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Is it a good idea to take out your CPP early and invest it?



The average Canadian who takes CPP/QPP at age 60 instead of waiting until age 70 can lose more than $100,000 of ‘secure, worry-free retirement income that lasts for life and keeps up with inflation,’ according to a report.ALEXANDRU SAVA/iStockPhoto / Getty Images

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Canadians are urged to delay receiving their Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) benefits until age 70 to receive a larger monthly income in their retirement years. Yet, research shows less than 1 per cent do.

Many choose to take the funds sooner either because they need the money, worry they won’t live very long, or want to invest it – strategies advisors say could be best in certain circumstances.

“It’s not always about the math, but also about the individual, their needs and risk tolerance,” says Julia Chung, chief executive officer, partner and senior financial planner at fee-only firm Spring Planning Inc. in Vancouver.


“There’s also the risk of delaying it and never receiving it [if you pass away].”

Taking CPP/QPP at age 60 – the earliest possible – has been the most popular option in recent years despite the many arguments in favour of waiting, according to a 2020 report by Toronto Metropolitan University’s National Institute on Ageing and the FP Canada Research Foundation.

The average Canadian who takes CPP/QPP at age 60 instead of waiting until age 70 can lose more than $100,000 of “secure, worry-free retirement income that lasts for life and keeps up with inflation,” the report states.

It urges the financial services industry to educate Canadians better on the benefits of delaying, citing a government survey showing that about two-thirds of Canadians don’t realize deferral is an option.

Strategies if taking CPP/QPP early

While Ms. Chung advocates delaying CPP/QPP when possible, she says some Canadians believe they can make better use of the funds by taking them sooner.

“You might be someone who wants to take CPP early, invest the proceeds and is comfortable with the associated risks,” Ms. Chung says.

An example could be someone with a defined-benefit pension plan and few or no outside investments looking to use their CPP/QPP benefits to sock away money for their heirs.

“Some people may be really concerned about there not being this pot of money, and they want to leave some kind of legacy,” she says.

People who take their CPP/QPP early to invest the funds should also consider the fees, whether it’s done through an advisor or do-it-yourself platform, adds Dami Gittens, senior wealth planning associate at Nicola Wealth Management Ltd. in Vancouver.

To make it worthwhile, she notes the return on the investment would have to be greater over time than the guaranteed increase in income being received from the government if you wait. Investors would also need to be comfortable with the market risk.

“If you’re the type of person who gets worried by the ups and downs of the stock market, then it probably makes more sense for you to delay,” she says.

There’s also an option to take the CPP/QPP early and contribute the funds to a registered retirement savings plan (RRSP), Ms. Gittens says.

“It could neutralize the effect on your taxable income, which means you essentially delay or defer paying taxes until you start to draw income from your RRSP, which you don’t need to do until age 72,” she says, but notes it’s a specific strategy that would only work for people who are still employed, or who have retired and still have RRSP contribution room.

“For some people, it would work if we can see that they will be in a lower tax bracket later on,” she adds.

Missing out on guaranteed income

Each year someone defers CPP/QPP after 65, payments are boosted by 8.4 per cent, which means starting at the age of 70 is 42 per cent larger than at 65. That percentage could be higher if wages rise faster than price inflation, according to retirement expert Frederick Vettese, former chief actuary of Morneau Shepell Ltd.

Mr. Vettese says Canadians who defer CPP to age 70 receive a guaranteed net return of about 6 per cent a year based on actuarial calculations that include mortality and interest assumptions.

“If you take CPP at 65 or sooner, you’re basically passing up a 6-per-cent guaranteed return,” he says.

Mr. Vettese notes that CPP/QPP benefits are also indexed to inflation, which Canadians are paying closer attention to these days.

“The new reason for deferring is that you also get inflation protection on the bigger CPP pension amount,” he says.

Jamie Golombek, managing director, tax and estate planning at CIBC Private Wealth in Toronto, urges Canadians not to take CPP/QPP early unless they really need the money or have a shortened life expectancy.

He also believes taking the benefit earlier than age 70 and investing it yourself may be too risky for some, especially compared to the CPP/QPP, which is guaranteed income.

