Wealth Management in Canada

Start Working with a Wealth Management Team in Canada

Written by Tiffany Woodfield, Associate Portfolio Manager, CIM®, CRPC® and John Woodfield, Portfolio Manager, CIM® CFP®

Read Time: 12 minutes

If you live in Canada and have built up or inherited substantial assets, you may be looking for wealth management in Canada. Whether you have $2 million or $20 million, your wealth manager should ensure you don't lose money to excessive taxes and common investing pitfalls. 

While some high-income earners and successful entrepreneurs like to do their own investing, it's important to remember that smart investing is only one piece of the puzzle when it comes to wealth management. Your wealth management team will help you with investing, financial planning, estate planning, legacy planning, tax planning, and important financial decisions such as when to sell a business or buy or sell your properties.

At SWAN Wealth, we've been working with high net worth and very high net worth individuals for over 25 years. We've seen many clients come to us from big banks or mid-sized firms who aren't happy with the service they're receiving, and this isn't uncommon.

So if you'd like to schedule a call, click here to do so. Or keep reading this article for more guidance on finding the right wealth management team in Canada.

Your wealth management team will be one of the most critical long-term business and financial relationships you have. A good wealth management team will be there for you at every important financial milestone and decision, acting as your guide and ensuring nothing is overlooked. You should feel completely taken care of and be able to sleep well at night knowing that your hard-earned money is being protected.

TABLE OF CONTENTS

1. Start Working with a Wealth Management Team in Canada
2. What is Wealth Management?
3. Wealth Management Online
4. High-net-worth Wealth Management
5. High-net-worth Investing
6. Three Essential Steps of Wealth Management
7. How Wealth Management Works
8. How to Select the Right Wealth Management Firm
9. Private Wealth Management Canada
10. Wealth Management Fees Comparison Canada
11. Wealth Management and Your Values
12. Sustainable Investing and Wealth Management
13. Financial Planning vs. Wealth Management
14. Estate Planning Is Part of Wealth Management
15. Do You Need a Trust?
16. Making an Impact with Charitable Donations
17. Insurance Planning
18. Investment Planning
19. Best High Net Worth Wealth Management Firms
20. Wealth Management in Canada for US Citizens
21. Summary of Key Points
22. Next Steps

What Is Wealth Management?

Wealth management is the management and planning of all areas that impact your life financially. It considers what is most important to you in regards to your finances now and in the future. Examples of services offered by a wealth management firm are tax planning, estate planning, financial planning and investment advice.

Wealth Management Online

The past few years have taught us that doing business online is efficient and effective. We've seen a rise in clients who aren't worried about meeting their wealth management team in person. Instead, they want to find the most skilled team. They're looking for wealth managers who understand their situation and can prevent costly problems, and help them achieve their goals.

Working with a wealth management firm over Zoom and email opens the doors to work with the people who will best serve you. You're not stuck with the local advisor who might not understand your specific situation. Whether you're a business owner, a dual citizen or have other complexities that you need help managing, we recommend finding a team specializing in helping people like you.

One more benefit we've seen with meeting our clients over Zoom is that people are often more relaxed in their home or office environment. This relaxed feeling can result in better conversations where it's easier to uncover a client's needs. It is a win-win because you're more comfortable, don't have to travel to a meeting, and get better service.

High-net-worth Wealth Management

High-net-worth wealth management means you have access to additional planning tools to ensure your wealth is protected and transferred in the way you intend. This may mean using trusts, charitable giving, business succession planning, or tax and financial planning. Your wealth management team will help you plan when to draw income to reduce the tax impact of withdrawals. When you have accumulated higher net wealth, you are at a greater risk of increased tax rates.

Simple things such as gifting and who to put on the title of certain assets can make a significant impact. A high-net-worth individual has additional opportunities and strategies to maintain and preserve their wealth.

High-net-worth Investing

The difference between investing when you have $1 million versus $20 million is the options you need to consider when planning what to do with your money. The more money you have, the more tools you need to protect it. The first guidepost is to understand what you need the money to do for you. What are your biggest concerns and your goals? It is only then you can develop a strategy to move forward.

