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Client expectation:

I expect my advisor to help me understand my options if I lose my independence. For instance, can I afford care with an income of OAS, CPP and a lump sum from the sale of my home?

– Ruth Howland, 83, great-grandmother, music lover, Lower Woodstock, N.B.

Advisor solution:

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Vanessa Flockton

Financial advisor, Nicola Wealth Management, Vancouver

To help Ruth, I’d first gather the required facts: OAS/CPP amounts; the potential OAS clawback amount; the lump sum amount; and other income streams and expenses, including care.

I’d also assess her longevity to project how many years she needs income. If Ruth and her family have a history of good health, she may live longer than average.

Finally, I’d ask about other goals, such as leaving a legacy.

These facts would inform her rate of return and whether her required income stream means depleting her principal. A real rate of return might be about 3% or 4%. Despite low rates, this return is achievable when investing in diversified real assets.

Using projection software, I would calculate Ruth’s income level and the year her funds are depleted, if applicable.

If Ruth has no legacy plan and wants a guaranteed income, an annuity is an option.

Client expectation:

I’m a conservative investor concerned about protecting my principal. For instance, I prefer locked-in GICs. Are these appropriate, considering low rates? Alternatively, with real estate prices rising, I’m open to a real estate investment.

– Vincenzo Curcio, 81, widower, gardener, Markham, Ont.

Advisor solution:

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Bev Moir

Senior wealth advisor, ScotiaMcLeod, Toronto

I wouldn’t recommend real estate for Vincenzo, because it’s illiquid, and prices could be at the high end of the cycle.

He could instead invest in fixed-term GICs of one, two and possibly three years. If he divides his investment over those terms, he can access cash each year to meet his income needs.

If liquidity is a concern — he has health costs, for instance — a cashable GIC offers a better rate than daily interest, and he can access the money without penalty.

If he’s willing to invest outside fixed income, he could consider a balanced, pooled investment. He could put a small portion of his investable assets in a mutual fund or ETF with 40% to 80% fixed income, so that it mitigates volatility but also gets some exposure to equities. He can also get out of the investment quickly if liquidity is needed. But, before recommending this type of investment, I would assess his net worth, risk tolerance and time horizon. For the latter, he could have several years or only a few, depending on his health and family history.

Client expectation:

Two different tax professionals prepared my return, with two different results. My advisor should help me understand these differences.

– Eleanor Brown, 85, great-grandmother, independent person, nature lover, Toronto

Advisor solution:

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David Wm. Brown

Partner, Al G. Brown & Associates, Toronto (no relation to client)

Both accountants could be correct, with different interpretations. But an advisor who’s not licensed as an accountant isn’t qualified to make a determination about the return.

If Eleanor’s issue involves an insurance contract, for example, the advisor can consult the insurance company, which would have a tax and estate planning department. But, again, the advisor can’t pass that information on as tax advice if he’s not licensed.

The advisor should connect Eleanor with a tax professional from his own referral network who specializes in her issue, whether it’s business, personal or international. The advisor may want to participate in the call or appointment with Eleanor to be another pair of ears.

Client expectation:

Does the government have measures in place to ensure my beneficiaries have stress-free access to my funds and banking account after my death?

– Maryanne Gomes, 83, grandmother, active volunteer, greeting card creator

Advisor solution:

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Keith Masterman

Vice-president, tax, retirement and estate planning, CI Investments, Toronto

No. In fact, banks aren’t required to release funds until they receive probate.

The one exception is funeral costs, which can be paid from your bank account.

If Maryanne wants a beneficiary — say, her son — to have access to her account, she should put the account in joint name with him. (This is a jointure for estate purposes, with the expectation that the son will transfer the asset in accordance with Maryanne’s will.)

The account could theoretically attract probate after death because it’s still deemed part of Maryanne’s estate, though the estate probably wouldn’t claim it because it’s in jointure.

But with jointure, there could be tax implications that affect any trusts created under Maryanne’s will. So if she has trust planning in her will, she should seek tax advice before proceeding.

Client expectation:

ETFs and index funds maintain relatively large percentages in large-cap stocks like Facebook and Amazon. Is buying these stocks to capture the impact of ETFs and index funds a good strategy?

– Donald Richardson, 85, do-it-yourself investor, Toronto

Advisor solution:

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Darren Coleman

Portfolio manager, Coleman Wealth, Raymond James, Toronto

Many factors affect stocks, not just weightings in ETFs and index funds.

Instead of trying to outsmart the market, Donald should find a basket of good stocks or ETFs and let market corrections work in his favour. That means staying invested during a downturn so he can buy more stock.

He could, however, use the transparency of ETFs to find good stocks by examining ETFs that follow his investment philosophy. For example, if he prefers a dividend growth model, he should find a half dozen ETFs with that strategy and choose the top 10 holdings that appear most often among these ETFs.

For smaller investors, rebalancing and trading costs may be prohibitive, so it might make more sense to buy ETFs in the first place.

Originally published in Advisor's Edge

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