cifps the smith manoeuvre as a new business prospecting tool for financial planners

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  • Slide 1
  • CIFPs The Smith Manoeuvre as a New Business Prospecting Tool for Financial Planners
  • Slide 2
  • THE SMITH MANOEUVRE Is your mortgage tax deductible?
  • Slide 3
  • Tonight you will learn how to: Tonight you will learn how to: 1. Get FREE tax refunds from the CRA 2. Pay off your mortgage faster 3. Build an investment portfolio
  • Slide 4
  • Tonight you will learn how to: 1. Get FREE tax refunds from the CRA 2. Pay off your mortgage faster 3. Build an investment portfolio SIMULTANEOUSLY SIMULTANEOUSLY
  • Slide 5
  • The problem
  • Slide 6
  • The solution
  • Slide 7
  • History of The Smith Manoeuvre
  • Slide 8
  • What is The Smith Manoeuvre?
  • Slide 9
  • The Smith Manoeuvre is a financial strategy designed to convert the non- deductible interest debt of a house mortgage to the deductible-interest debt of an investment loan, which simultaneously ensures the building of a free and clear investment portfolio. The Smith Manoeuvre is a financial strategy designed to convert the non- deductible interest debt of a house mortgage to the deductible-interest debt of an investment loan, which simultaneously ensures the building of a free and clear investment portfolio.
  • Slide 10
  • A pictures worth a thousand words
  • Slide 11
  • Ten thousand words Ten thousand words
  • Slide 12
  • THE SMITH MANOEUVRE Appraised Value Is your mortgage tax deductible? 75% Lending Value The left bar chart will represent the fate of the bad debt, the middle chart will show good prevailing over evil, and the right chart will confirm that debt does not increase.
  • Slide 13
  • THE SMITH MANOEUVRE Appraised Value 75% Lending Value Is your mortgage tax deductible? You win $30,000 in the lottery and having read the book, you use it to pay down your mortgage by the same amount, so your total debt drops by the same amount.
  • Slide 14
  • THE SMITH MANOEUVRE Appraised Value 75% Lending Value Is your mortgage tax deductible? Having increased your equity in your house by $30,000 you are immediately able to borrow back $30,000 to purchase investments of your choice. Good debt rises by $30,000 such that your total debt is back to $150,000.
  • Slide 15
  • THE SMITH MANOEUVRE Appraised Value 75% Lending Value Is your mortgage tax deductible? Lets say you inherit $20,000 a few months later. You repeat the process again. You have paid down a total of $50,000 of bad debt, but you have immediately borrowed it back to invest it. Total debt is still $150,000.
  • Slide 16
  • THE SMITH MANOEUVRE Appraised Value 75% Lending Value Is your mortgage tax deductible? You pay down and immediately reborrow and invest another $20,000.
  • Slide 17
  • THE SMITH MANOEUVRE Appraised Value 75% Lending Value Is your mortgage tax deductible? We are winning.
  • Slide 18
  • THE SMITH MANOEUVRE Appraised Value 75% Lending Value Is your mortgage tax deductible?
  • Slide 19
  • THE SMITH MANOEUVRE Appraised Value 75% Lending Value Is your mortgage tax deductible?
  • Slide 20
  • THE SMITH MANOEUVRE Appraised Value 75% Lending Value Is your mortgage tax deductible? The end is in sight.
  • Slide 21
  • THE SMITH MANOEUVRE Appraised Value 75% Lending Value Is your mortgage tax deductible? The conversion is complete. The original bad debt is now all good debt. All of the interest is now deductible. Why not leave the loan in place for another 50 years and claim a tax deduction of $10,500 every year for the rest of our life?
  • Slide 22
  • I. Another thousand words
  • Slide 23
  • Slide 24
  • Tidbit how much do you have to earn to pay off a $200,000 loan?
  • Slide 25
  • Read it and weep Summary $700,402 - you need to earn this much $700,402 - you need to earn this much 40% - at this tax bracket 40% - at this tax bracket $280,161 - to pay this much income tax $280,161 - to pay this much income tax $420,241 - to have this much left $420,241 - to have this much left $220,241 - to pay this much bank interest $220,241 - to pay this much bank interest $200,000 - to pay back the original loan $200,000 - to pay back the original loan $700,402 !!!!!! $700,402 !!!!!!
  • Slide 26
  • Is this legal?
