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Guest expert: Brian Shumak B.Sc., CLU, CFP, CHS, CFDS, TEP, EPC
With the amount of money being bequeathed to the next generations, planning has become imperative for everyone. But planning has missed one large item as it has developed as an estate planning necessity – inter-generational communication.
Too often, a parent leaves a child something that the child really does not want while another child unbeknownst to the parent really wanted that something.
For the last eight years, Brian, has been facilitating family meetings to help all generations get through the transference of assets from one generation to the next. Although only working as a facilitator for the past eight years, Brian has been doing this informally since he started in the financial world in 1990 following in a family history in the financial world that dates back to the early 1950`s.
After hearing renowned speaker, Tom Deans (author of “Every Family’s Business and other planning books), Brian realized that there was a void between generations that was not being addressed. Brian skillfully fills that void by working with clients of all ages helping them plan their legacies.
To help us better understand the value of a third party facilitator, Brian shares some of his experience and wisdom with our audience.
Included in our conversation, we talked about:
- Who needs a Family Conversation Facilitator?
- What topics are discussed in a Family Conversation?
- What is the process involved in a Family Conversation?
- Examples of family problems that Brian has seen and was able to help resolve
We wish to thank Brian for joining our project and we encourage you to listen to this podcast and contact Brian directly to see how he can help you with with your financial plans.
About Brian Shumak B.Sc., CLU, CFP, CHS, CFDS, TEP, EPC
After graduating with a Bachelor of Science from the University of Toronto in 1990, he moved into the Insurance Business to continue a fifty-year family history. Since his initial foray into the insurance world, Brian has excelled in the corporate and personal arenas of Employee Benefits, Wealth Management and Estate Planning.
Brian has also been an active member of his community assisting in the raising of many thousands of dollars for charity.
After completing the university level Chartered Life Underwriter (CLU) curriculum in 1998 and obtaining his designation, Brian ventured abroad to work in one of the world’s financial capitals in Zurich, Switzerland.
Upon his return, he has resumed an active role in the Financial Planning World, obtaining his Certified Financial Planner’s (CFP) designation in 2003 and his Trust and Estate Planning (TEP) designation in 2004. He also served on the Board of Directors at Advocis, in 2004 and 2005, as the Director of Mentoring where he redesigned the program from top to bottom. In addition, he continued to build his successful practice. In addition, in 2016 Brian obtained his Chartered Financial Divorce Specialist (CFDS) designation becoming only one of about three hundred in Canada to have passed the required exams to achieve his designation. In 2017, continuing with his commitment to ongoing education, Brian obtained his Certified Health Insurance Specialist (CHS) designation as well.
“I provide independent financial advice to ensure that every financial plan I prepare for a client is based on unbiased research.
I value a client’s trust above everything else and once a client makes a decision to work with me, I continually work hard to maintain their trust.
Brian Shumak Financial Services
What we do:
1. Financial Planning
Many people will offer you advice on which investments to buy. But there’s more to your financial life than your RRSP. Estate taxes, income taxes and education funds for your children are just some of the other complex aspects of your total financial picture.
You need a Certified Financial Planner to help you develop an effective financial plan.
Personal financial planning focuses on you as an individual – bringing together all the financial and psychological factors that have an impact on your life.
A well-designed financial plan will help you reach your personal financial goals and objectives, and give you a greater sense of security.
Many people call themselves financial planners, but the true professional financial planning practitioner uses the Total Financial Planning Process, which is made up of six distinct steps.
- Helps you clarify your present situation by collecting and assessing all relevant financial data – assets and liabilities, tax returns, records of securities transactions, insurance policies, wills and pension plans.
- Helps you to identify financial and personal goals and objectives, and also to clarify your financial and personal values and attitudes.
- Helps you to identify financial problems that can create barriers to your financial independence.
- Provides you with written recommendations and alternative solutions. These should be structured to meet your needs without undue emphasis on purchasing specific products.
- Assists you to implement the right strategy to ensure that you reach your goals and objectives.
- Provides a review and revision of your plan to ensure that you achieve your goals.
How do you know if you need a Financial Planner?
People hire financial planners for many reasons. These questions may help you decide if you need professional financial advice.
- Do you have the time to attend to your personal financial affairs?
- Are you confused about conflicting financial advice from several sources?
- Do you feel you are paying too much tax?
- Are you confused about where to invest your money?
- Do you feel that you can’t make ends meet?
- Do you feel that you can’t save any money?
- Has there been a recent change in your life that could affect your financial future, such as retirement, job loss, an inheritance, an addition to your family, or loss of your spouse?
