Confessions of a CFP: You may need an online bank


You may need an online bank this RRSP season.  I probably shouldn’t be telling you this because I’m a financial planner and in order to keep my job I need people to invest their money with me, but it’s true.  Before you completely dismiss the idea of banking online due to your fear of the internet, cyber space and anything online just take a few minutes and read all about the benefits of having an online bank.

Online banks go against everything I believe in when it comes to my professional life, but as an everyday consumer – who needs to invest in her RSP before the deadline – I have to tell you I’m a big fan.

The RSP deadline is March 2 – where will you be?

Hopefully you won’t be in line at your bank.  As the RSP deadline quickly approaches Canadians all across the country are calling their financial planners and visiting their banks to find the best possible rate for their RRSP contributions.

What if you didn’t have to go through the trouble of spending your lunch hour waiting in line at your bank and what if you didn’t have to sneak out of work early to make it to your bank before they close?

With online banks you can literally bank anywhere, anytime.  Even though the market closes at 4 p.m. and some banks close at 8 p.m. online banks are at your service 24 hours a day, 7 days a week.  That’s the first major advantage of using an online bank for your RRSP contribution – it’s convenient.

You don’t have time to make an appointment

Tangerine is a financial institution whose mission is to help clients live better lives, they aim to provide Canadians with the ability to bank where they want, how they want, and when they want.  Joe Snyder, Product Analyst, Tangerine Investments says “For the typical Canadian, the reality is that most of their banking needs can be done online, and better yet, on a mobile app.  (But) there are some clients whose needs probably require that face-to-face interaction due to a certain amount of complexity.”

With an online bank you can access your accounts and perform transactions from absolutely anywhere at any time.  This is especially convenient for people who work shifts or irregular hours.  With an online bank there’s no need to rearrange your schedule, all you have to do is tap on your mobile phone or click on your computer.  “I think the idea of having to physically fill out paperwork and visit a bank branch is one that will soon be outdated.  That being said, many Canadians also have decades-old relationships with their bank and feel a certain degree of loyalty to their primary financial institution.” says Snyder.

You want the best possible interest rate

Superior interest rates is the main reason why I recommend online banks to my clients (don’t tell my employer) and it’s the second major advantage of having an online bank.  When clients make an appointment with me they don’t always want my expert investment advice – sometimes they just want a good interest rate.

Andrew Schrage is an online entrepreneur and owner of the popular personal finance website Money  According to Schrage online banking does have several advantages. “(You) can save time over having to make trips to a traditional bank, there’s easier access to your accounts, and you might be able to find better interest rates as well.”

Are you convinced?

Two major reasons why all Canadians don’t have accounts with an online bank are lack of personal service and fear of cyber space, but Tangerine is overcoming those fears one client at a time.  “I think the reality is that Canadians have indeed embraced online banking, as online functionality and mobile platforms continue to improve.”  Today Tangerine proudly serves almost 2 million clients across Canada with over 500,000 downloads of Tangerine’s mobile banking app.

When making your RRSP contribution this year keep in mind It doesn’t have to be all or nothing.  Just because you love your financial planner doesn’t mean you can’t also have an online bank and just because you made your RRSP contribution online to get the best interest rate doesn’t mean you still can’t have other accounts with another bank – or several other banks for that matter.


Tahnya Kristina, CFP

Photo from Flickr

Financial advertising, marketing and sales without the 56% google inefficiency.

Google admits that advertisers wasted their money on more than half of internet ads


Online advertising is a fickle thing. It accounts for 20% of the ad industry’s total spending, and over 90% of revenue for the internet giants Google and Facebook. That said, no one seems to have any idea whether it actually works.

That uncertainty reached a new high this week, as Google announced that 56.1% of ads served on the internet are never even “in view”—defined as being on screen for one second or more. That’s a huge number of “impressions” that cost money for advertisers, but are as pointless as a television playing to an empty room.

This is not a big revelation. The web metrics company ComScore reported last year that 46% of online ads are never seen., an ad fraud company acquired by Google in February, has pointed out that a large portion of ads are “viewed” only by robots, revealing that one botnet of 120,000 virus-infected computers viewed ads billions of times, running up the tab for advertisers without offering them the human eyeballs they sought.

Still, the acknowledgement by a heavyweight such as Google that ad viewability is a problem could shake up the industry by delaying possible IPOs of ad companies and requiring new ways for advertisers to gauge the effectiveness of their ads.

