# About to acquire 1.8m, looking for advice...



## njbr (Apr 15, 2011)

I'm in my early 30s, looking for advice on how to manage this so it doesn't get wasted ... after paying off the house, debt, buying a 2nd car for the family i should still have 1.5 million left ... should i invest it all ? put in specific types of savings accounts ? What kind of returns could I get ? I'm clueless when it comes to knowing what next steps to take, and want to make sure it doesn't get wasted ... do I just look for the best possible financial advisor i can find ? thanks for any advice/suggestions !


----------



## jamesbe (May 8, 2010)

I'd quit my job and live off the dividends. I'd get professional advice unless you really want to deal with it yourself.

It may not even make sense to pay off your house etc as you could use the gains (say 3-5% dividends) to pay off your house. Depending on the rates. 

At 3% per-year, income would be $45,000 on 1.5 mil! Congrats, find a low stress job to top it off and have fun!


----------



## andrewf (Mar 1, 2010)

How old are you? Would you like to continue to work? What are your financial goals?

You should probably get some professional advice. This forum is a great place for a second opinion to check if your advisor is giving you sensible advice.


----------



## Causalien (Apr 4, 2009)

Seek pro advice. 

Because you are not used to handling this amount of money, you freeze up at the fear of any losses, or greed up when people goad you with opportunities of riches beyond eyes can see. Fear and Greed will prevent you from making the most optimum decision.

Congrats on making it in life. Now you have to figure out what to do with it.


----------



## Financial Cents (Jul 22, 2010)

Wow, nice problem to have 

First of all, *I suggest to take your time. * You don't need to make this decision right away. Think things through at least twice with this amount of money.

Secondly, if your preference is to pay off all debts (which is fine), then I would suggest after that putting a large chunk of your money (say maybe 75%) in broad-index products. Follow a somewhat "Couch Potato" strategy:

Say 60% equities and 20% short-term bonds and 20% medium-term bonds.

Never touch this money and live off the dividends and distributions forever.

Thirdly, I would suggest buying some dividend-paying companies that have an established history of increasing their dividends over time. This would consume a small portion of your assets, say maybe less than 20%; money you should never lose but then again, stocks are stocks. 

The rest, albeit only 5%, have fun with. Travel or do whatever. Life is short. Life is for the living after all.

Fourth, regardless of what I say, you could always seek professional (and hopefully unbiased) advice.

Cheers,
My Own Advisor


----------



## njbr (Apr 15, 2011)

Thanks everyone ... now comes the obvious question, how do i find a good financial advisor ? I'm in a smaller town on the east coast and for some reason believe this may be a difficult task.

thanks again everyone, great advice so far !


----------



## the-royal-mail (Dec 11, 2009)

Welcome to the forum!

The good news is you have the luxury of time. There is no reason you can't take $50K of the $1.5M to live on while you figure everything out. I would LOVE to be in your shoes right now. I would issue a pink slip TO my employer. 

I think you can make some good investment income off this amount of money. Even in a HISA at 1.25% interest, that would give you a nice interest payment.

I am a bit skeptical of advisors. But my opinion counts for nothing in this case. I believe there are some very bright people in this forum who may be able to steer you in that direction. I would hate to see you lose it all a la Howard Jones (? that guy from Montreal who scammed all those people out of their investments). Be extra, extra careful with this. It's your money. Perhaps you could spend some time in CMF and gather some opinions to form your own ideas about what you should do? This gives you maximum control over your windfall.

Congratulations. I'm truly envious of you. Back to my rockpile.


----------



## andrewf (Mar 1, 2010)

I agree. By all means, get professional wealth management advice, but before you sign anything or transfer any funds, ask for some help evaluating their plan on this forum (and people here are generally good at spotting the suspicious recommendations).

As far as potential options for advisors on the east coast, taxtips.ca has a directory of advisors and other services. 

http://taxtips.ca/busdir/financialplanners.htm

I have no experience in the industry so take my recommendations with a grain of salt. Based on a cursory glance, this outfit in Halifax seems like it might be worth checking out:

http://www.moneyworks-fps.ca/index.html

There's also this firm in Moncton: 

http://www.attiscorp.com/


----------



## FrugalTrader (Oct 13, 2008)

njbr, it really depends on your goals. Do you or your wife plan on leaving work? Maybe transitioning to part time? Do you want to build a portfolio worth $5M before retiring? Or start a trust for your kids? Once you determine what you want, then it should be easier for members here to offer their specific opinions.


----------



## Rico (Jan 27, 2011)

Beyond getting professional advice, which is prudent, I can think of a few things I'd do if in the same situation (the first couple match your plan):

1. Pay off mortgage - but only when the term was up for refinancing.
2. Clear credit card/vehicle debt (if I had any)
3. Max RRSPs, TFSAs, RESPs (if I had kids)
4. Since I do some self-directed investing, I'd up that account to over 100K in to qualify for cheap commissions. 
5. Spend a bit on something nice for family/self

If you do not want to work, remember you have to do something with all that extra time (hopefully not just blowing your windfall  ) If it makes sense for you, perhaps you could start your own business?


----------



## Oldroe (Sep 18, 2009)

Time to start networking.

Go to every adviser and ask questions and get it writing exactly were your money will be invest at what return and how much the adviser makes.

Then bring it back here.


----------



## njbr (Apr 15, 2011)

Andrew thx for the links im about 2 hours from Moncton so that mat be close enough if they are good enough.

In terms of what I want to do im not sure, we have a 22 month old and another on the way in july so timing is great.

My wife would like to stay home after mat leave until the kids are old enough to go o school her income is about 33k after tax so that wouldn't be a huge it so i'm pretty sure she'll do that.

As per myself there is lots of options, I can stay with my current company at about 85k but only have like 4 weeks vaca a year which isn't enough for me... so right now i'm thinking do consulting in the winter and take summers off. I may also have access via a family member to get a good deal on a seaside very very nice piece of land at a good price where we could spend summers if I built a cottage, I would somewhat consider this an investment as a well.... anyone see any big no no's with a plan like that? I think I'd have to budget about 300k tops for something like that to buy the land and build the cottage.


----------



## njbr (Apr 15, 2011)

Oldroe said:


> Time to start networking.
> 
> Go to every adviser and ask questions and get it writing exactly were your money will be invest at what return and how much the adviser makes.
> 
> Then bring it back here.


Great idea, i'll do that


----------



## njbr (Apr 15, 2011)

What about seeing a company like BMO Nesbitt or RBC financial or ernest and young. Would they provide the right type of services I'm looking for ?


----------



## humble_pie (Jun 7, 2009)

hello njbr & congratulations on your good fortune. Now is the time imho to resolve never to let these assets slip away.

i for one believe that a person with such assets, who says he has not yet gained much experience managing these in financial markets, should bypass retail stockbrokers & financial planners and go straight to investment counsel for a few years, while he learns & plans. 

