Plan to Maximize Your Wealth or Plan to Fail?

According to a CIBC study Are Canadian Entrepreneurs Ready for Retirement? , $1.2 trillion in business assets will change hands due to retirement within the next five years. Sixty per cent of entrepreneurs aged 55 to 64 have yet to start discussing their exit plans with their family or business partner.

Many business owners think they are just too busy running their business to take the time to put proper plans in place. “I’ll get to it when I get to it,” usually results in lost opportunities. The failure to plan is, in essence, a plan to fail.

However, it’s not all “doom and gloom.” Business owners have a unique opportunity to avail themselves of financial and estate planning strategies that typically are not available to others. According to the same CIBC study, the “average” entrepreneur is expecting to generate roughly 30% of his or her retirement income from the sale of a business, 16% from pensions, and the balance from RRSPs and other investments. The following strategies can help business owners maximize their wealth:

• Realistic Investment Return Expectations and Risk Management Controls
• Individual Pension Plans (IPPs)
• Retirement Compensation Arrangements (RCAs)
• Holding Companies
• Principal Protected Notes
• Specialized Trusts

The genesis of all truly effective comprehensive plans, leading to wealth maximization, is a frank discussion with a trusted competent advisor (or advisory team). A skilled advisor can help you uncover key issues, crystallize a vision for the future, and formulate and execute a plan to realize your vision in a risk, tax, and legally efficient manner. If you want to maximize your wealth, don’t delay. Contact a trusted advisor sooner rather than later. Effective plans take time to create, and it also takes time for strategies to “mature.”

An accountant recently referred a client to me who had just sold his business, and wanted to put his affairs in order since he was about to retire. The client recognized that he had been so busy running his business that he did not dedicate the required time to properly manage his wealth. Unfortunately, it is now impractical to implement some of the strategies that he heard about from his business associates. The result is the loss of hundreds of thousands of dollars in tax savings. Looking at the positive side, on a go-forward basis, the client now has an effective comprehensive plan in place to realize his retirement dreams and estate concerns. The result is peace of mind.

If you have any questions, or would like a copy of the CIBC report mentioned above, please feel free to contact me.

Guido Di Cesare is an Investment Advisor with CIBC Wood Gundy in Hamilton, Ontario. He may be reached at 1 (800) 263-0914 or guido.dicesare@cibc.ca (website: www.guidodicesare.com).

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