Neither Angela nor her husband Harold (not their real names) were ready for an early retirement. At 61 and 58, respectively, both are successful business owners. They’re secure financially but before now, weren’t ready to commit to an exit plan. 

“She said, ‘If your husband is retiring, what about you?’” Angela recalled from their conversation this past spring. “It’s something I’ve never thought about before, because my initial response was, ‘You don’t retire from something you love.’”  

This is the first in a series of articles focused on how financial advisors are working with clients to create retirement plans tailored to their individual needs.   

• The expert: Thuy Lam, an advice-only certified financial planner with Objective Financial Partners in Markham, Ont. 
• The client: Angela, a 61-year-old woman and owner of both a non-profit business and a for-profit business in Ontario. 

Harold was the first to engage advisor Thuy Lam on the subject. She then turned her attention to Angela. 

Lam encouraged Angela to embrace retirement. The two ultimately landed on a five-year phased approach, giving Angela enough time to create a succession plan she feels comfortable with and to mentally prepare for the transition.  

“I’m working on putting pieces in place so we can continue to have the impact that we’ve been having,” Angela said. 

The changing nature of retirement

The average Canadian retirement age was 65.3 years old in 2024, according to Statistics Canada. That figure reflects an ongoing trend toward later retirement that started to take shape in the 2000s. A ban on mandatory retirement, increased longevity, the increasing cost of living and a desire for continued participation in the workforce are some of the forces behind this trend, which has seen many Canadians either opting for a phased retirement, coming out of retirement to work or structuring their plan to allow them to work later in life.   

Lam asked several probing questions to get Angela thinking about the right approach for her. 

For one, she asked how she planned to spend retirement alongside her soon-to-retire husband, encouraging her to reflect and rediscover her interests and passions in this next phase of life.   

“It’s about creating that space for clients to get them to a point where they’re psychologically, mentally ready,” Lam said. “And it makes for a successful retirement.”  

Angela said she sees them spending more time with their two grandchildren, at their cottage, travelling overseas, finding ways to give back to their community and riding around on her husband’s motorcycle, which has been sitting around collecting dust. 

Lam also asked Angela if she envisioned herself continuing in the same roles and in the same capacity in her businesses once she retired, or if she could see herself gradually taking steps back.  

It was clear that Angela “does see herself significantly reducing hours of when she’s involved, but she’s not ready to let go … entirely,” Lam said.   

Based on that revelation, they built a plan that would see Angela shift from working at 100% capacity to 60%, then 30% and then 10%. During this transition period, she plans to delegate more responsibilities to her staff and identify her desired successors. By the end of the five years, she hopes to work for the businesses strictly in an advisory capacity and to retain some equity in her for-profit business to partially fund her retirement.  

Angela called it “a mental preparation more so than a financial preparation.”  

This is common, Lam said, among business owners who have the financial means to retire but view their businesses as “their babies — they started it from scratch and they just love what they do and they feel responsible for the team and responsible for having that business plan in place.”  

The numbers  

Behind the scenes, Lam compiled a full financial picture of where Angela and her husband stand. This included their assets, liabilities, expenses, incomes, tax returns, group benefits and Canada Pension Plan contributions. 

“I find when people are transitioning into retirement, they’re not confident, because … they don’t even know how much they need to spend to fund that retirement life they envision,” she said.  

The first exercise for Lam was updating Angela and her husband’s current spending needs, including their base and variable expenses.  

Lam then created a separate set of capital projections to determine their cash flow needs based on their vision for retirement, which includes local and international travel.  

She also accounted for extraordinary expenses that would continue into the couple’s retirement, such as car replacement, home renovations, as well as goals with regards to estate planning or pre-gifting for their three adult children. 

“[I was] asking probing questions to get a better, more realistic assessment of what their spending needs would be during their active years in retirement, and then their not so active years, because that’s important,” Lam said.  

In terms of Angela’s decumulation strategy, Lam said she used financial planning software to model different drawdown scenarios, such as: “What if she brought down her RRSP early? What does that look in terms of overall taxes? What marginal tax rates can I keep her in since her husband has a defined benefit plan and there are income splitting opportunities there?” 

“It is actually a bit of a fine art to balance,” she explained. 

Ultimately, she recommended early RRSP withdrawals for both Angela and her husband, and applying to unlock the small balance Angela had in a locked-in retirement account.  

She said she intends to revisit the couple’s plans with them prior to Angela’s husband retiring from his position in 2026, and at regular intervals after that. 

For Angela, these conversations have helped her feel confident in the plan because she didn’t think it was feasible for her to retire, she said. This was especially reassuring because she’d heard stories about two friends who recently retired and “really struggled.” 

“One had to seek some therapeutic help, because it was such a shift [from] getting the regular income that they were used to getting,” she said. 

Beware of disconnects 

Some advisors may assume their clients really know and understand their spending needs, but Lam recommended either working with soon-to-retire clients to identify their expenses or encouraging their clients to calculate them because “there might be a disconnect.”  

“It’s a really good exercise,” she said. “I believe that it forms a strong foundation for the plan and more accurately reflects the client’s spending needs. And not only that, but I believe it kind of makes the numbers more meaningful for clients, when they can really connect how their spending dollars can fund their goals and their dreams.” 

At the same time, advisors need to recognize that retirement planning “really goes much deeper than the numbers,” Lam said.  

Many people pour hours of work into their career, and it forms the basis of their identity, so advisors need to help their clients reidentify and rediscover themselves once their career comes to an end or takes a back seat to other parts of life, she recommended.  

“It’s very emotional,” Lam said. “How we can continue to make a contribution, have a sense of story and reidentify ourselves, I think that’s a really important aspect. From there, the vision comes for what activities you’d be doing, where you’d be spending your time, and then that translates to time and numbers.” 

That’s been the most difficult aspect for Angela to wrap her head around, she said, because she spent more than a decade developing her two businesses and mentoring people along the way.  

Her advice for soon-to-be retirees is to find a financial mentor to help with the retirement planning process.  

“It’s been an eye-opener, having somebody professional who is on the journey with you helping you with that documentation, asking all the right questions and … able to present the facts,” she said. 