  • Slide 27
  • During the past 20 years, The Smith Manoeuvre has not been challenged by any tax authority, by any lawyer, by any accountant, by any financial planner or by any financial guru as regards the theory, the strategy, the mechanics, the arithmetic or the projected outcomes During the past 20 years, The Smith Manoeuvre has not been challenged by any tax authority, by any lawyer, by any accountant, by any financial planner or by any financial guru as regards the theory, the strategy, the mechanics, the arithmetic or the projected outcomes
  • Slide 28
  • Quantify the value of The Smith Manoeuvre for the Blacks
  • Slide 29
  • The Blacks $200,000 at 7% for 25 years $200,000 at 7% for 25 years Both work, $100,000 per year Both work, $100,000 per year 40% tax bracket 40% tax bracket $50,000 rainy day fund $50,000 rainy day fund Adding $500 per month Adding $500 per month 40 years of age, 2 kids and a dog 40 years of age, 2 kids and a dog
  • Slide 30
  • Future value for the Blacks current investment program?
  • Slide 31
  • $1,205,152
  • Slide 32
  • What if they did The Smith Manoeuvre?
  • Slide 33
  • $1,962,770
  • Slide 34
  • Smith Manoeuvre way: 1,962,770 The Blacks way: 1,205,152 The difference: 757,618
  • Slide 35
  • For the Blacks, this is a decision worth three quarters of a million dollars.
  • Slide 36
  • The Smithman Calculator Go to page 35 of your book
  • Slide 37
  • Who is doing the financing?
  • Slide 38
  • Whos paying for this?
  • Slide 39
  • Lets summarize
  • Slide 40
  • Your next step
  • Slide 41
  • Procrastination is the enemy of your financial success.
  • Slide 42
  • Thank you for your friendly welcome, and thank you to Bick Financial Security for hosting me tonight.
  • Slide 43
  • BICK FINANCIAL BICK FINANCIAL Toll free - 1 888 777-2425 Toll free - 1 888 777-2425 www.bickfinancial.com www.bickfinancial.com
  • Slide 44
  • NEW BUSINESS IS THE LIFEBLOOD OF ANY BUSINESS, INCLUDING YOUR OWN
  • Slide 45
  • Where do planners go for their new business?
  • Slide 46
  • Wealthy people
  • Slide 47
  • Slide 48
  • Whos looking after the not-wealthy people?
  • Slide 49
  • How many notwealthy families are there in Canada?
  • Slide 50
  • Approximately: 32.0 million Canadians 10.5 million families 3.5 million in rented homes 3.5 million in mortgaged homes 3.5 million in free and clear homes Approximately: 32.0 million Canadians 10.5 million families 3.5 million in rented homes 3.5 million in mortgaged homes 3.5 million in free and clear homes
  • Slide 51
  • There are 7 million families that need your help starting today
  • Slide 52
  • How much investment needs to be done?
  • Slide 53
  • Half a trillion in mortgages $500,000,000,000 !!!
  • Slide 54
  • That $500 billion in non- deductible interest mortgages needs to be converted to $500 billion in deductible interest investment loans, starting now.
  • Slide 55
  • A mortgage is not a drag for the client or the planner it is a big opportunity for you both.
  • Slide 56
  • How do most planners react to finding a $200,000 mortgage in that new clients net worth statement?
  • Slide 57
  • PROSPECTING 1. Existing clients 2. Former prospects 3. Friends and neighbours 4. Former clients 5. Mortgage lists 6. Realtors 7. Mortgage brokers 8. Seminars PROSPECTING 1. Existing clients 2. Former prospects 3. Friends and neighbours 4. Former clients 5. Mortgage lists 6. Realtors 7. Mortgage brokers 8. Seminars
  • Slide 58
  • Which homeowners are prospects? 1. Zero equity? 2. 25% equity? 3. 50% equity? 4. 100% equity?
  • Slide 59
  • Long or short? 1. Milevsky 2. HELOCs 3. Readvanceable mortgages 4. Creditline mortgages 5. Austrailian mortgages
  • Slide 60
  • Proposed legislation
  • Slide 61
  • Next step
  • Slide 62
  • Thank you for listening, thanks to the folks at CIFPs, and thanks to Lloyd Snyder, CFP for his support.
  • Slide 63
  • The Smith Manoeuvre www.smithman.net www.smithman.net (250) 652-0825 (250) 652-0825