Be Wary of Free Advice

These days, many people are focusing more on their finances, and with good reason. Rising costs, increased job insecurity and the prospect of funding decades of retirement living are just some of the factors that might keep you up at night. How can you make ends meet while also saving for the future?

If ever there was a time for financial advice, this is it. However, the challenge is knowing where to turn for such advice. Who’s credible? Who can you trust?

Let’s face it, free advice isn’t hard to find. Thanks to the internet, you have immediate access to a world of information on a litany of financial topics. There’s also the media, both traditional and social, inundating you with articles, blog posts and videos. Add to that your friends, family and maybe even your hairdresser, and it’s clear that anybody and everybody can have an opinion on what you should do with your money. Free financial advice is everywhere. But what about its quality?

As the saying goes, you get what you pay for. There’s a lot of questionable advice floating through cyberspace. Some of it is well intentioned but misguided or non-specific, while other times scammers are actually trying to lure unsuspecting people and exploit them for financial gain.

You might also encounter breezy narratives and vague rules of thumb, like “own gold” or “buy and hold.” On their surface, simple stories offer certainty in an uncertain world. Despite their innate appeal, these simplified perspectives can prove dangerous to your financial health. Follow them blindly at your own risk. Whether inaccurate, oversimplified or too generic to apply to individual circumstances, this type of “advice” positions money management as being easy. Of course, if it were easy to succeed financially, everyone would be wealthy, right?

In reality, financial decision-making is complex. What you do (or don’t do) as it relates to your finances can hugely impact your present and future well being. If you have a family or own a business, the complexity increases. Good wealth planning isn’t about churning out sound bites or video clips. It involves looking closely at your whole financial picture and how all the pieces connect, then developing coordinated, personalized strategies that fulfill your unique needs. It’s also about having a trusted coach by your side to help you get through the inevitable bad days when you’re liable to succumb to emotion and make poor decisions about your money.

That’s why so many people choose to work with an investment advisor. Advisors have the education, ongoing training and real-world experience to address your current financial goals and prepare you for the unexpected, while also building your wealth for the future. Although their advice isn’t free, you will get your money’s worth. According to a November 2022 report published by the Investment Funds Institute of Canada, advised investors have significantly more assets after 15 years than their non-advised counterparts.¹ The report also noted the 2022 Canadian Pollara Investor Survey that found 92% of mutual fund and ETF investors were satisfied with their advisor.²

Contact us to explore the potential benefits of working with a professional advisor. Together, we can create a wealth plan that’s designed to meet your specific circumstances and objectives – now and for years to come.

¹ https://www.ific.ca/wp-content/uploads/2022/11/Financial-Advice-in-Canada-Whitepaper-November-2022.pdf?id=27821&lang=en_CA
² https://www.pollara.com/wp-content/uploads/2022/10/IFIC_2022_MF_ETF_Investor_Study.pdf

This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax, legal or investment advice. Please obtain independent professional advice, in the context of your particular circumstances. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.

Consumer habits have changed drastically within recent years, and e-commerce has been steadily gaining ground. So, online shopping—is it yea or nay? It’s quick, easy and convenient! But is it safe?

Discover the best practices to adopt to avoid being scammed by cybercriminals.

What to look out for when deciding whether a website is trustworthy?

Keep cyberattacks at bay by never letting your guard down! Online data theft isn’t just a myth; the main goal of cybercriminals is to scam you out of your money.

So, even if a website or social media site seems totally safe, always take a few precautions to protect your personal information and avoid becoming a victim of scammers.

1. HTTPS protocol

Every website address (URL) begins with the acronym HTTP (HyperText Transfer Protocol) or HTTPS (HyperText Transfer Protocol Secure). The difference between the two? Security.

So, the first thing to do when you open a web page is to check whether the address in your browser’s address bar begins with HTTPS. New web browsers sometimes hide the beginning of web addresses and display a little padlock symbol instead!

These two features are even more important when it comes to transactional web pages. Never buy online from an unsecured site! If either of these security features are missing, you should leave the page.

Pro tip: Make sure your web browser is up to date by performing spot checks as the Internet is constantly evolving.

2. Spelling

Is the website riddled with spelling errors? Leave it right away! Fake websites often contain a slew of spelling and grammatical errors. The quality of the writing and the overall professionalism of the website can therefore be guarantees of trustworthiness.

Important! Look out for the address bar, too! It may also contain errors when it comes to fraudulent online stores. They attempt to immitate legitimate company websites by using terms very similar to well-known corporate giants.

