Here’s one extraction which may save your practice a great deal of taxes


As a dentist you know that from time to time you may be presented with a challenging case of a difficult extraction.  As a Wealth Advisor and Financial Planner, I can tell you we are also often presented with a case of a potentially difficult extraction but instead of it being a molar, our challenge is to how best extract funds in the most tax efficient manner from the Dental Professional Corporation (DPC) of a practicing dentist.

One of the methods which has become more popular, especially given the recent tax changes involving Canadian Controlled Private Corporations (CCPC), is the Individual Pension Plan or IPP.

An IPP is a defined benefit pension plan tailored to small business owners such as dentists.  It allows for the DPC, as sponsor of the plan, to fund a defined benefit style pension for the dentist and even their spouse if they are also employed by the practice. Thus, extracting corporate funds and directing them to a source which will provide tax efficient retirement income.

The amount of annual funding is similar to an RRSP in that it is a percentage of T4 earnings to a maximum annual limit; however, for an IPP that limit is even higher than the RRSP contribution limit – and grows each year.  In addition to the annual funding, the company can also contribute any past service earnings as well as a lump-sum terminal funding at retirement.  All these contributions are tax deductible to the corporation.  Like an RRSP, your investment choices are broad and any income or capital gains generated inside the plan are sheltered from taxes, but unlike an RRSP, all of the administration fees and investment management fees are tax deductible expenses to the corporation.

Because an IPP is a formal pension plan, it must be registered with the provincial government and must make annual filings and reporting.  In addition, a triennial valuation must be performed by an actuary.  The plan administrator will generally perform all these requirements and the cost for these is customarily included in the annual administration fee, which is tax deductible.

When the actuary conducts this triennial review one of the items reviewed is the rate of return achieved by the plan.  IPP’s are legally mandated to achieve an annualized rate of return of 7.50%.  If there is a shortfall, the company is required to contribute the difference to the plan.  Again, this catch-up contribution will be a tax-deductible expense to the corporation. However, if the plan achieved a greater than 7.50% return, the DPC might have to take a contribution holiday if the amount is significant.

At retirement the plan can be set up to provide a regular stream of income by way of a pension or the commuted value of the pension can be transferred to a Locked-in Retirement Account or LIRA.

The difference in value over an RRSP at retirement can be significant.  One projection we had calculated for a 55-year-old dentist and his 50-year-old spouse had them with over $1 million more in the IPP than if they just went the RRSP route at retirement.

This will not only allow them to extract more money from the company in a very tax efficient manner, but it will also provide them with a known pool of capital at retirement, which will provide them with a predictable income stream through retirement.

Upon death of the annuitant the remainder of the plan can be transferred to a surviving spouse or if there is no surviving spouse, the annuitant’s estate.

However, there are some drawbacks to an IPP.  The most common drawback is that it limits contribution room to an RRSP. However, this limitation isn’t a major one for dentists since the bulk of retained earnings, is destined to provide for a retirement income in the future. Some of the other drawbacks are because regular contributions are required to be made, this can be problematic for businesses that don’t have regular income streams.  Another small limitation is that funds within the IPP can’t be accessed before the age of 55, but for most dentists these constraints are not an issue.

At TriDelta Financial we recognize that the recent tax changes, IPP’s have become a very effective tool for extracting funds efficiently from your DPC and should be given serious consideration by every incorporated dentist over the age of 45.

Michael Trklja
Written By:
Michael Trklja
Senior Wealth Advisor
(416) 904-7123

Investing like the pros


The traditional so-called 60-40 asset allocation model, has 60% invested in stocks and 40% in government or other high-quality bonds. But after a decade or more of out-of-the-ordinary market conditions, many investment professionals are tweaking the model or abandoning it altogether.

The historical 60/40 investment management approach performed reasonably well throughout the 80’s and 90’s, but a series of bear markets that started in 2000 coupled with a three decade period of declining interest rates have eroded the popularity of this approach to investing.

Bob Rice, the Chief Investment Strategist for Tangent Capital, spoke at the fifth annual Investment News conference for alternative investments and predicted that a 60/40 portfolio was only projected to grow by a mere 2.2% per year in the future and that those who wished to become adequately diversified will need to explore other alternatives such as private equity, venture capital, hedge funds, timber, collectibles and precious metals.