Reflecting on a book her husband is reading on retirement, which she also picked up recently, Angela shared another message: “Recognize that this is what you’ve … been working all these years for, and now it’s time to enjoy it and figure out how you will spend your time. How will you spend your time when you’re not accountable to anybody but you?” 

Life insurance is one of those all-to-common things in financial services: a solid value proposition that prospective customers find ever more creative ways to avoid buying. Canada’s post-pandemic inflation rate is just one of the reasons otherwise intelligent adults choose not to do the right thing for their financial future.

If only we could read clients’ minds.

Since we can’t, a review of comments from financial wellness program attendees will have to do. Check out these four real-world excuses.

Life insurance is a waste of money

It’s common for people to feel that life insurance may be a waste because most people don’t think they’ll die during their working years. They aren’t wrong, but no-one knows for sure.

Many put off a purchase because they feel they can’t afford it right now. Some even think their family may not need the money. So they put it off.

I have enough insurance at work, or I have mortgage insurance

The average person doesn’t sit around thinking about how much insurance they need.

Having one year’s salary, or their mortgage paid off can seem like a big windfall that will cover their family for a while. But people don’t really take the time to map out the financial hole losing their salary would create, and for how long that would impact their family.

It will cost half as much for my spouse to live if I pass away

People assume they’d spend half as much if their spouse were to pass away. Sure, the grocery bill will be reduced and there will be less use of water in the household.

But the property tax isn’t based on how many adults are in the house, and the power bill won’t change that much. If there are children involved, then the reduction in expenses will be even less noticeable.

I’m not wealthy enough to have estate issues

This is one of the most common beliefs. People feel that only the ultra-wealthy must think about their estates.

When we explore this with wellness program participants, we find out they don’t realize that if their RRSP passes to a non-spousal beneficiary, it’s a deemed disposition. That makes it fully taxable on the final return of the deceased.

That means any sizable accounts will be ravaged by taxes. What passes to the heir will be greatly reduced. Many of your clients may realize this. Still, we educate plenty of people with advisors who don’t.

When I talk with program participants and explore the root of their beliefs, here’s what it boils down to — people have trouble understanding how much coverage they need, and they struggle to justify spending money on life insurance.

The good news is that working on your clients’ cash flows can solve these issues. Helping your clients free up money to cover insurance costs without impacting their lifestyle, and helping them see in greater detail how much their life costs, helps them take ownership over how much coverage they really need.

Too many adults are underinsured. According to LIMRA’s Life Happens study, 57% of Canadian adults say they have life insurance, but 8.4 million adults realize they need more coverage.

We’ve found a significant number of program participants who feel they have enough, and only realize they have a serious gap after they complete a quick test. People need an easy way to figure out how much coverage they need. Then, showing them how to afford it without giving up things they love removes the other barrier.

There are a lot of competing priorities. Your role is to help clients find the money to fund ideal life insurance coverage.

You can provide your clients a great service by considering their cash flow as part of an overall insurance strategy. Don’t assume that higher income, or higher net worth clients won’t benefit from spending management strategies. Not only can these concepts help them build more wealth, it can protect that wealth too.

Natalie Jamison, a senior wealth advisor at Scotia Wealth Management in Oakville, Ont., decided to specialize in serving women clients early in her career, after her mother came to her in a panic.

“My mom came to me, and she said, ‘I don’t know what your father’s doing with all my money. He’s invested it all in Italy,'” Jamison recalled. “I said, ‘No, he would never do that, mom.’ She said, ‘Yes he did, look at my statement right here — it says LIRA.’”

That incident — her mom not knowing that LIRA stood for locked-in retirement account, and the fact that she didn’t take the concern directly to her husband, who was a stockbroker — was the reason Jamison decided to become an advocate for women in the wealth industry.

“I have a unique position being a female in this industry and being able to talk to other females about their money,” she said.

The financial industry serves women much better today than it did when Jamison started out more than 25 years ago. She founded Women & Wealth, a specialty service offering financial education, events and access to a team of planning, investment, insurance, and trust and estate professionals through ScotiaMcLeod. The bank-wide Scotiabank Women’s Initiative also provides educational resources and events, with other banks having similar programs.

But the great wealth transfer, which is now underway, could create even more opportunity for advisors — a new wave of clients as some women seek to engage a financial advisor for the first time.

According to a McKinsey & Co. study released in May, the growth of female-controlled assets is outpacing the market. Between 2018 and 2023, global financial wealth increased by 43%, while the amount of wealth controlled by women rose 51%. It now represents around US$60 trillion in assets under management (AUM), or 34% of global AUM.

In Canada, women are expected to control $3.8 trillion in assets by 2028, nearly double the $2.2 trillion they held in 2019, according to a CIBC World Markets study.

At the same time, women are less likely to engage with financial advisors, with McKinsey estimating that 53% of assets controlled by women are currently unmanaged, compared with 45% of assets controlled by men.

Here’s how advisors who want to grow their practices through the historic wealth transfer — and ensure they retain clients — can prepare now.

Build relationships with both partners

Boomer women are at the forefront of the great wealth transfer, as many outlive their spouses. But advisors can’t take their loyalty for granted.

Canadian figures are hard to come by, but U.S. studies show that 80% of widows switch advisors within a year of their husband’s death. Advisors who make the effort to build relationships with both partners in a household are more likely to retain clients.

“Anyone who moves is because they don’t have a good relationship with their advisor,” Jamison said.

“Even though one of the spouses usually takes the lead, it’s important that both spouses be involved in every conversation, that they have a say, that they feel valued and heard, and that their goals are included in the financial plan.”

Micha Choi, a client portfolio manager with Guardian Capital Advisors, says advisors need to make a special effort to reach out to women, especially if they seem less interested and engaged.

“Most advisors will say, ‘Well, I always try to include wives, but they don’t come out. What do I do?’” Choi said it could be as simple as asking to speak to the wife separately.

If one partner in a couple isn’t interested or engaged, the advisor should try to find out why, Jamison said.

“It’s up to the advisor to find out, well, where does her interest lie? Because if her interest is all about the children, then let’s start by including her in the conversation about educational planning, perhaps that’s how you open the door to including her,” Jamison said. “If we do our job well and we have in-depth conversations, we’ll figure out what matters to her and find a way to include her in that conversation.”

Done right, both partners will appreciate the attention.

