It is time for you to start looking for the right advisor for you. Almost every week I hear about peoples’ frustrations with the way they are being treated at their banks. Their issues range from the constant phone calls trying to sell them another credit card or line of credit, to tellers pushing the flavour of the month on them. Or worse yet, finding out they have just been passed over to another new personal banking representative or junior advisor who has no knowledge of their situation or needs.
A recent visit with some retired farmers was an eye opener for me. They had been dealing with a bank brokerage for many years, but hadn’t once been asked if they knew what the potential tax liability would be to their estate, if both were killed in a common disaster. A quick calculation showed their final estate would be liable for a tax bill of well over $500,000 between capital gains, income from cashing in their RRIFs, stock portfolios, sale of a lake cottage, etc. while had never been discussed!
This is something very basic that should always be reviewed when someone has significant investments or property. Other questions that need asking are; how current are their wills? Do they have powers of attorney on each other? Do they both have personal directives?
These same people had very significant investments. I asked them what they thought about the very low rate of return they had earned on their investments, and about the large amount sitting in cash earning nothing. Their reply was, “We guess we need more than this invested with the bank for someone to be interested enough to take the time to review it with us on a regular basis.”
Banks push their life, disability and critical illness coverage when people apply for mortgages, lines of credit, car loans, etc. asking a couple of long winded questions that most people answer no to. The premiums are deducted every month from their bank account and they assume they are covered. The bank neglects to point out that they own the coverage, not the client, and the underwriting isn’t done until there is a claim. Let’s just hope at that time their bank don’t find some undisclosed medical or other issue, because if they do, the coverage is likely void. This isn’t a good situation for a surviving spouse who has $300,000 owing on the mortgage, lines of credit or other loans. Plus, even if there is a death and the coverage is honored, only the loan balance owed to the bank is paid off, and the surviving spouse is left without coverage.
Mortgage transfers are another example. In the past, if you wanted to move to a different lender; your bank usually only charged three month’s interest penalty. But as some people have recently found, it’s done differently today. One client was recently told that he would have to pay the “Interest Differential” – bank speak for a $43,000 penalty! This was never pointed out when he signed the mortgage documents, but it was hidden in a short paragraph amongst many others that he initialed at the time.
Consumers today have more options than ever when seeking financial advice, and technology has made it easier to obtain. Virtual banks, private advisors, robo advisors, etc. make information about products and options readily available at our fingertips. Rather than trying to make sense of all the misinformation on the web, seek out an experienced advisor who will take the time to listen to your individual situation and tailor advice and a plan specifically for you and your family’s needs.
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