The Wealthy Barber Podcast - #27 — Jason Heath: Financial Planning 101

Episode Date: October 7, 2025

Our guest this episode is Jason Heath—Managing Director at Objective Financial Partners and one of Canada’s most respected fee-only/advice-only financial planners. In this episode, Dave and Jason cover the foundations of financial planning in Canada, tackling hot-button topics like RRSPs vs. TFSAs, reverse mortgages, annuities, CPP/OAS timing, insurance planning, estate-planning pitfalls and more. They also discuss how to prioritize financial goals, avoid common mistakes and build a plan that actually works in the real world. Whether you’re planning for retirement, building your financial future or just want a clearer understanding of how all the pieces fit together, this episode is a masterclass in financial planning.   Show Notes (00:00) Intro & Disclaimer (00:55) Intro to Jason Heath (03:00) The Rising Cost of Living in Canada (05:00) The Pros and Cons of Getting Financial Information from Finfluencers (10:06) Investing vs. Financial Planning (12:47) Objective Financial Partner’s Clients and Services (15:10) Estate Planning (18:41) Reverse Mortgages Get a Bad Rap (21:04) Use Cases for Annuities (24:24) People Don’t Want to Listen to the Experts and Defer CPP and OAS (25:31) TFSAs vs. RRSPs (27:54) Decumulation Planning for Retirees (33:01) Disability Insurance (35:29) Life Insurance (40:04) Gifting Money to Kids (41:52) Estate Planning Mistakes (44:24) The Importance of Prioritization in Financial Planning (49:34) Financial Education and Finding Balance

Hey, it's Dave Chilton, The Wealthy Barber and former Dragon on Dragon's Dent. Welcome to the Wealthy Barber podcast. Well, we'll be hosting some of the top minds in the world of personal finance. Yes, that's to balance me out. The podcast is about making this subject not just easy to understand, but dare I say, even fun, honest. Whether you're trying to fund your retirement, figure out how to build a down payment, save for your kids' education, manage debts, whatever. we'll be here to help you do it. Before we jump in, a quick but important note,

nothing we discuss here should be taken as investment advice. We don't know you and your personal financial situation, so we're not here to tell you we're specifically to put your investment dollars. We're here to educate, get you thinking, and we hold entertained. But please do your own research and or consult with your financial advisor before taking any action. Hey, everybody, it's Dave Chilton, the Wealthy Barber, here with the Wealthy Barber podcast. Thank you so much for tuning in. Amazing how the listenership keeps growing and growing. And one of the more popular podcasts in the country now, we're delighted to say.

And today will not disappoint. We have an outstanding guest on. We've tried to get him on in the past. It's Jason Heath. Jason entered the business in the early 2000s. He's a fee-only financial planner, outstanding communicator. You've probably seen him before. His writings appear in the National Post, Canadian MoneySafeer, Money Sense magazine.

He's interviewed a lot, wide-ranging knowledge. I really enjoy his material. In fact, we've never met. We really haven't. But I've followed him for years. I followed his thinking, it's very similar to mine, which is why I like him. This is the depth of my analysis. If someone thinks like I do, I think they're solid people and I bring them on.

This is how it works. No, he's a great guy, but I was laughing with Jason before. He set up his firm, it's objective financial partners. He's the managing director. And again, does a lot of interviews. But because he does so many, he's the most quoted source on chat GPT. Is that official? It is.

Like when you go on chat GPT and ask a financial question in Canada, he often comes up. So I said to him, I mean, he better know what he's doing because millions could go down with the ship, but this guy is not good. But he's very, very solid. Dave, I'll tell you what, every once in a while I'll be preparing for a meeting or I'll be dealing with a concept. And I'll do a quick Google search. Sometimes you want to sort of validate your sources and make sure you still know what

you're talking about. I can't tell you how many times I've Googled stuff. and the first result is an article I've written. And I think, at one point, I knew the answer to that question. So I've had that same experience myself. No, you've done a very good job in that front. And really, you are an outstanding communicator. And I'm sure the clients benefit dramatically from your ability to teach them the points.

If they understand what they're doing, they're much more likely to stick with it and not stray from the plan and so on and so forth. So we're going to have a wide range of discussion. We're going to start out with some subjects that affect more of the younger audience. and we're going to later look at some of different moves in retirement, pre-retirement planning, etc. In general, for people in their 20s and 30s out there right now, do you agree that it's tougher, that the cost of living has made all of this a bit more challenging, if not a lot more challenging? I sure feel like it has.

I mean, it depends where you are in the country, but certainly a lot of big cities, the cost of real estate, whether it's buying or renting, is a huge hurdle. You know, education costs are a lot higher inflation for, college and university expenses has increased significantly as well. So I think there's a lot of people that are starting at a disadvantage just from that perspective. And I can understand why young people are a little bit disillusioned. It's a tough go right now. It really is. And you nailed it. The education costs are up at a greater than reported inflation rate pace, the CPI. And I think that's put people into that debt as they first end of the world. But just the general cost of living, food and everything else has been

so high the last five, six years. People are very squeezed. And so the kind of of things I teach, setting aside 10 to 15% of your net income, et cetera, become very difficult to do in this real estate market. But you made a very good point about where people live being a vital part of this whole process. I'm actually surprised there hasn't been more migration to lower cost centers. You know, this whole work from home thing has opened up opportunities. I've seen some people who've made a move to lower cost jurisdictions, but to not nearly as many as you would think. And I guess maybe that's a good thing. You're starting to see certain organizations that are bringing people back into the office and work from home is

