Trusted Tips and Resources

Trusted Tips & Resources

Trusted Regina Financial Management Consultant John Barabe Discusses Inflation and Investments

John Barabe is a Trusted Regina Financial Management Consultant and he has an unwavering commitment to quality and service which has enabled him to build and retain a successful practice in Regina. He and his team of Regina financial professionals and support staff believe that planning with honesty and integrity are cornerstones to improving their clients' quality of life. He applies his knowledge to help clients make the right choices when considering all the product and service options that exist in today's marketplace. In his latest Trusted Regina financial expert article, he shares information on investment strategies and how to keep up with the pace of inflation. 

Do your Investments Keep Up with The Pace Of Inflation?

If you need $1000 per month for expenses and you have $1,000,000 in deposit accounts (for example a guaranteed investment certificate, term deposit, or savings account) earning 1.2% you are set, right? Well, if inflation is 2% the expenses will increase from $12,000 to $14,628 in 10 years and to $17,831 in 20 years. Your investment falls short of the income you need so you end up spending your original capital to make up the shortfall. 

What you need is a return that will allow you to draw an income that keeps up with the cost of living.  

Let’s simplify further with an example of the poor current deposit account returns:

In 1991 $150,000 invested in one year GIC’s earned enough to purchase a new Ford.

In 2011 $150,000 invested in 1 year GIC’s earned enough to purchase the same 1991 Ford.

Despite record low interest rates, you still need an income from your investments. If your investment return is coming from a guaranteed deposit account currently, you may not even be keeping up with inflation.  

What if there were a way to get a better return, a reasonable return, and still remain low risk? 

Unfortunately many people that need income for retirement or even just an investment return that is reasonable are not getting this direction.  I will provide you with access to unique methods to reduce risk, while allowing you the returns you deserve with the objective of maximizing your returns. I want to assure you there are investment strategies that can outpace inflation and provide you with reasonable retirement income. 

I thank you for reading this article and would like to offer you a value-added service for your time. I will make myself available to act as a sounding board. Please understand, you do not need to become a client to take advantage of this service. The reason I do this is because I became a financial advisor to help people make informed choices with their financial future. It’s very gratifying. One of two things typically occurs when going through this process; either I validate for you that your current approach is fundamentally solid, or I reveal a few minor flaws that you might want to consider adjusting.  As you know, minor adjustments can often lead to major improvements down the road. Either way, I will make myself available and ensure that this is a great investment of your time.

John Barabe, Madison Schenher and team.

John Barabe  is a Trusted Regina Financial Management Consultant

Trusted Regina financial professionals tip on marriage finances

 Trusted Regina’s Financial experts tip on 50/50 finance in a marriage:

Can 50/50 finances work in a marriage?
















Bills can be a headache at the best of times. Figuring out who pays for what in a relationship can be complicated enough to trigger a migraine.

Should you split bills evenly in your marriage or partnership? What if one person makes substantially more? Should it be based on a percentage of income instead?

A 50/50 split is one way to go, but it seems fraught with problems.

“Fifty/fifty isn’t usually sustainable as incomes differ, and over a lifetime one partner usually takes time off to raise children, care for elderly relatives, or may be on sick leave for a period,”. “Fifty/fifty is a roommate, not a marriage.”

Fee-only financial planner Marie Engen of Boomer & Echo agrees that splitting expenses down the middle has the potential for unhappily-ever-after.

“This may work if both salaries are somewhat equal, but if there’s a considerable difference the lower-income partner is eventually going to resent it,” Engen says.

Ron Graham, president of fee-only financial-planning firm Ron Graham and Associates Ltd., has seen the ways a 50/50 split can work out for the worst.

“I have some clients with vastly different incomes who keep their finances separate,” Graham says. “They discuss and agree to which expenses they will pay jointly and each put an equal amount into the pot to pay those joint expenses. The balance of their incomes is then available to be spent according to each partner’s wishes. This is where sometimes conflicts arise. One person has money to go on vacation, and the other cannot afford it. I have seen some couples take separate vacations as a result. Sometimes these relationships do not last.”



A better plan

So what are alternatives? Some couples decide on another breakdown, say 60/40. Some have an informal agreement where one covers the mortgage and the car, and the other takes care of things like food and kids’ clothing. Others have the higher-paid partner pay the bills while the lower income-earner’s wages go straight to investments.

Pooling resources appears to be the most effective means to a marriage not marred by money woes.

“I have seen most harmony from a joint account all income goes into,” Waite says. “From this, pay fixed expenses … Figure out what you afford as an allowance for each person and open individual bank accounts. That way, the lower-income earner isn’t overstretched paying a high percentage of income towards fixed costs, and you each have some personal money you can spend without feeling guilty.

“Save for joint goals out of the joint income so no one feels the mountain is insurmountable alone,” she adds.

Graham says that putting money into a joint account, with each person having an equal amount of spending money, works well, especially when there’s a large discrepancy in incomes.

“If you go into a relationship thinking that your money belongs to you, this can lead to conflict and potentially separation,” he says. “My suggestion for newlyweds is to pool their resources to pay for the family expenses, put aside savings for future goals, and pay five to 10 per cent of the total to each partner to spend as they wish.

