Frequently Asked Questions

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Who are you?

Planswell is a team of smart people working together to change the financial industry for the better. We started by building software that uses proven principles of financial planning principles to calculate how to maintain the best possible standard of living throughout your life. Thousands of Canadians have created plans with us, and we’re focused on reaching as many people as possible.

Why are you doing this?

Until now, financial planning has been only for the wealthy. The financial industry has thrived on high fees, high interest rates, low transparency, and excluding most people from getting good advice. Planswell is here to change all that. We’re the first company to build excellent financial plans for everyone, and to make implementing a plan as affordable as possible. It’s a big mission, and we hope you’ll join us.

What are your qualifications?

Our team members have a wide variety of financial credentials and backgrounds including CFA, CA, CPA, PFP, CFP, CIM, LLQP and degrees in economics, mathematics, computer science, finance, law and business from universities like University of Toronto, Western, Waterloo and Harvard. Many of us also have experience in traditional financial institutions such as CIBC Wood Gundy, London Life, RBC Dominion Securities, TD Wealth and Investors Group, so we really understand what’s broken and how to fix it.

Are you a robo-advisor?

No, we’re a financial planning company. Sure, we enable you to invest online like a robo-advisor through our relationship with Planswell Portfolios (see About Investing for details), but that’s where the similarities end. The lifelong planning and guidance that we provide, along with the integration of investments, insurance and borrowing, allows you to realize infinitely more value.

Are you secretly owned by a big company?

No, we’re independent and plan to remain this way. We do obtain many of the financial products that we recommend for your plan from big companies, but that’s part of the magic. Instead of those companies dictating the terms of your financial life, we make them work for you. If we don’t like what we’re getting from one place, we’ll go somewhere else to find you a better deal.

Where are you located?

Planswell HQ is at 100 Lombard Street in downtown Toronto (see map). We serve clients all across Canada.

What if I need to talk to someone?

You may have questions about your plan. You may need to make changes, or you may simply need to bounce something off a financial professional. We have PlanPros ready to talk to you by phone or email seven days a week. You’re also welcome to visit us at our office.

What happens if you go out of business?

In the unlikely event of our demise, all of your money will remain safe. If you have investments with Planswell Portfolios, they will continue to be held by BBS Securities Inc., whose job is to independently safeguard your funds. Your insurance policies will continue with the insurance companies that issued them. Your mortgage will continue with the lender that provided it to you.

What is a financial plan?

Great question! At Planswell, a financial plan shows you the absolute best thing to do with your money every month so you can enjoy the highest possible standard of living for the rest of your life.

Is this about budgeting?

Not exactly. We won’t tell you to spend less on the things you enjoy. You can save as much or as little as you wish, and we’re like a crystal ball that shows you exactly what that means in terms of when you can retire and how much income you can expect in retirement. We hope you’ll take advantage of this rare insight to make the financial decisions that will make you happiest.

How do I know my plan is right for me?

Your plan is fully customized based on the inputs you provided. The investment amounts and account types are designed to maximize your after-tax results. The insurance recommendations are tailored to cover your debts and replace your income. Any mortgage recommendation is calculated to meet your borrowing needs at the lowest possible cost.

How often do I update my plan?

We recommend updating your plan every six months to make sure it’s still consistent with you and your goals. However, you may want to update it more often if there’s something new going on, such as a change in your work, finances or family. Updating can be done from online and only takes a few minutes.

How can I see the calculations within my plan?

If you want further insight into how we developed your plan, check out this document. It explains the financial philosophies, facts and estimates that go into our recommendations.

What if I already have benefits at work?

Great! You should take full advantage of your benefits, and we can account for them in your financial plan. If it looks like you need to supplement your workplace pension, add some more insurance protection, or streamline your borrowing costs, we’ll help you make everything work together.

Who’s managing my money?

Planswell Portfolios is an operating name of Higgins Investment Group Inc., a registered portfolio manager in the provinces of B.C., Alberta and Ontario. Chief Investment Officer, Gordon Higgins, holds CA and CFA designations, as well as an MBA from the Schulich School of Business at York University. Over the past 30 years, he has managed investments for major mutual fund and insurance companies. Planswell Holdings is a separate company that builds free financial plans for Canadians and is not registered to provide securities advice. That’s why we refer folks who make plans with us over to Planswell Portfolios to have their investment portfolio designed and implemented. Please note that all of the following information about investing refers to products and services offered by Higgins Investment Group Inc. operating as Planswell Portfolios, and not by Planswell Holdings Inc.