disappearing. And so maybe the tide is changing, so to speak. You know, it's interesting. I remember the statistics used to say that Canadians are much less likely to move than Americans are, that Americans will chase opportunities much more aggressively than Canadians. And anecdotally, I think that may be true. When I look at my friends, my colleagues, they've been more hesitant to move. A lot of them would rather be near family or in a place they're accustomed to, etc. And moving across the country is intimidating for any of us. I mean, I can see that too. But you're right. The real estate prices and the big cities make it very, very difficult. When you deal with some younger clients, and I'm sure you have a lot of older clients, because

of course they've already built up their wealth. But when you deal with younger clients, what are they looking at, what problems they're running into? And what are you talking to them about, FHSAs and all those types of things? Yeah, definitely. I think one of the challenges, well, one of the good things and bad things is there's more choices these days. is over the last 15 years. We've had tax-free savings accounts, now first home savings accounts that have been introduced. There's more options that are available. You know, you mentioned chat GPT and we talked about Google. Technology has increased the access to information, but certainly I've talked to people where it's information overload. They don't know what's your information to

apply to themselves. What's the right way? And I think that's one of the most challenging things about personal finance. I think it is truly personal. There's not a, one-size-fits-all answer to somebody's challenges. And I think the more information you can get, the more educated choices you can make. Do you worry with a lot of the young people now that they're getting advice from a lot of the online experts in quotes that are being pushed to things they probably shouldn't take on? I'm seeing a great number of them, especially male, are now getting into much more risk-oriented assets and away from ETFs, etc. You know, I have a bit of a contrarian opinion here for somebody in the financial industry. I think I wrote an article recently

for the financial post on influencers, and I've been a couple interviews on the topic. And I actually think that, you know, with a big asterisk, that there is a net positive from all the financial information that is out there. I've got three teenagers, Dave. And some of the things that they're talking to me about and bringing up and seeing online, I'm surprised. Like, I just didn't care about investing when I was a teenager. You know, you and I didn't learn about personal finance when we were in elementary school. So I think to a certain extent, the influencers have a benefit just bringing awareness to the importance of financial decision making. I think most of the advice is terrible. And, you know, there are some good ones out there that preach some of the same

things that you and I would. But there's a lot of terrible advice about, you know, day trading and speculation and, you know, business opportunities and things like that that's terribly biased. But I do like the fact that it's bringing more interest to the field. No, I agree with that, but you're going to be surprised to learn that I was such a geek that I was, in fact, reading personal finance in elementary school. Really? Yeah, that is how big a geek that I was. I was into this stuff at such a young age.

I think my parents knew when I was 10 that I was going into the finance business in some way, shape or form. I'm almost embarrassed to admit that. Going back to the Finfluencers, the part that worries me the most interestingly is not them pushing into speculative investments in day trading. It's that some of the more credible ones, ones that I think are really well-intentioned and sometimes well-informed, still think that a lot of the people out there can outperform the broad market averages by picking their own stocks. When all the evidence says they can't, all the evidence I see from people trying says they can't, that concerns me because the underperformance is often 300 to 400 and even 500 basis points a year over extended time frames. That part concerns me a lot.

Yeah, I would tend to agree. One of the things that I referenced in the column that I wrote on Finfluencers was this study that looked at the performance of stocks that were being pitched by influencers. And there was a significant underperformance compared to just buying an index fund. And it's something I've struggled a little bit with. Even one of my kids has been really interested in investing and has talked to me about, you know, buying and selling Bitcoin and knowing when the right time is to get in and get out. And for his birthday a couple years ago, I took 100 bucks. They put $25 into Bitcoin, $25 into Ethereum, $25 into Apple and another $25 into Tesla, just to sort of teach him about investing. Dave, it's significantly outperformed

my own portfolio. I've at least managed, he's said, let's, you know, it's time to sell, time to buy. And I said, note, you're going to hold, you're going to watch, you're going to learn. And it's blowing the socks off my own investment. Yeah, I know. You did a very good job there. You're trying to teach him how dangerous all that stuff is. And of course, it's done extremely well. It's fanfired to the end degree. If he does figure out how to figure out exactly when to buy buy and sell Bitcoin, can you have them call me? Give him my number after the show. I mean, it sounds easy, right? And I think as a lay person, when you hear, you know,

you buy low and you sell high and just look for signs. And it sounds logical, right? But as you start to learn more about investing, you realize, oh, it's not that easy even for the professionals, right? No, an investor psychology works against us to the endth degree. I mean, it's so easy to get excited as things are roaring along. It's so hard to get out when you're making money and things are doing very, very well, and so difficult to get in when fear is overriding and everything else. So, no, I couldn't agree more.

Now, as a fee-only financial planner, you're not pushing product at all. You're not commissioned in any way. How do you handle the investment part of all of this? Do you talk to them about the kinds of ETFs that match up to their objectives over the long term, and then they go on their way and they implement the portfolio or find it on their own? Well, I wish I could. The regulations are a little bit different here in Canada versus the U.S. We're not allowed to make specific securities recommendations.