“This way, each partner gets to spend the same amount on what they want,” he says. “The family expenses are covered, and they are putting aside funds for future goals like buying a house, new vehicle, kids’ education retirement, et cetera.”

Engen is onboard with the idea of shared money too.

“I believe that in a committed relationship, income should be pooled,” she says. “Couples should determine together what is required and budget for regular expenses and short- to medium-term savings for large purchases and Registered Education Savings Plan (RESPs). Longer term Registered Retirement Savings Plans (RRSP) investments would depend on variables such as the availability and type of company pension plans. Each partner should have an amount for their own discretionary spending, no questions asked.”



Often one person has more of an interest in financial matters than the other, Engen notes, from paying bills to investing. “The other partner should be involved in discussing goals and strategies and at least have basic knowledge of assets owned,” she says.

To avoid future disagreements, Waite suggests handling joint expenses systematically.

“It’s really important to write down what you agree [to],” Waite says. “Email it to each other, use a spreadsheet saved in a joint Dropbox or OneDrive, or write it in a notebook so there are no arguments later.

“Set up automatic transfers,” she adds. “Use phone apps and tools like Mint and FreshBooks …to track progress.”



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Trusted Regina Financial experts tip on Client Defections

 Trusted Regina’s Financial experts share a tip on client defections: 

Client defections to speed up!

“There are a lot of advisors who don’t keep up with their clients and wait for them to call instead of being proactive and keeping up regularly,” she said. “If my client mentions something about taking a trip at a specific time, I’ll often call them just to find out how it went. It lets them know I care, that I’m thinking about them and it’s led to more referrals while keeping my attrition rates low.”



A survey of client attrition rates for 2014 may, in fact, represent a turning point for the industry as it prepares for fallout from regulatory change.

Currently, Canada’s top financial advisors have a one per cent attrition rate while the average for Canadian advisors as a whole is closer to 10 per cent, according to Maximizer Services Inc., based in Vancouver B.C.

But CRM2 is expected to change that, with many transactional advisors anticipating client defections will double post CRM2’s full implementation.

“There will be a lot of unhappy clients out there once they realized the truth about their accounts and how much fees they’re paying to some of these advisors,”  “I think that we’ll see the attrition rate get much higher when CRM2 finally kicks in.”

Top advisors and their commitment to using advanced technology as well as those who previously anticipated CRM changes and engaged clients in difficult conversations are most likely to maintain low attrition rates.

The study also found that 69 per cent of advisors had an attrition rate of five per cent or less if they were previously using a strong customer relations management system.

Using DayLite or Symantec has helped to build her business because she is able to keep up with clients regularly. The Important thing, she says, is to be proactive for their needs, and not reactive to their demands.



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Trusted Regina Financial Experts tip on breaking up with your Financial Advisor - Part 2

Trusted Regina’s Financial experts share a tip on how to break up with your Financial Advisor - PART 2:

If you are looking for compensation, consider contacting the Ombudsman for Banking Services and Investments, a dispute-resolution service for banking services and investment clients. OBSI receives about 8,000 complaints a year and launches 600 to 800 investigations. They will try to facilitate a settlement and if one cannot be reached, they will write a report and make a non-binding recommendation. They can recommend restitution of up to $350,000.

Suitability is the biggest complaint (the next most common complaint is that fees are not properly disclosed), says Tyler Fleming, OBSI’s director of communications.

“Advisors and their firms have an obligation to make sure that the investments that they recommend are consistent with the client’s investment objectives, risk tolerance, financial circumstances,” he says.

“Lets say there’s a young couple who is looking to buy a house in six months and they need their savings in a safe, low-risk product. Their investment advisor puts them in something that is high risk and they lose the money that was meant for their down payment, that might be an instance where we would find it was unsuitable.”

You can take efforts to minimize conflict, he says. Take notes at meetings. Get everything in writing. Keep copies of your documents. Ask questions if you do not understand. Review your account statements. Bring someone with you who understands. Have a regular dialogue with your advisor about your changing goals — this may affect your investment plan.

“Trust your gut. When you have a feeling that something is wrong, don’t be afraid to raise that with your advisor,” Mr. Fleming says.

If things are not working out, you can either just walk away and let your new advisor deal with the transition or send a Dear John letter:

“Thank you for your help in the past. I will be going in another direction. I will no longer be needing your services. I wish you well in your future,” Ms. Waite says. “This is a good lesson in life. This is not personal,” Ms. Waite says. “Send a nice ‘thank you’ note and move on.”

Be aware that you do not have to sell your investments when you fire your advisor. If the advisor has used widely available funds such as Fidelity or Trimark funds, you can move them “in kind” to another advisor, Ms. Waite says. You may get charged an administration fee.

However, some fund companies such as Primerica and Investors Group sell their own products and an advisor at a different company may not work with them; you can opt to find another advisor within the company.

If you want to leave the fund company, make sure you contact the firm to ask what fees you may pay if you sell your funds; a typical deferred sales charge (a back-end fee that is charged to a mutual fund investor if they redeem their investment prior to a set amount of time) starts at 6% of your initial investment in year one, declining to 0% by year seven.