“The fundamental question is, do you really want to do this all alone?” Mr. Golombek says. “In other words, do you really want to be in charge of that investment? I guess it depends on how risk-averse you are.”

For more from Globe Advisor, visit our homepage.

Editor’s note: This article has been updated to clarify that the CPP and QPP are funded by the contributions of employees, employers and self-employed people as well as the revenue earned on CPP investments. For more information please visit: .


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Some investment firms not adhering to new conflict of interest rules, regulatory review concludes – The Globe and Mail



Some Canadian wealth management firms are not adhering to new conflict-of-interest rules, particularly when selling their own proprietary products, according to a new compliance report by an industry watchdog.

In a report released this week, the New Self-Regulatory Organization of Canada revealed that while a number of investment dealers have implemented strong controls to “identify, disclose and address” conflicts in the best interest of their clients, there are still a “few common weaknesses” involving various aspects of the conflict-of-interest rules that began in 2021.

One such weakness is that solely providing disclosure to a client does not satisfy the rules and investment dealers must implement controls to address the conflict in the client’s best interest.


While the rule applies to any type of conflict – such as third-party compensation, product recommendation, sales incentives – the New SRO review identified specific gaps by investment dealers in controls to address conflicts associated with the sale of proprietary products.

The New SRO is the amalgamation of the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA).

The new rules, known as client focused reforms or CFRs, came into effect in June, 2021, and were intended to address conflict-of-interest concerns in certain situations – for instance, if an adviser’s compensation is linked to selling an institution’s proprietary products.

But the rule reforms also brought unintended consequences when several of Canada’s largest banks halted sales of third-party investment products from their financial planning arms in 2021. Certain banks shifted to only offering their own proprietary mutual funds, and clients working with financial planners are no longer able to purchase independent funds in their investment portfolios.

Shortly after, both IIROC and the MFDA, along with the Canadian Securities Administrators, launched an industry-wide compliance sweep to determine how the new rules were being implemented by investment firms – including the Big Six banks.

This involves examining conflicts associated with proprietary products and restrictions related to a firm’s product shelf.

In addition to deficiencies with proprietary products, the New SRO also found firms did not always disclose all three components of the conflict of interest to clients: the nature and extent of the conflict; the potential impact and risk that a conflict could pose to the client; and how the conflict of interest has been, or will be, addressed by the investment dealer.

And some investment firms did not adequately document their assessment of conflicts to provide evidence to regulators that they are addressing the conflict in the best interest of the client.

IIROC declined to comment on whether the review included examining the product shelves of bank-owned discount brokerages that have come under scrutiny by the industry for blocking do-it-yourself investors from purchasing low-risk cash exchange-traded funds.

The New SRO said the separate joint report – which will be released at future date – will more provide more details of the “deficiencies” identified across all investment dealers and platforms as well as some best practices observed during the sweep.

The sweep is independent of another review conducted last year by the Ontario Securities Commission on the product offerings of Canada’s largest banks. Ontario Finance Minister Peter Bethlenfalvy launched that review after he had concerns about financial institutions halting sales or “unduly” restricting sales of third-party investment funds.

The OSC submitted recommendations to him on Feb. 28, 2022. The report has not yet been released to the public. Last month, a spokesperson for the Finance Minister told The Globe and Mail that Mr. Bethlenfalvy is still reviewing the OSC’s recommendations, more than a year later.

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Wall Street is thirsty for its next big investment opportunity: The West's vanishing water – CNN



Cibola, Arizona

Situated in the Sonoran Desert near the Arizona-California border is the tiny rural town of Cibola – home to roughly 300 people, depending on the season.

Life here depends almost entirely on the Colorado River, which nourishes thirsty crops like cotton and alfalfa, sustains a nearby wildlife refuge and allows visitors to enjoy boating and other recreation.

It’s a place few Americans are likely to have heard of, which made it all the more surprising when investment firm Greenstone Management Partners bought nearly 500 acres of land here. On its website, Greenstone says its “goal is to advance water transactions that benefit both the public good and private enterprise.”