So we can talk at a high level about passive versus active investing. We can talk about tax implications of different investments. We can't provide sample portfolios. I would say probably, I don't know that. the statistic for certain. I'm speculating here, but I'd say probably three quarters of the clients that we work with have an investment advisor of sorts and maybe 25% are self-directed investors. And it's interesting because a lot of times when I see people talking about, you know, go find an advice only or fee only financial planner out there in the media, a lot of times

it seems to be targeted at self-directed investors. So I think people would be surprised to know the majority of our clients actually work with portfolio managers or other investment professionals in addition to us. And it's different skill sets investing in financial planning, in my opinion. So are you being used as a checks and balance system or are you being used because they feel that their investment advisor is not offering them holistic advice on things like tax planning, estate planning, or both? I would say both. It depends on the situation. In a lot of cases, it's because the portfolio manager just manages stocks and bonds and that's their area of expertise. you know, certainly if they're with the banks, oftentimes they've got internal financial planners

that can provide some level of support. But a lot of portfolio managers just manage investments and there's so much more like tax planning, estate planning. You know, we do a lot of retirement planning and decumulation planning. Right. How do you accumulate and draw down your assets? And in some cases, we are the check and balance people that will join a client in a meeting with their investment advisor, ask hard questions, help them find a new portfolio manager. We do a lot of interviews. And, you know, a lot of people don't know what questions to ask. You know, they'll say, you know, my brother-in-law said I should talk to so-and-so and, okay, well, let's, where do they work? Oh, they work there. Okay. You know, what the fees? Okay, those are the fees. So people don't know

what they should be looking for and what questions they should be asking when it comes to their finances. And I think that's an unfortunate part about being a consumer financial advice here in Canada. It's not in your favor, you know. Now, do you work primarily with high net worth individuals? I would say that not on purpose. I would say the majority of our clients are high net worth. And I feel like that is simply because those are the individuals who are more likely to reach out or feel that they qualify for financial advice. We have a lot of clients that are not.

at all high net worth that are just people that have financial needs and questions they can't get answered elsewhere. So there's no, unlike a lot of financial professionals, there's no minimum investable assets or net worth or income. We can work with anybody and everybody. And it might be that somebody with a relatively simple situation will work with us once or sporadically, whereas somebody who's a high net worth business owner with complexity is more inclined to work with us. year in and you're out. But I think it's something that I like the most about this particular, you know, advice only space is that we can work with anybody and everybody is just as important and valuable as the next person. No, I agree with that. And are you providing all-encompassing

advice? So you're doing estate planning. You're doing tax planning, gifting to kids. You're walking them through all of those different types of things. For sure. Yeah, all those different areas. We even have an accounting practice where we do tax returns for for clients. So tax planning in particular, I feel like is one of the most important areas of personal finance and, you know, whether it's an individual who's listening or certainly anyone in the financial industry, oftentimes I speak to people who say, look, how do I become a better financial planner? Tax is always my answer. The best courses, the best knowledge, the best learning I've ever had has been taxed because

so much financial planning is driven by not what you make, it's what you keep. after tax returns. It's minimizing and smoothing out tax during your life and upon her death as well. You said that very well. I couldn't agree more because you don't have to change the risk profile of the client. They can stay at the same risk level, but still increase their bottom line by doing proper tax planning. And let's be honest, in general, that's a weak point for a lot of the financial advice you see in Canada, that it's not rolled in in a way it should be. And there's a lot of people who have not optimized on that front or even close to optimized throughout the years. So that's interesting.

What about estate planning? We can tell from the videos we put out that estate planning, partially because of demographics, is a piping hot, subjectary. People are thirsty for knowledge. Is that a lot of what you provide as well? Yeah, 100%. And it can vary. It can be, you know, the initial estate planning that a young family does in their 30s when

they write their first will, you know, simple stuff like what kind and what a amount of insurance do I need in the unlikely event I die at a young age. I met today with clients who were in their 80s where estate planning is much more front and center. And oftentimes we're helping people that are at the point where they're gifting and they're trying to minimize probate. We coordinate with lawyers. We've actually got an estate paralegal on our team who can help with estate planning and estate settlement. So tax and estate, I think, are a really hot topic to particularly when you look at the amount of baby boomer wealth, Dave, that is going to be passed along. And a lot of people are wondering, do I gift during my life?

Do I wait until I die? How do I make sure more of my money goes to my kids in the government? And so super important. That's one of the questions I'm asked most often when I'm out in public is how best to gift money to the kids. My father's never asked me, unfortunately. Many other people have asked me that question. So I couldn't agree more. You're seeing that become key.

You mentioned probate. We put out a very short video on. probate. Amazing. It was our number one video ever that we put up. And one of the reasons is, is that people didn't even know what it was. So they hear the word all the time, but really didn't know what the process entailed, et cetera. But I find in Canada, a tremendous number of people are doing things they shouldn't be doing to try to avoid things going through probate, slapping their kids' names on joint accounts without any research, without realizing it could trigger tax consequences, lead to family fights, all kinds of things. That's why turning

to a financial expert, turning to an estate planning expert, so important at that time of life. Absolutely. I write a lot of articles on that topic for MoneySense in particular. And I see a lot of people that are adding children's names to accounts and to assets, all to avoid, I mean, in Ontario where we are one and a half percent probate, and it can be a big number on a large estate. Sure. It's relatively small in the grand scheme of things compared to the risks of, you know, adverse tax implications or a child going through a divorce and or a lawsuit, lawsuit, creditor protection, you know, it's, it's fascinating. And you see a lot of people getting advice from the bank teller that, you know, is, is there a state planning advice? Or even