ICs are the princes & cardinals of the investment management business. The name is evolving into variations such as private investment counsel or portfolio manager. The ICs are nearly always CFAs, manage on a discretionary basis, and have the highest ethical standards of all.

what i am thinking is a managed portfolio for a few years while you learn & plan in greater detail. Perhaps i am wrong, but i don't quite see how a novice investor can suddenly take on management of 1.5M. In addition, in seeking an advisor, such investor is vulnerable, so imho it's best to seek impeccable & ethical management, even if what they propose would be on the conservative side, at least during the early years.

the reason i would bypass retail stockbrokers is that they are compensated by the number of trades they can sell to their clients, so there tends to be a certain amount of churning, especially with vulnerable clients. As for financial planners, in most provinces these are licensed to sell mutual funds only.

the problem with mutual funds, for a wealthy client, is that the fees - which are hidden inside the funds - are not only higher than standard investment counsel fees, but these fees are not tax deductible. On the other hand, IC fees are lower than mutual fund MERs and are billed directly to the client's account, so they are tax deductible as a carrying charge. (In both cases the fees on 1.5M are going to be substantial.)

there is an investment counsel association, with an easy-to-navigate directory of members. You could search for small boutique firms in your region.

http://www.portfoliomanagement.org/

for greater safety, a novice investor with a sudden fortune could seek out the investment counsel group within the private wealth management divisions of the large canadian banks. IC portfolio management at the big banks begins with 1-2M portfolios & larger.

the fact is that the IC divisions of the big banks run all core portfolio decisions out of toronto. Local representatives, even though they may hold the coveted CFA designation, are really glorified hand-holders & personal account managers.

you will find that IC fees are similar whether the firm is a big bank division or a small local boutique firm. Fees will run to roughly 1.5% per annum including custodial fees (the custodian of the securities should always be a separate organization) for the first million, lower thereafter.

if i were in your place, and if i had a wish to eventually manage my fortune myself, i might look for an investment counsel with strong communication skills. I might contemplate perhaps a 5-year term under their management, during which time i'd study the world of finance as diligently as i could. There is probably a university in your area with adult extension courses in finance. There are courses by correspondence. There are reading & study selections mentioned in this forum. As a last resort, it's even possible to browse this forum, and to learn from it here & there, even though it must seem chaotic to a novice investor.

there is one well-known investment counsel firm with an outstanding reputation who are masters at the art of capital conservation and who charge a fee that is approximately half of the national average. Perhaps something like .6 or .7% instead of the typical 1.5%. Three possible problems arise in your case, namely, that 1) part of their economy might be less communication than a novice eager-to-learn investor would like; 2) their minimum is 2M, although they could be flexible with less; and 3) they have offices across canada but i'm not sure if they have an office on the eastern seaboard itself.

however, with respect to 1M, that difference in fees between .7 and 1.5% is going to translate into 6 or 7 grand per annum, so it seems to me that an investor could buy plenty of university adult ed finance courses, and plenty of how-to books, with the funds he would be saving; and he would still have several grand left over.


----------



## FrugalTrader (Oct 13, 2008)

Next question is, with all of your debt paid off, what are your monthly expenses? Acccount for the kids as well. One idea is to invest the $1.5M for income and spend the distributions only. If you can manage to yield 4%, then that is $60k per year which is more than enough to replace your wifes salary.


----------



## humble_pie (Jun 7, 2009)

just wondering. How does a self-admitted novice investor, one who describes himself as clueless, "invest 1.5 M for income."

i for one believe he needs ethical professional advisors for a couple of years while he learns, even if this means a conservative income portfolio for the time being.


----------



## I'm Howard (Oct 13, 2010)

Similar situation, buy one year GIC's for the immediate.

Take some kind of course that familiarises you with Investing Terms, no point in talking to an advisor until you have some rudimentary knowledge of investing.

Watch BNN, get feel for the Investing World.

You do not need to restrict your choices to the East Coast for an FA, a computer makes dealing anyhwere easy.

My Plan, and I am doing this for 30 something sons

20% One Year GIC

15% MDY

15% CDZ

10% XRB

20% XCB

10% GLD

5% Cash/ING or similar

I like Royal Bank, website makes tracking and analysing very easily, you can set up your goals and it will provide you with a model portfolio.

This is a long term plan designed to grow at a medium 6% pace, based upon current rates,but this advice is worth what you paid for it.


----------



## njbr (Apr 15, 2011)

I'm Howard said:


> Similar situation, buy one year GIC's for the immediate.
> 
> Take some kind of course that familiarises you with Investing Terms, no point in talking to an advisor until you have some rudimentary knowledge of investing.
> 
> ...


ok, so completely theoretical here, and this is probably super newbie question, but say the above is accurate, does that mean that assuming i'd invest 1m as indicated above, I'd see a gain of about 60k/year ? I'm assuming that gets taxes as well, or is this factored in already ? If I can find a FA that can help make this happen, and then supplement with consulting work on the side when necessary (or when i get bored) this would be a great scenario.


----------



## stinsont (May 29, 2009)

I am in a similar situation. Here's what I did

1) Hire investment advisor. I used private wealth managers at CIBC. Returns are 'ok' - not industry leading but good enough for me. The management fee's are arount 0.50%.

2) Spend nothing initially. Let this all sink in, don't go out buying big ticket items until you understand your new wealth and have a plan. 

3) I kept my job. It pays well and I need something to do; besides I have young children and I feel that Dad working sets a good example.

I saw the comments regarding educating yourself on the world of investing (courses, BNN etc). This is great advice, some of the best actually. In fact I manage a portion of my portfolio myself since I really enjoy following the markets.

As another poster said this is a good forum for second opinions. The folks here are very independent and frugal which is likely why they are all well on the path to financial freedom.


----------



## FrugalTrader (Oct 13, 2008)

@humble, you are right, it's probably not a great idea that he invests himself just yet. As with all of these posts, it's just a starting point for ideas. At least he will have some of his own opinions when speaking with an advisor.


----------



## Plugging Along (Jan 3, 2011)

In terms of buying a cottage, I would not think of it as an investment, but rather a lifestyle choice that just happens not to depreciate. Unless you're planning on renting it out, it really isn't an investment. It's in the similar category as your primary residence with no non taxable advantage.

We have a vacation property that we use in the summer and on long weekends. For the memories and experience it is great, and for that reason we keep it. However, it will not bring you any income until you sell it, and you can't be gaurenteed any sort of appreciation (thought likely). Also, it was cost money to maintains, so depending on what your goals are (ei to live off the 1.5 mil alone), then it may be contradicotry. 

If that's something you would like to buy for the lifestyle, then go for it. However, I would not factor it into you living income. It will make a great inherentence for the kids, and wonderful memories with the family.

I think my cabin we bought as an 'investment' (that was our justification at least), is really an expensive luxery item.


----------



## kcowan (Jul 1, 2010)

One thing I did when I got a windfall from the sale of a house in Toronto was put a chuck of the equity with MAPF. This firm produces superior returns by managing the Preferred Shares of Canadian companies. After MER, it has returned 26.6% in 16 months. Better than any other alternatives during that time. This is before tax.

No advisor will recommend this fund because he does not pay for placements. It is under $20 million and run out of Toronto. To see the guy who runs it, check out prefblog.com


----------



## humble_pie (Jun 7, 2009)

stinson's comments are A-1. A level-headed approach like this probably means success all his life & eventual significant legacies for children & grandchildren.

may i especially point to the sentence about keeping the job so as to set a good example for children - not to speak of retaining respect among peers - as being admirable. As years pass, stinson will be able to choose jobs that will be as challenging & as enthralling, or conversely as light and as undemanding, as he wishes.

stinson is farther along in the process of acquiring/managing sudden wealth than the OP, so he's already got his advisor in place, plus he studies & he manages a portion of portfolio himself.

great stuff !

ps cottage will take the OP down closer to 1M, which is not really a huge amount of money, and it's going to be a memory garden rather than an income producer. If it were myself, i'd hold off on additional real estate for quite a while. It will probably be remarkable, now that OP is suddenly rich, how many friends & relatives will have assets to sell that are said to be capable of producing a good income ...


----------



## humble_pie (Jun 7, 2009)

_" After MER, it has returned 25% in 16 months."_

don't you think, though, that just about every reasonable portf returned at least 25% over the last 16 months ...

.


----------



## njbr (Apr 15, 2011)

humble_pie said:


> stinson's comments are A-1. A level-headed approach like this probably means success all his life & eventual significant legacies for children & grandchildren.
> 
> may i especially point to the sentence about keeping the job so as to set a good example for children - not to speak of retaining respect among peers - as being admirable. As years pass, stinson will be able to choose jobs that will be as challenging & as enthralling, or conversely as light and as undemanding, as he wishes.
> 
> ...


I like this advice very much as well especially the keep working part. As for the cottage it's where i spent my summers growing up so i would love to be able to share the experience with my kids in the same location as well.


----------



## kcowan (Jul 1, 2010)

humble_pie said:


> _" After MER, it has returned 26.6% in 16 months."_
> don't you think, though, that just about every reasonable portf returned at least 25% over the last 16 months ...
> .