When you have $20 million, you likely will not run out of money in your lifetime. Instead, you will need to consider how to transfer your wealth in a manner that is consistent with your beliefs and goals. Many high-net-worth individuals are concerned that if they transfer wealth to their family members, it will negatively affect the beneficiaries. You might be worrying whether passing along your wealth will ultimately demotivate your heirs to create success on their own.

Wealth transfer planning is something you can discuss with your wealth management team. You can work together to create a strategy that will take care of those you love without having negative consequences.

In addition, when people have inherited wealth from a family member, it's common to want to honour the person who gave the gift. This topic is something you can discuss with your wealth management team.

However, the biggest potential threat to your wealth accumulation and protection is often taxation, making it just as important as succession planning. If you don't work with a team that understands your situation, you can easily fall into tax and investment traps. What matters most regarding wealth management isn't getting the biggest return but rather what you can keep in your pocket.

You also need diversification and a separately managed individual portfolio tailored to your needs when you have more considerable wealth. Whereas, if you have $1 million in assets, you may still consider using mutual funds.

Three Essential Steps of Wealth Management

Step 1

Invest with a plan in mind and allow for diversification.  You need to understand how much return you need and the risk you are able to take.  

Step 2

When investing, you need to create income from your investments.  You can use forms such as dividends to create tax-efficient income. 

Step 3

Decide how you want to maintain and transfer your wealth so that when you are no longer here, your legacy continues. Ask yourself this question: How do you keep your loved ones protected and motivated to achieve their goals? 

How Wealth Management Works

When you work with a wealth management team, you usually work with a discretionary manager who charges a fee to manage your investments. As part of the service, you receive personalized services such as estate planning, financial planning, succession planning, and tax planning. 

How to Select the Right Wealth Management Firm

There are three important considerations when selecting a wealth management team. Ask yourself these questions:

First, do they have expert knowledge in helping clients like me?

Second, do they communicate in a way I can understand?

Third, does their communication make me feel confident in their ability?

It's all too common for people to go with an advisor or wealth management team who is convenient or puts on a good show. I recommend going onto an advisory firm's website and doing some research to understand their level of expertise, designations and how that translates into helping you.

Your wealth management team must have background knowledge. However, it is equally vital that you understand their values and how they communicate. 

Private Wealth Management Canada

Private wealth management is a term essentially used to describe wealth management. In the past, referring to a service private wealth management was used to create an elite or exclusive feeling. While this term may still be used at some institutions, it's less common.

If you're assessing a wealth management firm, it's essential to see if you get individualized services tailored to your needs. You'll also want to see if you get additional services like estate planning, succession planning, tax planning, trust services, and financial planning. I suggest looking beyond the marketing smoke and mirrors to find out what you get when working with a particular firm.

At SWAN Wealth Management, we offer all our clients wealth management services. So if these are services you require, please click here to schedule an introductory call with one of our team members.

Wealth Management Fees Comparison Canada

When you compare wealth management fees in Canada, you'll need to look at the total cost and understand if there are any hidden fees. Ask your advisor or a potential wealth management firm what the total costs are. Also, be sure to ask if there are hidden costs such as mutual fund costs and commissions.

Usually, the most cost-efficient relationship will be a fee-for-service where you have a customized portfolio tailored to your needs. In such a case, your portfolio manager will buy and sell individual holdings according to your plan and tax year. This fee-for-service cost structure will save you money in the short and long term.

It is equally important to understand what you get for the fees you're paying. Your fees usually go to the investment firm or bank and cover the costs of administering the investment products, making transactions, operating your account and offering advice. Additionally, included in this cost structure may be a financial plan.

Wealth Management and Your Values

You have worked hard, invested and made sacrifices along the way. Or you may still be at the stage where you are building your wealth.

No matter what stage of wealth-building you're in, choosing a wealth management team that aligns with your values is essential. Why does this matter so much? Your wealth management team should be a long-term partnership. If your wealth management team's values don't align with yours, you will not achieve a high level of satisfaction. No matter how much money you have invested, I recommend finding a quality team whose values align with yours.