“You cannot invest in one future anymore; you have to invest in multiple futures,” Rice said. “The things that drove 60/40 portfolios to work are broken. The old 60/40 portfolio did the things that clients wanted, but those two asset classes alone cannot provide that anymore,” he said. “It was convenient, it was easy, and it’s over. We don’t trust stocks and bonds completely to do the job of providing income, growth, inflation protection, and downside protection anymore.”

At TriDelta we put together a brochure that summarizes alternative investments titled, Alternative Investments, A proven path to higher and stable returns (Click to download).

A case in point is the continued success of Yale Universities USD27 billion endowment plan. They recently published an update that confirms excellent performance, a return of 11.3% ending June 2017 as a result of a highly diversified portfolio that significantly limited exposure to bonds of only 7.5% and equities to 19.5% (4% domestic US and 15.5% global, ex US). The rest comprised real estate, absolute return, venture capital, leveraged buyouts and natural resources – these are so called ‘alternative investments.’

Yale University as a prime example of how traditional stocks and bonds were no longer adequate to produce material growth with manageable risk.

Alex Shahidi, JD, CIMA, CFA, CFP, CLU, ChFC, adjunct professor at California Lutheran University and managing director of investments, institutional consultant with Merrill Lynch & Co. in Century City, California published a paper for the IMCA Investment and Wealth Management magazine a few years ago. This paper outlined the shortcomings of the 60/40 mix and how it has not historically performed well in certain economic environments. He states that this mix is almost exactly as risky as a portfolio composed entirely of equities, using historical return data going back to 1926.

At TriDelta Financial we recognize the short-comings of a portfolio limited to the old traditional 60/40 stock, bond model and as a result have embraced alternative solutions as an integral part of our investment management platform.

Anton Tucker
Compiled By:
Anton Tucker, CFP, FMA, CIM, FCSI
Executive VP and Portfolio Manager
(905) 330-7448

The importance of a Will


A Will is something that most of us should have unless our net worth is limited and we’re happy with the way the government mandates distribution between spouses, children and grandchildren (detailed below).

Any special inheritance wish will however need to be properly spelled out in a legal document, which takes effect when you die.  Without a valid Will with detailed instructions, the result is often contentious with family members feeling that the deceased would have wished things to be different.  This results in more grief and often family in-fighting.

For most of us a Will is a vital part of your financial plan that must be updated throughout our lifetime.

Canadian Will surveys over the past decade reveal remarkably similar statistics showing that approximately 55% of Canadians have a written Will. This is encouraging although still leaves many without clear direction of how to handle the distribution of assets.

Another key point is how old the Will is and whether it is still applicable to one’s evolving life situation and distribution wishes. A recent survey by Legal Wills suggests that about 12% of Wills are out-of-date, which bumps the number of people needing Wills (either new or amended) to well over half of Canadian adults.

So what do we need to do? First off, let’s understand the basics:

  • Estate planning involves the transfer of someone’s assets (e.g. property, money) when they die, as well as a variety of other personal matters. Wills, estates, trusts and power of attorney are all common tools used in estate planning.
  • A person’s will is a written document that sets out the person’s wishes about how his or her estate should be taken care of and distributed after death. It takes effect when the person dies.
  • An estate is the property that a person owns or has a legal interest in. The term is often used to describe the assets and liabilities left by a person after death.
  • A trust is created to hold property or assets for the benefit of a particular person called the beneficiary. It is managed by a person called a trustee, who has an obligation to deal with the property for the beneficiary of the trust.

The bottom quintile of Canadians net worth tops out at $206,765 (Environics Canada), which means that in the event of death for couples without a will, the spouse essentially inherit all the assets, which may not be the deceased’s wish.

This is how it works when a person dies without a valid will, called “intestate”, Ontario’s Succession Law Reform Act sets out how the estate is distributed.

  • According to the Act, unless someone who is financially dependent on the deceased person makes a claim, the first $200,000 is given to the deceased person’s spouse if he or she has decided to claim his/her entitlement. The other possibility is to claim half of the net family property. A lawyer can help determine which is the better choice.
  • Anything over $200,000 is shared between the spouse and the descendants (e.g. children, grandchildren) according to specific rules.
  • If there is no spouse, the deceased person’s children will inherit the estate. If any of them have died, that child’s descendants (e.g. the deceased person’s grandchildren) will inherit their share.
  • If there is no spouse or children or grandchildren, the deceased person’s parents inherit the estate equally.
  • If there are no surviving parents, the deceased person’s brothers and sisters inherit the estate. If any of the brothers and sisters have died, their children (the deceased person’s nieces and nephews) inherit their share.
  • If there are no surviving brothers and sisters, the deceased person’s nieces and nephews inherit the estate equally. However if a niece or nephew has died, their share does not pass to their children.
  • When only more distant relatives survive (e.g. cousins, great nieces or nephews, great aunts and uncles), the rules are complex and you should speak to a lawyer.
  • If any heir was alive when his or her relative died, but died before the estate was distributed, that person’s own heirs are entitled to their share.
  • When a person dies without a will, only blood relatives, including children born outside of marriage, or legally adopted children can inherit. Half-blood relatives share equally with whole-blood relatives.

