Understanding Advisor Credentials



By iA Private Wealth, July 20, 2022

Investing is an essential part of building a retirement nest egg. But it can be complex, time consuming and even detrimental if done without proper research and guidance. That’s why many Canadians work with an advisor to help them select the right investment solutions and strategies to achieve their financial objectives.

When choosing an advisor, it’s important to inquire about their credentials and the services they’re qualified to offer. Learning about industry-specific titles and designations may help you determine what an advisor brings to the relationship and how they can assist with your wealth goals.

Regulatory oversight

Two regulatory bodies are responsible for advisor licensing in Canada.

The Mutual Fund Dealer’s Association of Canada (MFDA) oversees regulation of mutual fund dealers and sales representatives. MFDA-licensed advisors can offer advice and execute trades related to mutual funds. If they meet enhanced proficiency requirements, they can also provide access to exchange-traded funds. These advisors often offer insurance solutions as well, though this activity falls under a separate provincial and federal regulatory regime.

The Investment Industry Regulatory Organization of Canada (IIROC) oversees regulation of “full-service” investment dealers and their advisors. In addition to the products and services offered by MFDA-licensed advisors, IIROC-licensed advisors can provide access to securities such as individual stocks, bonds, derivatives and commodities. Many IIROC-licensed advisors also provide access to insurance products.

IIROC and the MFDA are proposing to merge into a single regulatory organization, which should allow for more efficient and consistent industry regulation.

Job titles

The industry has moved increasingly toward standardization and transparency of titles. For instance, an advisor registered as a Registered Representative may use the title of Investment Advisor or Wealth Advisor. If such advisors meet certain criteria (e.g., minimum five years of experience, responsibility for $40+ million in client assets), they’re entitled to be called Senior Investment Advisor or Senior Wealth Advisor. As an investor, you can gain a better understanding of an advisor’s experience and qualifications just from their title alone.

Industry designations

The professional designations an advisor has earned reflect their skill set. To uphold their designations, advisors must fulfill certain ongoing education and training requirements. Here are some common designations among advisors:

  • CERTIFIED FINANCIAL PLANNER® (CFP®). Advisors holding the CFP designation have completed intensive education in all aspects of financial planning, and are equipped to create customized financial plans. In Quebec, the comparable designation is Financial Planner (F.Pl).
  • Personal Financial Planner® (PFP®). Advisors with this designation focus primarily on financial planning for individuals. PFPs are knowledgeable about investments, insurance solutions, and tax and estate planning.
  • Chartered Investment Manager® (CIM®). Those who have earned the CIM designation commit to deciding which investment solutions are most appropriate for each client by managing investments according to prevailing market and economic conditions.
  • Chartered Alternative Investment Analyst (CAIA). CAIA charterholders may be responsible for managing, analyzing, distributing or regulating alternative investments. As more investors use alternatives to help enhance risk-adjusted returns, the role of a trained CAIA charterholder gains relevance.
  • Chartered Financial Analyst (CFA). CFA charterholders are highly educated in disciplines such as portfolio management and investment analysis. Only a small percentage of advisors hold this elite designation.
  • Responsible Investment Specialist (RIS). Advisors licensed to sell mutual funds may complete the requirements to earn the RIS designation and focus on selecting investments for clients that meet environmental, social and corporate governance (ESG) criteria.

While industry-related licensing and designations vary, all qualified advisors can offer significant value. In the case of an Investment Advisor, they may provide extremely knowledgeable guidance around financial planning, investment selection and monitoring, and tax management. As well, when markets are volatile and emotions tend to run high, they help keep clients disciplined and focused on their long-term goals.

There are many ways our advisors can help you meet your financial objectives, so please reach out and connect with a member of our team today.

This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.

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Navigate Bear Markets with Professional Advice


By iA Private Wealth, June 23, 2022

If you’re like most investors, emotions tend to creep into your investing decisions.

When markets are strong and your investments are rising in value, you may become overconfident and less careful, investing money in the next “sure thing” without thoroughly researching the potential risks involved. On the other hand, when markets decline and your investments start losing value, your initial response might be to panic and sell before you lose even more money.

It’s human nature to bring emotions into investing, but it’s also a likely way to fall short of your longer-term financial goals. That’s where an Investment Advisor’s steadying influence and expert advice can help.