I come across, even at lawyers, you know, that make mistakes on on estate matters, let alone other professionals, not to say that I've got all the right answers, but, you know, it's interesting to see there's deafing paps out there, Dave. Well, the one I've seen a couple times is where people have said, I put a child's name on this asset. It has a big capital game belt up there, and the advisor said I'll be able to avoid the capital gain tax. And you're going, oh, my gosh, I wish it was that easy because we'd all be doing it. No, that worries me. It's funny that we just did a video on this today, because I'm seeing it so often. And I think people have to slow down here. And again, the effort to avoid

probate is leading to some very strange decisions. And they've got to get expert advice for sure. All right, let's stick with the older group for a little bit. I want to go back to the younger group after. And I'm going to throw a few random topics at you. Do you see any clients thinking about reverse mortgages? What are your general thoughts? I will say that it's not something that I come across a lot in my practice. And I don't know, I guess I tend to work with with a lot of retired clients that have saved up money where they're not in that position. It's something that I write about. I do a lot of interviews about. And I've got a very strong opinion that I think reverse mortgages get a bad rap, to be honest. I find that, you know, there's a lot of negativity out there around

reverse mortgages. And certainly if somebody has investments and somebody has other solutions, by all means you should use your investments first. And if you've got a home equity line of credit, it's a lot cheaper than a reverse mortgage. But there's people, particularly in really expensive cities where they've got all this home equity built up. They might have a $2 million, $3 million home in Toronto or bring fever. And if they just need five more years before they downsize,

and they've got no other access, they've drawn down their investments, they can't get a line of credit. You know, when you're retired, you don't have an income. You can't just go to the bank and get a regular conventional mortgage at 4% interest, you may need to get a reverse mortgage. You're going to pay a higher rate of interest, but if it allows you to stay five more years, so be it. And a lot of the criticism is that, you know, if you get a reverse mortgage, it's going to deplete your estate, you're going to leave less money to your kids. Well, if you sell your house and you downsize and

you spend some of the money, that will also leave a smaller estate. So it's, you know, it's a tool in the right situation, just like everything out there. So you and I, you and are on the exact same page. But we're two of the only voices out there who view it that way. Agreed. I don't blast reverse mortgages. And I think in a select number of cases, they can be used. You're right. It's a tool. It wouldn't be my first choice in many instances. You mentioned if somebody could access a line of credit. You basically create your own reverse mortgage less expensively, especially to get proper guidance. But like you, I think there's the odd instance. And you mentioned the big cities with the huge built up equity in some of these homes from people

with lower incomes, then they can make sense. Yeah, absolutely. Now, you are turning compounding into your enemy, and our whole lives we spent saying you have to turn it into your friend, but to your point, if you sell the house and spend a lot of the proceeds, I mean, it's essentially the same thing. So, no, it's all very interesting. What about annuities?

Canada does not like annuities. If you look at the U.S., the U.S. as variable annuities, let's forget those for a second, but even conventional annuities in the U.S. are much more popular per capita. That's true in many other countries. For whatever reason, Canadians have more or less avoided them. I think the old-fashioned thought, I'm going to buy my annuity, walk out the front door, the insurance company, get run over by a bus. Oh, my gosh.

And people don't know they can build in guarantees. Do you ever see a use or a situation where annuities make sense? Yeah, absolutely. I would say that if you've got a relatively conservative investor, an annuity can be a great option. if you've got somebody who has a lot of investment assets and wants to have sort of a certain base level of income that comes in a regular basis that's relatively simple and predictable can work really well. One place where I really like annuity is at a meeting the other day with a woman who unfortunately is considering and likely to receive with medical assistance and dying and she has money that she's going to leave to a child and she's worried about that child and their spending habits, their partner. And we talked about rather than establishing a trust, trust, she has no family members, it would probably be a trust company that has a lot of expenses. We talked about either an

immediate annuity that would begin to make payments upon her death purchased by her estate or a deferred annuity where it would basically buy her son a pension with a lump sum of money. So I've done that in a few instances where there's been, you know, some uncertainty about using a trust as part of an estate. So again, it's like the reverse mortgage, Dave. I think annuities have a place, but not very common in Canada. There's not much market for them. You know, it's interesting. The example you gave was a very good one. Do you remember, well, you may not because I'm quite a bit older than you, but for a little while there, those were fairly common usages of annuities. People were worried about the people they were leaving the money to.

And so they arranged and do that type of thing. They kind of came and went and faded a little bit. The thing that I think gets ignored in the annuity front is that there's a lot of research saying that people who have that certain amount of money coming in beyond CPP, etc., tend to be happier and less stressed, and not a little bit of research, a lot. And I don't think that can be ignored. And so I think that maybe Canadians should be a tad more open-minded to them. Like you, I think they're too old and they don't fit in every instance. But the fact that we more or less have written them off, I think maybe going a little bit too far. Yeah, I agree. I think that most of the real-life annuities that I've seen in my career have been those that have been purchased

back in the 80s when interest rates were higher and annuities were more popular and I find most people are hesitant. It's one of the reasons that I'm such an advocate of deferring CPP and old age security because it's it's annuity income that is indexed to inflation, government guaranteed, and it's a relatively lucrative increase in your payments from deferring. So especially if you've got no other annuity income, no other pension income, so to speak. And I'll tell you, my very unscientific study, Dave, clients that I work with that have defined benefit pensions in retirement seem to be happy. They are dressed. So there's something to be said about that. I couldn't agree more. There's no financial experts out there really, I can find a candidate. I mean, true experts,

people like you, who don't think for most people deferring CBB and OAS make sense. The problem is the general public is more or less saying, screw you guys, I'm taking the money. And even my friends who have great trust in me, I will sit down and show them the math. I make no money from them not doing it. And they'll say, yeah, Dave, everything you say is true, but I'm taking it. It's amazing how powerful that get it right away feeling the bird in the hand type argument is very compelling for a lot of people. Yeah, I agree. I wrote an article that was in the financial post today on CPP and old aid security.