But critics accuse Greenstone – a subsidiary of the East Coast financial services conglomerate MassMutual – of trying to profit off Cibola’s most precious and limited resource: water. And it comes at a time when Arizona’s allocation of Colorado River water is being slashed amid a decadeslong megadrought.

“These companies aren’t buying up plots of land because they want to farm here and be a part of the community, they’re buying up land here for the water rights,” said Holly Irwin, a Cibola resident and La Paz County district supervisor.

Water from the Colorado River is used to irrigate crops in Cibola, Arizona.

Those water rights could soon benefit Queen Creek, Arizona, a growing Phoenix suburb about 200 miles away. Last September, the town approved the transfer of a $27 million purchase of Colorado River water from Greenstone’s properties in Cibola, though the deal is now mired in a lawsuit filed by La Paz, Mohave and Yuma counties against the federal Bureau of Reclamation for signing off on the water transfer.

The Bureau of Reclamation referred all lawsuit questions to the Department of Justice, which did not respond to CNN’s request for comment.

In a court-filed response to the counties’ lawsuit, DOJ attorneys argued that Reclamation’s environmental assessment “fully satisfied” the National Environmental Policy Act. It convincingly demonstrated that the transfer would not result in any significant impacts to the environment: at most, it will result in a trivial reduction (for less than half the year) in the flows in one stretch of the Lower Colorado River.”

After hearing arguments from the counties’ attorneys and DOJ attorneys on Wednesday, US District Judge Michael Liburdi said he will make a ruling on the lawsuit in late April.

A farmer in Cibola, Arizona, cuts down harvested cotton crops in preparation for the next growing season.

“Greenstone is going to make millions at the expense of what it’s going to do to our communities in the future and the precedence it’s going to set,” said Irwin. “We are in the midst of an extreme drought, our communities need this water. At some point, the state has a responsibility to protect the people that are here and to protect our water and not cater to those that are buying property for the water rights to make millions off of it to benefit metropolitan areas.”

Grady Gammage, an attorney representing Greenstone, told CNN in a statement that its “proposal was recommended for approval by the Arizona Department of Water Resources after extensive hearing and comment” and “has no impact on the potential of cities along the river to grow.

“As property owners, my clients hold a water right,” Gammage said. “This is the same as all the farmers along the river, who hold land that has been irrigated, in most cases for over 100 years. That water right is valuable property, which can be transferred. It’s like buying and selling land, except that, Colorado River water can only be transferred if it goes through an extensive review process at both the State and Federal Levels. Any proposed transfer is independently analyzed.”

The Colorado River in Mohave Valley, Arizona.

In neighboring Mohave County, Supervisor Travis Lingenfelter describes what he sees as a battle for the future of Colorado River communities, adding that a number of East Coast investment firms have been trying to get in on the action.

“These companies are actually pretty savvy in that they come out West, purchase and pick up cheap rural agricultural land, they sit on it for a little while and then they’re trying to sell the water,” Lingenfelter said. “I don’t think that they should be allowed to profiteer off of Arizona’s finite resources … If they’re coming after a portion of our only water supply on the river for many of our communities, we have to fight it.”

Wells are running dry in drought-weary Southwest as foreign-owned farms guzzle water to feed cattle overseas

It’s not just Arizona. East Coast firms have bought up thousands of acres of irrigated land across the Southwest, local officials told CNN. Water Asset Management, a New York-based investment firm, has become one of the biggest players in the field, with purchases in Arizona, California, Colorado and Nevada as well as pending deals in New Mexico and Texas.

Water Asset Management president Matt Diserio has called water in the United States “a trillion-dollar market opportunity,” and said he started the company “on the core belief that scarce clean water is the resource defining this century, much like plentiful, cheap dirty oil defined the last century.”

Water Asset Management describes its mission online as “investing in companies and assets that ensure water quality and availability.”

“Water Asset Management is proud of our investments in production agriculture and water in the American West,” company COO Marc Robert told CNN via email. “In the face of record shortages on the Colorado River, we have voluntarily answered urgent and repeated calls to conserve water. Moreover, we will continue to manage our assets in a manner that contributes to solutions to water scarcity and work actively to promote conservation.”