“Many of my male clients tell me often, ‘Natalie, I love that you include my wife in these conversations, because I know if I die first, you’ve got her back,’” Jamison said.

Choi, who cofounded Guardian Capital’s Guardian Women initiative four years ago, says her male clients are grateful for the program, which provides financial education and social events.

“We’re taking care of their family members. This is their estate planning,” Choi said. “So actually, a lot of my male clients love this and will say ‘Oh, thank you for including my wife. She’s interested. She’s learning. I can sleep better at night, knowing that she’ll be taken care of because now she has a relationship with you.’ So it’s actually strengthening the relationship.”

Use plain language

Industry jargon can be intimidating. Jamison said her clients sometimes say they think of her as a financial translator, because “finance can be like a completely different language.”

Using plain language helps everyone, she added.

Choi also focuses on using plain language and making complex concepts easier to understand.

Instead of using the term “investment objective,” she’ll ask questions that get to the core of a client’s goals, values and motivation, like: Do you want to leave money for your children? Do you care about certain charities? How do you want to live your life?

Then she makes it clear that the portfolio is there to support the client in achieving those goals.

Choi also avoids sports analogies including language about batting averages, and comparisons like relative performance, which in her experience women are generally less concerned with.

Take the time to explain

While women investors are sometimes perceived as lacking confidence, Choi says women expect more information and want help understanding what the advisor is proposing and why.

Women value advisors who provide financial education and who take time to explain concepts, strategies and investments.

“Women won’t invest in it if they don’t understand it, whereas a lot of my male clients will be like, ‘Yeah, let’s go ahead,’” Choi said, acknowledging that’s a generalization.

Jamison said advisors who are patient and take the time to explain concepts in depth will win client loyalty.

“Let them ask as many questions as they want. Women want to comprehend and understand, and that sometimes requires asking a lot of questions,” she said. “Just be patient and answer them — that also leads to building trust.”

Don’t make assumptions

Women are perceived as — and sometimes perceives themselves as — more conservative investors, Choi said. But that’s not always true.

Women are more “risk aware” and advisors may need to build trust with them more slowly.

“A male client who has a million dollars in his bank account will give me a million dollars and say, ‘Here, [invest] it,’” Choi said. “A woman with a million dollars in her bank account will say, ‘Can I start you out with $50,000 or $200,000?’ Then, once they get comfortable it’s, ‘Here is everything.’”

Often, Choi said, greater risk tolerance will come with more education and financial knowledge.

One client of Choi’s left another advisor because she was “devastated” by the 40% market fall that happened at the start of the pandemic. She cashed in her investments at a market low.

When Choi onboarded the new client, she explained what had happened in the market and why it was detrimental for her to sit on the sidelines with cash. Choi brought her back into the market over time, tranche by tranche. “When there was another market tumble after ‘Liberation Day,’ she felt fine.” Choi said.

“I don’t think we can generalize that women don’t have risk tolerance,” she said, explaining advisors need to properly explain risk to clients and educate them where necessary.

Be a BFF

The wealth transfer opens an opportunity for advisors to become a BFF — not a best friend forever, but a “best financial friend,” as many of Jamison’s widowed clients refer to her.

For them, they’ve lost a partner in life that was also their partner in managing their finances.

“I cannot replace the spouse, but I can become their financial partner,” Jamison said. “I become their sounding board for all financial decisions going forward, and that’s really what they need.”

Often, clients are “frozen” when they receive a significant inheritance and aren’t sure how to use the money in a meaningful way.

“Our job is to help them prioritize. Should they pay down debt. Should they retire early? Can they help adult children purchase a house? There are all these competing priorities, and they’re kind of unclear,” Jamison said.

“That can only be done with prudent financial planning and lots of discussions.”

Advisors also need to be sensitive to the emotion involved with any inheritance, which necessarily is accompanied by loss.

“Don’t rush someone to make financial decisions when they’re grieving their loved one that was just deceased.”

As advisors, our role often extends beyond managing wealth. We have the privilege of helping clients create a legacy and realize their deeper aspirations, especially those rooted in generosity, values and social impact.

One of the most rewarding parts of my work is supporting clients in giving back to causes that truly resonate with them. Recently, I had the opportunity to do just that with a client who was inspired to create a public art display to benefit four women’s shelters in Montreal.

It all began during an extended stay in Modena, Italy, where my client, Nori Bortulzzi, volunteered for an event called Viva Vittoria. It’s a one-day public art installation aimed at raising awareness and solidarity around violence against women. Deeply moved by the experience, Nori returned to Montreal determined to create a similar initiative that would raise funds and foster connection and creativity.

And so, Crafted for Courage 2025 was born.

The power of a donor advised fund

We set up a donor advised fund (DAF), a flexible, tax-efficient vehicle for charitable giving that we had previously established together. We also rebranded the fund under the Crafted for Courage name to give it a distinct identity that aligned with her mission and made it easier to promote the initiative publicly.

DAFs are one of the most effective tools advisors can offer clients who want to give back meaningfully. They allow donors to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time. This structure gives clients the ability to be both strategic and spontaneous in their philanthropy.

One of the most impactful funding strategies for a DAF is the in-kind donation of appreciated securities. Instead of selling investments and donating the cash proceeds, clients can contribute publicly traded securities that have increased in value. This approach offers two key benefits:

• Eliminates capital gains tax on the appreciated amount
• Provides a full charitable tax receipt for the fair market value of the securities

This strategy maximizes the value of the gift and enhances the client’s overall tax efficiency. It’s a smart way to align investment performance with philanthropic goals.

Personally, I’ve used this approach to fund my own family’s charitable foundation, donating shares from my ETF portfolio. It’s a powerful reminder that philanthropy and financial planning don’t have to be separate conversations. When integrated thoughtfully, they can reinforce each other.

For advisors, DAFs offer a unique opportunity to deepen client relationships. They open the door to conversations about values, legacy and impact, topics that go far beyond portfolio performance. And because DAFs are easy to administer and can be passed on to the next generation, they’re an ideal tool for clients who want to build a legacy of generosity.

Planning the event: community, creativity and collaboration

Nori spent countless hours over the span of a year bringing Crafted for Courage to life. She secured the beautiful Esplanade of Place Ville Marie in downtown Montreal and rallied an impressive team of volunteers. The concept was simple yet powerful: volunteers would knit blankets and visitors could donate $75 to the DAF to receive one. All proceeds would go to local women’s shelters.

