You may contribute to your spouse’s or common-law partner’s RRSP if you’re the higher income earner. You’ll receive a tax deduction that may lower your tax bill. Consult with your advisor so you’re aware of the various rules related to spousal RRSPs.

      Key RRSP benefits

      RRSPs offer an immediate tax break, as your contribution amount is deducted from the year’s gross income, which means less income tax to pay. Many people take the tax savings and invest it or use it to reduce their debt. Either way, you’ll strengthen your financial position.

      Also, any growth in your RRSP from capital gains, dividends or interest will remain tax deferred until you begin making withdrawals in retirement. This feature lets you compound growth in your RRSP without immediate tax consequences, so your money works harder for you and helps build wealth faster for retirement.

      RRSPs are flexible as well. You can invest in stocks, bonds, mutual funds, ETFs, GICs and more. For added convenience, consider a pre-authorized contribution (PAC) plan. Once you decide how much to invest, at what interval and in which financial products, the money will be automatically invested according to your instructions. For example, your PAC might allocate $250 per month to a certain mutual fund.

      An iA Private Wealth Investment Advisor can help create and maintain an RRSP strategy that’s right for you. Get in touch with one today.

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      Can You Retire Early?

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      By iA Private Wealth, January 11, 2024

      While some people love their job so much they never want to retire, for a lot of us the only thing better than saying goodbye to the rat race is doing it sooner than expected. But before clocking out early, there are a few boxes to check to ensure you’re making the right choice.

      Figure out your finances

      The first thing to consider is whether retiring early is financially feasible. Working with an advisor to assess your wealth plan may identify issues affecting your long-term finances, and allow you to amend your plan to ensure you have the money needed in retirement.

      An advisor can calculate your sources of income after you stop working, and project what benefits you’ll likely receive from the Canada Pension Plan (CPP) and Old Age Security. Keep in mind that if you draw from CPP before the typical age of 65, your benefits are reduced accordingly. If you hold personal RRSP/TFSA assets and a workplace pension, those will be accounted for as income sources, as will investment accounts, a business or property you might own, plus other savings and assets. Whatever your income streams, factor in tax implications because a good portion of your cash flow could be taxable income.

      After totalling your financial resources, consider likely expenses, including the cost of everyday life. Where do you plan on residing and will you rent or own? Do you have health concerns or family history to be mindful of? What lifestyle do you anticipate? Will you travel regularly? What are your hobbies? Do you have dependents to look after? Once you answer these questions, you can arrive at a rough estimate of your expenses.

      If there’s a shortfall between income and expenses, you’ll need to address it. Proven ways to close the gap include modifying your expected lifestyle to reduce costs, possibly working part time, saving more aggressively and generating higher investment returns (e.g., maintaining enough exposure to equities and other securities with growth potential).

      Benefits of retiring early

      There are two major benefits to taking an early retirement:

      1. Mental/physical health. Over the course of many years, work takes its toll. Even if you enjoy your job and colleagues, working is often stressful and can drain you mentally and physically. Maybe long work hours compel you to sacrifice valuable activities like regular exercise, socializing and eating sensibly. If you have a serious illness, it might make sense to retire early and tend to your health care needs.
      2. Meaningful use of time. While all work has value, being retired lets you focus on things you like doing. Perhaps certain volunteer opportunities and other philanthropic pursuits are appealing, or you want to devote more energy to favourite hobbies. You’ll also have abundant quality time to spend with friends and loved ones, or to begin working on that “side job” or project you always wanted to try.

      On the fence?

      Maybe you need a change of pace but don’t want to retire completely. In this case, consider a phased retirement, which means scaling back on work (e.g., taking a part-time job or putting in fewer hours at your current job). This phased approach allows you to continue earning money for the future, provides the social benefit of interacting with colleagues, promotes mental fitness so your mind stays sharp, and offers flexibility to spend more time doing things you enjoy.

      Whatever you choose, ensure your decision takes into account all your unique personal and financial circumstances.

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      It’s Year-end: How Will You Manage Your Expenses?

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      By iA Private Wealth, November 23, 2023

      As we approach year-end, it’s a great time to assess your expenses with the goal of setting yourself up to be financially stronger. New year, fresh start. When expenses are under control and you’re in a position to build wealth instead of spiralling deeper into debt, it helps you work toward reaching your short-term and longer-term financial goals.

      So, how can you resolve to manage expenses at year-end? Here are a few tips to get you on your way.

      1. Create a wealth plan. If you don’t already have an advisor, here’s the first New Year’s resolution to make. Everybody has specific objectives to achieve, and a comprehensive plan can give you a head start on next year’s finances. A professionally developed wealth plan will account for your unique circumstances, objectives, time horizon and risk tolerance. It helps you save and invest wisely, manage debt obligations and be more tax efficient. Also, it can adapt to changing circumstances so your plan stays relevant at any life stage. Since it requires significant training, skill and experience to create and maintain a personalized wealth plan, it’s best to work with a qualified advisor.

      2. Maintain a budget. A key aspect of wealth planning is setting a budget. Basically, a budget tracks your sources of income and expenses over a given time period (e.g., monthly). It provides an ongoing snapshot of how well you’re managing money and where improvements might be possible. With holiday season in full swing, an increase in social outings and gift buying can quickly send your expenses into overdrive. This year-end, be mindful of expenses and mounting debt by setting a reasonable holiday budget and sticking to it.

      3. Consolidate debt. The amount you spend over the holidays is largely discretionary, but sometimes carrying debt is unavoidable. Many people have mortgage payments, car loans, home-related expenses, etc. An advisor can review your various debt obligations, working with you and your financial institution(s) to see if it’s advantageous to consolidate debt into one relatively lower-rate loan or line of credit. Consolidating debt is often a practical way to lower your overall expenses.

      4. Commit to saving. While reducing debt is important, the flipside is to increase your savings. A proven strategy is to “pay yourself first” by putting a set amount (e.g., 10%) of each paycheque into a savings and/or investment account. It’ll build long-term wealth while helping you avoid the temptation to overspend. Also, year-end is a great time to devote money to registered plans for the following calendar year. For instance, on January 1 you can begin making that year’s contributions to your RRSP and TFSA. Not only will it help curb expenses by “forcing” you to save, but you’ll also begin enjoying tax benefits sooner in the year. Another aspect of saving is putting away money for emergencies like job loss, major home/vehicle repairs, serious illness, etc. You never know when you’ll need immediate access to cash, so an emergency fund – many experts recommend a minimum three months of household expenses – is essential for financial preparedness and peace of mind.

      Although any time is a good time to get a handle on your expenses, the year-end period often sparks motivation for people to focus on their finances and make improvements for the year to come.