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ADVERTORIAL
DOLLARS & SENSE

Risk Management and Proper Planning

It's very surprising to find that many businesses and wealthy • Holding companies. If you are a business owner and you have
individuals we work with have focused on their business and ensured accumulated surplus assets in your business that are not needed
they were running lean secure operations always minimizing risk; for operating expenses, then consider transferring these assets to a
however when we take a look at their own family financial plan, there holding company. This can help protect the assets from the operating
are so many gaps which could seriously change their lifestyle. company’s creditors.

We all work hard to accumulate assets, so it’s important that we take 2. Risk of market downturns
precautions to protect it from the various risks that are a part of life. Diversification is one of the golden rules of investing to reduce the
When it comes to protecting our wealth, there are three primary risks risk of losing capital due to market downturns. Traditionally, diver-
that one should plan for. Here are some ways to get ahead of the risk – sification has meant allocating assets between the three main asset
so you can sleep better at night. classes (cash, fixed income and equities) as well as between different
geographic areas and sectors of the economy. More and more people
1. Risk of a potential lawsuit with excess of one million-plus investment portfolios are considering
Protecting your assets from lawsuits is not about defrauding legitimate alternative investments for further diversification to protect assets
creditors – it’s about segregating your assets using common and legal and boost returns. Speak to your advisor about different alterna-
strategies at a time when you have no existing or foreseeable claims. tive investment options such as private funds, segregated funds and
In addition to any professional, business, car or house principal-protected structured notes.
liability insurance you can purchase, the following are
some typical strategies to protect your assets: 3. Risk of income loss
This is one of the largest risks to you and your family.
• Gifting. Although giving assets to a family member If you become disabled or die, are you confident that
reduces the amount of assets you have that are subject your family will have adequate financial resources to
to creditors, it increases the assets subject to the family maintain their lifestyle? Adequate disability and life
member’s creditors. This may work in some situations insurance coverage should be a top priority when it
where family members are not exposed to risk. Please comes to planning your finances. Without the proper
keep in mind that gifts other than gifts to a spouse is coverage, you risk rapidly depleting assets you have
considered a sale at market value for Canadian tax pur- worked so hard to accumulate and having a much
poses, potentially triggering a taxable capital gain. lower standard of living. You should also have a discus-
sion with your advisor (who is insurance licensed) on
• Trusts. Transferring assets to a trustee of a formal trust the costs and benefits of disability, critical illness and
results in a loss of legal ownership and some control of Erica Tennenbaum, CFP, FCSI long-term care insurance. These areas are becoming
the funds, thus reducing your assets subject to creditors. Vice President & Wealth Advisor increasingly necessary as more people survive illnesses
This is also an interesting tax strategy, it may also be and diseases than ever before, and require additional
subject to capital gains/loss taxation. One needs to be confident that care and financial support as a result.
the trustee is someone who will protect and manage your assets in
your best interests. Consider a corporate trustee for this purpose due Risk Management is equally important to your family and your busi-
to their reputation and expertise in managing trust assets. Offshore ness. Take the time to discuss the risk to your portfolio and planning
trusts may provide greater creditor protection than domestic trusts in the areas above with your Advisor. Just a few hours of planning will
due to a specific country’s creditor protection laws and the potential protect you and your family for the future.
unwillingness of a domestic creditor to chase after assets in a foreign
jurisdiction.
If you would like more information regarding Family Wealth Manage-
• Life insurance. Based on provincial laws and court precedents, if an ment please give our office a call and request our brochure entitled
insurance policy is structured properly, the investment component of – Ten Strategies to Build and Protect Your Family’s Wealth or or for
an insurance policy is not subject to creditors. This strategy can also further information please contact Erica Tennenbaum at 519-621-
help to minimize risk with regards to the way in which the investment 1307.
component is structured.

Professional Wealth Management Since 1901

This document has been prepared for use by the RBC Wealth Management member companies, RBC Dominion Securities Inc. (RBC DS)*, RBC Phillips, Hager & North Investment Counsel Inc. (RBC PH&N IC), RBC Global Asset Management Inc. (RBC GAM), Royal Trust Corpora-
tion of Canada and The Royal Trust Company (collectively, the “Companies”) and their affiliates, RBC Direct Investing Inc. (RBC DI) *, RBC Wealth Management Financial Services Inc. (RBC WMFS) and Royal Mutual Funds Inc. (RMFI). *Member-Canadian Investor Protection
Fund. Each of the Companies, their affiliates and the Royal Bank of Canada are separate corporate entities which are affiliated. “RBC advisor” refers to Private Bankers who are employees of Royal Bank of Canada and mutual fund representatives of RMFI, Investment
Counsellors who are employees of RBC PH&N IC, Senior Trust Advisors and Trust Officers who are employees of The Royal Trust Company or Royal Trust Corporation of Canada, or Investment Advisors who are employees of RBC DS. In Quebec, financial planning services are
provided by RMFI or RBC WMFS and each is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RMFI, Royal Trust Corporation of Canada, The Royal Trust Company, or RBC DS. Estate & Trust Services
are provided by Royal Trust Corporation of Canada and The Royal Trust Company. If specific products or services are not offered by one of the Companies or RMFI, clients may request a referral to another RBC partner. Insurance products are offered through RBC Wealth
Management Financial Services Inc., a subsidiary of RBC Dominion Securities Inc. When providing life insurance products in all provinces except Quebec, Investment Advisors are acting as Insurance Representatives of RBC Wealth Management Financial Services Inc. In
Quebec, Investment Advisors are acting as Financial Security Advisors of RBC Wealth Management Financial Services Inc. RBC Wealth Management Financial Services Inc. is licensed as a financial services firm in the province of Quebec. The strategies, advice and technical
content in this publication are provided for the general guidance and benefit of our clients, based on information believed to be accurate and complete, but we cannot guarantee its accuracy or completeness. This publication is not intended as nor does it constitute tax or
legal advice. Readers should consult a qualified legal, tax or other professional advisor when planning to implement a strategy. This will ensure that their individual circumstances have been considered properly and that action is taken on the latest available information.
Interest rates, market conditions, tax rules, and other investment factors are subject to change. This information is not investment advice and should only be used in conjunction with a discussion with your RBC advisor. None of the Companies, RMFI, RBC WMFS, RBC DI,
Royal Bank of Canada or any of its affiliates or any other person accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. ® Registered trademarks of Royal Bank of Canada. Used under
licence. © 2018 Royal Bank of Canada. All rights reserved. NAV0004 (12/19)
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Spring 2019