Guiding you through the tough times

An Investment Advisor is trained to approach the markets rationally and with a long-term perspective. They understand that markets are volatile, rising and falling in response to macroeconomics, geopolitics and, yes, the emotions of other investors.

Let’s say we’re in a bear market, which is commonly defined as a prolonged decline where investment prices have dropped by 20% or more from recent market highs. Would you have the confidence and resolve to stick with your financial plan and long-term investment strategy? Most people wouldn’t.

However, Investment Advisors aren’t like most people. A key part of their role is to help you invest methodically and without emotions so you can remain focused on your long-term goals. They know bear markets don’t last forever. In fact, history shows that bear markets are typically much shorter in duration and less pronounced than bull markets (i.e., when overall prices have risen at least 20% above recent market lows). It’s just that most people feel more pain when they lose money than happiness when their investments gain.

Strategies to weather the storm

An Investment Advisor will help you stay the course and continue investing through short-term market turbulence. Bear markets may even be a good time to buy, as they often create opportunities to invest in attractive companies trading at undervalued prices. A strategy of “buying low” may lead to significant gains once the markets recover.

If you’re hesitant about investing a large lump sum when markets are challenging, consider a “dollar-cost-averaging” (DCA) strategy where you invest a set dollar amount at regular intervals. For instance, you may choose to invest $250 per month in a particular mutual fund. That way, if the unit value of this fund declines, your $250 will allow you to buy more units. As values rise, you’ll buy fewer of the higher-priced units. A pre-authorized contribution plan, often referred to as a “PAC,” pairs well with a DCA strategy because it provides the convenience of investing automatically without emotions getting in the way.

Not only can an Investment Advisor help you stay invested and potentially profit from “oversold” markets, but they also review your investment portfolio regularly. They will work to keep your portfolio tax efficient and well diversified, allocating to investments that suit your specific circumstances, risk tolerance, time horizon and financial objectives. If required, they’ll make adjustments to your portfolio.

While it’s dangerous to be greedy when markets are performing well, it’s equally risky to let fear cloud your judgement when markets are declining. Without proper guidance, you might not stay on track to meet your goals and secure the financial future you want. A trusted Investment Advisor will offer the advice and direction you need, especially during bear markets when you’re probably most vulnerable to investing emotionally.

We can help you create – and stick to – a personalized investment strategy as part of your overall financial plan. Contact us today.

Unlock the Equity in Your Home


By iA Private Wealth, June 13, 2022

If you own a home and hold a mortgage, you’ve likely heard about a home equity line of credit, or HELOC. If you’re planning on owning a home in the near future, you’ll want to know more about this convenient way to borrow money.

What’s a HELOC?

A HELOC is technically a second mortgage, but in many respects it’s more like a revolving line of credit or a credit card. That’s because, while your bank or mortgage company may approve you for a HELOC, you’re not charged unless you withdraw funds. Unlike a credit card or even a traditional line of credit, however, the interest rate on the money you withdraw from a HELOC is quite low because it’s secured against the equity in your home.

How does it work?

There are different types of HELOCs — ones that are combined with a mortgage and ones that are guaranteed by your home but not connected to your mortgage. The amount you qualify for can vary but a good rule of thumb is that you can be approved for up to 65% of your home’s purchase price or market value.

What are the benefits and risks?

A HELOC offers a convenient way to access the equity in your home for renovations or as an emergency source of funds. And it can be a smart way to consolidate your other debts, particularly high-interest credit card debt.

When deciding whether a HELOC is right for you, a little common sense will go a long way. For instance, taking out a HELOC for big ticket expenditures like fancy cars or lavish vacations is clearly not a prudent decision. Likewise, using a HELOC for non-essential home renovations during a recession, when job security can be fragile, is also a bad call. As long as your income is sufficient and stable, and your purpose for the HELOC is sensible, the risk of falling into a debt trap is generally low.

While a HELOC’s interest rate is comparatively low, it can go up if the Bank of Canada raises rates, as it’s doing right now. And, like a mortgage, your lender expects you to make a minimum payment each month on the interest and principal you owe. So when you’re crunching the numbers and deciding if a HELOC is right for you, be sure that you’re not stretching your finances thin, as rapid rate hikes could make your monthly payments significantly higher than at the outset of the loan.