To support her efforts, I also contributed through my own DAF by promoting a matching donation campaign within my network of clients and friends. This dual approach, client and advisor working together, helped boost both attendance and generosity.

The advisor’s role in philanthropy

The event was a resounding success, mobilizing $65,000 for four local organizations supporting women in need. Volunteers transformed more than 5,000 fabric squares into 500 handmade blankets, and welcomed hundreds of visitors. The atmosphere was inspiring, with many attendees making on-site donations to Nori’s DAF in exchange for a blanket.

This was a rewarding experience for my team and me, and for colleagues across Raymond James. The event took place during RJ Cares month, allowing us to mobilize volunteers and funds from within our firm.

Here are five takeaways on how advisors can support clients and positively impact their communities:

• Clarify intentions: By asking thoughtful questions, help clients identify the causes they care about and define their vision for impact.
• Structure giving: Whether it’s setting up a DAF, creating a private foundation or integrating charitable giving into estate planning, provide tailored solutions.
• Leverage networks: Our professional relationships can connect clients with the right partners, organizations and experts to amplify their efforts.
• Ensure sustainability: Design giving strategies that endure beyond a single event.
• Measure impact: By incorporating tracking tools, enable clients to see the tangible results of their generosity.

Crafted for Courage 2025 wasn’t just a fundraising event, it was a living example of what can happen when a client’s passion meets the right support and structure. It showed how philanthropy can be deeply personal, powerfully communal and impactful.

As advisors, we have the tools and the responsibility to help clients turn their values into action. When we do, we don’t just manage wealth, we help build legacies of meaning, purpose and compassion.

Sébastien Desmarais recalls a time when his client received “the offer of a lifetime” for their business, setting the wheels in motion for an exit.  

But because the client had never thought of creating a succession plan, they didn’t have their corporate, legal and tax records in order.   

With just a few months  to produce these documents for the deal to go through, the business owner ended up scrambling, said Desmarais, vice-president, tax and estate planner and business succession advisor with TD Wealth in Ottawa. 

“The purchaser knew full well at some point that the client was struggling to get things in order. So, they were playing hardball. They were about to renegotiate the prices down,” he said. “The emotional toll on that client was significant.” 

While Desmarais and his client were able to produce the required documents in time and the deal was completed at the initial offer price, the experience underlined a valuable lesson. 

“Business owners live every day for their business, so …  they don’t anticipate these successions, whether it’s an offer or letting go,” Desmarais said. “I think this is where advisors can really come together and help them, at least planting the seed to make sure everything is in order, or start putting things in order for that business owner.” 

Here’s how financial advisors can help their business owner clients plan a successful exit. 

Get clients thinking about their exit  

Advisors can get clients’ succession planning gears turning by asking key questions. 

For example, ask them what price they’d be willing to sell their business for.  

“That triggers a little bit of a subconscious idea that, ‘Wait a second, that can happen tomorrow, an unexpected offer,’” Desmarais said. 

They can also ask whether the client wants anyone in their family to take the reins of the business, and if so, what timeline they’re considering for such a transition.  

That will help them realize that if they want the business and the next generation to succeed, “they need to take the time to plan for it,” Desmarais said. 

Further, advisors should listen carefully to what their clients want in a succession — it can be an emotional life change.  

“Sometimes advisors like to take the lead and plan for what would be in the best interest of the client, and they may not align with the business owner, which brings frustration,” Desmarais said. 

This is especially crucial because for many entrepreneurs, their business is “kind of their baby,” said Kevin Zhao, senior engagement manager with Sapling Financial Consultants Inc. in Toronto.  

“They built it out for 20, 30, 40 years [in some cases], and they’re really trying to pass it off in a nice way, so that it can survive the future and not just kind of disappear into the unknown,” he said.  

Start the planning early 

While no two businesses are the same, the general rule of thumb is to plan a succession two to five years out from an anticipated exit or ownership transfer. 

This allows enough time for thorough preparation, including tax planning, identifying and developing successors and adequate consultation with experts. 

“I’d say if you give yourself five years, it gives plenty of time to the business owner to grasp the concept of business succession, of letting go, and make sure that the advisor crosses all the t’s and dots all the i’s properly,” Desmarais said.   

The harm of not planning far enough in advance is that something unexpected could happen, leaving a business owner’s family members, staff or even community members to pick up the pieces.  

“You’ve heard the stories saying, ‘He left a mess, passed away, no business succession plan,’” Desmarais said. “That could’ve been avoided or minimized, just with proper planning.” 

Zhao’s advice is to “start with the hard stuff.”  

If a business has “really bad” accounting or software systems that manage key parts of the business operations, he recommended homing in on those systems early on.  

“Trying to change the system itself could take half a year to a whole year, so starting there will be good,” he said. 

Connecting clients with the appropriate experts, including accountants, lawyers and business valuation professionals, early in the planning process also helps ensure a smooth transition. 

Closer to the selling day, business owners should undertake different initiatives “to show the growth trajectory of the business” to potential buyers, such as increasing their revenues and hiring more people, Zhao said.  

“If a big portion of the company’s revenues are one time in nature, non-recurring, or hard to predict, then buyers are more likely to discount that amount in the future,” he added. “But if you can show consistently, year over year, the same customers, same amount or increasing sales, then obviously that’s good and … increases the valuation.” 

Accounting for the accounting 

Before an offer comes in or a business owner client prepares to transfer ownership of their business, advisors should ensure their client consults an accountant or accounting team and that their financial statements are accurate and up to date.  

“If a third party comes in and says, ‘We’re looking at purchasing,’ and you say, ‘Here are my books, everything is in order — the tax implications are in order, financial statements, balance sheet, income statement,’ it brings confidence on the [part of the] purchaser,” Desmarais said.  

One thing to consider is whether the business owner needs to convert from cash to accrual accounting, which is seen as a more comprehensive and accurate picture of a company’s financial health. Accrual accounting features revenues and expenses that are recorded when they’re earned or incurred, not necessarily when cash is received, Zhao explained. 

“The converting process can be long, so that’s why if you start early, it can iron out other kinks,” he said. 

