President, Ron Graham and Associates Ltd.
In the business
Number of households
Between GICs and bonds with similar yield to maturity, I’d usually pick GICs for clients who are in a comfortable position to meet their retirement goals. GICs are much safer in this uncertain interest-rate environment.
Clients requiring 3% to 4% before-tax real return are mostly invested in a mixture of GICs, individual stocks and ETFs that own dividend-paying stocks. For dividend-paying stocks, I have a Canada bias due to the tax benefits. For foreign exposure, I suggest ETFs tracking the S&P 500, the EAFE index, or U.S. and international dividend aristocrats.
I believe in directly owning an investment rather than indirect exposure through packaged instruments like principal-protected notes or index-linked GICs. It’s way cheaper. For example, certain firms sell limited partnerships in farmland they anticipate will be converted to commercial or residential property. A few years ago, a client was considering buying such an LP, and I told him he could buy his own quarter section (160 acres) of farmland for the same amount he’d pay a firm for 16 acres through the LP.
I take more risk with my own money because I’m able to lose 100% of my investment. I own stocks, public and private mortgage investment corporations, private REITs, private LPs and penny stocks. I have no GICs or bonds.
I have an advice-only service; Edmonton doesn’t have many planners like me. If clients want referrals to stockbrokers or advisors, I provide them. If they do their own investing, I facilitate that through low-cost mutual funds or discount brokerages. In addition to tax planning and hourly fee-based advice ($175 per hour), seminars for large and mid-sized corporations are another steady source of revenue and new clients. I typically charge $2,000 for a day, and at least 20% of my clients come through these seminars.
Originally published in Advisor's Edge
Read this article and full issues on the iPad - click here.