When we make decisions around money, there are two parts: the logical and emotional sides. Even if you logically know that you need to do something with your money, you may not move forward with confidence unless you uncover the emotional side.

Money gives us the flexibility and freedom to make choices that align with our values. Values are an integral part of our emotional life. Working with a team that not only understands your values but holds the same values makes everything easier.

Sustainable Investing and Wealth Management

Sustainable investing means considering what investments to avoid, such as sectors that are not aligned with the investor's values. Often sustainable investing focuses on companies with positive social or environmental outcomes. Or you may have heard of "sin stocks." You might wish to avoid any company whose activities you might consider unethical, such as tobacco, gambling, weapons, or adult entertainment. In this case, it becomes an ethical question rather than a matter of sustainable investing. Some people avoid these sin stocks because they exploit human vices and weaknesses.

When you work with a wealth management team who will create a customized portfolio and has similar beliefs, you can be sure your investments align with your values.

Financial Planning vs. Wealth Management

Is there a difference between financial planning and wealth management?

In short, yes. 

Financial planning is only one element of your financial picture. A financial plan is like a map to your destination, whether that be a work-optional lifestyle or retirement. Meanwhile, wealth management takes financial planning to the next level.

With wealth management, you have a map and a guide who can keep you on track and provide advice along the way. Your wealth manager will advise you on tax planning, wealth transfer strategies, investment management and financial planning.

I relate this question to going on a safari. You can have a map of where the best spots are, or you can go on a safari with a guide who can adjust the journey and use their knowledge to make sure you reach your goals. Financial planning gives you the map, while wealth management gives you the map and professional, personalized guidance.

For many people with high net worth, having a guide is invaluable. Wealth management is often the best choice for anyone with invested assets over $2M.

Estate Planning Is Part of Wealth Management

Estate Planning is an essential part of wealth management. While most people are okay with paying the required taxes, they are not happy if they find out a large sum will be going to the government rather than their loved ones. Without proper estate planning, the government will get more of your estate than necessary. You'll need to work with your wealth manager and attorney to implement the right wealth transfer strategies to prevent this. 

Do You Need a Trust?

A trust can be helpful for the following benefits:

• creditor protection

• tax planning

• transfer of wealth

• holding assets such as a family vacation property while reducing potential disputes with families

A trust can be seen as an excellent way to build a fence around your assets. When you set up a trust, you can hire a professional trustee who has a fiduciary responsibility to manage the assets on the beneficiary's behalf. Having a professional trustee can help you avoid complications with a minor beneficiary. One example of this would be if you have children from a previous marriage or if you want to help protect a disabled loved one.

A trust can outline your wishes now and when you are no longer here to make decisions. 

*Keep in mind that trusts do not work the same way in Canada and the US. You will need to speak to a cross-border professional before you consider opening a trust as a US person living in Canada.

Making an Impact with Charitable Donations

You may be surprised to know that you get the best rewards for donating, as a donor. You get to contribute to a cause that has meaning to you, while also helping others in need. Also, from a purely financial perspective, it can be a tax deduction which means more money to your charity of choice and fewer taxes to the government. It would be best if you spoke to your financial advisor more about the intricacies of charitable donations.

*Please note that charitable donation deductions work differently in Canada than in the US. However, they are still beneficial in both countries.

Insurance Planning

Insurance planning can help reduce the financial risk of loss and protect your loved ones if something unforeseen happens to you. Area insurance can help with medical expenses, managing risk when owning a business, and providing for your family in the event of your death. In addition, insurance planning can be structured to help to reduce future tax liability.

*insurance products work differently in Canada and the US and you will need professional advice.

Investment Planning

Investment planning considers how soon you will need the money and considers your risk tolerance. Some people find it helpful to consider their investments as three different buckets of money.

The first bucket is for the money you plan to take out in the next two years. These investments need to be more liquid and less risky as you will need the cash sooner.