Where applicable, business owners must also reconcile their accounts and separate their personal and professional expenses in financial statements, Zhao recommended.  

Tax considerations 

Another key part of the succession planning process is accounting for tax implications. 

Advisors and other experts should pinpoint ways that their business owner clients can take advantage of tax incentives in Canada to either avoid, minimize or defer taxes.  

This includes the lifetime capital gain exemption (LCGE), which allows eligible small business owners to sell qualifying shares of their business and shelter up to $1.25 million in capital gains from taxation. 

In a family succession, it’s also possible for multiple family owners to use their individual LCGE, Desmarais said. 

Another potential future tax incentive is the Canadian Entrepreneurs’ Incentive (CEI), which has yet to receive royal assent. If the CEI gets implemented and is combined with the LCGE, eligible entrepreneurs could benefit from at least $3.25 million in total and partial lifetime capital gains exemptions when selling all or part of a business. 

“With proper tax planning, business owners will be able to potentially minimize their taxes, providing great value for all the hard work and time that they spent over the years in the business,” Desmarais said.  

Like other tough life events, the end of a client’s marriage is a complex, emotional transition that provides advisors with an opportunity to deliver real value and deepen one or both relationships. And one of the key decisions advisors must help their divorced clients make is what to do with their matrimonial home — the property they live in at the time of separation.  

Treena Nault has guided multiple clients through the process. She is a certified financial planner with Nault Group Private Wealth, which operates under IG Wealth Management in Winnipeg. 

“Financially, with the right advice and the right choices, their life doesn’t have to be massively impacted,” she said. “I’ve seen people move on and thrive in life, and meet the love of their life, or maybe the second love of their life, and live happily ever after.”  

Give clients the time and space to express their feelings before going straight into numbers and planning next steps, Nault recommended.  

“Really listen and take time to be there for them emotionally first,” she said.  

Sharing personal stories or client stories — without identifying them — is one way advisors can help clients make sense of their situation and what to do about the family finances, Nault suggested.  

“This isn’t something that happens in one meeting and it’s one and done. It takes time to go through it,” she said.  

Advisors can also ask their clients if they’re seeking counselling support and share stories of themselves or other clients speaking to a counsellor and how it helped them. 

Should you serve both spouses? 

Advisors differ in their views on whether it’s a best practice to continue serving both spouses after a divorce. It’s a decision every advisor must make, and individual situations often dictate the right answer. 

Nault believes it’s tricky to protect the interests of both parties after a divorce. Typically, she talks to both partners about that and then recommends that she work with just one of them. “Otherwise, it’s a conflict of interest, in my opinion,” she said. 

After hearing them out, advisors need to focus the client’s attention on a new financial plan.  

“I often say to clients, ‘OK, look, I get that there’s an emotional side to this, but my job is to bring the facts,’” Nault said. “So, I obviously listen, I empathize, I allow that conversation to happen from an emotional perspective and then we get into the financial plan, which really gives us all the answers.” 

What about the matrimonial home? 

Among the most significant assets to be dealt with is the matrimonial home, which represents a powerful combination of financial and emotional value.  

Clients will often speak rashly — they don’t want more change; they don’t want to move the kids. Emotions tend to be especially heightened among those who didn’t initiate the split.  

The most common options include a spousal buyout, where one spouse buys their ex’s share of the matrimonial home and takes sole ownership, or the divorced couple sells the home and each party walks away with half of the net proceeds, said Olivia D’Ammizio, a family lawyer and associate with Shulman & Partners LLP in Toronto.  

Couples can also come to a temporary arrangement where the spouses co-own the home for a period of time or rent out the home and share profits or costs while waiting for a better time to sell. Alternatively, one spouse could keep the home while the other gets a larger share of other assets to balance the home’s value. 

“Some separations take a year, some take three years,” Nault said. “I’ve seen people co-own a home or own a home for another person for their lifetime. There’s no cookie-cutter approach.” 

In some parts of the country, home ownership is out of reach for many single Canadians. D’Ammizio said she sees a lot of divorced couples selling their homes and splitting the proceeds as soon as they can because “people are just finding it unaffordable to pay rent for a new place, as well as the carrying costs for the matrimonial home.” 

Many will list the home for sale — which can take months, given the softness in the current residential real estate market.  

“A lot of my clients, when they’re in these situations, they’re saying either they’re staying in the home until it’s sold or until it’s dealt with, or we need to list it as soon as possible so they can get whatever funds are owed to them, so that they can move on,” she added. 

Advisors should ask clients what they’ve discussed with their ex and whether they have it in writing. Also, ask if there’s one person who’s really attached to the home and wants to keep it, Nault suggested.  

They should also remind their clients that even if they do end up selling the home and splitting the proceeds, they may not be able to qualify for a new home mortgage on a single income. In these cases, advisors could refer a client to a mortgage specialist to help outline their options. 

“It’s very hard, because if somebody’s in … a million-dollar house, but now they can afford to buy a $500,000 house, that’s a big difference in possibly neighbourhood, obviously square footage, all of that stuff,” Nault said. “And one of the first things I’ll say to a client when they’re going through a separation is, ‘This is a very large impact in your financial plan to go from two incomes to one income, so I just want you to expect that things are going to change a little.’” 

For a spousal buyout, the divorced couple must first determine the value of the home. 

“The best evidence is always an appraisal of the home,” rather than relying on online estimates, D’Ammizio said. If a couple cannot agree on a buyout price based on one appraisal, she recommended using the average of two appraisals or a third appraisal if its value is between the first two appraisals. Another option is to get a letter of opinion from a real estate agent.  

Based on the agreed-upon home price, advisors can then calculate the net equity of the matrimonial home.  

When that’s all done, advisors should walk their clients through several considerations such as how they’ll come up with the money to buy out their ex; if they’ll buy out the home through a lump-sum payment, a new mortgage or a combination of both; what their cash flow would be if they opted for a buyout; and how the buyout would impact their other plans such as funding their children’s education or their retirement. 

“Take the time, understand what their priorities are. Maybe for some people, they would say, ‘You know what, in order to keep my children in this house, I’m willing to put off my retirement by 10 years, or five or whatever,’” Nault said.  