This was not a portfolio. This was the Preferred Share segment. So you would have to compare it to the PF ETFs which did the following over the same period:
Index 14.75% 
DPS.UN 16.21%
CPD 13.38%
so yes I am happy with the performance...


----------



## kcowan (Jul 1, 2010)

njbr said:


> As for the cottage it's where i spent my summers growing up so i would love to be able to share the experience with my kids in the same location as well.


I agree. There are some things more important than money.

Have you considered moving to Okanagan Lake so you can have it all?


----------



## njbr (Apr 15, 2011)

kcowan said:


> I agree. There are some things more important than money.
> 
> Have you considered moving to Okanagan Lake so you can have it all?


I'm actually on the east coast ... I've never even visited Ontario (yet) aside from the TO airport.


----------



## Plugging Along (Jan 3, 2011)

The other advice has been really good, get financial advice, bring it here. Also, really look at what you are really wanting long term.

You are in a wonderful opportunity, and really should just determine what is the life that you and your wife are envisioning. Think about this in terms of number of kids, how you may want to help them (or not), what is important in terms of raising them (staying at home or not), your work / retirement goals, etc. Figure out the type of life you want, and then that will help you determine what needs to be done with the money.


----------



## kcowan (Jul 1, 2010)

Plugging Along said:


> Figure out the type of life you want, and then that will help you determine what needs to be done with the money.


Good advice. Also be aware that you will go through several stages. Kids in school, empty nesters, retired, and each phase will bring new challenges.

But you have been given a golden opportunity to live a life that not many can achieve. Resist the impulse to spend on things.


----------



## v_tofu (Apr 16, 2009)

Cocaine, strippers, and johnny walker.













Sorry, I don't really have anything to contribute. I would say invest it into precious metals, but that idea would probably be laughed at more so then the previous one 

Best of luck to whatever you decide!


----------



## njbr (Apr 15, 2011)

humble_pie said:


> hello njbr & congratulations on your good fortune. Now is the time imho to resolve never to let these assets slip away.
> 
> i for one believe that a person with such assets, who says he has not yet gained much experience managing these in financial markets, should bypass retail stockbrokers & financial planners and go straight to investment counsel for a few years, while he learns & plans.
> 
> ...


When you refer to IC's would it be someone like this ? (note the Investment Planning Counsel logo in the top left) - http://www.dennisfinancial.net/services/tailoring/highnetworth.aspx


----------



## the-royal-mail (Dec 11, 2009)

njbr, please note it's not necessary to quote every msg that you respond to. We have a thread going on about this very issue in the off topic section. In this case you quoted a huge block of text and only added two lines at the bottom. This isn't really necessary as you could have simply addressed pie and then started your typing without requoting his entire post.


----------



## njbr (Apr 15, 2011)

@the-royal-mail - no problem, force of habit but I'll cut down on the quotes.


----------



## MoneyGal (Apr 24, 2009)

IPC is a brand name (and is owned by the Power Financial Group, the parent company of Investor's Group and a bunch of other financial companies. Check the link). 

However, IPC is not on the list of actual investment counsel firms in Canada. 

What Humble is talking about, discretionary portfolio management, is individuals/firms who are registered under the (new) portfolio manager category of the applicable securities legislation in their jurisdiction. PM individuals/firms provide discretionary wealth management exclusively. (The term "investment counsel" is now obsolete as the relevant registration category has been re-named portfolio management.)


----------



## Montrealer (Sep 13, 2010)

njbr said:


> I'm in my early 30s, looking for advice on how to manage this so it doesn't get wasted ... after paying off the house, debt, buying a 2nd car for the family i should still have 1.5 million left ... should i invest it all ? put in specific types of savings accounts ? What kind of returns could I get ? I'm clueless when it comes to knowing what next steps to take, and want to make sure it doesn't get wasted ... do I just look for the best possible financial advisor i can find ? thanks for any advice/suggestions !


What do you do for a living? If you work and are not happy at your job/career then I would suggest you invest in a business or use the money to create some kind of a wealth building pass time or hobby like venture capital or day trading.

I would:

1) Pay off all commercial debt (credit cards, lines of credit, loans, cars etc.)
2) Pay off my mortgage
3) Quit my job within the month
4) Take a vacation
5) Start a plan to start a business in either real estate investing/flipping or buy into an existing business or franchise

*And don't trust anyone with your money, no one cares more about your money than you do! *

GOOD LUCK AND ALL THE BEST!


----------



## njbr (Apr 15, 2011)

Met with the first of 3 advisors I have lined up. I'm pretty sure I'll be investing about 1.5 after loans, house, car, etc are payed off.

More details to come, but after a higher level convo he said probably something like a 60/40 stock/bonds split and said I could probably expect about an 8% annual rate of return. Their fee is about 1 to 1.25%

Does this all sound about right ? Once I get full package of recommendations back from them I'll post more detailed info.


----------



## Four Pillars (Apr 5, 2009)

njbr said:


> Met with the first of 3 advisors I have lined up. I'm pretty sure I'll be investing about 1.5 after loans, house, car, etc are payed off.
> 
> More details to come, but after a higher level convo he said probably something like a 60/40 stock/bonds split and said I could probably expect about an 8% annual rate of return. Their fee is about 1 to 1.25%
> 
> ..


8% on a 60/40 split sounds a bit optimistic.

The fee doesn't sound outrageous, but I guess it depends what is included with that. Why is there a range in fees?

MoneyGal would have better info on what kind of fees you should expect to pay. I remember she posted on that topic a long time ago.


----------



## njbr (Apr 15, 2011)

The fee ranges depending on the amount your investing.


----------



## I'm Howard (Oct 13, 2010)

Why are so many people so damn anxious to retire, if you don't like what you are doing, find something you do like to do, and get paid for it?

People who still go to the office at 70 are Retired, they just choose to continue in their occupation, that is why you see so many 70 year old Surgeons and Lawyers, they don't need the money, they enjoy their occupation.


----------



## humble_pie (Jun 7, 2009)

ok i'm a bit skeptical.

8% is a tad high to be indicating at the present time. Would you have any details about where he is drawing this forecast from. Please keep in mind that bonds are paying zip or a touch above zip, so for overall to yield 8% the stock portion would have to yield north of 10-11% which is not doable in conservative portf ... & conservative is how a beginning investor should commence imho ... although w experience & knowledge a youthful investor (which you are) could rapidly increase his risk allocation.

in addition i'm a bit skeptical about the 1-1.25% fee because these fees are typical only of investment counsel (currently morphing into portfolio manager name, but this will take couple of years to achieve in ordinary parlance.)

and there are no inv counsel in new brunswick, so i'm not quite sure how you could have met w one unless you flew to toronto.

alternately, was he a retail stockbroker promising you an individual portfolio of stocks & bonds, with a wrap fee such as you mentioned.

or was he a financial planner promising you a portf of mutual funds, plus he had the ability (some have) to obtain reduced MERs for larger clients.

or (worse case scenario) are there additional fees that he didn't explain properly ...

please note, i'm not asking to identify the personnage, and i sincerely hope you will not do so. But i am inquiring as to exactly what kind of shingle or license he hangs out.


----------



## the-royal-mail (Dec 11, 2009)

Easier said than done, Howard. Many, many people spend their entire lives looking for that perfect job but it proves to be elusive. Even if you do finally land your dream job, it can all disappear on a moment's notice. There are a lot of people (esp in southern Ont) waiting for either the $1M lottery win or retirement date. Sad, but true.


----------



## njbr (Apr 15, 2011)

From a retirement perspective Im not looking to retire. That being said, my wife may decide to stay home with the kids until they are in school and I can't get any more than 4 weeks vacation at my current employment, I'm hoping to somehow maybe get a month or so of leave without pay each summer, but that's not on my list of immediate todos. (or tofigureouts)

The meeting this morning was with Nesbitt, I think the 8% was more accurately what I should expect to avg out (yearly) over 5 years. The main sales point i think was showing me a chart that since 1950 over a 5 year investment period the lowest gain/loss was +3% or something similar, I don't remember if this was for the tsx or a composite or certain funds specific funds.