Going to a lawyer rather than drawing up your own will significantly reduces the risk that assets will not go to those you had hoped to benefit. This is especially important in today’s world in which we see more common-law relationships, blended families, and second or third marriages.

Some people simply opt for inexpensive ‘Will kits’ that may prove problematic particularly given the many blank spaces in these kits and how easy it is to make a mistake, which typically wouldn’t come to light until after you had died.

There are now also a number of online versions that serve many Canadians needs at a fraction of the cost, which may be suitable for your situation, but be sure to research your options and take the time to review the competitive offerings applicable to your province.

An advantage of these online services is that updating your will can be easily achieved, but the main attraction is the lower cost than a lawyer.

Our opinion is to be sure of all the angles and take advantage of our legal experts to discuss your needs and ensure that your Will is applicable for your needs despite a price premium. The financial peace of mind this delivers will be well worth the cost.

Regardless of the method you choose what’s important is to get your wishes properly documented and procrastinate no further.

Anton Tucker
Compiled By:
Anton Tucker, CFP, FMA, CIM, FCSI
Executive VP and Portfolio Manager
(905) 330-7448

Renting as a senior might make more financial sense than downsizing and buying


Many seniors are presented with the option of downsizing their home once they reach retirement.

Ted Rechtshaffen, President and Wealth Advisor of TriDelta Financial says this may make sense for some seniors, but so might renting.

Ted Rechtshaffen
Posted By:
Ted Rechtshaffen, MBA, CFP
President and CEO
(416) 733-3292 x 221

FINANCIAL FACELIFT: How one woman is trying to make the most of her investments to meet her travel goals


Below you will find a real life case study of an individual who is looking for financial advice on how best to arrange her financial affairs. Her name and details of her personal life have been changed to protect her identity. The Globe and Mail often seeks the advice of our VP, Wealth Advisor, Matthew Ardrey, to review and analyze the situation and then provide his solutions to the participants.

Written by: DIANNE MALEY
Special to The Globe and Mail
Published February 9, 2018

Nancy is 74, a widow with two daughters. Last year, she sold her modest house in a small Ontario city to free up enough money to travel while her health is good. She has no work pension.

Now, Nancy would like to squeeze more out of her investments to give her a bigger travel budget for the next five years. Her goal is to be able to spend a total of $36,000 a year. Longer term, she wants to preserve enough money to cover home care or other health-care needs that might arise.

“Realizing monthly rent and health care may likely increase substantially beyond five years, my goal is to have sufficient projected income to age 95, and have some remaining asset balance as a contingency,” Nancy writes in an e-mail.

“Can my existing RRIF [registered retirement income fund] and financial holdings as structured contribute the monthly income to meet my goals?” she asks.

As with many people, Nancy made the big decisions first and then wrote to Financial Facelift for advice.

Awhile ago, Nancy took her concerns to her daughter, revealing how she had invested proceeds from the sale of her house at her local bank branch. The daughter says shes suspects “the planning and product selection might not have been in her mother’s best interest.”

We asked Matthew Ardrey, a vice-president and financial planner at TriDelta Financial in Toronto, to look at Nancy’s situation.

What the expert says

Nancy is receiving combined Canada Pension Plan and Quebec Pension Plan benefits of $8,577 a year and Old Age Security benefits of $6,996, Mr. Ardrey notes. In addition, she has a small survivor pension of $3,961, which is not indexed to inflation. The balance comes from her RRIF.

Nancy is spending about $2,200 a month today. She would like to travel more and enjoy life now that she has some additional savings, the planner says. Her goal is to spend $3,000 a month during the remainder of her retirement, adjusted for inflation. Nancy feels that this same $3,000 a month would be sufficient to cover off any nursing-home costs she may face in future.

In drawing up his plan, Mr. Ardrey assumes Nancy will live to be 95 and that the inflation rate will average 2 per cent a year. The plan assumes Nancy continues to transfer $5,500 a year from her taxable investment account to her tax-free savings account.