“And so, I think it is numbers, but it’s also very personal to each situation.” 

Ultimately, Nault said advisors may want to consult their client’s lawyer and understand what’s in their separation agreement to ensure everyone is on the same page throughout the decision-making process.  

“You have to kind of know what’s being discussed with the lawyer. Possibly there’s a meeting with the financial advisor and the client and the lawyer to get more information out there and to walk through some of the scenarios,” she said. 

Advisors who successfully support a smooth transition for their clients are likely to reap benefits too, Nault said. You’re helping with a complex set of issues when it’s needed most — that won’t be forgotten. 

“You want to explore all the angles with the client and get them through it, and then they will be thankful to you, and they will be loyal to you, and you’ll get great referrals from people you’ve helped through such a large life event.”  

Know your client (KYC) requirements are often viewed through a regulatory lens. After all, KYC’s core ideas about understanding clients’ unique needs and protecting investor interests emerged in the post-Great Depression era. As such, it’s treated as an obligation.

It has prescribed areas of focus, including time horizons, objectives, knowledge, age, marital status, etc. And it comes with the threat of punitive consequences should an advisor fail to follow the process. Advisors must obtain specific information about their clients to inform product and service recommendations while upholding prescribed rules and regulations.

KYC is a critical component in today’s wealth management business due to its crucial and highly interconnected role in informing professional judgment for product and service suitability and client relationship management. What it misses though, is the day-to-day realities of a client’s life where biases live and can be controlled. 

We’ve long known that clients’ emotions impact their decision-making. Behavioural finance tells us that your clients’ biases, behaviours or beliefs can be costly. Advisors have biases too, which can impact client outcomes. For example, research shows they tend to believe the people they serve are more like them than they are. That impacts how they communicate with clients, recommendations they make and more.

Biases impact both sides of the advisor-client relationship. And none of that shows up on a KYC form.

Few financial advisors have cultivated the skills required to fully build behavioural finance best practices into the experiences they deliver clients. It starts with recognizing that clients’ emotional responses to money, life and decision-making are unique and context-dependent.

Today’s financial advisors need to shift from a form-driven relationship to one that meets their clients where they are at in life, a little like therapists do. Stop asking questions to fill in forms. Talk to clients about their life, their money and what they want from it.

Soft skills and meaningful dialogue

Engaging with your client’s emotional responses differently will result in a better understanding of their circumstances, which helps mitigate negative biased responses while achieving a holistic understanding of clients needs, realities and objectives. It is this shift that will help advisors achieve the much-needed step-change to elevate their value proposition.

That means being a better listener, being more intuitive to client signals — both verbal and nonverbal — and establishing relationships with mental health professionals that you can bring in the same way you call on lawyers and accountants. This demands a range of soft skills and personal awareness that leading advisors are working hard to develop.

It’s more than just understanding client biases. When talking with clients, identify impending issues or events that — given what you know about the client — have a high likelihood of contributing to adverse financial decision-making down the road.

Wealth management is a relationship business first, and a money business second. Without strong relationships built on trust, financial advisors can’t be successful. As people turn to social media and AI for financial advice and education, the advisor value proposition needs to lean into the humanity of money and the engagement of clients through meaningful conversation.

The KYC form represents data and fixed points, which don’t reflect the person. There’s more to your client than that.

Next-level financial advice comes with the respectful exploration of the very human nuances that exist between the checkboxes. Really knowing your client means understanding the contextual pieces that drive your client’s decisions.

Not everyone who comes into money is a financial expert. Financial literacy is a common stumbling block for clients with new wealth. That includes entrepreneurs who build great wealth but came from modest backgrounds.

When wealth comes suddenly, as the result of a business sale, inheritance, insurance payout or severance package, financial advisors can play a hands-on role to help these clients come to grips with their new situation. There are a range of urgent and long-term priorities.

Kathy McMillan, a senior wealth advisor and portfolio manger with McMillan Wealth Solutions in Calgary, part of Richardson Wealth, recently onboarded a client in Alberta with a net worth of close to $10 million after selling his trucking business.

The 53-year-old married father of two found himself stuck with a “humungous” tax bill owing to the types of assets he had chosen to keep in his corporation. They included rental properties, for which he had paid cash, plus about $5 million in GICs.

On top of that, he had accumulated $10,000 in penalties for overcontributions to his TFSA through haphazard deposits, even though he hadn’t come close to tapping out his overall contribution room.

“After we reviewed the tax return together with [the McMillan team’s] chartered accountant, we identified all the interest income and the horrendous amount of tax he was paying,” as a well as a sub-par rate of return.

He also wanted to treat his corporation as a multi-generational asset that would support his kids and grandkids. So, McMillan introduced him to a mortgage broker who’s helping him leverage out of existing property to buy new property. “So now we have some debt that’s tax deductible.”

By getting to know the client and what’s most important to him, as well as his overall financial situation, McMillan is working to ensure his financial plan, investments and the investment vehicles they’re held in support his larger goals and values for him and his family.

“He wanted to raise two great boys. He wanted to take care of his father. He wanted to [work with]horses,” McMillan said. But he still thought he should get a job. “I suggested that he already had a job, which was raising two boys, helping his dad on [his] farm, and helping his community, and that I would supply his paycheque.”

While the client is a conservative investor, he now has more of his wealth in blue-chip equities like bank stocks, providing tax-preferred income through dividends. And because the GICs are laddered, McMillan has been able to bring the cash over incrementally as they mature, using dollar-cost averaging to invest.

“We didn’t scare him. We added in a touch of tech and a little dash of nuclear energy,” McMillan said, adding they have performed very well. “He thanks us all the time.”

Traumatic events

Other times, a windfall is associated with a loss of some sort — a divorce, severance package, or an inheritance or insurance policy payout after the death of a loved one.

“All these events are traumatizing. So, if you have financial literacy or not, you’re full of cortisol and you’re not thinking. This is where a lot of mistakes are made,” said McMillan, who holds Certified Financial Transitionist and Financial Divorce Specialist designations. “You must deal with the trauma around the money first, or you’re going to have to undo everything that’s been done.”

One client had considerable assets after her marriage of nearly 50 years ended — dividing household assets of $30 million, including three homes in several countries. But she was completely new to investing. She chose McMillan out of three financial planners she interviewed.

