NIGEL KETTLE, WEALTH AND PHILANTHROPY ADVISOR
Nigel Kettle started his career by spending 20 years on the front line of Bay Street. He spent several years as a corporate bond trader and then as an investment banker at three of Canada’s major banks. Nigel left the institutional side of Bay Street to become a retail broker when he learned about tax efficient strategies to help people plan for their retirement, engage in greater levels of philanthropy and leave larger legacies for their children.
“Now I use that knowledge and experience for good, instead of evil. Helping my clients instead of making the banks richer,” says the independent Wealth and Philanthropic Adviser with a laugh. “I prefer to work with individuals and families where I can give one-on-one customized care.”
Nigel works with C-Suite executives and families that have built successful businesses with a net worth between $5 and $100 million. His clients are not overly-concerned about RRSPs and being able to pay for their children’s educations but they still need top-tier advice. Usually even more so because of the complexity of their financial affairs.
“While it may not elicit much sympathy, these people are staring down the barrel of a 53.5% tax rate,” Nigel explains. “That means they are only getting 46 cents on the dollar, and that tax rate kicks in when their income reaches an upper middle-income level of $200,000 per year, not when it is $1 million plus. Having tax rates in excess of 50% for middle income earners, especially if they live in Canada’s larger cities where a house can cost $1 million-plus, is not the same as going after the “one percent” billionaires in the US that don’t pay any taxes.”
The result is what is known as tax fatigue, a condition anecdotally shared by those who feel used by the system. They feel they are just expected to keep throwing money at the government to feed its insatiable appetite.
“My clients are all patriots and want to pay their fair share of taxes. They’re just not sure that 53.5% is the right number. Once you’re paying over 50% in tax, few people feel they are getting value for their money,” Nigel says. “I help the families I work with make great investment decisions. I help them diversify their investments into secure and tax efficient assets and assets that can help them get their money out of their companies in a tax efficient manner.”
Nigel refers to these strategies as tax-efficient pension plans and are the first thing his clients focus on. The plans have attributes investors want: They create a large tax efficient cash flow over 30-plus years of retirement, experience no volatility, and cannot go down in value, among other qualities In addition, when it is of interest to the client, Nigel will review the family’s philanthropic activities and can help them structure their affairs so that they can redirect their taxes to the charities of their choice instead of the Canada Revenue Agency.
At the moment Nigel works with 35 families and adds one or two more each year. Occasionally Nigel’s help involves coordinating the efforts of a family’s other key advisors to make sure the family’s operating company, holding company, family trust, and personal taxes are all integrated and aligned to minimize both taxes and risks to the family.
“Having more time for each client helps create a relaxed, unrushed, and more personal atmosphere” Nigel says. “It allows us to really explore the client’s passions and goals, including philanthropy and how to have a bigger impact on their charities while they are alive. After all, it’s more fun to give money away when you can see the smiles on people’s faces than it is leaving it as a legacy at your passing. This is especially true when their increased philanthropic activity will not lessen or impact their estate and the legacy left for their children and grandchildren.”
Nigel cites the example of a 60-year-old couple with four adult children who have a net worth of $60 million. They have more money than they need for the next 30 years and in fact have what Nigel calls $20 million-plus of excess survival capital. They can afford to give some of that money away and that is what they were planning to do at their passing.
“However, if they give $2 million away each year for the next 10 years, they can invest the $1 million tax refund each year in a whole life insurance policy. The life insurance policy will have a face value of $20 million on day one and will grow each year,” Nigel explains. “So, they are never in a position where the family loses money. The children and grandchildren come onside as they understand the strategy and realize their parents increased philanthropy will not impact the family’s estate. The approach reduces conflict and encourages support of the strategy from every member of the family.”
Furthermore, affluent families typically incur a significant tax liability when the head of the family passes. Nigel refers to this as the family’s social capital because it is given to the Canada Revenue Agency notionally for the benefit of Canadians. Nigel helps his clients redirect their social capital to the charities of their choice instead of CRA.
Nigel encourages his clients to have conversations with their families about legacy planning and charitable giving opportunities, insurance strategies, and tax minimization opportunities. “We all want to instill great values in our kids,” he explains, “but conflict happens. Family meetings are crucial to discuss the family’s values, succession planning for business interests, and how the assets are structured and can be managed by the next generation.”
That emphasis on family values is central to Nigel’s own life and career. He practices what he preaches at home with Nigel’s wife, Jaci, playing a significant role in the business
The couple’s four young adult children are now between the ages of 18 and 26. The two oldest daughters were married over the past two years and the youngest started at Queen’s University in September. Nigel’s voice swells with pride when he talks about them.
“I love running my own business and being able to set my own schedule,” he says, “that allows me to balance my priorities, taking great care of my clients and balancing that with my family’s activities.”
Kate Baggott's technology and business journalism has appeared in the Technology Review at MIT, the Globe and Mail, Canada Computes, the Vancouver Sun, and on the Business to Business News Network.
Kate Baggott is the author of two short story collections.
Nigel A. Kettle, B. Comm, CPA, CMA, CFP
Wealth & Philanthropy Advisor
5575 North Service Road, Suite 500