You can also leave your account as is and move the money when the DSC expires or gets lower; each year, you can take out 10% of the original amount invested without being charged a DSC. Take note, your next mutual funds representative may want you to transfer your funds because she gets a commission, Ms. Waite adds.

“There are often more options than people think there are. Don’t just panic and cash out.”


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Trusted Regina Financial Experts tip on breaking up with your Financial Advisor - Part 1

 Trusted Regina’s Financial experts tip on how to break up with your Financial Advisor - PART 1:

Barry Choi was walking through an underground path in downtown Toronto one winter when he ran into his former financial advisor. 

“Hey, how are you doing?” Mr. Choi said to him. Their relationship had not worked out; but Mr. Choi wanted to be civil, and at first, it was. 

Then his former advisor said, “Just so you know, you ruined my life.” 

“I don’t know what you’re talking about,” Mr. Choi protested. 

“You ruined me,” he continued. “You have to live with it. I hope you go to sleep and you think about me…I hope you die.” 

Breaking up with your financial advisor can be an emotional and stressful event — almost as traumatic as a romantic break-up. The reasons are also somewhat similar: “I’ve found someone else (another advisor). I’ve changed and my needs are different (I’m done with mutual funds). I want to go out there on my own and explore my options (I’m signing up with a discount brokerage).” 

Your relationship with your advisor is highly charged because it is based on that all-important thing: your life savings. But getting out of the relationship needn’t involve any shouting or tears. 

“Initially in the relationship, you put a lot of faith in this person, when it doesn’t work out, trying to communicate with someone that you’ve lost that faith or that it didn’t work out is quite a personal thing,” says Kathy Waite, a fee-only advisor who serves clients in and around Saskatchewan. 

So what happened between Mr. Choi and his financial advisor to merit the vitriol? 

The advisor approached Mr. Choi, a 32-year-old director at a Toronto news station, about six years ago. At the time, they were work colleagues. 

“I figured, ‘Oh, this guy is going to be looking out for me.’ He was a friend to begin with. With the banks, they never follow up with you but with this guy, he was more active.” 

They went over his goals. They talked about his short-term plans of getting engaged and putting a down payment on a home. They did not discuss in detail fees. 

About a year or two later, Mr. Choi was chatting on a discussion board when someone suggested he look into the fees associated with his mutual funds. 

“I called the firm directly and said, ‘What am I paying as far as fees are and if I need to pull this money out, am I being charged for it?’” he says. 

They explained his management expense ratio and his deferred sales charges. “They said, ‘If you want to withdraw, you’ll be paying five to six percent.’” 

“It was a huge hit. I was in total shock.”  

He reached out to his advisor for an explanation and received little response. He then spoke to the advisor’s supervisor. “In the original paperwork, the advisor actually wrote that in the short-term I’d be looking for a home. When I presented that to the manager, he said, ‘If you said ‘short-term,’ why would he put you in any funds with a back-loaded fee?’” 

Mr. Choi transferred his funds out of the company and the company decided to waive the fees. The advisor was eventually let go from the firm. 

“It’s an industry that works very much on referrals. That’s how advisors get their clients, [they’re] friends of friends,” Ms. Waite says. “I’ve had clients who are not happy but [their advisor is] a friend of [their] son’s. That has been a real problem. How do you have a dispute with someone who is an acquaintance or a friend?” 

Even if your advisor isn’t a personal friend, money is a sensitive issue. And money issues can seem complex to the average person. If clients go in unprepared and try to discuss their concerns, they may get blasted with “a load of jargon and leave defeated and belittled,” Ms. Waite says.

“Have some confidence and know your facts. You have rights. No one cares about your money more than you do. You don’t have to apologize for not being happy.” 

That being said, there is a good way and a bad way to approach your advisor with concerns. No one is recommending you recreate the court scene from A Few Good Men (“I want the truth!” “You can’t handle the truth!”). 

“I’d go in and try and have a dialogue. Let’s treat each other with respect,” Ms. Waite says. 

“Unfortunately, what I hear is, the majority of times, the advisors go on the defensive. They’re used to telling people what to do. If you turn around and question that, don’t be surprised if they’re not comfortable with what you’re saying.” 

If the talk doesn’t work out, put it in writing. Pen a polite letter — state the issues, your evidence and a deadline for a response — and stick it in the mail. “[Also say,] ‘I’m willing to work with you to find an amicable resolution but I will escalate it.’ You have to be willing to say who you will escalate it to,” she adds. 

Escalate the issue in writing with the firm; they have 90 days to respond to a complaint with its final decision, according to Investment Industry Regulatory Organization of Canada (IIROC). If you are not satisfied with the way the firm handled your case, you can contact a regulatory agency or seek arbitration or legal recourse (which could be costly). 

To report a suspected regulatory violation, you can reach out to IIROC or the Mutual Funds Dealers Association; they investigate complaints and dole out disciplinary action, including fines and suspensions. 


Stay tuned for Part 2!!!



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