What is an Exchange-Traded Fund (ETF)?

An ETF is a security that tracks many other securities, similar to a mutual fund. However, it trades on an exchange like a stock. The goal of an ETF is to replicate the performance of an entire stock or bond index at low cost.

Why does Planswell Portfolios use ETFs?

Two reasons. First, they give you access to thousands of stocks and bonds around the world. Over the past couple of decades, investing in a broad selection of investments has proven to be more effective than trying to pick only the “winners.” Secondly, ETFs bring the cost of investing way down. Every dollar you save in fees is a dollar that can stay invested and grow into many more dollars for you.

How do ETFs differ from mutual funds?

ETFs and mutual funds hold similar investments, but the fees are vastly different. The value of your mutual fund account is quoted after fees, which makes them difficult to see. But considering the fees are well over 2% per year on average, they make a huge impact. Some estimates say the average mutual fund investor loses $250,000 of their retirement savings to fees. Planswell Portfolios uses ETFs with an average fee of just 0.17% per year, and the savings stay in your pocket.

How much does Planswell Portfolios charge?

The fee you pay depends on the size of your account. In addition to the fees below, the ETFs in your account have management fees that average about 0.20%. There are no fees for deposits, withdrawals, trading or rebalancing your account. The management fees listed below include GST/HST.

First $5,000 Up to $99,999 $100,000 or more Free for one year 0.50% 0.40%

What types of accounts does Planswell Portfolios offer?

You can invest in a regular individual or joint account, as well as accounts with special tax features, such as a Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA), Registered Education Savings Plan (RESP), Locked-In Retirement Account (LIRA), and Registered Retirement Income Fund (RRIF).

What is an RRSP?

RRSP is short for Registered Retirement Savings Plan. The idea with this type of investment account is to avoid paying tax on some of your income today and instead pay it after you retire. There are two advantages to this. One, it is likely that you will be in a lower tax bracket when you retire. And two, being able to invest more of your money now will lead to a bigger nest egg when it comes time to spend it. Here’s a simplified example: If you made $10,000 and paid income tax at the highest marginal rate of about 50%, you’d have $5,000 left to invest. If you earned 6% annually over the next 20 years, you’d end up with about $16,000. Next, you’d have to pay tax on the gains you made. If you were in a retirement tax bracket of, say, 30%, the taxes on your $11,000 profit would be roughly $3,300, leaving you with $12,700 after all is said and done. Now, if you put that $10,000 in your RRSP instead, you’d pay no income tax on it. You could invest the whole $10,000 at 6% annually for 20 years, and end up with $32,000. This time, you’d have to pay tax on the full amount, not just the profit. But at a retirement tax rate of 30%, you’d still be left with $22,400, or nearly twice as much money. One of the limitations of an RRSP is that you are only given contribution room of 18% of your income each year with a cap of roughly $25,000 per year (this figure usually increases a bit each year). The good news is you can carry forward unused contribution room from previous years. Check the Notice of Assessment from your most recent tax return to see how much total contribution room you have available. You can take money out of your RRSP at any time, but there will be withholding tax just like a paycheque. The exception is when you take money out of your RRSP to buy your first home or to return to school as a mature student. There are programs that allow you to “borrow” from your RRSP for these purposes without paying tax, as long as you pay it back into your RRSP within 15 years for home purchases or 10 years for school.

What is a spousal RRSP?

A Spousal RRSP is a lot like a regular RRSP, except one spouse is allowed to make some or all of their annual RRSP contribution to an account in the name of the other spouse. This comes in handy when there is a large income disparity between the two. Now, the higher-earner gets the full, immediate tax relief when a contribution is made, but the lower-earning spouse gets the tax liability down the road when the money is withdrawn. The goal is to achieve a lower tax rate and smaller overall tax bill for the couple when they retire. Two things to keep in mind. Whether you just have your own RRSP or your own RRSP plus a Spousal RRSP, your annual new contribution room is still limited to 18% of your income up to a fixed cap, and any unused room from one year can be carried forward indefinitely. Also, in order to discourage cheating, the government will attribute the taxes back to the contributor on any amounts that stay in a Spousal RRSP for less than three years

What is a TFSA?