The nineteenth-century retailer John Wanamaker famously said, “Half the money I spend on advertising is wasted. The trouble is I don’t know which half.” In this case, it’s the obviously the half that pays for ads which are never seen, and now advertisers are looking for new tools to figure out which those are.

It’s worth noting that Google made this acknowledgement of the deficiency of the model it has profited richly from while also offering a new model to advertisers: In July it introduced its Active View product, which measures only viewed ads.

Protect Yourself: A Primer on Financial Abuse and Fraud Against Senior Investors

Senior financial abuse and fraud continues to be one of the most prevalent and “lucrative” enterprises in Canada.  Approximately 30-35 % of all complaints received by regulators involve seniors.  I suspect the elderly statistics are distorted as it’s my experience that the elderly are usually reluctant to formally complain for many reasons.  Seniors often avoid publicity or litigation due to the embarrassment of having been bilked.  They may unduly blame themselves for losses, are reluctant or unable to formulate a complaint or unaware that something is amiss.  A 2007 Canadian Securities Administrators Investor Study: Understanding the Social Impact of Investment Fraud, estimates that over one million adult Canadians have been the victim of investment fraud.  The study shows it is a common occurrence in the lives of many Canadians, with almost one-in-20 having been victimized.

1. Check registration:  Engage with registered dealers and advisors with good reputations.
2. Don’t fall for investments that promise “guaranteed” or exceptionally high returns: If an investment seems too good to be true, it probably is.
3. Avoid investments that are advertised as “risk free”:  All investments have risk.  As a general rule, the greater the potential return, the greater your risk of losing money.
4. Don’t be rushed into an investment by high pressure sales tactics:  Always take the time to evaluate and understand an investment before purchase.  Always be leery of “once in a lifetime” opportunities, or investments that are only available “for a limited time.”
5. Be wary of inflated titles:  A few advisors may use inflated titles to market themselves such as Vice President and the like.  Too often, these are meaningless.  Don’t be lulled into complacency or be intimidated by the titles.
6. Be wary of professional designations:  Some advisors may use professional designations to market themselves as retirement or senior specialists.  While most professional designations require rigorous study or extensive education or experience, some may be relatively easy to attain, and may even be available to individuals with no  experience.
7. Avoid “free lunch” financial seminars for seniors:  These seminars may be carefully scripted sales presentations designed to prey upon seniors’ fears.  Some of these seminars may pitch investments that may be unsuitable.
8. Make sure that you clearly communicate your investment objectives to your advisor:  Don’t let them steer you into investments that are not in line with your investment objectives or time horizon.  Seniors typically live on fixed incomes and need conservative low risk, income-supplementing investments.  Most importantly, closely review any document you are asked to sign, especially those with “investment objectives” and/or “risk tolerance” information about you.
9. Never sign a blank or incomplete document:  Always take the time to review documents you are asked to sign, and ensure the document is filled out completely.
10. Never give cash to a financial or securities professional:  When making an investment, use a method of payment that can easily be tracked.  Make payments only to the registered dealer, NEVER to an individual.
11. Avoid any personal financial dealings with your advisor:  You are not a bank so don’t start lending out money.
12. Get a second opinion:  If you have questions about an investment and the advisor fails to fully or satisfactorily explain things, consult a different financial professional.
13. Ask questions:  Some advisors may use language or jargon with which you may be unfamiliar.  If you don’t understand something, ask for a clear explanation.
14. Don’t be afraid to contact your provincial securities regulator:  Every province has a Commission/agency devoted to protecting people financial abuse and fraud.  Contact your provincial securities regulator if you suspect you’ve been targeted as part of a financial scam or cheated in some way.

The following are the most basic questions that seniors, and investors in general, should ask when facing the decision to make an investment:

· Do you have a fiduciary duty to me?
· Can you explain the investment to me without using industry terms or jargon?
· What risks are associated with the investment/program?
· What are the investment cost in terms of commissions and fees?
· Are there additional or ongoing fees?
· Are there surrender charges associated with this investment?
· What happens if I decide to sell or cash in my investment?
· What are the pros and cons of this product re taxation?
· Why is this investment suitable for me?
· What type of reports will I receive and how frequently?
· How easy is it to sell or convert the investment to cash if I need money quickly?
· What happens if I have a complaint?

