George A. McConechy & Scott McCartney
Many of the financial situations we face in life aren’t covered in any text book. “Somewhere around 50, life gets complicated. Real life situations, like aging parents, divorce, blended families, market meltdowns, children who don’t leave home (or who come back with babies in tow), health challenges, real estate mistakes, and golden handshakes, have entered the mix. You’ll need professional advice to tease out the good decisions from the bad when all things – relative to you – are considered,” says Portfolio Manager and Wealth Advisor, George A. McConechy, in his book, if MONEY COULD TALK.
George McConechy began his financial services career as an investment advisor in 2001. His goal was to become the ‘go-to’ resource on all things related to money. Continuous learning ensures he keeps his finger on the pulse of what matters most to clients, and what role money can play in a lifetime.
George is a Certified Investment Manager (CIM®) Certified Financial Planner (CFP®), Financial Management Advisor (FMA®), Certified International Wealth Manager (CIWM®), Personal Financial Planner (PFP®), Chartered Investment Manager (CIM®), and a fellow of the Canadian Securities Institute (FCSI). Most recently, George added Portfolio Manager to his long list of credentials.
“No matter how many certificates hang on my wall, I will never forget that success in the investment industry comes from three things - an ability to focus on the client, see the solutions with clarity, and deliver results with commitment,” George says.
In 2013, Scott McCartney, entered into a professional, business partnership with George. Scott has a BA (Hons) from the University of Alberta, and is a Personal Financial Planner (PFP®), Certified ETF Advisor (CETF®), Chartered Investment Manager (CIM®), and a fellow of the Canadian Securities Institute (FCSI). Like George, Scott is also a Portfolio Manager. “Wealth Management must address the major concerns that successful individuals, families and business owners share: Investment Counselling, Wealth Enhancement, Wealth Transfer, Wealth Protection and Charitable Planning. By joining forces, and engaging the expertise of other professionals, George and I are able to cohesively deliver the wealth management solutions and financial peace of mind that our clients require,” Portfolio Manager and Wealth Advisor Scott McCartney explains.
George and Scott call their novel approach Novus Pro, Latin for a fresh approach or a new direction. Novus Pro also describes the aspirational and motivational philosophy behind everything they do, including the Bucket System for Retirement and the Snowball Effect for TFSA’s.
They are equal partners and clients benefit from consultative input from two professionals. George describes himself as the bigger picture person, and Scott, who loves to work with analytical charts, drills down and finds the best way to earn the capital needed with the least amount of risk.
As Portfolio Managers, George and Scott can also invest directly in securities on behalf of clients. These specialized investment services are most relevant for institutional business, pension funds, and wealthy individuals. As another value added service, and at no cost to the client, the partners have established a Professional Panel consisting of two tax partners, two law firms, a chartered business evaluator, and high end insurance consulting. The Panel is activated when necessary.
The Bucket System for Retirement
The idea behind the Bucket System is to use market gains to fund a client’s retirement paycheck. The client has peace of mind going into retirement, knowing that three years of their income is NOT reliant on the equity markets. Here’s how it works.
After George and Scott have completed a thorough financial plan for their clients, they know what the retirement income needs are, and when the funds are needed. Let’s say the clients, Mr. and Mrs. Smith, have determined they require $60K/year (over and above government funds CPP etc.). The idea is to create three years of retirement income which is set aside from the portion of their portfolio that will continue to grow.
Why three years? The average market cycle for a downturn is about three years. By setting these income needs aside, the Smiths know that once they start drawing on their $60K, they won't be drawing from investments that are still growing - George and Scott call the non-retirement buckets the Magic Bucket. Based on the foregoing, the Smith’s would require $180K (three years of $60K per year).
The Snowball Effect for TFSA’s
The idea behind the Snowball Effect is to turn a TFSA into a pension plan that increases its tax free income every year.
The partners purchase high quality, blue chip, dividend bearing equities and funds inside a TFSA with the goal of income - currently their Snowball mandate is yielding about 6.5%. Here's how it works and why it’s important:
Let’s say, Mrs. Smith has a TFSA worth $80K of equity mutual funds and a cash account with taxable securities. George and Scott replace those funds in the TFSA with their pre-selected Snowball securities, on January 1, 2018. At 6.5%, $80K would generate $5,200 worth of tax free income. This income is sent to Mrs. Smith either monthly or annually.
The TFSA rules say that on January 1, 2019 Mrs. Smith can contribute another $6K, plus anything taken out the previous year (in this case, $5,200). The partners move a total of $11,200 (6K + $5,200) from Mrs. Smith's non registered, taxable, account to her TFSA. This sum is then invested in the existing Snowball securities currently in the TFSA.
Assuming the original $80K has not fluctuated (and chances are it will somewhat) there is now $91,200 earning 6.5%. This translates into $5,928 worth of tax free income to Mrs. Smith in 2019. This income is sent to Mrs. Smith either monthly or annually. On January 1, 2020, Mrs. Smith can again contribute another $6K plus $5,928 (what she took out in 2019) for a total of $11,928. Now, the TFSA (again assuming market values stay the same) will be $103,128 and at 6.5% = Mrs. Smith can look forward to $6,703 of tax free income in 2020. See the snowball?
The Nuts& Bolts
“One of our core beliefs is this - if we can’t explain it on the back of a napkin, it’s overly complicated and inefficient. Clients appreciate this and George and I have unbelievable client retention. In fact, we still have our first clients - 20 years later!” Scott adds.
Whenever possible, both partners participate in all ‘discovery’ meetings. Open-ended questions help George and Scott identify, among other things, what money means to their potential client, the client’s belief systems around money, and any expectations. The partners’ discovery process is so detailed and specific that it even defines how often the client wants to be contacted. “Everything we do is focused on what the client expects to see 6 months down the road, 1 year, 2 years, 3 years etc.,” George adds.
After the meeting, a Memorandum of Understanding is prepared. There may be some follow up meetings to determine if anything was missed. Once the prospect has agreed to become a client, a Memorandum of Commitment is prepared.
As a final word, Scott says, “Our clients know we’ve uncovered their wants and needs and have customized a program that will allow them to retire stress free.”
Novus Pro is a financial advisory team with Raymond James Ltd. Information provided is not a solicitation and although obtained from sources considered reliable, is not guaranteed. The view and opinions contained in the article are those of the authors, not Raymond James Ltd. Raymond James Ltd. member of Canadian Investor Protection Fund.
Suzen Fromstein is the author of Suits and Ladders, Ten Proven Ways to Keep Your Job Safe - with a few jokes thrown in. Suits and Ladders was an Amazon Best Selling Book in the Career Guides Cate
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