Advisor’s Edge hits home with closer look at mortgage, cottage issues

(August 9, 2004) In such a competitive industry, today’s financial advisor needs to offer added value to their client, even in fields which they have not traditionally been active.

“Our cover story for August is entitled ‘Prime choice,'” says Deanne Gage, managing editor of Advisor’s Edge. “It looks at mortgages and whether fixed rates are better than variable rates. There’s been a lot of speculation in the past couple of months about when the Bank of Canada will raise interest rates, since we’ve been enjoying some extraordinary interest rates over the past few years.”

Gage notes that it is usually the client who brings mortgage issues to the attention of their advisor and suggests that advisors could be taking a more proactive role simply by asking when the mortgage comes up for renewal.

A house is the biggest single investment most people will ever make and should be part of long-term planning.

“Typically advisors are not advising clients on mortgages or buying a car, but the fact is these are items that most clients will spend a lot of money on,” says Gage. “Because it’s such a big part of their clients’ lives, it’s something the advisor needs to be looking at. It’s another way the advisor can add value for the client.”

Once the house is paid off, clients might look for a little place in the country for their vacations or even retirement. But there can be many challenges in passing the summer home on to their children.

“We have an estate planning article entitled ‘Cottage life,’ by Sandy Cardy,” says Gage. “It’s a look at the family cottage and how to pass it down to the next generation, while reducing tax as much as possible.”

Because the cottage is not likely to be registered as the primary residence, there is usually a deemed disposition associated with the transfer of ownership. The article looks at whether it makes more sense to transfer the cottage sooner rather than later and issues of control.

Elsewhere in the new issue, David Wm. Brown’s “Insurance insights” column looks at communicating product changes to clients. Policies can change for any number of reasons, including mergers of insurance companies, or simply due to a change in corporate policy.

“This happens a lot in the insurance world,” says Gage. “With insurance, the products tend to be a lot more complex and clients want to know what changes there might be in their policy’s fine print.”

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com