If the salesperson can’t or won’t answer your questions in writing and to your satisfaction, the investment may not be right for you.  Ask questions and stay informed about your investments.  Seek help if you believe you are being targeted or have been a victim of financial fraud or abuse.  Some light reading to protect your assets:

Understand Investment Jargon The Steadyhand Investment Dictionary
Pursuit of a Financial Advisor Field Guide – v13 A MUST read for retail investors.
The Responsible Investor
Is Your Advisor to Blame? Things to consider when filing a complaint.
Financial Fraud and Abuse Against Seniors |

Paper Money

At a very young age, I would accompany my mother to the bank with the crazy parking lot.  I would watch my mom hand over two pieces of paper (paycheques) to the bank teller.  I was always in awe of how important those two pieces of paper were to our family.  The teller would then transfer money to a savings account for insurances at my mother’s request.  After that the teller would then count out a large stack of money back to my mom.  Now we were off!  Our first stop was to the Hydro building were we waited in line again, and my mom took out several of the colourful bills and handed them to the clerk who took her money and gave her a piece of paper with a big blue stamp on it in exchange.

After that there were many other stops to go to pay our bills, and then finally grocery shopping.  By the end of the day the large colourful pile of paper money was almost gone.  Yes, those trips were full of running errands and paying bills and very little fun for me as a young child, but those days taught me an important lesson on the value of money.  I would see how hard both my parents worked, shift work, early mornings and I would witness cash being exchanged back and forth in everyday transactions.  Credit cards were not even heard of, if you needed extra money you went to apply for a loan at the bank in hopes that you might be approved.

Fast forward thirty years…
Any parent in today’s society can tell the one large draw-back to using their debit or credit card is the total disconnect for children when it comes to the concept of from where does money come.  It’s not their fault!  Most children do not see money on a daily basis.  They are not witnessing the regular use of paper money.  It is rare to go into a bank and see a teller, and in any store it is rare for them to see the clerk count back change and if they do it is with the use of the cash register calculating the transaction for them.  Gone are the days of a cash only society.  Now we can transfer money from one bank to another, pay bills on line, send E-transfers and shop on-line for everything imaginable all before our morning cup of coffee.   But are we better off?  Are our children better off?  Do they actually understand the value of money?

This was brought home to me when I was telling my youngest daughter that we needed to wait for payday to purchase an item.  She looked at me like I was really forgetful and silly.  She went to my purse pulled out the debit card, and proudly said just use this mom, you put it in the bank machine and every time money comes out, just like MAGIC.  That really hit home to me how important it is for our children to see and use cash.

So how do we teach our children to value money, when the majority of all transactions are done on-line or with debit and credit cards with endless reward promotions?  In order to teach a lesson, we need to take action.

Here is an easy first step: start by taking out some cash for the family fund.  Yes take out a set amount of cash every pay day, bring your child to the bank with you and, what the heck, go and stand in the line-up rather than just using the bank machine.  So take the time, now let your child ask for the money in different denominations.  Take this money home and put it in a glass jar labelled Family Fun.  Now over the next two weeks when the kids ask to go swimming, or to the movies or for ice cream, take the money out of the jar.  Do not use your plastic cards for any of these purchases.  Let them pay with the money and return the change back to the jar.   Why?  Because your time spent on teaching this life lesson to your child will be priceless in their future.  We all want our children to grow up being honest, competent, highly functioning adults, not living off mom and dad.  This simple little habit will help the next generation value money.

The next step is for them to manage their own money.  I am often asked what I recommend when it comes to allowances for children.  I have always told my children starting at a young age, mom and dad will provide for your NEEDS.  Your allowance that you have earned, (not from cleaning their room, that is expected) is for your WANTS.  It is so beneficial to teach children the difference between these very opposing terms.  By giving children an allowance you are allowing them to learn to manage their personal finances.  They can easily learn to save up for larger items, learn to give donations, learn the value of every coin.  Allow them to spend it all in one day and then have nothing left for the remainder of the time till next allowance.  Allow them to save up for that special something that you perceive as just another toy.  We all learn by making mistakes, that means we are in fact trying.