I believe it was for a portfolio of 60/40 stock and bonds...

This was a higher level meeting, mostly taking info and answering questions, I'll get more detailed information from them, guessing next week.


----------



## humble_pie (Jun 7, 2009)

ok he's a retail stockbroker.

imho this is a tad above that rather unprepossessing moncton firm of advisors who seemed to be - entirely falsely - claiming connection with the investment counsel association of canada.

imho selecting an advisor should not be a fast job. Personally i would allocate at least 2-3 months as a minimum, and i would not mind spending 6 months especially if i had to fly to toronto or montreal where the head offices are located.

which brings me to my next question/issue, since it hasn't come up yet. Will you be, or have you been, stashing these funds temporarily in short-term GICs or in high-interest savings accounts. Some will suggest to you that funds be divided among institutions as the highest guaranteed insurance offered by the CDIC is only 100,000 per institution. I for one don't think you could divide funds to the utmost because that will mean 15 institutions, which is laughably far too many. For ultra-safe temporary parking places, though, you might try 2-5 insured establishments.


----------



## njbr (Apr 15, 2011)

The transaction closes (source of the funds) in about 2 to 3 weeks so I have a little time still before i need to place the funds anywhere. I currently bank with RBC, but was thinking of splitting the funds between 4 or 5 banks high interest savings) maybe as long as 6 months until I understand enough and I am comfortable enough with the investment approach.

Being in NB I'm skeptical as to whether I'll find any excellent financial advisors locally.

I had a look at the Weigh House site (seen it referenced on this board a few times) and I'm impressed with it, and like the fee approach however I'm not sure if my experience level is suitable, ie pay hourly rates for advice, then I'm on my own for implementing.

I'll be meeting with someone at RBC Dominion next week and have a number for an accountant at kpmg who supposedly has good financial contacts.

Thanks again to everyone who has been responding, such a great help, and is also motivating me to want to learn as much as possible over the next year.


----------



## humble_pie (Jun 7, 2009)

felicitations, everything you say is always so sensible & so appropriate. Can't think of a finer young family to whom this good fortune could have happened.

big season coming up for you with the baby arriving in july & all !

ps i think i'd put some in GICs if the rates for 6 & 9 months were higher than regular savings accounts ...


----------



## njbr (Apr 15, 2011)

thanks humble.

yeah, I like the idea of GIC because it'll lock the funds up maybe for a year so that I can't make any rash decisions and forces me to do some solid research.

Are GIC's more protected than a savings account in terms of the 100k insurance ? If the 100k insurance is the same for a savings and GIC's maybe I'll split it up into 100k chunks of one GIC and one savings account (totalling 200k) across 5 institutions for a year (or something along those lines).


----------



## MoneyGal (Apr 24, 2009)

humble_pie said:


> in addition i'm a bit skeptical about the 1-1.25% fee because these fees are typical only of investment counsel (currently morphing into portfolio manager name, but this will take couple of years to achieve in ordinary parlance.)


This is an absolutely typical fee for a fee-only investment advisor shop working with HNW clients.


----------



## andrewf (Mar 1, 2010)

njbr said:


> thanks humble.
> 
> yeah, I like the idea of GIC because it'll lock the funds up maybe for a year so that I can't make any rash decisions and forces me to do some solid research.
> 
> Are GIC's more protected than a savings account in terms of the 100k insurance ? If the 100k insurance is the same for a savings and GIC's maybe I'll split it up into 100k chunks of one GIC and one savings account (totalling 200k) across 5 institutions for a year (or something along those lines).


CDIC is for all holdings per institution. So, a savings account and a GIC totalling $200k would only be covered for $100k.


----------



## Karen (Jul 24, 2010)

My understanding is that Andrew's answer is correct as far as it goes, but my bank tells me that the $100,000 limit can apply to more than one account, i.e. separate coverage for an account in a husband's name only, a wife's name only, and a joint account. I also understand that an RRSP is covered separately (if it's invested in GICs, as mine is). 

Also, banks place GICs with various related institutions, which each cover investors for $100,000. For example, my GICs are all with Scotia Bank, but are invested among several issuers, all related to of Scotia Bank (Bank of Nova Scotia, Scotia Mortgage Corporation, National Trust, and Montreal Trust Company) and I make sure that none is allowed to exceed $100,000. The same thing applies to my RRSP accounts so between my registered and unregistered TIC accounts, I'm covered by $800,000.


----------



## MoneyGal (Apr 24, 2009)

RRSPs are insured separately; here's a link:

http://www.cdic.ca/e/calculate/rrsp.html


----------



## Jungle (Feb 17, 2010)

"CDIC insures eligible deposits *at each CDIC member institution* up to a maximum of $100,000 (principal and interest combined) per depositor (or, in the case of joint deposits, per set of joint owners), for each of the following:

savings held in one name,
joint deposits (savings held in more than one name),
savings held in trust for another person,
savings held in Registered Retirement Savings Plans (RRSPs),
savings held in Registered Retirement Income Funds (RRIFs),
savings held in Tax-Free Savings Accounts (TFSAs), and
money held for paying realty taxes on mortgaged property.

found here : http://www.cdic.ca/e/depositinsurance/faq.html#online banks


----------



## humble_pie (Jun 7, 2009)

_" This is an absolutely typical fee for a fee-only investment advisor shop working with HNW clients." _

i can't see how a "fee-only" advisor can name the exact securities a client should hold, not to speak of timing their purchase.

therefore, in order to get the portfolio management part of the job done, a client would be paying another firm to do the actual stock selection & purchase, would he not. And his total annual fees would be considerably greater than 1-1.25%, would they not.

i am aware of one large fee-only financial planning firm in my city that includes an extremely busy fund-selling division that isn't advertised or even much talked-about. But it exists, and it's thriving, and their clients have only to walk a few doors down the hall, within the same suite of offices.

one has to wonder how such a "fee-only" practice could differ very much, if at all, from common-and-garden variety financial planners who openly sell mutual funds & openly declare that they are compensated by the fund companies.


----------



## humble_pie (Jun 7, 2009)

may be only a wild poetic hunch on my part, but i'd say that:

1) no part of the OP's windfall is going into rrsp at present;

2) all of it will be going into temporary deposit accounts held in his name only and in outright ownership.

therefore andrew's answer is best (it usually is).

(signed)
intuitive celtic pie


----------



## MoneyGal (Apr 24, 2009)

Humble. We are talking about different things. 

I know there is no firm agreement on the terms "fee-only" and "fee-for-service." I did write about this here on this forum within the last week and I linked to a long discussion on Morningstar which provides the terminology I use. 

When I was a licensed investment advisor, I was a fee-only advisor. This meant that I was compensated by my clients with fees they paid directly. I was not paid commissions either for my trades (we absorbed all trading costs) nor was I paid commissions by mutual fund manufacturers (kind of irrelevant, because I did not place money in retail mutual funds). Instead, my clients paid a tiered asset management fee based on the amount of money they had managed by me. 

The distinction I am drawing here (as does Morningstar) is with respect to how an investment advisor is paid for managing money. I was not paid by commissions from manufacturers, I was paid fees directly charged to clients. 

Fee-for-service "financial planners" is something else. The firms I worked at did fee-for-service financial planning divorced from asset management. That is, whether or not you were a current client, we might do a financial plan of some kind - for a quoted fee. That is a one-time engagement and did not deal with stock selection. This is a COMPLETELY different thing from money management and would never, not ever, be charged out at a percentage of assets. Instead, there's an hourly rate (typically) and the amount may be discounted or waived if the client moves their assets over. 

If you are managing money on behalf of clients, you can be compensated by way of fees, or commissions, or a mix. There is no other way to be compensated at the firm level (you could be an assistant earning a salary but you would not be a direct money manager, pulling the trigger). 

If you are providing financial planning advice, you may or may not be managing client assets. BUT THIS IS NOT THE SAME THING.


