Anthony Layton MBA, CIM

Chairman & CEO, Portfolio Manager

Peter Guay MBA, CFA

Portfolio Manager
  • T514.875.7566 x 224
  • 1.800.875.7566
  • F514.875.9611
  • Place Alexis Nihon
  • 3400 de Maisonneuve Ouest,
    Suite 1501
  • Montreal, Quebec H3Z 3B8

Busting some of the myths that surround RESPs

Welcome back to “Do It Together” financial planning and part two of my RESP series. You can watch part one here. In my last video I talked about the advantages of opening an RESP as early as possible.

In this video, I talk about the tax treatment of these plans and what happens once your child starts college or university and what happens if they chose not to attend school. I also talk about how you can save to send your child to a private high school.


By: Peter Guay | 0 comments

What you should know about passing on your family business

If you’re an entrepreneur, you know it’s not easy to run a business. You need ambition, a clear vision and hard work to be successful.

 It’s not surprising that so many entrepreneurs—after devoting all that time and energy—don’t want to think about the day when they will have to hand it over to someone else.

But that lack of foresight can have dire consequences for your company, your family and your chances of enjoying a comfortable retirement.

Passing on your business is one of the biggest challenges an entrepreneur faces. That’s why it’s so important to begin planning early.

You will need to assemble a team of advisors that will likely include an accountant, a lawyer, a banker and your financial advisor. You might also want to hire a consultant who specializes in business transitions.

Once your team is in place, there will be many important decisions to make as you build your succession plan. To start, you have to consider what to do with the business when the time comes for you to step aside.

Will you pass it on to your children? Will you sell it to your employees? Or will you try to find an outside buyer?

Is there a successor in your family?

A lot will depend on the business and your family. Is there a suitable successor among your children? Can the company be sold? Are there other shareholders? What do they want to do?

When you think about your interests, a key consideration should be to make sure you have enough money to fund your retirement.

If you are thinking about transferring the business to the next generation of your family, you have to ask: Does this business generate enough income to both create a comfortable retirement for me and my spouse and continue as a going concern?

Assuming there is enough money for you to retire and pass along a healthy business to your children, there will be another set of questions about how the succession will work.

Who will be your successor at the head of the company? How should that person be groomed to take over? How should the transaction be structured to be fair to everyone involved and minimize taxes?

If passing your business on to your children, or another family member, is not an option, then you will have to consider selling it.

Can you employees buy the business?

At that point, an important consideration will be whether the buyer will be a group of employees or someone from outside the firm. There are advantages and disadvantages to both options.

Your employees know the business and this will usually make the transition easier. Indeed, a study by the Business Development Bank of Canada found transitions involving insiders—family members or employees—perform better than outsider acquisitions.

However, employees will tend to have less money to put into the purchase. Typically, this means you will receive less cash up front and have to put more vendor financing into the deal. Vendor financing involves you agreeing to be paid a certain percentage of the sale price over time with interest.

Here is where you want to keep your personal financial situation in mind. How much cash do you need from the sale to fund your retirement? If the vendor financing can’t be repaid, will you be in trouble?

A sale to outside parties may be more disruptive to the company, but it may also lead to a higher price and more upfront cash, especially if there are multiple bidders.

Strong performance brings a higher price

The best way to get a high price for your business is to be able to show good performance and strong profits over several years. You will also want to show potential buyers that the company can run without you.

That’s why you can’t take your foot off the gas pedal when you see retirement on the horizon. You need to keep investing in technology, equipment and marketing. You also need to make sure you have strong employees and systems in place that allow the business to run efficiently when you’re not around.

It follows that preparing for the transition is not something you can do at the last minute. Just like a house that’s had some plaster and a coat of paint slapped on, potential buyers will soon see the true condition of the property.
Above all, you will need to be patient regardless of what path you plan to take. I know from my own business experience that transitions don’t always work the first time. In fact, it might take two, three or more tries.

Get started early and be patient

If you try to do it in a hurry, chances are you will not get full value for your company.

That’s why it’s important to not wait to get started, stay cool and be patient. Have that discussion with your family, business partners and key employees. And then, assemble your team of advisors and lay out your plan. It’s not easy, but the earlier you start, the better.

If all goes well, you will enjoy the fruits of your business career and ensure your legacy is preserved long into the future.


By: Anthony Layton | 0 comments

Why you should open up an RESP as soon as possible

Welcome back to “Do It Together” financial planning. I just finished my two-part series on how to hire a nanny for your children and I thought it made sense to segue into another popular question I get from my clients: how can I pay for my children’s education.

Did you know that the average student debt load in Canada is $27,000? As thoughts turn to back to school, paying for your child’s education becomes top of mind and that often means a Registered Education Savings Plan or RESP. In this video, I’ll tell you why an RESP can be a beneficial savings tool for your child’s education and why you should open one as early as possible. Here’s a hint, both levels of government contribute to it.


By: Peter Guay | 0 comments

Why good reporting from your investment advisor is important for your financial health

You need your car’s dashboard to drive safely. It tells you how fast you’re going; how much fuel you have; and alerts you when something is going wrong.

You can think about the monthly reports you get from your financial advisor as a dashboard for your family’s wealth. They should help you understand what assets you own, how much risk you are taking and how your investments—and your investment advisor—are performing. They are an essential tool for keeping your finances safe.

Unfortunately, too many investors don’t get adequate reporting and that means they’re driving blind when it comes to their family’s finances.

The reports you receive should be built on the foundation of what’s known as an investment policy statement (IPS).

What is an IPS?

An IPS is an agreement between you and your advisor. It establishes how much risk you are willing to take in your portfolio. It does this by setting down what kind of investments you are going to own and how much of them you are going to own

Your monthly reports should allow you to monitor your portfolio and make sure you are on track with your IPS. They should show you how much you have invested in different asset classes—from safer fixed income securities to riskier investments like equities.

And within each asset class, you should be able to see where your money is invested. In the equity bucket, for example, you should see how much is in the various markets—Canada, the U.S. and international.

Your report should show you how each of these categories compares to the targets you established in your IPS. Say you targeted 60% of your portfolio for equity and you’re currently at 65%. You are overweight in equity.

That’s not unusual, but it could mean you’re taking on more risk than you want. So, it may soon be time for your advisor to rebalance your portfolio by selling some equities and buying some fixed income securities to restore your target asset mix.

Where are your investments held?

Your report should show not only what investments you own, but also where they are held for tax purposes. How much is in registered accounts such as your RRSP? How much is in taxable accounts? This is important to make sure your tax treatment is optimized.

But it doesn’t stop there.

For one thing, you may be following not only your own investments, but also those of your spouse and children. If you are a wealthier person, you may have a family trust and a holding company to track.

You may also have several different investment managers to monitor, each with different investment styles—active or passive— and different fees they are charging you.

And there’s more – pension payments, capital additions and withdrawals, currency exposure, private investments, and so on.

It’s a lot and it’s changing every day. If you’re like most people, you can’t keep track of it all yourself—it’s just too complicated and too time consuming.

Reporting from many firms is inadequate

But the reports from many firms aren’t much help. They leave out key information like investments managed by third parties.

That’s dangerous for your financial health. You need good reporting that you gives you the whole picture. And to get the full picture, you need a trusted, independent financial advisor who can pull all the pieces together, help you interpret them and take the appropriate actions to keep your family’s finances on track.


By: Anthony Layton | 0 comments