An irrigation canal adjacent to the Greenstone Management Partners property in Cibola, Arizona.

Cotton is grown in Cibola, Arizona.

Andy Mueller, the general manager of the Colorado River District Water District, disagrees, describing Water Asset Management and other East Coast investment firms as “drought profiteers.”

“They’re trying to suck the very lifeblood out of these communities for their own financial benefit,” Mueller said.

Water Asset Management owns at least 3,000 acres in Western Colorado’s Grand Valley, where Mueller works to protect Colorado’s share of the river. He said the full scale of the land grab is difficult to track because investment firms use different names to disguise ownership.

In deep-red corner of Arizona, threat of losing water starts to outweigh fear of regulation

“Water Asset Management has engaged in a number of different purchase methods to keep their transactions unknown to many of the local jurisdictions,” Mueller said. “It’s a very unpopular move to come from New York and invest in irrigated agriculture with the intent to dry it up and watch it blow away.”

The investment firm did not respond to CNN’s question about allegations it hides its land ownership by using names other than Water Asset Management. In property searches on county assessor websites in Mohave County and Mesa County in Colorado, no results were found when CNN searched for properties with the name Water Asset Management as the listed owner.

CNN found multiple properties in both counties under various names, such as WPI Hulet Farm AZ LLC, WPI II-GV6 Farm CO LLC and WPI-919 Farm AZ LLC, all of which have a mailing address that match the address for Water Asset Management’s headquarters in New York City.

The Colorado River in Eagle County, Colorado.

Kerry Donovan, a rancher in Eagle County, Colorado, and a former state senator.

Under a pilot program, the federal government has dedicated $125 million in drought-relief funds to pay Colorado River farmers and ranchers to conserve water by fallowing their land. The feds are also readying additional funding for short-term fallowing. Some are worried that outside investment firms could profit from such a program.

A showdown over Colorado River water is setting the stage for a high-stakes legal battle

“That’s where I think we start to see this investment speculation, when these outside landholders get big dollars to grow nothing,” said Kerry Donovan, a rancher in Eagle County, Colorado, who tried to strengthen Colorado’s anti-speculation laws during her time as a state senator. “These companies don’t have the passion to grow crops, they have a passion to make money. It’s a very different land management mindset.”

Donovan now runs her family’s 400-acre Copper Bar Ranch, where she raises highland cattle along with her husband and two dogs. Like other farmers and ranchers in the state, she worries about how Wall Street will influence their future.

“It’s not their land, it’s not their legacy – it’s their bottom line,” Donovan said. “For me it’s personal because it’s my family’s land that we are fighting to preserve … and that could be in jeopardy when New York comes to play.

“One day they will sell that water off, which means the land would go out of agriculture production,” Donovan continued. “And they’ll sell when water is worth the most, which is when we have the least of it.”

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UBS set for talks with Michael Klein to terminate Credit Suisse investment bank deal




March 21 (Reuters) – UBS (UBSG.S) is set to enter talks with Michael Klein to terminate a deal that would have seen the Wall Street dealmaker take control of much of Credit Suisse’s (CSGN.S) investment bank, the Financial Times reported on Tuesday.

UBS on Sunday agreed to buy rival Swiss bank Credit Suisse for 3 billion Swiss francs ($3.23 billion) in stock and agreed to assume up to 5 billion francs ($5.4 billion) in losses, in a shotgun merger engineered by Swiss authorities to avoid more market-shaking turmoil in global banking.

Klein, a veteran dealmaker, was merging his eponymous advisory boutique into Credit Suisse’s investment banking operations to create CS First Boston as a standalone business which he would have led from New York.


UBS has now assigned a legal team to examine how to void the contract Credit Suisse signed with Klein in the cheapest way possible, according to the FT report, which cited people with direct knowledge of the matter.

“We assume he (Klein) is cherry picking. The deal was done when the selling bank had a gun held to its head and we are no longer in that position,” a person close to UBS said, according to the report.

UBS and Credit Suisse declined to comment, while Klein could not be immediately reached for comment.

Reporting by Anirudh Saligrama in Bengaluru; Editing by Shounak Dasgupta



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