When McMillan asked why, about a year after the woman became a client, she said, “You were the only one that asked about my well-being.”

In these cases, advisors must be prepared to listen, be patient and put the person before the investment plan. As basic as it sounds, that can win both new clients and referrals.

McMillan is also careful not to hand a big to-do list to an overwhelmed client, instead helping them prioritize what’s most important right now.

For example, one client who was packaged out of a job after many years of service, was overly focused on a detail that wasn’t urgent — her dental plan. Instead, McMillan helped her refocus on something that was: consulting with a lawyer to gauge if the offer was fair.

Building trust

Whatever the origin of a client’s cash infusion, establishing trust is paramount, according to Vanessa Flockton, president, private wealth with Vancouver-based Nicola Wealth.

Many incorporated professionals or business owners haven’t worked closely with financial advisors. “They may have an advisor, it might have been somebody at the bank or a broker, but it’s a small amount of their money, and their lives are so busy that they don’t pay a lot of attention,” said Flockton, who also works directly with clients.

These relationships are often shallow, and conversations may focus purely on investments rather than the client’s overall financial big picture, planning and goals.

These clients need a partner they can rely on to help guide them, Flockton said. “This is a new world for them to navigate.”

For advisors hoping to serve these clients, like McMillan, Flockton said the focus should be on getting to know the person. “Build a relationship, understand what’s important to them and help them achieve it. The investments should be helping them achieve their goals, not be [just] about investing money and gaining returns in isolation.”

Clients who have or had ultimate control in their own business may be wary of entrusting their financial well-being to another person, said Andrew Dimock, an investment counsellor with Guardian Partners Inc.

“Sometimes they’ll look at it from a skeptical lens, like who is this person that’s trying to help me? Do they have my best interest in mind?” Dimock said, adding they also want to know their advisor understands their goals and objectives. That’s where experienced advisors who are fiduciaries have an advantage.

Diversification and risk tolerance

It’s common for business owners to be under-diversified or — counterintuitively — overly conservative.

Some have taken risk in building their business and investing in an area where they’re a subject matter expert that they feel more comfortable holding cash, GICs or Treasury bills when they have a liquidity event, Dimock said.

Risk tolerance has two components ­­— the ability to take on risk and the willingness to do so, and the latter is influenced by a person’s background and upbringing.

“In most cases, when people come into a significant amount of money, the ability to take risk is there. But sometimes the willingness is not,” Dimock said.

Getting to know a client at the outset, understanding their risk tolerance and educating them on the benefits of investing for the long term is key to setting the right asset mix, he added.

Other clients have no interest in diversification and instead want to continue to take risks in the area they know best.

“I work with a lot of clients who made money in a certain way — say it’s tech, health care or retail, whatever they’re comfortable with,” said Micha Choi, a client portfolio manager with Guardian Capital Advisors. They’ll point to the $20 million they made in retail and say: “‘I’m going to put it back in retail, because I trust it, I know it, I love it,’” she said.

“It is a bias, but who are we to say, ‘no, you’re wrong’?”

Wherever a client stands on the risk spectrum, it’s important for advisors to present options based on their overall financial plan and educate the client. But they also need to listen to them and respect their wishes, Choi said.

“These clients who come to us, they didn’t diversify. You can’t build $25 million from nothing by diversifying,” she said. “Concentration builds wealth. Diversification keeps it.”

For those clients, she will offer to safeguard and grow a portion of their wealth and ensure it’s not eroded away over time by inflation.

“If you want to protect $5 million, $10 million, $20 million ­— [we can help you with] that. Outside of that, you do whatever you want or need to do.”

Some clients may have heard that adding children to a home title can avoid probate fees, make the estate process simpler and give the children the right of survivorship. However, “there are some definite misconceptions and some significant risks in doing it that way,” says David Christianson, a senior wealth advisor and portfolio manager at National Bank Financial Wealth Management in Winnipeg.

The home may be taxed as part of the estate if the children aren’t the true owners. There is the risk that the home could be lost to a child’s creditors. The move could also lead to an unequal inheritance between the children.

In Ontario, the probate fees are only 1.5% for the value of assets above $50,000. Kate Wright, a co-managing partner and practice lead of wills and estates at Mann Lawyers in Ottawa, asks clients to weigh the risks and benefits of adding their kids to a home title.

“Proceed with extreme caution,” Wright said. “Probate avoidance is not the be all and end all. It’s only one factor and it shouldn’t be driving the bus of your planning.”

Wright’s clients often see adding a name to a title as a simple move, but when she explains that the client will need tax, family law and financial advice, the clients usually reconsider.

Kim G. C. Moody, founder of Moodys Tax and Moodys Private Client in Calgary, said he tries to understand a client’s objective and where the client got their information before telling them that they’re misinformed.

“It usually results in some sort of bursting of a balloon,” Moody said. “There’s a level of sensitivity and empathy that’s required in order to truly understand what their objectives are.”

Taxes and beneficial ownership

If a child is added to a property’s title, it must be clear if half the home is being gifted to the child, or it’s simply a matter of convenience in estate planning. If it’s a gift, the client will need to report the property’s partial sale to the Canada Revenue Agency and may be liable to pay capital gains tax if the home does not qualify as a principal residence, Christianson said. 

The process must be well documented as siblings may challenge ownership when the parent dies. The client needs to meet with a lawyer in the absence of their children to ensure they’re not under undue influence, Christianson added.

Whether the home will be included in an estate after a transfer of legal title depends on whether there has been an intended transfer of beneficial ownership when the title was changed, Moody said. He recommends clients seek separate legal advice on this matter.

For example, if the parents continue to pay the mortgage or declare all the rental income on their tax slips after the title has changed, it may indicate that the child didn’t have beneficial ownership, Moody added. And when the client notifies the mortgage lender of the ownership change, the financial institution may call the mortgage.

Exposure to a child’s creditors or divorce

Adding a child’s name to a home title could expose the parents to the child’s creditors or divorce claims.

If a grandparent wanted to add a grandchild to a home title for estate planning purposes and the grandchild is found at fault in a car accident, the house could be drawn into litigation as an asset, Moody said.