2. Tax Planning
Taxes are a fact of life. They affect every Canadian in most aspects of their lives. Whether it’s earning an income, making a purchase, owning real property, investing, running a business, or transferring your estate, life is full of taxable consequences that, if left unchecked, could consume an ever increasing amount of one’s livelihood. While the Income Tax Act was created specifically to ensure that everyone pays their fair share it also affords all taxpayers the right to organize their financial affairs in such a way so as to minimize their taxes whenever and however possible within the legal confines of the Act. And that is the objective of tax planning.
The biggest mistake many people make is to wait until April to concern themselves with their taxes. Throughout the year there are many financial decisions that can be made that could significantly impact the amount of taxes owed. The Act is full of income exclusion rules, key tax credits, retirement plan contribution options, and investment rules that are easy to miss or miscalculate without the organization and foresight that tax planning provides.
And, if there is any certainty beyond taxes, it is that the tax rules will change as they seem to do nearly every year. Because these changes usually affect such important things as exclusion amounts, credit eligibility, retirement plan contribution limits, and the tax rates themselves, they will almost certainly affect spending, saving, investment and borrowing decisions made throughout the year.
At its core, tax planning is the process of organizing your finances in such a way to take advantage of the many rules that allow you to maximize the amount of income you keep each year or defer into the future. While the process is essentially the same for any taxpayer, it may entail different types of tax strategies depending on your particular financial situation. Strategies for deferring or splitting income, deferring or maximizing retirement contributions, capital gains or losses, property ownership, charitable giving are applied differently in each situation, so they must be developed specific to your needs.
Tax planning and tax strategies involve the application of the rules and provisions of the Income Tax Act, which is voluminous and in a constant state of change. Because their effective application can result in hundreds or even thousands of dollars of tax savings each year, it is strongly recommended that you seek the guidance of a financial professional with experience in income and investment planning strategies for minimizing personal income taxes.
3. Retirement Planning
For most Canadians, retirement is a major financial goal that requires considerable financial commitment. 49% of Canadians hope to retire before the age of 60.* Whether you have already established a Retirement Savings Plan or are just beginning, it is never too late to begin saving.
Links to more info:
Retirement Planning: Seven KEYS to Success
1. Determine Your Retirement Income Needs
Retirement Planning is a primary financial goal for most Canadians. Whether you have a savings program in place, or are interested in one now, determine how much will be available to you at your retirement.
Contact our office for DETAILED ANALYSIS of your retirement income needs and opportunities.
2. Remember THE Three “S”s
Save now, Start now and Stay invested. Begin by investing what you can and try to increase this amount every few months. Using a pre-authorized deposit plan allows you to make regular contributions to your retirement savings plan. Remember, small amounts can accumulate significantly over time. No matter when you start investing, the key is to stay invested as long as you can. The longer you hold your investments, the more they will benefit from compound growth.
3. The Importance of Diversification
Diversification is the financial equivalent of not putting all your eggs in one basket. You spread your risk by investing in several different investments, therefore reducing the impact of one poor performer in our portfolio. Experts agree that the asset mix of your investments – safety, income and growth, account for more than 80% of your portfolio’s return.
Retirement planning involves setting aside enough money during one’s working years to provide income during retirement. A simple concept, but a complicated activity once investment choices and taxes are taken into account.
We all start to prepare for our retirement years at different stages in our lives. The most effective strategy is to begin in your 20s or 30s with the purchase of your first Registered Retirement Savings Plan (RRSP) or Tax Free Savings Account (TFSA).
A good strategy will carry you right through retirement – confident in the knowledge that your finances will last you for a lifetime. Regardless of your age, the key to a financially secure retirement is to start now!
While it’s impossible to estimate exactly how much you’ll need for retirement 30 or 40 years from now, it’s important to start saving for it today. By contributing to a RRSP/TFSA while you’re young, you put time on your side and watch your savings grow tax-free over the long term.
4. Start Early
It doesn’t take a lot of money to build a nest egg if you start early enough and let time work for you. Make your first contribution as early as possible in your working career to benefit from compound interest.
5. Contribute Regularly
Taking a slow and steady approach to building your RRSP/TFSA, setting aside small amounts regularly is the best way to ensure your success.
Freeing up a large sum of money at year-end is often difficult and is the most common reason people fail to maximize or sometimes even make their annual RRSP/TFSA contribution.
6. Contribute THE Maximum
Make a point to contribute your maximum RRSP/TFSA amount whenever possible. Make sure to determine whether an RRSP, TFSA or both are best to help build your nest-egg.
7. Consider Your RRSP/TFSA Untouchable
While it can be a valuable safety net in times of financial crisis, don’t tap into your RRSP/TFSA unless you absolutely have to, unless it is part your planned strategy. Funds you withdraw today will not be there when you need them at retirement.
* Statistics Canada, Summer 2014 Perspectives and Labour Force Survey.