Start this lesson early and you can avoid dealing with a 19 year-old, who has racked up their first credit card debt that was being promoted on campus that has a 29.99% interest rate. Teach this life lesson NOW, before the student loans, before the credit cards, before the DEBT…that is priceless! Official Site:Best Rate Around
GIC Rates home of the best rate around.

GIC Rates : the online destination place for the best rate around.  Guaranteed Investment Certificates. The Canadian GIC Market is worth over 730 billion and is a money maker for top banks.  A recent study shows that the average account is worth over $60,000.00 and the majority of assets are with big banks at low rates. The review in Money Magazine explains that most people are getting burned when they turn to the safety portion of what should be a balanced portfolio. GIC is the bread and butter of the major banks in Canada.

This will all change by perception and over time. The highest rates paid are from some of the smallest companies, trusts, credit unions, caisse populaires and near banks. Few people know this and fewer people take advantage of it and stick to the big banks and pad their pockets and lessen their own.

It’s perception and decepti0n; how long will it be until there is an even playing field and a more efficient marketplace. Those that    need to step up, monitor and manage this metamorphosis are still sleeping at the switch. The independent deposit broker will change the way things happen just like the mortgage broker used to be the lender of last resort and now is the go to facilitator.

GIC rates will become more and more competitive when the banks realize they are losing market share with the same old low rates when new and secure institutions will give out better rates for more and better business. The public will lose millions in lost interest in the meantime as the banks have no interest in marketing this GIC Industry Secret.

MONEY Tip: Use a registered deposit broker and get the best rate around for a personal or business investment account.



Reputation Management in Canada

[Canadian National News] Opponents skeptical after Rob Ford's post-rehab speech  Reputation Management in Canada – Rob Ford famous mayor of Toronto is now in the fight of his life and political life. It will be a landslide in one way or the other.

People, businesses, politicians and governments need reputation management for many reasons and there are all types of mistakes, gaffs, errors, errors in judgement and faux pas.

It really would be great to fix mistakes, reverse negative actions, take it all back, say my bad and in the case of most Canadians have a simple and meaningful apology and move on.

Everyone can make a mistake but not everyone can apologize sincerely. REPUTATION.CA in Toronto makes its living from investor relations, customer service and fixing problems as a go to in-house contingency and crisis management team. In person, online and throughout the Internet people may get a bad rap or want to change a real or perceived reputation.  If you are not in trouble and don’t need their help it is called marketing and when you know you need help to remove negative comments, bad reviews or worse call or email the fine smart people at REPUTATION.CA Think twice before you act or act badly in person, in writing or online. Checking your personal or company reputation online is a matter of fact and business both large and small are taking notice.

James Dean


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Getting Tax Credits for Your Unwanted Life Insurance

Ten or twenty years ago, you purchased a life insurance policy. It was part of a good financial plan to keep your family protected in case of the unthinkable. Today, the mortgage is paid off, your family is grown, your retirement plan is in place and the insurance that once provided peace of mind is no longer required. What should you do with the policy?

For most Canadians, the answer is to collapse the policy. Between 85% and 88% of permanent policies never pay out a death benefit. In some cases, allowing the policy to lapse makes sense. Term policies may have no value and served their purpose. Whole Life policies may have significant cash value that you’d rather collect now. In these scenarios, the best course is frequently to relinquish the policies.

There are however other situations in which you have a valuable policy and lapsing the policy gives you little, or nothing, in return. The only benefactor is the insurance company who receives your valuable policy at no cost. Rather than providing a gift to the insurance company you should consider donating the policy to charity. The charity receives a valuable asset and you receive a worthwhile tax credit.
There are three ways to donate a life insurance policy of charity:

1. Name the charity as the beneficiary of the policy
2. Have the policy pay to your estate and have your estate make a donation to the charity
3. Give the policy to charity now, making the charity both the owner and the beneficiary

Each method has advantages and disadvantages; the best option will depend on your own circumstances. We will touch on two important tax considerations.

Premium Payments Tax Credit

Under the first two methods, you keep the policy in force and donate the proceeds upon death. The first method is typically preferred over the second, as it avoids possible taxation, probate and creditor issues in the estate. You will receive a tax credit in the year of death equal to the amount donated, but you do not receive a credit for the premiums that are paid every year.

One advantage of the third method, donating life insurance now, is that each premium payment provides you with a tax credit. The majority of charities require that you continue to pay the premiums after donating the policy.

