Financial services in Saint John

Five things you think are separate, all pointing at the same industry. CWCC works with Saint John households, business owners and incorporated professionals on wealth creation, insurance and capital strategy. The firm is licensed to place insurance in New Brunswick with the Financial and Consumer Services Commission and matches you with an advisor licensed in the province. Every meeting is held online.

Where to start

Saint John is a refining city, a port city and a heavy industry city, and it has been an industrial employer of families for longer than almost anywhere else in the country. Canada’s largest oil refinery operates here. The port moves bulk, containers and cruise traffic. Pulp and paper, tissue, aquaculture and the trades that serve all of it fill in the rest. Choose the situation that looks most like yours.

What you get

Seven areas, one team, and your accountant and lawyer in the conversation when the question belongs to them.

• Wealth creation. RRSP, TFSA, FHSA and RESP, ordered around a workplace pension rather than as though you had none.
• Capital strategy. Infinite Financial Sovereignty®, described below.
• Life insurance. Term, permanent and participating whole life, sized to a household rather than to a rule of thumb.
• Living benefits. Critical illness, disability and long-term care, which matter most where the income depends on physical capacity.
• Investment options. Segregated funds and education across the full menu available to Canadians.
• Group benefits. For your company, and a proper read of the plan you already have.
• Succession planning. Corporate shares, the Capital Dividend Account, and the plan that keeps a business in the family.

Five risks that are actually one risk

Write down what a typical industrial household here owns and depends on. Your income. Your spouse’s income, often from the same employer or from a contractor to it. A pension earned inside that industry. A house whose value reflects what people in this city can afford to pay. And whatever severance would arrive if any of it stopped.

Financial plans treat those as five independent lines. In this city they are not independent. A serious contraction in one industry moves all five in the same direction at the same time, and it moves the fifth one last, which is the cruel part: the severance arrives in the same year the house is hardest to sell and the second income is least secure.

This is not a warning about any employer, and it is not a forecast. It is arithmetic about correlation, and it is the single most useful thing to understand about money in a one-industry city.

What follows from it is unglamorous. Liquidity is worth more here than it is in a diversified market, because the moment you need it is the moment everything else is illiquid at once. Coverage you own outright matters more than coverage attached to the employment. And an investment portfolio should not be pointed at the same sector that already pays for your groceries, which happens more often than anyone expects, usually through shares acquired at work.

The city knows the shape of this. Shipbuilding here ended permanently with the closure of the shipyard in 2003, in a place that had been the largest shipbuilding city in British North America. Nobody in Saint John needs the risk explained to them. What is worth doing is naming it on a page and then planning around it.

The decision nobody prepares you for, made in the worst week of the year

An industrial career in this city rarely runs to retirement at a single employer. People move, plants restructure, and pension plans are sometimes wound up. Each of those events produces the same decision, and it is one of the very few in personal finance that cannot be reversed.

When you leave a defined benefit plan before retirement, you generally choose between two things. You can leave the benefit where it is as a deferred pension, payable to you for life beginning at a retirement age set by the plan. Or you can take the commuted value, a lump sum representing the present value of that promise, transferred out to a locked-in account and invested by you.

Both are legitimate answers and neither is universally right. The deferred pension is guaranteed by the plan, requires nothing of you, and is generally the better answer for someone who wants certainty and expects a long life. The commuted value gives you control, can pass to your estate in a way a pension usually cannot, and shifts every investment and longevity risk from the plan onto you.

Two features of this decision are routinely missed, and both cost money. The first is that a commuted value cannot always be transferred in full on a tax-deferred basis: the Income Tax Act sets a maximum transfer value, and any excess is generally paid out in cash and taxed in the year you receive it, which is often the same year you received a severance. The second is the deadline. Plans give a limited window to make the election, and if it passes the plan makes the choice for you.

What we do here is not tell you which one to take on the first phone call. It is get the option statement in front of somebody before the window closes, and work through what each answer means for the rest of the household rather than in isolation.

Shift work, and a career that ends earlier than the plan assumed

Refinery operations, the terminals, the mills and the trades that serve them run continuously, which means a large share of this workforce has spent decades on rotating shifts. The pay reflects it and so does the pension.