Whether a child’s interest in the home will be exposed in a divorce claim for property equalization depends on the facts of each case, Wright said. If it was a gift before the marriage, it can’t be excluded, but it might be excluded if the gift was made during the marriage, for example. This process will require a disclosure by the parents, who might not want to get involved.

“I get clients who say, ‘My neighbour added their kid, I think this would be a good idea for me,’” Wright added. “[But] what is right for somebody else isn’t necessarily going to be right for you.”

An unequal inheritance

Leaving a house to one child and other assets to the siblings could result in an unequal inheritance. While the value of the assets may be equal at the time the will was drawn up, the value of a home will increase at a different pace than an investment portfolio or life insurance policy will, Christianson said.

“It’s pretty risky to have different elements to work out. You can create some equalization clauses in the will, but that opens the estate to all kinds of disagreements and potentially litigation,” Christianson added. “When part of the family is suing the other part of the family [it] never feels like it’s a win.”

But fair doesn’t always mean equal. For example, it may be fair for parents to will a family farm to the child who is willing to take it over with the non-farming siblings inheriting other assets, Moody said.

In any case, the family should meet to ensure that all the siblings are on the same page and know what their parents intend to do, Christianson said. This is best done on neutral ground, such as an advisor’s office, with the advisor and lawyer present.

Jeopardizing options

Adding a child to a home title could jeopardize future financial options for the parents and the child.

If the client needs to mortgage or sell the house to fund their retirement, they will need to seek their child’s consent to do so as a co-owner, Wright said. “Everyone will say, ‘My kids will go along with it,’ until they don’t.”

In addition, it could jeopardize the child’s first-time homebuyer benefits such as opening a first-home savings account or claiming the first-time homebuyer’s tax credit, Wright continued. The parents and the children will need to get separate legal, tax and financial advice.

We need to stop making assumptions about things clients know based on how well they’ve saved for their future. Having a high income may let clients automate their savings and put significant amounts of money towards retirement. But having a larger balance or a high income doesn’t mean that clients have vast knowledge about all areas of their finances. Net worth is not evidence of financial literacy. It only shows your client’s current financial capacity.

Many of those we see in our employee financial wellness program share their financial beliefs and current knowledge through surveys and polls. This has allowed us to spot numerous knowledge gaps that could cost participants if they don’t gain new information and make changes before it’s too late.

Check out these frequent misassumptions among highly paid professionals, most of whom have an advisor. Verify that your clients don’t have any of their wires crossed when it comes to these issues. And make sure you’re not making your own mistaken assumptions.

1. RRSP or RRIF withdrawals are taxed at a lower rate

One of the most common misassumptions is the belief that RRSPs and RRIFs are taxed at a lower rate when withdrawals are made over a certain age. This may be because during the sales process, clients are told that they’ll likely have a lower marginal tax rate in retirement. The truth is no one knows what marginal tax rate your client will pay in retirement.

When I ask questions to see where this belief comes from, it seems to be a misinterpretation of the age rules regarding when an RRSP becomes an RRIF. But the age someone is when they make an RRSP or RRIF withdrawal has nothing to do with how taxable the income is.

Sure, some people will pay significantly less tax on a dollar withdrawn from their retirement account than they were paying on a dollar of income when they worked, but that’s only if their income is quite a bit lower.

Clients who have a pension, or have done a really good job maxing out their RRSP, aren’t likely to see tax rates much lower than they were when they were working. Even if it’s lower, it’s not likely to be zero. It really depends on how much income they keep, which is the only income that really matters to a retiree.

Still, plenty of well-educated, intelligent people with great jobs and large RRSP accounts do not realize that every dollar they ever take out of that account will be 100% taxable, just like a salary or any other regular income. This is an inaccurate, dangerous and expensive assumption.

One strategy I like to teach people is what I call retirement income stacking. Use a charting tool (any spreadsheet software can do this). Enter all your client’s sources of income in retirement. Include whether they are taxable or not, to see how much fully taxable income is stacking up during any given year of retirement.

2. A TFSA is best for emergency savings

This knowledge gap is the result of how TFSAs were marketed in the early days. They were often promoted for short-term savings, though the penalties for withdrawal and redepositing make it clear that these accounts are not great for this purpose.

For instance, a client with a maxed out TFSA would be frustrated trying to top their funds back up after taking out money for an emergency, and then getting hit with a penalty for not waiting until the following year to recontribute those funds. 

Many people in our programs have TFSAs full of cash, and think of them as emergency savings accounts. They are wasting the most impressive feature of TFSAs. It makes more sense to use their account for investments that have the best chance of long-term growth to maximize future tax-free income.

The TFSA can also be added to retirement income stacking because it’s a tax-free layer that can fill in gaps, or sit on top of their taxable income sources. They can increase their cash flow without increasing their total taxable income.

3. Everyone should take CPP and OAS as early as possible

When we teach people about life insurance, nobody thinks they’re going to die prematurely. But those same people want to withdraw from their CPP or OAS as early as possible because they’re worried about dying young and missing out on payments.

This is hyperbolic discounting (present basis). People want their CPP and OAS payments as soon as they can get their hands on them, not because they have done the math to determine optimal timing.

When your clients take government benefits can have a drastic impact on how long their investable assets last. This is a personal decision, but clients need you to help them avoid getting sucked into their own present bias.

Once again, my retirement income stacking strategy can help map out the timing of when to start CPP or OAS. Taking the time to help your clients see a visual of when they start taking what, and how it could affect their total cash flow, is crucial. You can also help clients with employer pension plans better understand CPP integration.

4. I will spend less in retirement

When we ask employees how much they’ll spend in retirement, they tend to underestimate what they’ll need. We take them through an exercise in which they note what expenses go up, down, away and stay the same. They also have to add new expenses.

Their reaction is almost always the same. They are shocked by how many expenses are going to go up, and how few will go away.

Longevity trends make this misassumption even more dangerous. Many of your clients would be well advised to plan for a retirement that is almost as long as their working life.

Adding cash flow advice to your process when clients are in their accumulation phase will build up habits that protect them during their decumulation phase. It will also provide you with a more accurate retirement income need, and help clients find the money to fund their retirement.

These misassumptions are exceedingly common. Check in with every client to ensure they understand how all these factors impact their retirement cash flow. Don’t let mistakes go unaddressed. It will cost you and your clients a fortune.