And every time I do, I end up getting a few nasty email. I had an email from a guy. with the swear words and the names and that and you know i felt like replying to to say like read the article read the points that i'm trying to make i'm not saying it's perfect but you know i think it's a it's a tool like the reverse mortgage like the annuity you know know the numbers know the math to decide whether deferring is is good for you but uh you know there's a reason that that people like you and i are endorsing it so well it's the same in canada when you tell people in RSP can be a better move than a TFSA if you can only do one.

Like 80% of people say, okay, walk me through why? 20% of people get mad at you and you'll have 5% of people write me a nasty letter and say, what's in this for you? Why are you pushing RSP? RSP's are a scam and so are you. Like I did some of the craziest letters about that. In fact, it's interesting. Just the other day, I pulled some fee only financial planners.

So people like yourself, some of their top people. And I said, walk me through your client's average tax rate. at withdrawal, tax rates in retirement for the couple, for the single, relative to where they were throughout their working career. Let's try to get a feel for what percentage of people are paying a lower tax rate on their RSP withdrawals than they took in the deduction at the time. And they're basically telling me it's 75 to 80 percent in most instances are coming out into a lower tax bracket, meaning that in a lot of cases, the RSP would have been a better first choice over the TFSA, but I know I'm about to get yelled at for saying that again.

I agree with you 100%. There are those unique instances. I think of a case where you've got a high income spouse and a low income spouse. They've got good cash flow and they're contributing to the low income spouses, RSP, because what else are they going to do with money? And maybe they end up in a higher tax bracket in retirement because they're pension income splitting. They're losing their old aid security benefit. We're getting a little bit complex with that concept.

But there are certainly instances where RSP can backfire, but most people during their working years, as long as their income is, you know, moderate and certainly high, they should be contributing to their RSPs. And I think in the long run, they're better than TFSAs. I've been doing this for 40-odd years in Canada. I think the RSP versus TFSA argument is one of the strangest, but certainly the one that gets people the most emotional.

Like the RSP critics are a bit nutty now. And it's because so many of them didn't recognize they were going to pay tax when they took the monies out of the RSP. And now that they're dealing with, that, they've extrapolated from that to RRS or evils. They're evil, not recognizing they had more money in the RSP because it was pre-tax dollars they were being saved. And, you know, it kind of drives me nuts.

I know a few others out there have done a really good job of them educating on this front, but they two have been beaten up so badly that they're starting to wonder whether it was worth all of their time. All right. Next question about that older group, I have been very, very aggressive in saying that a lot of Canadians are not getting the advice they need about de-accumulating in the optimal way, that a lot of the advisors out there who've done a very good job helping them to build their wealth in many instances have not been able to help them as wisely to rid themselves of

that wealth, slowly spend it, give it away, whatever else. Do you agree that that's a weak spot in Canada? I would. You know, and I think there are a couple of culprits. There's been a lot of research that has shown that retirees are reluctant to spend down their assets. They're worried about running out of money and I think those who accumulate a lot are also so used to saving it's kind of hard after 30 or 40 years now all of a sudden I need to become a spender

I mean I can't and I don't like to travel and I don't like to go out as much as I used to but I think that part of it is the financial industry unfortunately there are some motivations I suppose for people that are managing assets to discourage you know those assets That's from being drawn down and not to paint the whole industry with the same brush, but I think it may cause investment advisors to be more hesitant to recommend spending.

And they also don't want to be wrong, right, and have their client run out of money. So it's not all a will. I don't think that last point gets enough attention. That the person who's saying, this is what we can afford to do, is in the back of his or her mind thinking, but if markets crash, if your spending goes ballistic because of assisted living, and my advice has put you in that spot, holy smokes. So by nature, they tend to be a little bit more conservative. When you are working through that with clients, are you using software to help you?

I mean, I mentioned in a previous podcast. I did it for a colleague of mine using Bristol board. It took me like 24 hours of work to go through every different possibility. I mean, you must be using software. Yeah, oh, for sure. We use financial planning software and look at different scenarios. And I think one of the biggest challenges with doing a, accumulation plan using financial planning software is it's all wrong. It's your best deaths holding

a hundred different factors constant. A lot of assumptions in there. Right. So, but I think it can be something that can help people make lifestyle decisions with with numbers, which ultimately I think is what we do is financial planners, show them the impact of, you know, their current trajectory. And sometimes you're, you're in a situation where you show somebody at this level of spending, you know, if markets don't perform well, you might need to downsize your house in your 80s. Are you okay with that? If they are great. And then there's other instances where you can show people, if your investments earn a 0% rate of return and you double your spending, you're still not going to run into money. So go on that vacation, help your kids, give more money to charity. And I think that's really

helpful to have that knowledge. And I'm shocked at the very intelligent people who can't do this You can't do this math on the back of a napkin. You know, people who think they need to work for another 10 years. And you're like, no, you could have retired 10 years ago, but you liked your job, keep by there. You're a little off on that. Well, yeah, you probably saw some of the reports coming out of the States in the last two weeks. There's two different studies that came out that said a surprising number of Americans,

middle income Americans have saved too much and have too much money. My argument is you've got to be careful there on two fronts. Number one, the markets have been very supportive of those people over the years. They've had very robust stock in real estate markets, and that's one of the reasons why they have too much capital. It's not because they save too much. But the second thing is late life expenses in Canada, assisted living, et cetera, are really going up. Those costs are huge. We're living to be so old.