TFSA is short for Tax-Free Saving Account. The name is slightly misleading, because a TFSA is really investment account that can hold all the same types of investments as an RRSP. The advantage with a TFSA is you can earn investment gains in your account and never pay tax on them. For example, if you invested $5,000 and it grew to $10,000, you could walk away with the whole $10,000. No taxes, no catches. Similar to an RRSP, there is a limited amount of contribution room. For 2017, the amount is $5,500. Also similar to an RRSP is the fact that you can carry unused room forward. If you’ve never contributed to a TFSA before, you should have more than $50,000 of contribution room available based on the annual limits set since they were introduced in 2009. A neat feature of TFSAs is that you get your contribution back when you make a withdrawal. Take $5,000 out this year, and you’ll have an extra $5,000 of contribution room available for next year.

What is an RESP?

RESP is short for Registered Education Savings Plan. This type of investment account is used to help a child pay for college or university. The first benefit is the ability to invest in the plan without paying tax on investment gains until withdrawals are made for school. At that time, only the profits are taxable, and only in the name of the child, who will almost certainly be in a very low tax bracket. The second benefit is really remarkable: the Canadian Education Savings Grant (CESG) matches 20% of your RESP contributions. That’s like a guaranteed 20% return on investment. The maximum grant is $500 per year up to a lifetime maximum of $7,200 per child. An RESP can remain open for 36 years. If your child still hasn’t made it to university by then, all is not lost. You can generally transfer the account to another child, or to your RRSP (minus the government grants). Be wary of companies that offer Group RESPs. This is an outdated financial product that thousands of Canadians still purchase every year, probably unaware that there are unnecessarily high fees, low investment returns, and strict rules that can cause you to lose all of your investment gains and government grants.

What’s a taxable or non-registered account?

A regular, run-on-the-mill investment account with no special tax features is often referred to as a non-registered account. This is the type of account you’ll generally invest in after you’ve used up your RRSP and TFSA contribution limits. You don’t get to deduct your contributions from your taxes or earn tax-free investment returns with this type of account, but that doesn’t stop you from doing some tax planning. This mostly comes down to which types of investments you choose to hold in the account. Interest income is taxed at your full marginal rate, just like your salary. This makes bonds, GICs, and other interest-bearing investments the least desirable choice for your taxable account. Dividends from Canadian corporations are taxed at a lower rate than interest income. This makes Canadian dividend-paying shares or ETFs a little more attractive for this type of account. Capital gains are only 50% taxable. For example, if you invest $5,000 and it grows to $10,000, you’ll only pay tax on $2,500, or half your gain. This makes common shares or growth-oriented ETFs the most attractive investment for this type of account, at least from a tax point of view.

What is a LIRA?

LIRA is short for Locked-In Retirement Account. This is a close cousin of the RRSP, except with some additional restrictions. A LIRA is created when you leave a job and transfer money out of a company pension plan, Once it’s in your LIRA, you can manage the money yourself and invest it as you wish, just like an RRSP. The catch is that you can’t put more money in, and it’s difficult to take any money out of a LIRA before retirement. With an RRSP, you can access your money at any time as long as you pay tax on the withdrawal. You can also make tax-free withdrawals with some conditions to pay for school or a first home. Not so with a Lira. About the only way to access the money before retirement is by proving financial hardship based on standards that vary by province.

What is a RRIF or LRIF?

RRIF is short for Registered Retirement Income Fund. LRIF stands for Locked-in Retirement Income Fund. They are both variations on the same theme: these are the accounts that an RRSP or LIRA must be turned into by the time you turn 71. You use them for taking money out rather than putting money in. The government requires you to withdraw a certain minimum amount every year. If you take only the minimum amount, the money should last for the rest of your life (at least based on their actuarial tables). You are free to withdraw as much as you like, but be aware that every dollar is taxable. Therefore, it takes some tax planning to make sure that your sources of retirement income add up to enough money to meet your expenses without going over and putting you in a higher tax bracket.

How does Planswell Portfolios perform?

Planswell Portfolios’ philosophy is to capture the returns of the market. Therefore, you should expect your portfolio to reflect the average performance of various stock and bond markets, minus the fees you pay. Mutual fund managers and stockbrokers might imply that they can offer better performance, but the data shows this is almost never true. One thing for sure is that they will charge you much higher fees.

How much should I invest?

There is no minimum or maximum investment. Generally speaking, you can build the most wealth and smooth out the bumps in the market best by investing a fixed amount every month. Your plan tells you exactly how much to invest each month to reach your goals and Planswell Portfolios makes it easy to do so automatically.