Be aware also that there are other costs associated with getting a HELOC, from home appraisal fees to legal and title search fees, among others.

Finally, before signing the dotted line, be sure to carefully read the HELOC’s terms, as they may include provisions you won’t be comfortable with. For example, in certain circumstances lenders can demand that you pay the full amount owing. And if you miss payments, your credit score can be affected and your lender may take possession of your home.

New HELOCs have been created at an accelerated rate in recent years and many experts worry that Canadians are relying too heavily on them. When interest rates rise rapidly, many homeowners may find it difficult to keep up. So it’s important to understand the risks and know your financial limits.

Want to learn more about HELOCs or other ways to borrow? Contact us today.

Women & Wealth: Growing Prosperity and Building Confidence


By iA Private Wealth, May 24, 2022

Women’s rights have made tremendous progress throughout the decades. And now, representing more than half of Canadian bachelor’s degrees, nearly 50% of household incomes and controlling about $3 billion in financial assets, women are forging a path towards independence, equality and wealth.

But challenges remain. Women continue to earn less than men in most professions and they’re still more likely than men to be holding down low-income jobs. Many women also left the workforce during the pandemic, as they disproportionately took on the responsibility of managing their family’s schooling and childcare needs. In fact, women are more likely to take on unpaid caregiving responsibilities for family members in general.

These realities have resulted in women saving less for retirement. Couple this with the fact that women live longer — four years longer on average — and the concerning result is a longer retirement funded by a smaller nest egg.

At the same time, more women are taking control of their financial futures. They are increasingly involved in their family’s wealth and are making more decisions when it comes to wealth planning. And many women are seeking the advice of an experienced advisor to help them form a realistic view of their current finances, map out future goals and measure progress along the way. While women are becoming progressively involved, many tend to have a different perspective when it comes to investing. Women may be more likely to take a conservative approach, which is why it’s important to find an advisor who understands not only your goals when it comes to finances, but also your philosophy.

Wealth planning isn’t only about goal setting, of course. A holistic strategy can include everything from tax planning to investment and legacy planning. In the past, men took the lead on many of these decisions, but as women continue to make strides in their careers and their financial independence, they have been coming to the table with their own views on how to manage their family’s wealth.

If you’re ready to take control of your financial future but aren’t sure where to start, please reach out to with one of our Investment Advisors today. We can help clarify your objectives and set you on a path towards achieving all your short- and long-term goals.

How to Pass on the Family Cottage


By iA Private Wealth, May 4, 2022

Canadians adore their escapes from the city. And what’s not to love? Not only is a cottage a great getaway, bringing joy to families and friends for generations, it’s also proven to be a profitable investment for many who purchased their property decades ago.

It may be hard to believe, but this cherished home away from home that has brought your loved ones together over the years can also cause strain on family relationships in the future. When you pass away, an inherited cottage often becomes a source of sibling friction as disagreements arise about how to share it, whether to sell it and what to do about the capital gains that’s accrued on it. That’s because, unlike a principal residence, which isn’t subject to capital gains, second homes are considered investment properties, and capital gains tax is owed when an estate is transferred from parents to children.

The only way to avoid the tax — and only for a finite amount of time — is to roll over the deed to a spouse, as you would with an RRSP or RRIF. That’s not possible to do with children, so eventually, taxes must be paid.

There are four main strategies for passing a secondary property like a cottage to the next generation:

Gift it now instead of later

A popular way to deal with the capital gains tax conundrum, especially if you only have one child, is to gift the cottage to them while you’re still alive. Doing so means you can pay capital gains based on the property’s value today, which makes sense if its value keeps rising.

To minimize the capital gains tax burden from the transfer, you may want to consider stretching out the gift over five years. Keep in mind that doing so might push your annual income into a higher tax bracket each year, instead of just once. And that means the government may claw back income support like Old Age Security.

Don’t forget about renovations

Capital gains tax is calculated based on the adjusted cost base of the property. That means you can count any major renovations you’ve made to the property over the years. This raises your “starting” purchase price and reduces the gain you’ve made, so you may be able to reduce your taxes. As always, it’s best to speak with an advisor and a tax professional to decide if this option makes the most financial sense.