“Reviewing her current portfolio, she has almost three-quarters in bank mutual funds, one-sixth in a GIC [guaranteed investment certificate] and one-tenth in index-linked GICs,” the planner notes. “So just over a quarter of her portfolio is locked in and thus could create a liquidity issue if the stock market were to drop and Nancy needed to draw on her portfolio to cover living expenses,” he says.

“If 40 per cent of her cash and fixed-income allocation cannot be redeemed on demand, it may cause her to have to [sell and thereby] crystallize her equity losses.” To note, the five-year GIC does have a once-a-year redemption on the anniversary date of up to 25 per cent of the initial value.

Nancy’s asset mix is 19 per cent cash equivalents (which includes the GIC, but not the index-linked GICs), 25 per cent Canadian bonds, 5 per cent global bonds, 27 per cent Canadian equities, 15 per cent U.S. equities and 9 per cent international equities. “So she has about a 50/50 mix between equities and the fixed income and cash-equivalent allocation,” Mr. Ardrey says.

This mix seems reasonable for a 74-year-old widow looking for income, he says. “But when we look at the long-term historical rate of return on this portfolio’s underlying asset classes, it is 4.06 per cent.” That’s before deducting the average investment cost of 1.75 per cent a year on the almost three-quarters of her portfolio that is in bank mutual funds.

If past returns continue in the future, Nancy will fall short of her goal, Mr. Ardrey says. She will exhaust all of her savings just after she turns 91.

“To make this scenario feasible, Nancy would have to reduce her spending target by $200 a month (to $2,800), which is about 7 per cent of her overall budget,” the planner says.

Alternatively, she could take steps to improve her asset mix and investment strategy, he says. By replacing the cash assets with low-risk, conservative income investments that act as alternatives to bonds and GICs, for example, and balancing the geographic exposure of her equities, he estimates Nancy would be able to achieve a return of 6.5 per cent a year. Her new asset mix would be 20 per cent alternative income investments, 30 per cent fixed income and 50 per cent equities with an equal distribution among Canadian, U.S. and international markets. “This return, after estimated investment costs of 1.5 per cent a year, would net her 5 per cent a year before inflation.” With this higher rate of return, she would be able to meet her retirement spending goal.

Nancy is not an experienced investor, so she needs help. To get the type of portfolio Mr. Ardrey recommends, she could turn to an investment counsellor, or the investment counsel arm of a financial planning firm. Nancy and her daughter could begin by looking at the website of the Portfolio Management Association on Canada. Investment counsellors charge an annual fee and have a fiduciary duty to act in the best interests of their clients.

Alternatively, because her portfolio may not meet the minimums of some investment counsellors, Nancy could switch gradually to low-fee, balanced mutual funds with solid track records. (Two of the more popular low-fee funds can be bought directly from the fund company with an initial investment of $50,000.)

Even with the higher return, Nancy will have very little cushion, Mr. Ardrey says. “This leaves very little room for error in her budgeting.” He suggests she review her budget now to ensure she will have the money she needs in future.


The person: Nancy, age 74

The problem: How to generate a little more return from her investments.

The plan: Shift gradually from bank funds and GICs to a lower-cost fund company or investment counsel.

The payoff: A return high enough to allow her to travel more, at least for awhile.

Monthly net income: $2,945

Assets: Term deposits $10,630; income portfolio $99,055; GICs $50,000; RRIF $98,805; TFSA $52,230. Total: $310,720

Monthly outlays: Rent $1,000; utilities $100; insurance $10; transportation $160; groceries $250; clothing $10; gifts, charity $50; travel $250; dining, drinks, entertainment $85; personal care $40; club membership $30; medical, drugstore $75; phones, TV, internet $140. Total: $2,200

Liabilities: None

Want a free financial facelift? E-mail Some details may be changed to protect the privacy of the persons profiled.

Matthew Ardrey
Presented By:
Matthew Ardrey
VP, Wealth Advisor
(416) 733-3292 x230

Lorne Zeiler on BNN’s Market Call, February 7, 2018


Lorne Zeiler, VP, Portfolio Manager and Wealth Advisor, TriDelta Financial, was the guest on Market Call last night (February 7, 2018).

Below is a link to Lorne’s top picks, market commentary and past picks

Click here to view

Lorne Zeiler
Written By:
Lorne Zeiler, MBA, CFA
VP, Wealth Advisor
416-733-3292 x225