The policy does not affect the 3% minimum distribution of assets requirement for the charity, as the policy is deemed to have nil value for that purpose. If you will pay the premiums, most charities will be happy to accept the policy and provide a donation receipt for the fair market value of the policy. For smaller charities not experienced in receiving life insurance, outside advice may be required to help facilitate the donation.

Policy Value Tax Credit

Under the first two options, the tax credit will equal the death benefit that the charity receives. The tax credit that you can use is limited to 100% of income in the year of death and the preceding year. The potential downside is that the tax credit can be a large amount which could exceed the income limit. If you will not have significant taxable gains triggered upon death, or a spouse with income to use the credit, then the tax credit will be lost.

One of the advantages of the third method, giving the policy now, is the ability to make better use of the tax credits. Rather than being limited to 100% of income over two years, you can use the credit to offset up to 75% of income in the current year, and in the subsequent five years. Additionally, the donation is made at a time of your choosing, when you know your income will be sufficient to make use of the tax credit.

The tax credit in this case is not the death benefit, as under the first two methods; it is the fair market value of the insurance policy. The fair market value of life insurance is less than the death benefit, but can be substantially higher than the cash value.
Which policies have value more than their cash value? Policies with guaranteed costs, such as level cost universal life, and term to 100 policies can have significant value, despite having low cash values. If your health has worsened since the policy was issued, then almost any policy has extra value. A fair market valuation actuary specialising in donating insurance can be consulted to help you determine whether your policy would be valuable to a charity, and how much of a tax credit you would receive.

Wall Actuaries

Can you really afford not to have life insurance?

flowersThe answer is no.  Think about this…You love your family, right? You don’t want to leave them with the burden of debt in case of an unforeseen even, right? But how can you ensure that your family is not dealing with having to pay off debts while they are grieving in their time of loss?  By having the proper amount of life insurance, of course.

As a financial planner my job is to make sure that clients have the savings and protection they need to be financially stable now and in the future; this includes saving for short term goals, investing for retirement and insuring credit products.  When I approve a mortgage application I always offer life insurance to clients so that their family and their home are protected in case of an unfortunate or untimely event. Although sadly more often than not clients don’t take life insurance on their most valuable asset because they feel that they can’t afford the extra cost. I say sadly because that statement couldn’t be farther from the truth. 

Your family inherits your debts along with your assets

The truth is that people can’t afford not to have a life insurance policy to protect their assets and their family in case of an unfortunate event.  Could you imagine losing your spouse or your parent and then also losing your home? For most of us that is an unimaginable nightmare that can be avoided with the right life insurance policy.  

I want to help clients fully understand the true value of life insurance as a financial product and as a form of protection for the future of their loved ones. The truth is that life insurance can fit into anyone’s budget and anyone with credit card debt, mortgage debt or other types of personal debt should have life insurance to pay off their debts, protect their assets and avoid leaving debt to their family.

Shop around for life insurance and get three quotes

Justin Thouin is the President and CEO, he confirms that clients should shop around to find the best rates possible for the coverage they need when buying life insurance.  Life insurance kind of has a reputation of being a non-flexible contract product and people hate the word contract. But with the right financial advice and good financial planning life insurance can be a truly great financial product. 

Many of my clients say that they don’t want life insurance because it’s a waste of money, but that is also not true.  Life insurance protects us in case of an unfortunate event and we just never know when that is going to happen. Having the right amount of life insurance fits perfectly into your estate planning and it’s definitely worth the cost of the monthly premium, but having too much insurance can be an unnecessary cost. With the help of a licensed life insurance agent or a life insurance calculator you can find the perfect amount of insurance to cover your estate needs.

Life insurance is a part of your financial planning

Thouin confirms that “All too often Americans spend more of their hard earned money than they should because they do not have the time or knowledge to compare offers from multiple vendors before purchasing big ticket items” and this has to stop.  If you would shop around and take the time to find the best credit card, why not do the same for your life insurance. 

Start where you are comfortable, go and see your financial institution for a life insurance quote.  You can also ask around and get a referral from a family, friend or co-worker.  It’s a good idea to shop online and compare life insurance quotes in their local area.  Be sure to get a quote for the same type of coverage to make sure you are comparing apples to apples. And never, no matter how much you may feel pressured, don’t buy more life insurance than you need – because then it’s just a waste of money.

– Tahnya Kristina, CFP

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