How do I transfer my other investments to Planswell Portfolios?

In most cases, all it takes is your digital signature on a standard transfer document. The Client Success team will walk you through the process quickly. If your bank wants to charge you a fee for transferring, they can even arrange to pay it for you up to certain limits.

How does Planswell Portfolios keep my information secure?

The company’s data security is as good or better than your bank. That means technical things like data encryption and data logging as well as physical things like keeping confidential paperwork safely under lock and key.

Where is my money kept?

When you invest with Planswell Portfolios, your cash and securities are held by a Canadian custodian called BBS Securities Inc. The custodian’s job is to safeguard the assets for you, and to buy and sell ETFs for you when they are instructed to do so. This structure is designed to protect you, and is used by virtually every investment dealer in the country.

Is my account protected?

Yes, there are two levels of protection. Planswell Portfolios is not a member of the Canadian Investor Protection Fund (CIPF), but the custodian of your assets, BBS Securities Inc., is a member. Customers’ accounts are protected by the CIPF within specified limits. A brochure describing the nature and limits of coverage is available upon request or at www.cipf.ca. In addition, BBS Securities carries insurance coverage of $10 million per account underwritten by Lloyd’s of London.

Why do I need insurance?

Around 50% of the time, saving money on a monthly basis and investing in a portfolio of stocks and bonds is enough to reach retirement in good shape. But the other 50% of the time, something will happen along the way, such as an accident, illness or even death. The role of insurance is to make sure that if one of these things happens to you or a family member, it won’t ruin your financial plan. You or your surviving loved ones will still have the money needed to sustain a consistent lifestyle.

What is Term Life insurance?

Term Life insurance pays a single tax-free lump sum benefit when the insured person passes away. Generally, we recommend enough Term Life insurance to pay off any debts that might be left behind, and to replace enough income so that the surviving family members can keep their home and maintain their standard of living.

What is Critical Illness insurance?

Critical Illness insurance pays a single tax-free lump sum benefit when the insured person is diagnosed with a serious illness, such as cancer, heart disease or stroke. Most policies cover about 20 more common illnesses. Generally, we recommend enough Critical Illness insurance to pay both your usual expenses plus any extra medical expenses for a whole year while you recover.

What is Disability insurance?

Disability insurance pays a tax-free monthly benefit equal to 65% of your salary until you are able to work again or until age 65, whichever comes first. This amount is designed to give you comparable take-home pay to when you were working. It is estimated that about one person in three will be at least temporarily disabled due to an illness, accident or injury at some point in their lives. This could be from something that happens on the job or something in your private life, such as a car accident, a back injury, or a medical disease.

How do I apply for insurance?

We’ll guide you through the application process. You’ll need to answer a few questions from us and also schedule a time with a nurse at your home or place of work to answer some additional questions and have a health check-up. You only have to deal with us, and we’ll find the best insurance company for your needs and deal with them for you.

Who provides my insurance policy?

We will shop the insurance market to find the best value for you based on your insurance recommendation, age, health and other factors. Your policy will be underwritten by a major Canadian insurance company, typically with a history of more than 100 years of paying their claims.

Why are you recommending a new mortgage?

If your plan includes a new mortgage, it’s because we can save you money. This could be because we can find a lower rate than your current mortgage (including any early termination fees) and/or because we can use the new mortgage to eliminate other debts you have. The goal is always to reduce your overall interest costs and putting more money towards building and protecting your wealth.

How does refinancing work?

A mortgage generally has the lowest interest rate you can get. So if you have other types of debt with higher interest rates, such as a credit card, line of credit or car loan, it might make sense to get a new mortgage for an amount big enough to pay off all of your debts. In many cases, the monthly payment on your new mortgage will be a lot lower than the payment on your old mortgage plus everything else you’ve been paying. The money you save each month can make a huge positive difference in your financial plan.

What are the advantages of a variable rate?

Over the past 50 years, variable rate mortgages have been 1% cheaper than fixed rate mortgages on average. It may not sound like a lot, but that difference could add up to hundreds of thousands of dollars over the life of your mortgage. When you choose a fixed rate mortgage, you are essentially betting that you can outsmart the bank, which almost never works out.

Who provides my mortgage?

We will shop the market to find the lowest interest for which you will qualify based on your location, choice of home, income history and other factors. Depending on where we find the best value for you, your mortgage could be funded by one of the major banks or by an established non-bank lender.

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