The exposure is that the earnings depend on physical capacity in a way a desk salary does not, and that the capacity often runs out before the retirement date on the statement. Disability coverage is the first question here, and the question is not whether you have it but what it says: whether it pays on your own occupation or on any occupation, how long the waiting period runs, and whether it stops after two years, which is the point at which a great many contracts quietly change definition.

Critical illness coverage sits beside it for a reason particular to this workforce. A heart attack or a cancer diagnosis in a fifty-something operator frequently ends the shift work rather than the working life. A disability contract may pay nothing if you go back to lighter duties at lower pay, and that is precisely the outcome a critical illness benefit is built for.

One more thing worth saying plainly: coverage is priced and issued on health, and health is what changes in this decade of life. The right time to answer the insurability question is while it can still be answered.

The strategy

In almost any financing arrangement, someone supplies the capital and someone else owns the structure it moves through. Most people occupy neither role. Infinite Financial Sovereignty® is about changing which side of that you are on.

It draws on the educational approach known as The Infinite Banking Concept®, set out by R. Nelson Nash in his book Becoming Your Own Banker®. CWCC is not affiliated with, sponsored by or endorsed by Infinite Banking Concepts, LLC.

In practice: capital accumulates inside a participating whole life contract issued by a Canadian mutual insurer, on a tax-deferred basis, and you reach it through a policy loan from the insurer rather than by applying to an outside lender.

Why it reads differently here. The problem named at the top of this page is that everything a household owns becomes illiquid at the same moment. Capital reachable on terms written into a contract does not ask what the local economy is doing that year, and it does not require an application to a lender who is reading the same regional news you are. That is a narrow benefit and it is stated narrowly on purpose.

Four points, without exception. A participating whole life policy is life insurance and not an investment. A policy loan is a real loan, it accrues interest, and it reduces the death benefit while it remains outstanding. Dividends are never guaranteed: they are declared annually by the insurer’s board. And this is insurance rather than a deposit account, so protection comes from Assuris, within its published limits.

The full mechanics, including an entire chapter on where the strategy does not fit, are set out in Infinite Financial Sovereignty®, Simplified.

For the business owner and the incorporated professional

A great many Saint John businesses exist because a larger one does: industrial services, fabrication, marine and port services, trucking, and the professional practices around them. That is a good business to be in and it carries the same correlation the households have, one layer up.

The pattern in an incorporated practice repeats wherever it is found. The corporation earns more than the lifestyle requires, the surplus stays inside because taking it out costs tax immediately, and it accumulates in company-held investments.

The Capital Dividend Account enters here. Where a corporation owns and is beneficiary of a policy, the death benefit generally credits the CDA by the excess of the proceeds over the adjusted cost basis, and that balance can be paid to shareholders as a capital dividend, generally free of tax subject to the rules in force. It depends entirely on how the policy is owned, and a policy held by the wrong entity can create a taxable shareholder benefit rather than the intended effect. It requires your accountant, your lawyer and us.

Where a business has more than one shareholder, a buy-sell clause with no funding behind it is a promise that the surviving shareholder will find several hundred thousand dollars in the year the business has just lost a principal. Where the business also depends on one or two major contracts, that year is harder still.

Who this fits, and who it does not

It fits a household whose income and assets are concentrated in one sector and would like that named rather than ignored, someone holding a pension option statement with a deadline on it, a shift worker who wants the disability contract read properly, or an incorporated owner with retained earnings.

It does not fit someone looking for a short-term investment. A participating whole life contract is a long-horizon instrument and the early years are the expensive ones. It does not fit someone who cannot sustain the premium in a difficult year, and in this city that year arrives for somebody every few years. And it does not fit anyone hoping to be told that a strategy will outperform a market, because that is not a claim this firm makes.

The first meeting

Thirty minutes, online, no cost and no obligation. If you are holding an option statement from a pension plan, bring it and bring the date the election is due, because that date decides how much of the rest of the conversation can wait. If you are not, bring the benefits booklet from work instead.

Frequently asked questions