That may come back in and raise your spending fairly significantly. The problem is it's hard to know how all this is going to play out, which to your point is one of the reasons so many people are being cautious on their spending. That would agree. It's something that I struggle with because when you're trying to determine how much life insurance, somebody needs. That's a relatively easy thing to figure out for somebody during their working years, a disability insurance. Like there's certain risks you can really insure against pretty well. But when it comes to long-term care, I mean, are you going to die at 75? Are you going to live to 100? Are you going to have expensive long-term care for six months or for 20 years? And it makes

it really difficult. And I'll tell you, Dave, one thing that I really struggle with is particularly in recent years, you know, personally and professionally, I've seen too many people. people die unexpectedly at too young and age where I kind of struggle with, you know, whether or not I'm encouraging people to save too much. I'm just as worried that people save too much and never get to enjoy their retirement to the extent they would as I am people running out of money. Like to me, they're both legit risks. They are. But you know what happens when you and I are so close to things is that when somebody dies early, it's such an emotional thing. It's such a shock to our systems that we put great weight on it. We've got to still back

up and look at the aughts. And again, it still happens very infrequently. And I don't think you're probably overly aggressive and encouraging people to save to the levels you do. You brought up disability insurance. I love your stuff on disability insurance. Again, mostly because we agree on everything. And one of the things that you've said in an article a while ago was that a lot of the group plans at work aren't particularly good when you do an in-depth analysis of them. I couldn't agree more and I have lots of evidence to prove it, where you've had denial of claims or you've had the benefits change two years in, et cetera, et cetera. Do you push a lot of your clients to go get an individual policy even when they have some coverage at work? I do. Absolutely. Particularly if somebody's

got a relatively high income, a lot of these group plans are maxed out at a certain monthly dollar amount. So high income people tend to not have good coverage. Self-employed people, there's a lot of self-employed people that have a ton of life insurance, but no disability insurance. So I'm constantly bringing it up. One of the big challenges that I run into, though, Dave, particularly the people who probably need it the most from their 30s, they're in their 40s, it's very expensive. You can go ahead with a massive life insurance policy for a relatively low premium. And then somebody goes to take a look at a disability policy. Oh, it's expensive. I don't want to buy that. And I'll always have to explain to people, well, the reason the life insurance, the reason that 10 year life insurance policy

when you're 35 is cheap is because the likelihood of you dying between 35 and 45 is relatively low. The reason the disability insurance when you're 35 is expensive is because if you become disabled and it's a good policy that'll cover you until age 65, there could be 30 years of payments. That's right. It's a very high risk, therefore a higher cost. And the fact that an insurance premium is expensive shouldn't necessarily be a deterrent. It should be actually a bit of a red flag to say, hey, this is risky. This is something that can derail your financial plan that you should think about out of mitigate.

Everything you said there is bang on. The problem I'm seeing is so many people are squeezed right now. We mentioned the cost of living early, the real estate prices, that when they're also trying to max an RSP or a TFSA, they just don't have enough left over. So it seems to be disability insurance they're willing to take the risk with, even though, to your point, I think the chances of a 30-year-old Canadian being disabled

at some point during her or his working career is one in four when you look at the six-month period. And that's a pretty big number. I used to think that number was exaggerated by the insurance industry. But as I've gotten over and watched friends, I've realized it's not that you've got all kinds of people run into mental health issues or accidents or whatever else. So it's very frequent. Go back to life insurance, another place that you and I are in strong agreement. You know, I've always advocated for that younger group to use exclusively term insurance and to make sure they're maximizing RSPs, TFSAs, and all those other registered products they can.

Are you still on that same page? I'm by term and invest the rest. I'm a true wealthy barber diehard in that regard. I would say the vast majority of people should have cheap, simple, term life insurance. And as they age, they likely get to a point where they're more and more self-insured because they're older. They've accumulated assets. They've paid down debt. And, you know, there are some tax and estate uses and other strategic uses of life insurance.

But they're very extraordinary. Like a small percentage, 1% of the population, I think, that, 99% of people should have cheap, simple term life insurance during their working years. And the insurance industry, I find, often pitches life insurance as a way to pay income tax. And it's something that I have to shake my head as it comes to estate planning. I mean, buying insurance to pay tax on death. I mean, you have a smaller estate if you pay the premiums. If you didn't pay the premiums, you'd have more money to pay the tax.

And as long as you've got liquidity in your estate, you don't. need insurance to pay the tax. The assets will pay the tax. No, I agree with all of that. Now, interestingly, I do think for people who are older, they've taken advantage of all the registered accounts, and they have a company. And in that company, they have retained earnings. For estate planning reasons, the math can be quite compelling for using some cash value insurance policies there. So before the industry yells at me again, which they basically have been doing for 40 years, there is a positive comment that I want to get out there that you, I think you agree with. I agree with you. Those are the, okay, good. Those are the people.

I'm referring to that, you know, if you've got the way I look at it, if you have more money in a corporation than you're ever going to spend in your own lifetime, life insurance is a fantastic way to get money out of that corporation at little to no tax and into the hands of your beneficiary, although it's interesting. I come across a lot of people that are perfect candidates that when I try to go through the concept with them, they're like, oh, no, I don't really like insurance, you know, I don't, okay, you know what, it's really bad insurance. Do you realize that? And it's like, no, it's, it's honestly, it's even worse for me because I've, I've tried to show some friends this and they go, yeah, but you know what? I read the wealthy barber to stick to term

insurance. I said, I wrote the wealthy barber. And now I'm, and now I'm telling you, this one's okay. This one might make sense for you. So no, you're, you're 100% right. Here's another thing, the insurance industry will applaud me for. And I think you'll agree with. There are too many young couples with kids who have a need for insurance who don't have enough insurance. In fact, in many cases, all go in and go, holy smokes. I mean, let's just pretend that you died or the other spouse died. We're in big trouble here with the amount of insurance you have. They often need, I'd say, 1.75 times the amount they're carrying.

