Advisor Invest With Confidence
Advisor Invest With Confidence
The Wealth Builder
Clients come to Wendy Farch for her investing expertise but quickly learn about her tax-planning prowess, too.
Date: October 6, 2017
Wendy Farch has made a name for herself by managing portfolios for 150 high-net-worth households, but she also knows that building wealth goes beyond stocks and bonds. That’s why she spends a lot of time working with qualified specialists on tax- and estate-planning strategies. “It’s about managing the entire life cycle for the client, from retirement to death,” says Farch, Vice-President, Portfolio Manager and Investment Advisor at TD Wealth Private Investment Advice in Calgary. “They need tax-efficient income,” she adds.
She’s found that working with tax- and estate-planning specialists, like those at Mackenzie Investments, is an integral part of the wealth planning process and that it can help investors find the right strategies in line with their objectives and risk tolerance.
Farch incorporates tax planning into her work in several ways, including adding tax-efficient mutual funds to her client portfolios. For example, two of her clients, a married couple in their sixties, want to reduce the risk in their portfolio as they near their retirement date. They also need income to help fund their day-to-day lifestyle.
Rather than recommending just any bond fund, Farch put them in Mackenzie’s Corporate Bond Fund, which allows the couple to receive income and keep tax liabilities at the lower marginal tax rate. How? The fund has a tax-efficient systematic withdrawal plan – or T-SWP – feature in which clients can potentially generate income from their investments but not claim it on their tax return. “They are able to defer that income, and it keeps them in a lower tax bracket,” she says.
Farch, who is usually in contact with clients three or four times a year to go over their investments and estate-planning needs, also makes a point of educating her customers on how different products impact a portfolio’s ups and downs. For instance, corporate bonds provide better yields than government bonds, but they are riskier – hence the higher payout. She makes sure clients and, often, their accountants, know how various products impact risk and returns.
Another area Farch focuses on is ensuring her clients have up-to-date wills. Just under half of adult Canadians have one, and those who do often provide generic instructions, like stating that everything should be left to a spouse or divided among children.
The problem with a basic approach, though, is that assets are not always divided equally, she says. For instance, the value of a registered retirement savings plan is not equal to the same amount sitting in a savings account. “Very few people think of all the details,” she says.
Farch makes sure to inform her clients about the many will-related problems that can occur. For instance, offspring often end up paying large capital gains taxes that could have been avoided if certain tax-reducing estate-planning measures had been taken. She also believes that before writing wills, families, especially blended ones, should have frank discussions about how assets will be distributed. It’s important for heirs to understand.
As her clients ultimately find out, there’s a lot more to producing a nest egg than just investment growth. “Most of my clients are not aware of tax- and estate-planning issues,” Farch says. “Sometimes they just don’t want to think about it…but they have to address these things.”
TD Wealth Private Investment Advice is a division of TD Waterhouse Canada Inc., a subsidiary of the Toronto-Dominion Bank. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the fund facts and prospectus, which contain detailed investment information, before investing. Mutual funds are not guaranteed or insured, their values change frequently and past performance may not be repeated.
Advisor Invest WithConfidence
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