3. Prices

Is the price of the item too good to be true? Beware of prices far below the usual market value and poorly designed websites! It’s probably because it’s a scam and a fake e-commerce website… Cybercriminals use the low-price technique to capture your attention and get their hands on your personal information.

Important! Goods or services may be sold in a foreign currency. If your online purchase is not in Canadian dollars, be sure to convert it to find out the actual selling price. Watch out for hidden costs!

4. Policies and legal notices

Legal notices, the fine print that most people don’t read on paper, let alone online… When it comes to security, a website’s privacy policies are paramount, especially when you share your personal information to complete a transaction.

Good to know: These notices are mandatory for all e-commerce websites. They are usually displayed at the bottom of the homepage. You should always be able to find the company’s contact details (telephone number and email or mailing address) on its website.

Are the legal notices missing or ambiguous? Don’t buy anything and leave the site!

What is a website’s return and refund policy?

All secure websites also have terms of sale or product use and a returns and refunds policy. It’s best to know what to do if an item is defective or broken at delivery!

How do you exchange it or get your money back? Do you have to ship the item at your own expense? Do you have to go to the store in person? Don’t ignore these unanswered questions before you shop online!

Important! Find out a product’s or service’s shipping costs and customs duties, if any, before completing your purchase.

Any trustworthy website will provide details (and a quote if the exact amount is not available) on the costs you will incur. You should therefore know the amount of the fees due, the shipping costs (if applicable), the currency in which payment will be made and any other charges.

If this information is missing, incomplete or unclear, do not proceed with the transaction!

Online shopping: pitfalls to avoid

Everything checks out? It’s time to shop! The process is quite similar on all transactional websites:

• Select items
• Add items to shopping cart
• Confirm order
• Pay for items

Note that some companies also require you to create an account.

The only information credible online retailers require is:

• Your name
• Your mailing address
• Information on the credit card used (number, expiry date and cryptogram comprising the three digits on the back of the card).

Important! No merchant can ask you for your Social Insurance Number (SIN) or your driver’s licence number!

Before you proceed, make sure you answer “No” to all of these statements:

• The asking price for an item is higher than the advertised price
• Your credit card information is requested, on the website, by email or via a pop-up window, without having confirmed your purchase
• Payment by credit card is not accepted
• The only payment method is cash or e-transfer

In any event, vigilance is key! At the slightest doubt, it’s best not to continue and to leave the site.

What to do after shopping online

Even after completing the transaction, caution is still necessary! Get into the habit of checking your bank statements regularly to ensure that all your transactions are in order.

You should also always receive a copy of your invoice by email. However, transactions may take a few days to appear on your credit card statements. Once the transaction has been processed, make sure you recognize the company name, amount billed, currency and any other information on the statement.

What to do if you have been scammed?

Are you a victim of an online scam? It can be difficult to recognize cyber threats before it’s too late… Cybercriminals try to stick as close to reality as possible to trick internet users!

If you are a victim of online fraud, here are the steps you can take to report the incident and mitigate its effects:

• Report the incident to your financial institution and your credit card company (if different)
• Reset credentials for all your accounts, such as your email or social media accounts
• Report the incident to the Canadian Anti-Fraud Center or call 1-888-495-8501.

Enjoy the benefits of online shopping, but be sure to take a few precautions to browse the web safe from frauds and scams!

As the old saying goes, the only certainties in life are death and taxes. Given this reality, it’s beneficial to have an up-to-date estate plan that reflects your wishes for potential care needs and distributing your assets to loved ones, while also minimizing your estate’s tax liability to help facilitate an effective transfer of wealth.

While creating a comprehensive estate plan is important, it’s equally important to communicate your plan to family members – as well as your specific expectations of them. Why? Here are three common reasons:

1. Gain clarity. If you don’t share key details of your estate plan with family, they won’t know your wishes or how they’ll be impacted. It’s better to gather your loved ones now to explain elements of your estate plan and why you made certain decisions (e.g., your choice of estate executor).Failing to discuss your plan could cause confusion or uncertainty down the road, at a time when family is already grieving. As well, by communicating your wishes and values, and allowing loved ones to ask questions, everyone will be equally informed about your plan and desired legacy. This alignment may help avoid family conflict, disagreements or perhaps even legal action later.
2. Get organized. People have different levels of complexity in their life, but it’s safe to say almost everyone has a number of accounts, passwords, assorted bills and documents, etc. that would be challenging to identify or track down without a formal estate plan that provides the required direction.You don’t want your family to scramble when their emotions are already frayed, searching for information and paperwork needed to make critical decisions. Since your financial institutions, advisor, lawyer, accountant, etc. will likely require certain info – including your will and powers of attorney – it’s valuable to prepare trusted family members to protect your privacy and share specific info on an as-needed basis. Some people may ask their estate planning lawyer to securely store their “master list” of vital information.
3. Undertake wealth planning. Not only does your estate plan cover important aspects of your financial affairs, but it also affects your heirs and their financial life. An open discussion allows you to explain how you’ve decided to allocate your assets. This could be the first detailed exposure your family has regarding the extent of your wealth. Empowered by having an idea of what their inheritance might be, they can begin thinking about incorporating it into their existing wealth plan (or it could encourage them to get started with wealth planning).If you own a business, communicating your estate plan also lets loved ones know whether you intend for the business to be sold or for family members to take over. If you’re part of a blended family, have dependent children or ones with special needs, an estate plan can address these complexities upfront. Talking about your plans now should help your heirs be more financially prepared so they can handle their inheritance responsibly.

Obviously, communicating estate plans can be uncomfortable given the sensitive subject matter, but doing so may offer meaningful financial and personal benefits to you and your family. It’s good to talk about your estate now instead of waiting for a time of crisis when people tend not to think clearly or logically. If you’d like some professional support, your advisor, lawyer or accountant have the relevant experience to help you hold a constructive, honest conversation that may offer you peace of mind and position your heirs well for the future.

This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax, legal or investment advice. Please obtain independent professional advice, in the context of your particular circumstances. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.

Building wealth is essential when trying to reach important financial goals, be it funding a child’s education, buying a home or enjoying a comfortable and meaningful retirement. Working with an investment advisor is often a good way to save more money, achieve greater tax efficiency and grow long-term wealth through investing.

However, investing for the future can be highly complex and typically requires specialized skills, experience and discipline to succeed. The same applies to retirement and estate planning, which is why many people seek out professional advice. If you’re working with an investment advisor (or considering it), you should understand how advisors are compensated. The topic of fees can be complicated, but we’ll stick to the basics.

There are three main forms of advisor compensation: a commission-based model, a fee-based model or by salary.

Commission-based. Advisors working in this structure receive compensation when their clients buy or sell an investment (e.g., mutual funds, exchange-traded funds or stocks). The commission they earn may depend on the investment type, the dollar value of a trade or other variables. Advisors may also receive ongoing compensation from fund companies in relation to the funds their clients hold (more on that later).

Fee-based. Advisors working in this structure earn a fee that’s based on the value of assets they manage on a client’s behalf. Even if a client makes many trades and frequently uses certain advisory services, the fee charged remains a prearranged percentage (e.g., 1%) of the value of assets being managed. Sometimes the fee percentage declines as a client’s assets increase.

Salary. An advisor working for a bank or credit union will often earn an annual salary plus a performance-based bonus. Salaried advisors provide value to clients but may not hold the same industry licencing as commission- or fee-based advisors, which may narrow the range of services they can offer.

Management expense ratio (MER)

If you invest in mutual funds, segregated funds or exchange-traded funds, you’ve likely heard about MERs. They’re calculated as a percentage (e.g., 2%) of fund assets and are deducted from the value of your investment. MERs are used to compensate fund managers and dealers, and to pay related taxes.

Fund manager. This is the firm that operates the fund you invest in. They set the fund’s strategy and objectives, and employ portfolio managers who decide what (and when) to buy and sell, in order to help enhance fund returns and manage risk. They also handle administrative duties like recordkeeping, as well as legal, accounting, audit and custodial services. For these important duties, fund managers earn a portion of the MER.

Dealer. This is the firm where your advisor is registered. Dealers maintain account records, produce and deliver account statements, and provide the technology for online account access. Dealers also ensure their investment advisors meet all regulatory requirements. Part of a dealer’s MER allocation (also called a “trailer fee”) typically goes to the advisors responsible for client-oriented tasks like planning, portfolio construction and monitoring, and trade execution.

Taxes. A portion of the MER is used to cover federal and provincial taxes charged on fees and services related to the fund manager and dealer.

Client Relationship Model 2 (CRM2)

In 2009, CRM1 was introduced as a way to standardize written disclosure requirements for dealers industrywide, to help clients understand key relationship issues like the way dealers determine product suitability, how they address compensation matters and potential conflicts of interest, what dispute resolution process they follow, etc.

Building upon CRM1 and implemented in 2017, CRM2 obliges dealers to provide clients with a personalized annual report that summarizes charges and compensation related to a client’s account. This report is designed to be transparent and is written in straightforward language. For a better understanding of fees (e.g., what you pay and where the fees go), check your personalized annual report.