Consider life insurance

Purchasing a life insurance policy that covers future capital gains your heirs will have to pay once you’re gone is another option. The policy may even be set up to cover other taxes — like those payable on the disposition of your RRSP, RRIF and other taxable investments. Finally, with enough life insurance, your children could also have enough to fund ongoing maintenance on the property.

Sell it

It’s worth having a frank discussion with your children about what they may want to do with the cottage after you pass on. Parents often assume their kids will want to keep it in the family, but the reality is that many children would either prefer to buy one for their own spouse and children or aren’t interested in the upkeep once the property becomes their responsibility. Another possibility is that one child may be more attached to the cottage and want to preserve its legacy while another may prefer instead to inherit some other portion of your estate.

If you decide to sell, you may choose to do so while you’re still alive or you can stipulate in your will that the property be sold after your death, with taxes and transaction costs paid by your estate and the remaining funds shared by your heirs. While selling it may be emotionally difficult for you and your family, it may also be the most straightforward solution.

Interested in finding out more? Contact us for seasoned advice on all your estate planning questions.

Stay in Control of Your Future Through Powers of Attorney


By iA Private Wealth, April 29, 2022

Being prepared for whatever life circumstances you may experience is at the core of a comprehensive wealth plan. This includes making plans for potential mental or physical incapacity. Once your wishes are formalized, it can bring you, and your family, peace of mind knowing that your decisions will endure if you are unable to communicate them.

What is power of attorney?

Most adults are responsible for making their own decisions about key aspects of their lives, such as personal finances, health care and living arrangements. When needed they might consult family members, trusted friends or professionals with proficiency in certain fields, but generally they are in control of their own choices.

No one likes to think about the possibility of having to give up control of these responsibilities, however, if there is a significant deterioration to mental or physical health, who would you want making these decisions for you? This person (or people) will act as a substitute decision maker, and is officially called a power of attorney (POA).

A POA document specifies the decision-making authority that a person (typically referred to as the “grantor” or “donor”) gives to a third party (known as the “attorney”). Note that the attorney doesn’t need to be a lawyer, but can be if the grantor so chooses. While the attorney is legally obligated to act in good faith and in your best interests (otherwise known as “fiduciary duty”), careful thought must go into choosing this person. They will have the ability to make highly impactful decisions on your behalf.

It is important to note that a POA document is different from a will. A POA is only valid while you are alive. After death, your will dictates how your estate should be handled and distributed.

Types of POAs

Depending on your personal circumstances, you may choose to make different types of POA arrangements. The most common are:

  • POA for property. This allows the attorney to make decisions regarding your financial matters, such as managing your investments and other financial accounts, paying your bills, renewing policies, implementing estate planning strategies and selling property.
  • POA for personal care. This allows the attorney to make decisions regarding your health care, such as medical treatments, hygiene, personal safety and long-term care or other housing arrangements. It helps ensure continuity of care, guided by your principles and preferences.

A POA for property only gives the attorney powers when the grantor is mentally capable. If you want this arrangement to continue should you become mentally incapacitated, then opt for an enduring POA (also known as a continuing POA). A POA for personal care takes effect only if the grantor becomes mentally incapacitated, as determined by a thorough assessment by a qualified evaluator or medical professional.

For any POA, you have the ability to place limits on the attorney’s powers, such as restricting them from selling your home. Also note that an attorney is not allowed to designate or change beneficiaries for your registered plans or insurance policies.

Importance of beneficiary designations

Since your chosen attorney cannot designate beneficiaries, it’s important to do it while you maintain adequate mental capacity. This way, you’ll have the comfort of knowing that your assets will be distributed to the people you have specifically selected. Through your will, you may also decide how your assets are distributed (for example, it’s common to set up trust accounts for minors).

Without named beneficiaries, your assets will go to your estate and the court may decide how to allocate them. This might be a slow and expensive process, plus there’s no guarantee your assets will be distributed as you desire. It’s in everyone’s best interest to designate beneficiaries on insurance policies and registered plans like RRSPs, RRIFs and TFSAs.

Similarly, if you don’t have valid POA documents, the court will appoint someone to manage your assets if you become incapacitated, which can also be time consuming, costly and not aligned with your wishes.

Ready to incorporate POAs in your wealth plan? Contact us today.