----------



## OhGreatGuru (May 24, 2009)

njbr said:


> ...I currently bank with RBC, but was thinking of splitting the funds between 4 or 5 banks high interest savings) maybe as long as 6 months until ...
> ...
> 
> I'll be meeting with someone at RBC Dominion next week and have a number for an accountant at kpmg who supposedly has good financial contacts.
> ...


This paranoia about putting too much money in one bank (or more than $100K GIC's from one bank) must be a Canadian trait. Do you really think any one of the Big Five is going to default on deposit accounts in your lifetime? And as soon as you invest it in mutual funds or stocks it is all uninsured.

Putting it into T-Bill or Money Market Mutual Funds might be easier. Ask your bank for advice.

As soon as you deposit this kind of money you will come to the attention of their wealth managers who will be drooling after your account. Get them to make proposals and interview them.

Dominion Securities would have the convenience of compatiblity with your bank. They can link your RBC and DS on-line accounts; and it is easier for them to move money in and out of RBC accounts. But otherwise whether you would be happy with them depends on your relationship with the particular advisor. Interview him/her and others from other institutions before making a decision.


----------



## MrRoboto (Nov 28, 2009)

I'm stepping away from what you should do with your money here, towards something I've always thought would be neat to do in this situation. 

Most of us went through a time in our life, probably when going through university, when we had to work one or more shitty jobs. From my experience, nine times out of ten these jobs were made shitty by the people you worked for, not really by the nature of the job itself. I think I would spend a bit of time locating these misery factories, getting hired there and just not accepting the crap. I'm not saying be an ***, just do the job, properly, but laugh out loud at the ridiculous stuff, or push against the more minor safety/unfairness issues that often go unchallenged. The stuff you kept bottled up when you were afraid to get fired because you had no money. Maybe you'll actually get promoted? At the least you should be able to raise moral. 

Don't let anyone know your agenda, just go in and do it until you've had enough of that particular place or get fired. Make sure to leave in a blaze of glory if the latter.


----------



## marina628 (Dec 14, 2010)

My husband has mid $xxx,xxx at TD bank even though it is only $100,000 coverage.I think you would get some sort of warning if any of the big banks were to collapse so I would not make that part too complicated.I do agree you need to split it up in 2-3 big banks ,it will keep your existing bank on their toes to try to keep you happy knowing you have other options.All the banks have private client services for clients with $500,000+ to invest.


----------



## andrewf (Mar 1, 2010)

OhGreatGuru said:


> This paranoia about putting too much money in one bank (or more than $100K GIC's from one bank) must be a Canadian trait. Do you really think any one of the Big Five is going to default on deposit accounts in your lifetime? And as soon as you invest it in mutual funds or stocks it is all uninsured.
> 
> Putting it into T-Bill or Money Market Mutual Funds might be easier. Ask your bank for advice.
> 
> ...


I agree that people obsess too much about the risk of banks defaulting on deposits. Even though CDIC only covers $100k, I can imagine the federal government guaranteeing all deposits in the event of a big bank failure just to avoid a panic.


----------



## Karen (Jul 24, 2010)

> This paranoia about putting too much money in one bank (or more than $100K GIC's from one bank) must be a Canadian trait. Do you really think any one of the Big Five is going to default on deposit accounts in your lifetime? And as soon as you invest it in mutual funds or stocks it is all uninsured.


I agree with you completely, and I certainly am not obsessed with this, but since I don't have to deal with another bank or go to any other kind of trouble to fully protect my money, why not do it?


----------



## humble_pie (Jun 7, 2009)

mg why are you shouting at me in all caps ?


----------



## MoneyGal (Apr 24, 2009)

I'm compensating for your lack of caps, obviously. More seriously, it is my slight shock that you don't understand these distinctions. I promise to keep my shouting ratio low. That was just 8 shouted words in that last post, not too bad.


----------



## the-royal-mail (Dec 11, 2009)

LOL - pie has the frugal keyboard that does not include a shift key LOL.


----------



## Pigzfly (Dec 2, 2010)

Advice often repeated to me by a CA:
If you come into a million dollars, change nothing. 
While it is a lot of money, 1.5 is not a ton of money and is quite easy to spend. A more expensive house here, a cottage there, a new car every few years, RESPs/trusts for the kids and poof, it's gone.

I would agree with your decision to lock it up for awhile so that you cannot make any rash decisions. I also second the idea of deciding to not touch the principle and only use the dividends that it generates. Don't forget that inflation will have significantly reduced the purchasing power in 25 years, so adding to the principle is a very good idea as well.


----------



## Montrealer (Sep 13, 2010)

Pigzfly said:


> *Advice often repeated to me by a CA:
> If you come into a million dollars, change nothing. *While it is a lot of money, 1.5 is not a ton of money and is quite easy to spend. A more expensive house here, a cottage there, a new car every few years, RESPs/trusts for the kids and poof, it's gone.
> 
> I would agree with your decision to lock it up for awhile so that you cannot make any rash decisions. I also second the idea of deciding to not touch the principle and only use the dividends that it generates. Don't forget that inflation will have significantly reduced the purchasing power in 25 years, so adding to the principle is a very good idea as well.


I like this, the only thing I disagree with is locking the money up and here is why:

If you have debts on which your paying over prime rate interest on, why would you want to lock away money when you can pay down debt? I would take the millions and pay down debt, however, stay in the same house, drive the same car and wear the same clothes until I create a plan for the money.


----------



## the-royal-mail (Dec 11, 2009)

That's right Montrealer. That's why I was suggesting the OP keep $50K of this money in a POSA to allow him to quite his job and live. This sum of money doesn't have to be treated as all or nothing and locked in. There is no harm IMO in keeping back $50K to keep food on the table while the OP carefully evaluates, just my opinion though.


----------



## njbr (Apr 15, 2011)

Current plan is as follows:

of the 1.85m pay off mortgage, debts, buy a second car (nothing pricy). That should leave me with around 1.55-1.6m. I'll initially dump this all in the 2% high interest savings currently available at CIBC. Then take the next few months to come up with the best possible plan for investing 1.5m. I'll continue employment and luckily my wife starts mat leave in july, so that gives her a year to then decide if she'll want to go back to work. I may also take 2 months leave of absence during that time as well.

Seem reasonable ? Only drawback I can think of is the risk that the bank defaults, but I'm guessing odds are pretty slim to none.


----------



## the-royal-mail (Dec 11, 2009)

Sounds like a good plan to me. Just make sure you choose an account that gives you regular interest pmts. Some of them only pay interest once or twice per year.

2% of 1.5M is $30K. Can you and your wife live on $30K per year once your mortgage, debts and 2nd car are paid off?

Good luck.


----------



## njbr (Apr 15, 2011)

Retiring or living off that interest amount isn't my number one concern, I plan on staying at work (at least for now) and once all the debt is paid off we can easily live off my salary alone so the added interest would be bonus. There is lots of flux from an expense perspective with a 2nd baby arriving in a few months, so I'm more inclined to put the money in safe spots with small gains until the dust settles and I have a better idea of where we sit.


----------



## kcowan (Jul 1, 2010)

I'm Howard said:


> that is why you see so many 70 year old Surgeons and Lawyers, they don't need the money, they enjoy their occupation.


In my experience, doctors and lawyers have the life sucked out of them by their jobs and don't develop sustainable outside interests so it is just easier to keep going.


----------



## MoneyGal (Apr 24, 2009)

My dad goes to his office pretty much every day, and he's 75.


----------



## Pigzfly (Dec 2, 2010)

To clarify a bit:

Personally, I would also pay off debts, as long as there is no major penalty for doing so. ie - when is your mortgage up for renewal? Does the savings on the interest for the remainder of the term exceed the cost to break the term? A phone call to the bank should clarify this. Other debt usually has no penalty for payment 

Also - I assume that any possible taxation relating to the transfer has been dealt with/accounted for? 

Sounds like your plan is pretty solid to me and that you've gleaned enough information to make up your mind to your own satisfaction; this is a good thing!


----------



## Lephturn (Aug 31, 2009)

Some great advice up in this thread. I would add one piece of wisdom I have learned from relatives who have managed wealth well.

*Your top priority is preservation of capital.*

I can understand paying down debts initially such as your mortgage - but after that you should never, ever, ever touch that capital. It is incredibly difficult to build a lump of capital that large, and properly managed it can slowly grow for many years and provide you with some income at the same time.

The only exception would be if you needed to tap into it later in life, or for some really important reason like health care as you age for example.

This may change when you get to a point where you really do want to both retire - then you may want to eat into the capital to maintain a high quality of life. You'll need to balance that with leaving that nest egg to your children. You are young enough you could teach them how to safely manage that capital as they grow up, so that when you are gone they will be ready and able to prudently manage and grow that wealth for future generations.

I recommend you read this: Family Wealth

It's not about managing your investments - so you may wait to read it for a few months - but if you want to raise your kids to know how to manage wealth you should read this.


----------



## Square Root (Jan 30, 2010)

kcowan said:


> In my experience, doctors and lawyers have the life sucked out of them by their jobs and don't develop sustainable outside interests so it is just easier to keep going.


That's a sweeping generalization that I doubt is true in most cases. Not like you. Maybe it was it supposed to be a joke?


----------



## Square Root (Jan 30, 2010)

I think your plan is fine in the short term. Only thing I would add is that it may seem like a lot of money(and it is) but it wouldn't be difficult to "blow" it, so be careful. Try to keep a normal perspective on your life and generally do the things that you otherwise would. Think of the money as a gentle breeze at your back for the rest of your life.


----------



## Trent1 (Apr 22, 2011)

*Take your time*

After expenses paid

look at BMO Banks/covered call Fund (pays 9.75 mer .6-.8%)
look at Morrison/Laurier on net - Real estate funding
look at private investment League on net.

Watch out for Mutual Funds 
The best are smaller funds (under 1 billion) not more than 40 stocks,
active manager, sector rotation - do your own research on best TYPE of
fund.

Find a money manager that works on a flat fee not percentage of $$.
Buy a GOOD long term insurance policy at your age by the time your are 55
it would be worth a lot.
Buy a long term critical illness policy - 1 in 3 eventual get some form of cancer and then it is too late! Buy a policy that refunds your premiums - you lose the interest but if nothing happens you get the premiums back.

And forget the toys for now but ENJOY life!

cheers


----------



## kcowan (Jul 1, 2010)

Square Root said:


> That's a sweeping generalization that I doubt is true in most cases. Not like you. Maybe it was it supposed to be a joke?


Yea I know it was a leap. It applies to all of them that I know personally. And sucked out is probably unfair. I could also have said that they love their jobs and spend all the waking time working at it. But having been retired for 9 years, I am a bit jaundiced about people who devote their whole lives to work. I did that for 10 years before I achieved some balance.

Sometime they bend the work to suit their lifestyle and so enjoy the whole deal including the 70 hour weeks. And I am open to hear about counter examples?


----------



## pfppaul (Apr 23, 2011)

njbr said:


> What about seeing a company like BMO Nesbitt or RBC financial or ernest and young. Would they provide the right type of services I'm looking for ?


I believe a company like this could definitely provide you with the type of services you are looking for. One of the other posts I think mentioned these places do not provide discretionary management but I kow for a fact that the office in my city provides this service. There are three in the office that do this.


----------



## MoneyGal (Apr 24, 2009)

Lots of banks offer discretionary management. Anyone who has the Canadian Investment Manager designation is able to offer discretionary management. 

There seems to be a huge amount of confusion about the different types of licenses people who manage money can hold, and the different services they provide, and the cost to investors. This thread is a good example of some of that mixed-up thinking.


----------



## humble_pie (Jun 7, 2009)

i guess everybody is confused except MG who, of course, has the last word


----------



## MoneyGal (Apr 24, 2009)

I'm not trying to have the last word. 

I do see new people coming into this forum saying that they want to learn from the advice and the "experts" here (that is intended to be a quote, not any kind of jibe), and I feel some responsibility to ensure that if people are coming here to get advice and information, the information they are getting is correct. And as someone who was a licensed investment advisor, I have an interest in ensuring that the different types of investment licenses are understood and appreciated. 

I don't have a lot of time to spend here (always between breaks doing something else) and my answers may not always be very long but I do have good links at my fingertips and when it seems appropriate, I post them.


----------



## OhGreatGuru (May 24, 2009)

MoneyGal sensibly points out that the term "financial planner/advisor" is used very loosely by everyone, and we should be careful not to tar all of them with the same brush.

However I would comment that the financial services industry contributes to all this confusion for the purpose of giving its representatives impressive titles.

CSI (Canadian Securities Institute) has 5 different certification programs: CFP (Certified Financial Planner); PFP (Professional Financial Planner - does that mean CFP's are unprofessional?) ; CIM (Certified Investment Manager); CSWP (Certified Strategic Wealth Professional); and FCSI (fellow of CSI).

Then add to that all the "non-certified" job titles that financial institutions give their sales people: Financial Services Representative; Mutual Funds Representative; Account Manager; Financial Advisor; Investment Consultant; to name a few. Is it any wonder consumers are confused?


----------



## MoneyGal (Apr 24, 2009)

Yeah; CSI would like to capture every little bit of training and licensing revenue that's out there. It's actually a pretty common pricing strategy - develop multiple versions of what is essentially the same thing, in order to exploit peoples' willingness to pay differing amounts for the same commodity. Think Starbucks. 

There doesn't seem to be any end of appetite on the part of advisors and consumers for new designations (note that designations and licenses are not the same thing). I don't know what to think about that. The U.S. has even more choices and licenses available. The cynic in me says this is just a reaction to the very low pass rates for the CFP and CFA designations.


----------



## heyjude (May 16, 2009)

kcowan said:


> In my experience, doctors and lawyers have the life sucked out of them by their jobs and don't develop sustainable outside interests so it is just easier to keep going.


Spot on! (and I know from experience).


----------



## OhGreatGuru (May 24, 2009)

To OP:
Considering that the typical users of this forum are overwhelming biased towards DIY investing, I am pleasantly surprised to see how many have held back and not urged you to go it alone.

It is difficult to find a fee-for service financial advisor who will just help you develop a financial (and estate) plan, and then tell you "OK, now go and invest your money yourself". Most financial advisors are also in the business of selling you either their company's products or their management services to invest your money for you. Bear that in mind at every interview. 

The advisors you consult should ask you what your financial wants & needs are. Do you want an immediate income stream, so you can retire or semiretire, or change jobs; or do you want to invest it for the longer term. When you are able answer that, you will have some idea of the types of instruments (and asset allocation) you should be looking for.

If you only to plan to invest in broad-based mutual funds, index funds, or ETFs, you can do this easily yourself, and it does not take a lot of study to select appropriate funds. 

IMHO buying individual stocks requires a lot more knowledge if you want to do it successfully. You can pay an advisor to do this in lieu of acquiring the expertise yourself.

With $1.8M you should be able to buy mutual funds at institutional MER rates. PH&N Investment Services for example. apart from their own funds, carries many RBC Class D funds at lower MERs than you can get at your retail bank. Or, for high net worth clients, they have PH&N Investment Counsel, which offers more comprehensive advisory services. But you have to be comfortable dealing with their advisors by phone and/or internet.


----------



## njbr (Apr 15, 2011)

I've found someone who came highly recommended from a local accounting firm at RBC Dominion. He only takes on clients values at 500k or more and limits to 150 clients (not sure if that is many or not), has to FA's working for him (not sure his exact title) and so far has been excellent to deal with and has been requesting tons of information via forms and spreadsheets (all information i would expect him to ask, yet much more details then the guy at nesbitt). Once i have detailed suggestions and offering I'll post back here.

My only concern at this point is the ~1% (where I'm investing 1.5m) fee seems like a fair amount, but i guess this is the going rate for this type of service.


----------



## Four Pillars (Apr 5, 2009)

njbr said:


> My only concern at this point is the ~1% (where I'm investing 1.5m) fee seems like a *fair amount*, but i guess this is the going rate for this type of service.


I assume you mean "fair amount" as in "quite a bit". 

Yes - $15,000 per year is a lot, but you are paying for expertise.

My only issue with this kind of compensation is that it probably isn't twice as much work (or complexity) to handle a client with $3 million (at $30k per year) as it is to service njbr at $1.5 mill.


----------



## njbr (Apr 15, 2011)

Right, and what if i go ultra conservative where i would only see maybe a 3% gain a year and after fees and tax i would have been better off leaving it all in a 2% savings account ?


----------



## MoneyGal (Apr 24, 2009)

Four Pillars said:


> My only issue with this kind of compensation is that it probably isn't twice as much work (or complexity) to handle a client with $3 million (at $30k per year) as it is to service njbr at $1.5 mill.


Which is why you should ask for and expect fees to scale down as the asset size increases.


----------



## Four Pillars (Apr 5, 2009)

MoneyGal said:


> Which is why you should ask for and expect fees to scale down as the asset size increases.


Ahhh, good point!


----------



## Four Pillars (Apr 5, 2009)

njbr said:


> Right, and what if i go ultra conservative where i would only see maybe a 3% gain a year and after fees and tax i would have been better off leaving it all in a 2% savings account ?


I think you have to hire these advisors for more than investment return. I'm assuming they do asset allocation, maybe some long term financial planning etc?


----------



## humble_pie (Jun 7, 2009)

sounds good. I was going to post that the top designation for investment dealers, formerly known as stockbrokers, is "portfolio manager." They have to write exams & have experience to gain this designation. Not sure if your candidate is a portf mgr but the fact that he came recommended by the accounting firm that you already know & trust is a good sign.

the limits you describe that he has drawn for his practice sound fine. As for his fees, it is standard to negotiate down the management fee for the 2nd million ... however it will not drop very much, while the 1% or so will likely remain in effect for the 1st million. Indeed you should arrive at 1% for the 1st M, and something like .75% for the next half-M. Perhaps you might leave that negotiation until a later moment, until after you've interviewed everybody on your short list (you do have a few more to interview, i hope.)

i take it you are preferring to find someone locally, whose offices you can visit, rather than travel to toronto, or montreal for that matter, since there are some excellent boutique investment counsel houses here in montreal, and it's a fun city to visit. But i can understand the practical comfort of having someone whom you can meet easily, even though after the initial encounter you may not see your chosen advisor again for 12 months or more.

ideally i was hoping you'd find a wealth manager with very high ethical standards, profound knowledge, and broad experience, who would also take an avuncular interest in mentoring or teaching you to the extent that you wish to learn. It would be a win/win situation, because your funds should be well looked-after night & day, with everything shipshape & no chance of anything falling between the cracks. Meanwhile, your life is full, what with the family, the job, the new baby & all, so it would be a question of absorbing whatever nuggets of info you wanted at whatever pace you chose.

i'm glad you're resisting all the exhortations from this forum to buy this or that particular fund. In different circumstances the advice would be excellent, but in your circumstances what you're doing is just right imho.

as for the sticker shock (15k ! omg that's 1250 per month !), i know what you mean. There are ways around it, but one needs a certain amount of knowledge & experience to navigate those waters. In a few years, you'll know more, you may have a different perspective. For right now, though, it's either sticker shock or else savings accounts & GICs at 2-3% per annum. 
PS won't you please inquire whether that 15k will be billed directly to your account so it will be tax deductible as a carrying charge. This is quite important imho. If these fees were inside a mutual fund you wouldn't get to deduct them at all.

best wishes, bonne chance. So far, you've done everything right.


----------



## heffer (Feb 21, 2010)

If I had a young family and took on all that money I would first have a long and serious conversation with my wife about what kind of financial household we should raise our kids in. For example, I would hold off on telling my kids how wealthy we are until they have learned the meaning behind there is no such thing as a free lunch.

Children/teenagers cannot be expected to fully comprehend the significance of 7 figure wealth. If they knew their parents were millionaires, they will try to hang out with other rich kids from school and expect the same expensive gifts, and to live in a bigger house compared to their schoolmates from middle class families. Their social lives will be impacted in other ways too, like that episode of South Park when those 4th grade girls pretended to be nice to Clyde so he would get them free shoes, because his dad owns a big shoe store. Peer pressure can be destructive. If I want my kids to experience a normal childhood with the chance for a meaningful adult life, I have to be modest in my approach. 

But once my kids have grown up, learned the real value of a dollar, and become responsible adults who can financially support themselves, I will surprise them one day and show them my bank statement and go "KAPOW fools! mom and dad are actually rich,*pfft* " And only then offer to help them invest in their small business, or with a down payment on their first home, or with their continuing education needs, such as an MBA or CA designation.

Of course some rich families choose to buy their kids smart phones and tablets, take them to Disneyland every year, send them to the best private schools, and fully fund their university tuition. There's absolutely nothing wrong with any of that either because_ there are multiple ways to raise kids._ It just comes down to both parents being on the same page about how to do it. Wow, 1.5 million investable dollars is a lot. Don't forget to look into participating life insurance if you don't already have that. Congrats on becoming a millionaire at such a young age.


----------



## njbr (Apr 15, 2011)

humble_pie said:


> sounds good. I was going to post that the top designation for investment dealers, formerly known as stockbrokers, is "portfolio manager." They have to write exams & have experience to gain this designation. Not sure if your candidate is a portf mgr but the fact that he came recommended by the accounting firm that you already know & trust is a good sign.


yes, I believe the title he goes by is portfolio manager


> i take it you are preferring to find someone locally, whose offices you can visit, rather than travel to toronto, or montreal for that matter, since there are some excellent boutique investment counsel houses here in montreal, and it's a fun city to visit. But i can understand the practical comfort of having someone whom you can meet easily, even though after the initial encounter you may not see your chosen advisor again for 12 months or more.


im all for something along this route, a trip like this is probably 1k or a little more but at this point it is pretty negligeable. if you can recommend anyone in mtl by all means please do so. my only concern here is finding the time but in 6 months from now that will be less of a concern.


> ideally i was hoping you'd find a wealth manager with very high ethical standards, profound knowledge, and broad experience, who would also take an avuncular interest in mentoring or teaching you to the extent that you wish to learn. It would be a win/win situation, because your funds should be well looked-after night & day, with everything shipshape & no chance of anything falling between the cracks. Meanwhile, your life is full, what with the family, the job, the new baby & all, so it would be a question of absorbing whatever nuggets of info you wanted at whatever pace you chose.


This matches me to a T and would like to see this play out, i'm actually looking into possibly some night classes at the local university maybe in Sept as they do have a respectful business dept. i'm very much hands on and a self learner.


----------



## njbr (Apr 15, 2011)

@heffer those are some great points. luckily my oldest isn't even 2 yet and the youngest isn't born for a few more months so we have plenty of time to think about this  

And to be honest I don't think this will be too much of a issue... everyone probably says that but we aren't very materlalustic and hopefully we can raise our kds the same way. The biggest luxury i'm hoping to gain with wealth is more free time to do what I want when I want and be a little less of a slave to the system. i'll be taking 2 months when baby is born later in the summer so that's a good start, maybe this would be an ideal time for a day trip to mtl.


----------



## njbr (Apr 15, 2011)

After some googling I've found an ICAC member within a few hours drive here in NB, however there isn't much on the site, I was hoping for a description of their service.

http://louisbourg.net/

The pdf however seems to have some pretty detailed information relating to investment. Is this what I'm looking for ? If so I'll add them to my check'em out list.

Edit: found a better description of the company here - http://www.assomption.ca/english/index/dynamic.cfm?id=31 - sounds like what I'm looking for, but now quite sure how they differentiate from the service provided by someone like RBC Dominion.


----------



## the-royal-mail (Dec 11, 2009)

Did you also google for problems with the company? Always do that as part of diligent research.


----------



## MoneyGal (Apr 24, 2009)

More information: http://www.assomption.ca/english/index/dynamic.cfm?id=31

From that site: 

The following comments highlight just a few of the advantages of our Private Client service.

"Net Worth" Management

We tailor the investment management process to your personal objectives and consider all aspects of your personal situation.

Investment Policy

We ensure that initial portfolio construction and any future changes are made according to our discussions and respect the risk level originally established.

Discretionary Portfolio Management

You delegate the responsibility of day-to-day investment decisions for your portfolio to Louisbourg Investments. Our managers then concentrate on managing your portfolio and are able to react quickly to benefit from any opportunities that arise in the marketplace.

Direct Access to Managers and Analysts

A manager is responsible for your account and becomes your main contact person with Louisbourg Investments. This means that you are dealing directly with an investment professional.

Tax-Efficient Management

We use a segregated approach, meaning that rather than owning units of a fund, you hold the actual securities in your account. Tax implications are carefully considered prior to any transaction.


----------



## MoneyGal (Apr 24, 2009)

x-post with you, njbr.


----------



## njbr (Apr 15, 2011)

thx @moneygal.

As far as I can tell this seems to be about the same service as RBC Dominion, the only difference possibly that the decisions are a little more independent/ethical at the ICAC ?


----------



## MoneyGal (Apr 24, 2009)

It's not exactly the same. When you work with an investment counsel/portfolio management firm, your money is pooled with all the other assets held by the company and invested in large blocks. 

When you work with an advisor like RBC Dominion, your money is not invested in pools managed directly by the firm, but in mutual funds, ETFs, and individual securities and bonds.

Maybe I can find a link which explains this in more detail...


----------



## humble_pie (Jun 7, 2009)

took a quick look. Interesting. Good for you for finding this firm, nj.

louisbourg has strong links to the francophone community in both new brunswick & quebec. Note the partnership between assomption-vie & montrusco bolton, which has long served the fédération des travailleurs du québec (labour union investments.)

as for nature of services provided, these should be somewhat similar to what the portf mgr at rbc dominion can offer.

in all circumstances you should not be put into mutual funds. These might be fine for a smaller account, but yours is too large. You would want to be able to deduct every penny of the sticker shock fees that you will be paying to these managers (did i say that already ?) Furthermore, the taking of (taxable) capital gains can be much more finely controlled with a portfolio of individual securities selections.

as for ethical conduct, this should also be high with respect to both firms, & frankly with respect to any firm you might care to interview. But in the last analysis it's always a case of caveat emptor, and the best watchman for your fortune is going to be yourself, as your strengths grow in this domain.

in the end i think it boils down to with whom do you feel most comfortable. With whom does the chemistry ignite. Which is why i feel it's important to take your sweet time & contact a number of firms, over the next several months if necessary.

notice, please, how stock markets are responding to your situation & lying down like lambs & doing nothing whatsoever except frisking to & fro a bit. In other words, you are losing nothing in these sideways markets by keeping funds in short-term deposits or GICs, whilst you carry on with your interview procedures.

visiting several firms has another valuable by-product, which is that, as they explain their rationale for the kind of investments they are recommending for you, you will be able to learn much.

PS with respect to the pooling of investments by investment counsel, there are certainly some who do not do this, although they are in the minority. I myself am well-acquainted with one boutique house that takes great pride in hand-tooling specific portfolios for each & every client.

and with respect to the individuation of portfolios that are managed by stockbrokers, there would certainly also be pooling among such a broker's clients as well.

the fact is that when advisor/managers decide that it's time to reduce holdings in north american energy drillers & explorers, for example, they will take out all of their clients, regardless of whether such advisor/managers are investment counsel or top-ranked brokers ... and this kind of timely action is exactly what the client is paying for.


----------



## MoneyGal (Apr 24, 2009)

Humble is right. IC firms do individual portfolios as well as pooled funds. The pooling of funds is distinctive to IC firms though.


----------



## carson (Apr 28, 2011)

First off congrats on being so level headed and taking the right approach to this sudden windfall.

Since you have said that you will continue working (for now) it's vitally important that you consider the tax consequences of your investments. Interest income or 

capital gains will be taxed to death if you already have an income of 85k per year.

I'm not going to try and tell you what to do, only what I would do in a similar situation.

* The following would be AFTER paying off all debt including mortgage.



1. Move all the remaining money into a high interest savings account from which money can be transferred to other investments. I'd stay with RBC for now as that is 

already your bank. Forget about CDIC insurance in the near term. RBC is not going anywhere.

2. Max out both your and your spouses TFSA with growth stocks. That is equities that have high potential for growth over the medium to long term. Forget about 

dividend producing stocks in your TFSA, they are not tax efficient.

3. Max out both your and your spouses RRSP contributions and possibly file adjustments to prior year tax returns to maximize your tax return. Place the tax return 

money back in to the original high interest savings account pool of money.

4. Open a self directed investment account, ( I like Scotia Itrade) and invest the bulk of your cash into large cap, dividend paying Canadian companies and proffered 

shares. Canadian dividend income is taxed at a much lower rate than capital gains. This of these stocks as a long term investment that may rise and fall in capital 

value but will continue to provide income via dividends over time.

5. Open an account with another large Canadian bank and buy government and corporate bonds. Look for inflation linked bonds as the idea for these investments is 

preservation of capital.

6. open still another account with a large Canadian bank and buy a 1 year GIC that has options to be renewed annually.

7. Keep the remaining cash in the high interest savings account until you decide whether you want to purchase another property or not. Also, use this cash to max out 

your RRSP contributions every year that you continue to work.



In the end you might see something like this, depending upon you remaining RRSP and TFSA contribution room.

TFSA 25,000 in growth stocks
RRSP 150,000 in balanced mutual funds (60/40) equities/bonds
Investment Account 600,000 in large cap dividend producing Canadian stocks
Savings account at Bank 1 200,000 in inflation linked bonds
Savings account at Bank 2 200,000 in GIC
Savings account at RBC (original money pool) 325,000 (until you decide on purchasing the cottage/property)

As for long term CDIC protection the above could be divided as so:

TFSA: BMO
RRSP: Standard life assurance company
Investment Account: Scotia Itrade
Bank 1: TD
Bank 2: HSBC
Original Bank: RBC

That way you would have a reasonable distribution of funds and still have 600,000 in CDIC protection. Also, you would have a steady stream of tax efficient dividend 

income from the self directed investment account and a rock solid safe income stream from the bonds and GIC.

Again, your numbers may differ from what I've outlined but that is what I would do. Congratulations and good luck!


----------



## 14dmoney (Jan 20, 2011)

Although I did not suddenly acquire my nest egg (I put in many years of +80 hr work weeks), I did have an epiphany a short while ago, and decided I would not keep paying 2-3% in high MER mutual funds for very poor service by my advisor. So, I too, found myself in the process of deciding how to proceed with a substantial amount of investment dollars with little investing experience.

I have been exploring the private investment counsel option as I am finding that I don't feel confident I know enough for DIY investing (for example, I bought RIM and can't help but get upset with myself even though I did well with RY, KO, BCE). I am relatively happy with my couch potato broad based ETF's along with the 10% I allocated to a fee-based advisor in a GARP portfolio (in keeping with the diversification principle).

Since you asked about options in Montreal, after interviewing a couple of other firms, I have pretty much decided that I am going to hand over a significant portion of my portfolio over to Connor, Clark & Lund. 

CC&L charges a minimum $10,000 annual fee (1.25% for the first 2M but it goes down after that). So yes, it is a big chunk of change. My decision came down to whether or not I felt I was going to get value for what I will be paying, and in the end, for me, I decided that it was worth it if I could have some better peace of mind. 

CC&L seemed to fit all the criteria that was mentioned by Humble Pie... I would be interested if MoneyGal or anyone has opinions to the contrary before I actually hand over my money though. In addition, CC&L has a number of alternative strategies that I found quite interesting. Anyways, worth checking them out for yourself.

So, njbr, I hope sharing my experiences with you can help lighten the load on your investment journey and save you some sleepless nights along the way. Best of luck.


----------

