Benefits of integrated wealth planning

Clients often approach their investment advisors for help with a quick question. Most often it relates to an investment opportunity, but more and more clients are asking about taxes or estate planning. While it may be tempting to provide a quick answer and move on, there comes a time when it’s beneficial to draw on the expertise of other professionals.

When done properly, an integrated team will explore how solutions fit within the overall context of each client’s unique financial situation. Most effective planning happens when professionals collaborate as a team, draw upon experts from the various disciplines, and ensure all the pieces fit together.

Value of an integrated approach

Sudden wealth issues often come up when a life event occurs. For example, when a business owner retires, his will may no longer reflect the wealth he’s accumulated.

At this point, it’s generally necessary to run new financial projections to determine how this lifestyle change affects the client’s net worth, cash flows and income tax in the years ahead.

It is also prudent to determine the size of the estate they’re likely to leave. This process may show they no longer need to take the same amount of risk to meet their lifestyle goals.

Also, if the succession planning process is done early enough, strategies such as performing an estate freeze, taking advantage of capital gains exemptions, and minimizing tax on the eventual sale or transfer of the business will likely be addressed.

Another example is a client with dual U.S.-Canadian citizenship paying sizable U.S. estate tax bills when her plans are not structured properly. An estate plan can provide solutions like life insurance, for example, which can minimize U.S. estate taxes if the client’s affairs are set up properly.

As always, it’s better to learn about the client’s needs early on since it can be costly to make changes to rectify a situation after the fact.

Integrated wealth planning also considers the implications for clients of the different rules in effect in different provinces.

In Quebec, for example, the civil code is much different from the common laws used in other provinces. Without a will, an unmarried couple is not recognized in Quebec under the Civil Code in case of death, no matter how long they’ve been together.

Having a relationship with other professionals allows you, as a team, to identify issues early enough, address problems and unique situations, and coordinate a seamless, integrated solution.

Working with the pros

Wealth planning plays out a lot like solving a puzzle. One piece links and leads to the next until there is a picture of the client’s situation laid out on the table, with a focus on minimizing tax and risk while achieving lifestyle goals, maximizing returns and protecting the estate.

Similar to a domino effect, one life event can set in motion a chain of events that brings the whole line of blocks down. When one piece changes it has an impact on the others as well.

The advisor plays a key role in determining when these life events might occur. From there it’s a question of how to deliver an integrated approach that will benefit the client. For instance, we’ve set up a team of professionals that includes both cross-disciplinary and inter-jurisdictional experts, which advisors draw upon and work with.

Working with the advisor, we create financial projections for clients to determine whether they will be able to meet their lifestyle goals and objectives based on various rates of return.

Our tax experts will determine when clients are planning to draw from their different asset sources and help structure withdrawals as tax-efficiently as possible.

We also identify plans that efficiently transfer assets to the next generation and wherever possible, protect those assets from outside parties, even — under certain conditions — in cases of marital breakdown.

A properly structured wealth planning team includes a multidisciplinary group of professionals that can review and augment any existing strategies by raising legal and business succession issues with clients. They’ll ask about their wills and how they want to handle the transition of their wealth to beneficiaries.

Even if a client is only in her 40s and does not intend to sell her business until she’s in her 60s, the team should be proactively discussing business succession opportunities so the client doesn’t find herself in a position where she’s caught off guard by unforeseen events.

Preparing a comprehensive wealth plan is the best way to guide your clients towards their long-term goals of maximizing wealth while avoiding pitfalls that can erode value.

A team of legal, tax, estate and insurance specialists working together to develop integrated wealth management solutions will ensure that the pieces of the puzzle fit together to provide the best results and achieve client goals.

Annie Boivin is Manager and Mike George is the Director of the Wealth & Estate Planning Team at Richardson GMP Limited. This team of in-house experts and professionals provides coordinated support to advisors to ensure clients have complete and comprehensive wealth plans in place.

Annie Boivin