Some of them just haven't thought through how big their mortgages are nowadays. I run into a lot where one was making a reasonable income. One's making a little bit lesser income. They don't insure the second income person at all. They think, well, I'm going to be okay. But remember, you're not going to move. You know, your kids have just lost a parent. Yeah.

And therefore, you're not going to put a move on them from a stress perspective, too. Well, your biggest cost, housing hasn't changed at all. So do you see some younger people you would argue don't have enough insurance? Yeah. I would agree. And I think that part of it is that when you look at the insurance industry, you know, a lot of insurance agents are going after those big whole life insurance sales to wealthy business owners. and there's not enough people out there that are preaching the importance of life insurance for young people.

I think that's part of it. Disability insurance, I find, is so overlooked. I think life insurance, because it's cheaper, because it's easier to qualify, because it's more dramatic insuring against the risk of death, I find that even insurance agents that could be talking about disability don't. They just focus on that life insurance sale. So I think that, you know, people need to seek out. insurance coverage. They need to ask the right questions. And I think we as an industry need to do a

better job of educating people as to the importance. Agree. And you know, you'll love the wealthy barber redo that comes out in a month because I talked a lot about both those things. And I even supplied the questions you need to ask on the disability front because you're right. They're not getting asked enough. So I agree with all of that. You're going back to something we were talking about, you mentioned you have a number of clients that are looking to give money to kids. This is such a common thing now. I think a very wise move if you can truly afford it. I mean, they can do things so the money you can't, maximize register plans, pay off non-deductible debt, but also you get to see them enjoy it. And the difference it can make in their lives and the grandkids' lives and everything else.

I think this is something that's happening even more than the reporting says it is. And you may have seen the one bank come out a year ago or two years ago and say that I think it was 21% of Canadians are being helped with their down payment by parent. I said 21%. It's like 75% of the ones I'm seeing. So is this a question you get asked a tremendous amount? I do, although it's interesting. My own experience has been that I'm surprised at how, by a large, how little gifting happens from people who can comfortably afford it.

And that's not so that I don't see it go the other way. I see people that are overly generous with their children or their grandchildren, for that matter, where I've had to deter them and say, look, this is a little bit risky, it's a little bit too much too early, let's do this in stages. Right. But I'm surprised actually how many people are hesitant to. And I think it goes back to that the whole discussion we had earlier about people being

reluctant to spend during retirement because they don't want to run out. I see some people that are hesitant to gift as well. So it's interesting. Everyone's a little bit different in terms of how they approach money. Well, my dad is on the extreme. He has not taken his wallet the last 59 times we've gone out for dinner. We're gifting him. We're gifting up instead of down.

And he threatened a while ago. He's going to live to be 115. And the entire family said, Dad, we assure you you're not. We can actually guarantee you're not going to make 115. You'll be lucky to make another 12 months. So let's chat about that. Okay, let's go back. What problems are you seeing in the estate planning front?

What mistakes do you see most frequently? So good question. I do find people that surprisingly have no will or powers of attorney, despite being relatively established in life and in wealth. I see people who have gaps in their estate planning in terms of, you know, wills that were done long ago that may no longer be appropriate. One thing that I point out a lot to young families, especially when you look at their net worth and you add in their life insurance,

if you have a situation where both parents were to die, for example, and you add up all the life insurance, add up all the wealth, and then you've got a standard boilerplate will where all the money goes to the kids at the age of majority, which is 18 or 19, depending on the province. I've gone through with people and done the math and said, you know, there's $7 million that your 18-year-old would get. Is that what you want?

You know, should you have more of a staggered trust distribution, should you be naming other people or charities? You know, we talked a little bit earlier about joint ownership on accounts and, you know, just misunderstanding about, the way tax implication works at death. I think there's a lot of people who don't understand what happens upon the first death, upon the second death. So I think it's important to walk through and talk through.

And death doesn't need to be a nasty four-letter, five-letter word. But, you know, I think it's something that advisors need to talk to clients about. No, I agree. And you mentioned that some people don't even have wills and powers of attorney. Amazing numbers of people don't have them. but also haven't looked at the ones they do have in 10 and 20 and 30 years. And the person appointed no longer makes sense. Same with executors.

We so frequently see where it was a friend of theirs when they were 28, 35, 40. They're not even in touch anymore or the person has passed on. I tell this story a lot, but it is true. And it's quite funny. My father's executor was my mother long after she had died. And his continued executor was his best friend who was also dead. He had two dead executors. And I told him that.

And he goes, yeah, we should look into that. And so he did make the changes. And he used a corporate executor, which I think we're going to see more and more of going forward. There's just been so much family friction come out of a lot of these large complex estates when one or two family members have tried to get the ball across the finish line that I think some people are saying, I'm willing to pay a certain fee because I don't want to deal with all of that. What about going back to young kids again? They've got their FHSA if they haven't purchased a home yet.