In the years to come, CRM3 will take effect and provide even fuller investment fund disclosure. For instance, annual total-cost reporting requirements will disclose all embedded costs of owning funds, including MERs and TERs (i.e., trading expense ratios), to offer investors greater clarity regarding the expenses incurred as part of the investing process.

Good advisors earn their compensation by providing significant value to clients. To learn more about the costs of investing and the benefits of professional advice, speak with an iA Private Wealth Investment Advisor.

This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax, legal or investment advice. Please obtain independent professional advice, in the context of your particular circumstances. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.

According to the 2019 Canadian Financial Capability Survey conducted by the Government of Canada, “about 1 in 6 Canadians (17%) say their monthly spending exceeds their income, while 1 in 4 (27%) say they borrow to buy food or pay for daily expenses.”

To stay on track with your financial goals, a budget is an indispensable tool. It allows you to keep track of how much money you have coming in and going out, to identify unnecessary expenses and to help you set aside money for your personal goals.

Find out more about the benefits of having a detailed budget and the key elements it should include.

Why do you need a budget?

Did you know that, according to the Financial Consumer Agency of Canada, around 51% of Canadians don’t have a budget? The main reasons behind this statistic are said to be a lack of interest or time and a feeling of being overwhelmed by managing one’s finances.

However, based on the 2019 Canadian Financial Capability Survey, people who have a budget are less likely to default on their financial obligations, are more effective in managing their finances, and are less inclined to live beyond their means or have to borrow money to meet their expenses. Having a budget can even help you pay off your mortgage and other debts faster!

Having a monthly budget is useful for:

• Knowing where your money goes and setting spending limits
• Deciding how much money to put into savings
• Allocating part of your income to pay your debts
• Feeling in control of your finances
• Planning for projects that are important to you, such as a trip or renovations
• Living within your real financial means
• Reducing your stress related to managing your money

Steps for creating your budget:

Creating your own monthly budget is much easier than you might think. Generally, there are three steps to follow.

1- Set your goals

In this first step, think about specific goals you would like to achieve with your money. Then, set a date for when you would like to achieve them.

Here are some examples of goals you could include in your budget:

• Go on a trip
• Pay off your credit cards
• Save for a house or condo
• Invest in your child’s RESP
• Be able to put a specific amount in your RRSP or TFSA every month
• Pay off a debt
• Build up an emergency fund (to cover your expenses in case of a disability or for unexpected renovations)

The important thing is to choose goals that you will be able to achieve and that are important to you in order to stay motivated.

2- Calculate your income and your expenses

The second step is no doubt the longest. It involves making a list of all your income and all your fixed expenses. To make it easier, hold on to your bills for an entire month and check your statement of transactions available in your online bank account.

Once this list is completed, it will serve you for years to come. Think of this step as an investment of time towards your financial wellbeing!

3- Adjust your budget every month

Lastly, at the end of every month, calculate the following: YOUR MONTHLY INCOME – YOUR MONTHLY EXPENSES

The result of this calculation is the amount you are able to put aside each month for your personal goals. If this amount is too small, check whether there is a category of expenses that could be lower next month, such as eating out or buying coffee from a coffee shop.

Items to include in your budget

By category, here are the items that should be included in your budget in the ‘monthly expenses’ section:

Here are the items that should be included in your budget in the ‘monthly savings’ section:

By category, here are the items that should be included in your budget in the ‘monthly income’ section:

Our tips

In closing, here are some tips to keep in mind to ensure that your budget is optimal and that it keeps up with your situation over the years.

• Give yourself leeway: It is often safer to round up your expenses to ensure that you are able to cover any unforeseen events that may arise, such as an appliance that stops working or a water leak in your home.
• Identify repetitive and unnecessary expenses: When tracking your budget from month to month, identify recurring expenses that could be reduced. The classic example is that yummy little latte from your favorite barista! Think about it, three five-dollar coffees a week adds up to $780 over the course of the year.
• Plan for expenses that come back at the same time each year: Vehicle registration, snow removal and municipal taxes are all expenses that you can budget for in advance to ensure that you have the money in your pocket when it comes time to pay.
• Adjust your budget when something changes: Whenever your income changes or a new life event occurs (such as the arrival of a baby or the purchase of a property), take the time to adjust your budget to avoid any unpleasant surprises or new financial stress.

Last but not least, don’t hesitate to call on the expertise of a financial advisor when making your budget. This expert will guide you in making the right choices to help you maximize the money you work so hard to earn.