The second bucket is money you will need in the medium term, i.e. in the next two to ten years. These investments could be medium risk. The third bucket is money which you will need in ten years or more. These investments can have more risk than the first bucket as you don't need the money right away. With all of these buckets, you still need to overlay your comfort level with risk and ensure your investments are consistent with your values.

Keep in mind the saying that you don't want all your eggs in one basket. If you have all your money in the first bucket which is only earning interest, you will risk losing to inflation. On the flip side, if you have everything in the third bucket for the longer term, you will be locking in a loss if you need the money tomorrow and the market is down.

It is essential to do investment planning and have a guide to know where to get cash from and how you can ride the waves of the market.

Best High Net Worth Wealth Management Firms

When looking for the best high-net-worth wealth management firm, you must understand the qualifications of the team you are considering and the services offered. Once you have determined this, you will want to gain an understanding of their style, values and whether you feel they understand you.

Money decisions are logical and emotional, so your team must understand all your needs. If they don't, you will always feel like you're in the dark about your investments. At SWAN Wealth Management, we offer our outstanding wealth management services to US and Canadian clients. If you want to learn more and speak with one of our team members, click here to schedule a call.

Wealth Management in Canada for US Citizens

As a US citizen living in Canada, proper wealth management becomes even more critical because there are significant traps into which you can fall. Since you are reporting your taxes to two countries, the risk of double taxation increases dramatically. The best starting point is to research what each wealth management firm offers and if they work with US citizens living in Canada. Your wealth management firm should know the pitfalls to avoid. Next, consider all the services they will provide, such as investment management, succession planning, estate planning, cross-border financial planning, Canadian financial planning, tax planning and charitable giving.

When you’re looking for the right wealth management team in Canada to work with over the long term, take your time and find the people who will be the right fit for your situation and values. Above all else, make sure you’re comfortable with your wealth manager and check that they have sufficient experience and qualifications.

Summary of Key Points:

• It is essential to consider your values when investing and choosing a wealth management firm.

• When your values align with your wealth management firm’s values, you will feel taken care of and understood.

• Having a financial plan done as a one-time event is not enough because a financial plan becomes less relevant with each small life change.

• Working with a wealth management team is like having a map and a guide to get you to your destination and avoid the common pitfalls. Whereas financial planning just gives you the map.

• If you are a US citizen living in Canada, you need expert advice because you report to two countries.

Next Steps

If you’re a Canadian resident or are planning on moving to Canada and need assistance with moving your investments, estate planning, and portfolio management, please get in touch. At SWAN Wealth, we specialize in Canadian financial planning, cross-border financial planning and cross-border wealth management. Or learn about our cross-border wealth management services here.

Read More Canadian Wealth Management Articles & Guides

If you’re planning a cross-border move, these articles and guides will help you simplify your move and ensure you’ve got everything covered.

Cross-Border Wealth Management

Financial and Tax Planning Essentials for US Citizens Living in Canada

How to Reduce Taxes for High-Income Earners in Canada

Cross-Border Estate Planning Guide

Learn About Your 401(k) in Canada

Retiring to Canada: A Financial Planning Guide

How Much Do You Need to Retire in Canada?

About the Author

Tiffany Woodfield is an associate portfolio manager and the co-founder of SWAN Wealth Management, along with her husband, John Woodfield. Tiffany specializes in advising clients who live both in Canada and the United States and need to simplify their cross-border financial plan, move their assets across the border, and optimize their investments to minimize their tax burden. Tiffany and John Woodfield, CFP and Portfolio Manager, help their clients simplify their cross-border finances and create long-term revenue streams that will keep their assets safe whether they live in Canada or the US. Click here to schedule an introductory call with SWAN Wealth Management.

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Information in this article is from sources believed to be reliable, however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views are those of the author, SWAN Wealth Management, and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Raymond James Ltd. is a Member of the Canadian Investor Protection Fund. Raymond James (USA) Ltd., member FINRA/SIPC. Raymond James (USA) Ltd. (RJLU) advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered.