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The Efficient Plan
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The Efficient Plan Presentation Transcript

  • 1. Introducing…………
    Ingersoll Golf & Country Club
    June 27, 2011
  • 2. Agenda:
    The Financial Services Industry
    The Canadian Landscape
    Real Estate and Solar
    Market Update
    Charitable Donations
  • 3. Independent and Institutional
    Mutual Fund Dealerships: A Comparison
    Industry:
    Mutual Fund Dealers Association (MFDA)
    Institutional
    (Dealership within large Institution)
    Independent
    Dealerships
    Retail Banks
    Other Publicly Traded Corporations
    • Insurance Companies
    • 4. Mutual Fund Companies
    Other Independent
    Mutual Fund
    Dealerships
    Private
    Non -Institutional
    The Difference is in the ownership. Independents are Mutual Fund Dealerships which are owned by 1or a few individuals. Institutional are Mutual Fund Dealerships owned by a publicly traded company. Regulations within both channels are identical, and both must comply to the same standards.
  • 5. Independent and Institutional
    Mutual Fund Dealerships: A Comparison
    3 Silos within the Financial Services Industry
    Investing
    Borrowing
    Insurance
    Most Canadians will use all 3 pillars at some point in their life.
    Institutional trends in the industry is to be a manufacture of all 3 Silos.
  • 6. The Industry Client/Advisor Relationship (Partnership) Holistic
    Borrowing
    Investing
    Client
    & Advisor
    (Partnership)
    Insurance
  • 7. Independent and Institutional Advisor:
    A Comparison
    Advisor Products Available:
    RETAIL BANK
    FRANKLIN TEMPLETON
    CI MUTUAL FUNDS
    FIDELITY
    AGF
    RETAIL BANK MUTUAL FUNDS
    + MORE………
    RETAIL BANK MUTUAL FUNDS
    ALL RETAIL BANK MORTGAGES
    OTHER LENDERS
    RETAIL BANK MORTGAGES
    EMPIRE LIFE
    MANULIFETRANSAMERICA
    RETAIL BANK INSURANCE
    +MORE……
    RETAIL BANK INSURANCE
  • 8. The Canadian Landscape
  • 9. Highlights in Canada:
    RSP introduced in 1957
    Modern Portfolio Theory receives Memorial Noble prize in 1990
    Mutual Fund industry grows from $25Billion in 1980 to $704Billion in 2010
    Introduction of 100% No Margin Loan through Independent Financial Advisors in early 2000’s – present.
    Major Financial crisis in 2008 almost freezes financial system.
    Liability Driven Investing being integrated by Canadian Pension Fund Managers in last 3 years
    The Efficient Plan’s “The Hybrid” becomes new model for Canadians to integrate along with their RSP in 2011.
  • 10. “The Hybrid”
  • 11. Bond Fund
    Stock Fund
    +
    A Typical RSP Model
  • 12. RSP
    NON RSP
    Bond Fund
    Bond Fund
    Stock Fund
    +
    +
    Leverage
    -
    “The Hybrid”
  • 13. Basis of “The Hybrid”
    • Most Canadians’ financial plan is based upon the RSP.
    • 14. Most Canadians have Stock and Bond Mutual or Segregated Funds invested in their RSP.
    • 15. RSP force “Non tax deductible leverage” during accumulation years.
    • 16. Stock Funds with capital gains less efficient inside the RSP vs. outside.
  • Investment leverage as a stand-alone program increases the risk of investing. The Hybrid program considers this increased risk and attempts to maintain the overall risk profile of the client’s investment portfolio. The overall risk of the investment portfolio is initially increased when integrating an investment leverage strategy; however, the overall risk of the portfolio is then reduced by integrating a lower risk RSP investment strategy. In order to evaluate the risk of The Hybrid program, it is important to consider the risk profile of the RSP and the risk profile of the investment leverage together and not independent of each other.
    The RSP Only and The Hybrid comparison is based on the same returns and same cash flow injection for each. The RSP Only portfolio showing is assumed to be invested as follows 15% (Original investment $1,500) TD Canadian Bond Fund, 15% (Original investment $1,500) Franklin Templeton Global Bond Fund, 50% ($5,000 original investment) Mackenzie Saxon Stock Fund, 20% ($2,000 original investment) Franklin Templeton Global Small Companies Fund. The Hybrid portfolio showing is assumed to be invested as follows: RSP Portion – 40% ($4,000 original investment) TD Canadian Bond Fund, 40% ($4,000 original investment) Franklin Templeton Bond Fund, 20% ($2,000 original investment) Franklin Templeton Global Small Companies. Non RSP Portion – 100% ($5,000 original investment) Mackenzie Saxon Stock Fund. Leverage – Interest rate ($5,000 original borrowed) Prime + 0.75%. Monthly Cash flow injection into both the RSP Only and The Hybrid is based on 1/12th of the annual interest payable on the leverage within The Hybrid. In the case of the RSP only portfolio, the Monthly Cash Flow into the individual funds is divided as follows: 15% TD Canadian Bond Fund, 15% Franklin Templeton Global Bond Fund, 50% Mackenzie Saxon Stock Fund, and 20% Franklin Templeton Global Small Companies. All 1 year returns are assumed at straight line returns for both the RSP only and The Hybrid portfolios. Borrowing rate for leverage is based on a Prime +0.75% with the average Prime rate for the 1 year period being used. Rebalancing of the portfolios back to their original weightings is assumed to be done on Dec 31st of each year, and original purchase of investments also done on January 1st of each year. Within The Hybrid, the profit from the Non RSP investment (if any) is reinvested after all applicable taxes (based on Capital Gains) and Grossed up (based on grossed up Marginal tax equivalent deposit to RSP ). A 35% Marginal Tax rate assumption throughout the 10 year period on deposits and withdrawals has been made. This is intended for illustration purposes only, actual results will differ. Refer to your authorized “The Efficient Plan” Financial professional for more details.
  • 17. Investment leverage as a stand-alone program increases the risk of investing. The Hybrid program considers this increased risk and attempts to maintain the overall risk profile of the client’s investment portfolio. The overall risk of the investment portfolio is initially increased when integrating an investment leverage strategy; however, the overall risk of the portfolio is then reduced by integrating a lower risk RSP investment strategy. In order to evaluate the risk of The Hybrid program, it is important to consider the risk profile of the RSP and the risk profile of the investment leverage together and not independent of each other.
    The RSP Only and The Hybrid comparison is based on the same returns and same cash flow injection for each. The RSP Only portfolio showing is assumed to be invested as follows 15% (Original investment $1,500) TD Canadian Bond Fund, 15% (Original investment $1,500) Franklin Templeton Global Bond Fund, 50% ($5,000 original investment) Mackenzie Saxon Stock Fund, 20% ($2,000 original investment) Franklin Templeton Global Small Companies Fund. The Hybrid portfolio showing is assumed to be invested as follows: RSP Portion – 40% ($4,000 original investment) TD Canadian Bond Fund, 40% ($4,000 original investment) Franklin Templeton Bond Fund, 20% ($2,000 original investment) Franklin Templeton Global Small Companies. Non RSP Portion – 100% ($5,000 original investment) Mackenzie Saxon Stock Fund. Leverage – Interest rate ($5,000 original borrowed) Prime + 0.75%. Monthly Cash flow injection into both the RSP Only and The Hybrid is based on 1/12th of the annual interest payable on the leverage within The Hybrid. In the case of the RSP only portfolio, the Monthly Cash Flow into the individual funds is divided as follows: 15% TD Canadian Bond Fund, 15% Franklin Templeton Global Bond Fund, 50% Mackenzie Saxon Stock Fund, and 20% Franklin Templeton Global Small Companies. All 1 year returns are assumed at straight line returns for both the RSP only and The Hybrid portfolios. Borrowing rate for leverage is based on a Prime +0.75% with the average Prime rate for the 1 year period being used. Rebalancing of the portfolios back to their original weightings is assumed to be done on Dec 31st of each year, and original purchase of investments also done on January 1st of each year. Within The Hybrid, the profit from the Non RSP investment (if any) is reinvested after all applicable taxes (based on Capital Gains) and Grossed up (based on grossed up Marginal tax equivalent deposit to RSP ). A 35% Marginal Tax rate assumption throughout the 10 year period on deposits and withdrawals has been made. This is intended for illustration purposes only, actual results will differ. Refer to your authorized “The Efficient Plan” Financial professional for more details.
  • 18. Similar Investment Models
  • 19. The Average Canadian
  • 20.
  • 21. “The Accelerated”
  • 22. NON RSP
    Stock Fund
    RSP
    Bond Fund
    Bond Fund
    +
    +
    Leverage
    -
    “The Accelerated”
  • 23. Investment leverage as a stand alone program increases the risk of the investing. The Accelerated program considers this increased risk and attempts to increase the return of the client’s investment portfolio. The overall risk of the investment portfolio is initially increased when integrating an investment leverage strategy however the overall risk of the portfolio is then reduced by integrating a lower risk RSP investment strategy. The Accelerated program increases the risk/return by increasing the amount of investment leverage over and above The Hybrid program. In order to evaluate the risk of The Accelerated program, it is important to consider the risk profile of the RSP and the risk profile of the investment leverage together and not independent of each other. The Accelerated program is a higher risk investment strategy than The Hybrid program. The Risk of this program is increased by the amount of investment leverage and this amount should always be measured in relation to the client’s overall financial situation.
    The RSP Only and The Accelerated comparison is based on the same returns and same cash flow injection for each. The RSP Only portfolio showing is assumed to be invested as follows 15% (Original investment $1,500) TD Canadian Bond Fund, 15% (Original investment $1,500) Franklin Templeton Global Bond Fund, 50% ($5,000 original investment) Mackenzie Saxon Stock Fund, 20% ($2,000 original investment) Franklin Templeton Global Small Companies Fund. The Hybrid portfolio showing is assumed to be invested as follows: RSP Portion – 40% ($4,000 original investment) TD Canadian Bond Fund, 40% ($4,000 original investment) Franklin Templeton Bond Fund, 20% ($2,000 original investment) Franklin Templeton Global Small Companies. Non RSP Portion – 100% ($10,000 original investment) Mackenzie Saxon Stock Fund. Leverage – Interest rate ($10,000 original borrowed) Prime + 0.75%. Monthly Cash flow injection into both the RSP Only and The Accelerated is based on 1/12th of the annual interest payable on the leverage within The Accelerated. In the case of the RSP only portfolio, the Monthly Cash Flow into the individual funds is divided as follows: 15% TD Canadian Bond Fund, 15% Franklin Templeton Global Bond Fund, 50% Mackenzie Saxon Stock Fund, and 20% Franklin Templeton Global Small Companies. All 1 year returns are assumed at straight line returns for both the RSP only and The Accelerated portfolios. Borrowing rate for leverage is based on a Prime +0.75% with the average Prime rate for the 1 year period being used. Rebalancing of the portfolios back to their original weightings is assumed to be done on Dec 31st of each year, and original purchase of investments also done on January 1st of each year. Within The Accelerated, the profit from the Non RSP investment (if any) is reinvested after all applicable taxes (based on Capital Gains) and Grossed up (based on grossed up Marginal tax equivalent deposit to RSP ). A 45% Marginal Tax rate assumption throughout the 10 year period on deposits and withdrawals has been made. This is intended for illustration purposes only, actual results will differ. Refer to your authorized “The Efficient Plan” Financial professional for more details. Integration of The Accelerated increases the risk of investing due to investment leverage exceeding the portfolio.