What else are you pushing them to get involved? to you get a lot of RESP questions? Yeah, definitely. I find that RES are underused or in some cases overused. You know, you see some people who don't have RESPs who could comfortably contribute to her putting money into their TFSAs, grandparents who have money that want to help out their kids that can do so indirectly by contributing to an RESP. On the flip side, you also see people contributing to RESPs who've got, you know, high

interest rate debt or they're in a high tax bracket and they've got our RSP room or a group RSP with a matching contribution at work. So I think it's really important to take a look at all the different options that are available for you from a cash flow perspective, RSPs, TFSAs, RESP's, debt repayment and try to prioritize what works best for you. And it can be overwhelming because there's a lot of choices, a lot of information out there. But again, the more you look into these things, the more you listen to podcasts and read books and articles and talk to people about these things, the more you can decide on the right approach for yourself. I want to say to our listeners, that was one of the better and more important answers we've had from anybody

on the podcast over the years. And I'll tell you why. It's that nobody can do all of this, and therefore you have to prioritize. And therefore you have to understand, you know, which is the best for you at a certain period of time. And that's tricky. So it's not enough just to know how to TFS works, how an RESP works, but if you can only do one of the two, what route do you take, etc. I just went through it. In rewriting the wealthy barber, it took me longer to do the rewrite than it did to do the original. And some of my friends have said, well, that doesn't make sense. I said it actually does. Because when I wrote the original, there was RSP's. Now there's TFSAs, obviously, have become much bigger. There's the homebuyers plan built it within the RSP.

There's the FHSA. I have to teach all of that, but also I have to teach how do you prioritize? If you can only do one or you can only do two, which two makes sense for your circumstance, and it gets challenging. But you nailed something in there that's probably one of the most important points in Canada. It's hard to beat the group RSP with matching. Almost nothing can touch it mathematically.

It drives me crazy when people aren't taking full advantage of it. I'm talking too much, but I'll tell you a funny story. I spoke in Boston, and they had a 401K at the company, so a group RSP equivalent in the States, a robotics company. And they did profit sharing matching, and the guy running it, I don't know where he came up with this number.

He said, for every dollar they put in this year, we matched with $4.95. Wow. And he said, and we still have 30% of the people not doing it. Can you say something to them? And so I did. I walked up and I said, if you're not doing that, you should be fired right now because you're clearly an idiot. And I doubt if you're adding value to this company.

But again, people make mistakes. They get caught up in their current situation. Even paying off a credit card is not as good to move as getting a dollar for dollar match, obviously, in the group RSP. That's a priority one for most people. Yeah, I agree 100%. And then the question of the RESP versus something like a TFSA or an RSP, that's a tricky one because they're different goals.

Yeah. You know, in one case, you're saving for somebody else in essence that somebody else is obviously your child, but the other one is retirement. I've seen people, as you mentioned, where they've put so much money in the RSP, but they haven't done a good job of building up their own retirement funds. I'd rather you go the other way, to be honest with you. If you can only do one, I tend to push people towards building their own RSP slash TFSA. That's it.

I think financially an RESP can be slightly better than a TFSA because RESP withdrawals, some of the money you pull out of your RSP is RESP is tax-free. Some of it gets tax to your child. They tend to be in a low tax bracket. So often your R-E-S-P withdrawals are tax-free like a TFSA withdrawals. And you get the grant. Government grant helps. But not if you have put so much of your extra cash flow to your kids that you can't take care of yourself.

and it goes back to gifting, you know, we love our kids and I'm sure your dad loves you, even though you pay for dinner every time. But I think we also need to make sure we take care of ourselves first and foremost. And, you know, you can't always just focus on what makes you, from an emotional perspective, makes you feel good or feel better giving a charity, things like that. You need to find balance. You need to prioritize yourself because, you know, there's nobody else up there is going to do it. Yeah, but, Jayce, my dad doesn't love me even though I pay for dinner. He loves me because I pay for dinner.

Okay, be clear on that. I made that joke in the wealthy barber returns that if you want to get the grandparents involved in the RESP contributions, the best way is to say to your parents, hear those RESP brochures you asked for. And then when they go, I didn't ask me, they go, oh, that was the in-laws. And then you start the competition going. There's all kinds of guilt, and you can really get them involved. But grandparents can play a very active role.

there's no question. Absolutely. Financial advice. I've never heard. That's good. I like that. Exactly. Go ahead and use that or not. Don't credit me though. Don't credit me. All right. We'll wrap up here. What are a couple other points you'd like to bring across to our wide audience? We have a strange demographic. It's everybody. We have a lot of people in their 20s, but a lot of people in their 70s as well. Any other quick pointers you'd like to give them or observations? You know, genuinely, I think the more you can do to educate yourself on financial stuff, the more empowered you're going to feel, the more confident you're going

to feel. I've met lots of people who are very successful at whatever it is they do for their career, very intelligent people who don't understand the difference between a stock and a bond, between an RSP and a TFSA. And you don't need to feel guilty about that. Financial decisions can be intimidating. Financial advisors can be intimidating. And you shouldn't feel intimidated when you're making these decisions. You should try to learn as much as you can. You should try to surround yourself by people who build you up and make you feel confident. So I think that's really important. Again, I alluded to this earlier.

I think it's really important to try to save for tomorrow, live for today. It's a really fine balance. You want to make sure you have enough money to live to your 110, but you also want to make sure that you're enjoying life and having a balance, not just saving, saving, saving, and avoiding living in the present time. So find balance and educate yourselves. and I think those are important takeaways. No, you did a great job.

And, you know, you really have become one of the go-to people in the industry. Your writings are outstanding. And, you know, we joked earlier, but I think you should be very complimented by the fact that the LLMs are drawing down from your material so frequently as they answer people's queries. I think that's a great sign that you're adding a lot of value and that you've got a lot of wisdom and that you're very good communicator. So congrats on your career success.

You've been an excellent guest. Hopefully we see each other again. I appreciate that. It's been a genuine honor. You know, you're probably one of the first personal finance books that I ever read. So it's amazing how life comes full circle. And I appreciate the opportunity to chat today with you and with your audience, Dave. So anytime.

Thanks. We'll do it again.