4. Portfolio Analysis
Careful portfolio analysis is necessary to ensure that you have the correct asset allocation according to your objectives and risk tolerance.
Long term investment returns are always directly determined by the types of assets held in an investor’s portfolio. An ideal portfolio mix can only be determined by first assessing a variety of critical factors such as: risk tolerance, personal income level, age range and investing time horizon. Depending on these various factors, a portfolio mix (equities vs bonds vs cash) can be determined to provide the highest possible probability of achieving a desired long-term rate of return while at the same time minimizing short-term financial risks.
Portfolio Analysis is the process by which an existing portfolio asset allocation is reviewed to determine whether the current allocation achieves the investor’s short and long term financial goals without taking unnecessary capital risks. To achieve an optimal portfolio asset allocation, the individual investor must balance their portfolio goals with their risk tolerance. Owning growth-oriented assets is essential to help offset the long-term risk of inflation, but the rewards of growth also involve the short-term risks of enduring market volatility and uncertainty.
The analysis of an individual portfolio is best conducted by a professional who has the required knowledge and expertise to properly evaluate all the different variables that affect the long-term performance of different asset classes. Proper portfolio analysis is important to long-term financial success because each asset class within a portfolio comes with a different type of short and long term risk.
By measuring an investor’s short and long term investment goals against various investment possibilities and return probabilities, a professional advisor can assist an investor in determining the portfolio mix best suited to their unique situation.
5. Estate Planning
Why is Estate Planning Important?
Many people assume that estate planning is only for the wealthy. So, it must come as a shock to the families of all the Canadians who die every year without a will when the province takes control of the estate to decide how the assets are to be distributed. Even for smaller estates, the costs and delays of probate can have devastating consequences. The goal of estate planning is to arrange your financial affairs in a way so that your assets can be passed to your heirs as quickly and as completely as possible.
The good news for Canadians is that no estate tax is owed when an estate is transferred to your heirs after you die. The bad news, however, is that depending on the type of assets in an estate there may be “deemed disposition tax” that could seriously disrupt the financial lives of your surviving family. Properly planned estates have assets arranged and titled in such a way as to minimize any taxes payable. Estate planning tools such as trusts are often employed to reduce the exposure to taxes. Estate planning is not just planning for death; it is also essential to ensure that your affairs are handled in accordance with your wishes while you are alive. Should you become mentally or physically incapacitated and unable to manage your own affairs, tools such as a power of attorney become important life planning tools.
Many people avoid estate planning because they think it is complicated and expensive, which, for most estates, is not true. While it usually requires the guidance and assistance of an estate planning professional or attorney to execute the legal documents, a lot of time and expense can be saved by organizing your financial information and determining your goals and objectives prior to meeting with one. At the very least, everyone should have a simple will, which for the amount of distress and costs it can prevent, is very inexpensive. Larger estates may require additional layers of estate planning tools, such as trusts. Still the more preparation done in advance, the easier and less expensive the process will be.
6. Insurance Analysis
Proper analysis is vital to ensure that you aren’t paying too much for insurance and that you have the correct type of insurance for your needs.
The decision to buy insurance to protect against a certain risk is usually based on some determination that there aren’t sufficient personal resources to cover the resulting financial loss. An insurance analysis is the only way to properly assess your financial situation to determine how much, if any, of the risk you are able to assume, and how much of it should be transferred to an insurance company. A loss of income due to a premature death, disability or critical illness will usually require a significant amount of capital in order to replace it.
An insurance analysis will quantify the capital need and then calculate the gap between personal resources and the potential need. Only in this way, can you be assured that you are purchasing the right amount of coverage. With so much at stake, you don’t want to buy too little coverage, and, if you’re like most people, you also don’t want to buy more coverage than you need. The analysis will also help you pinpoint the right kind of insurance based on your budget and your preferences.
A complete insurance analysis will also ensure that you have your greatest risks covered. While most people own some form of life insurance for protection against the risk of dying too soon (17% chance between 25 and 65), relatively few are protected against the more certain risk of becoming disabled or critically ill. They face a 37% chance of becoming disabled and unable to work due to a prolonged illness or accident; and a 27% chance of being diagnosed with a critical illness such as cancer, stroke, heart attack etc. The loss of income due to a disability or critical illness is one of the leading causes of bankruptcies.
For seniors, there is a four in ten chance that they will require some form of nursing care which, at the current rate, will become prohibitively expensive or even unavailable for most people. An analysis will enable you to see exactly what kind of financial exposure you face if these risks are not covered.
The other certainty of life is change. Our financial and family situations will evolve; we will age; and, eventually our health will decline. And, as life unfolds, our needs and risks change. With some major life event occurring, on average, every three years for most people, it is essential to have a complete insurance analysis with the same frequency.
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