  • 24. Investment leverage as a stand alone program increases the risk of the investing. The Accelerated program considers this increased risk and attempts to increase the return of the client’s investment portfolio. The overall risk of the investment portfolio is initially increased when integrating an investment leverage strategy however the overall risk of the portfolio is then reduced by integrating a lower risk RSP investment strategy. The Accelerated program increases the risk/return by increasing the amount of investment leverage over and above The Hybrid program. In order to evaluate the risk of The Accelerated program, it is important to consider the risk profile of the RSP and the risk profile of the investment leverage together and not independent of each other. The Accelerated program is a higher risk investment strategy than The Hybrid program. The Risk of this program is increased by the amount of investment leverage and this amount should always be measured in relation to the client’s overall financial situation.
    The RSP Only and The Accelerated comparison is based on the same returns and same cash flow injection for each. The RSP Only portfolio showing is assumed to be invested as follows 15% (Original investment $1,500) TD Canadian Bond Fund, 15% (Original investment $1,500) Franklin Templeton Global Bond Fund, 50% ($5,000 original investment) Mackenzie Saxon Stock Fund, 20% ($2,000 original investment) Franklin Templeton Global Small Companies Fund. The Hybrid portfolio showing is assumed to be invested as follows: RSP Portion – 40% ($4,000 original investment) TD Canadian Bond Fund, 40% ($4,000 original investment) Franklin Templeton Bond Fund, 20% ($2,000 original investment) Franklin Templeton Global Small Companies. Non RSP Portion – 100% ($10,000 original investment) Mackenzie Saxon Stock Fund. Leverage – Interest rate ($10,000 original borrowed) Prime + 0.75%. Monthly Cash flow injection into both the RSP Only and The Accelerated is based on 1/12th of the annual interest payable on the leverage within The Accelerated. In the case of the RSP only portfolio, the Monthly Cash Flow into the individual funds is divided as follows: 15% TD Canadian Bond Fund, 15% Franklin Templeton Global Bond Fund, 50% Mackenzie Saxon Stock Fund, and 20% Franklin Templeton Global Small Companies. All 1 year returns are assumed at straight line returns for both the RSP only and The Accelerated portfolios. Borrowing rate for leverage is based on a Prime +0.75% with the average Prime rate for the 1 year period being used. Rebalancing of the portfolios back to their original weightings is assumed to be done on Dec 31st of each year, and original purchase of investments also done on January 1st of each year. Within The Accelerated, the profit from the Non RSP investment (if any) is reinvested after all applicable taxes (based on Capital Gains) and Grossed up (based on grossed up Marginal tax equivalent deposit to RSP ). A 45% Marginal Tax rate assumption throughout the 10 year period on deposits and withdrawals has been made. This is intended for illustration purposes only, actual results will differ. Refer to your authorized “The Efficient Plan” Financial professional for more details. Integration of The Accelerated increases the risk of investing due to investment leverage exceeding the portfolio.
  • 25. Our process
  • 26. “The Solar”
  • 27. Bank
    Account
    (Savings)
    $
    Leverage
    “The Solar”
  • 28. Solar Panel Program
    • Microfit program – Ontario Power Authority.
    • 29. Roof top and ground mounts
    • 30. Estimated returns 10% +
  • “The Property”
  • 31. Real Estate
    Leverage
    Mortgage
    “The Property”
  • 32. Real Estate
    • Anticipate the future
    • 33. Aging Baby Boomers
    • 34. Rental Market – demand may be growing.
    • 35. Residential Real Estate has 2 components
    • 36. Owner Occupied and Rental – both are affected differently within the economy.
  • Next Steps
    Contact one of our Financial Advisors and begin the process.
  • 37. THANK YOU!!!!!!
    Ingersoll Golf & Country Club
    June 27, 2011