Author Archive

#22 Finding Purpose and Creating a Positive Impact with Jonny Imerman

Friday, June 7th, 2024

In this episode of the Polestar Podcast by VELA Wealth, Jonny Imerman speaks with Kevin Parton about his journey with fighting cancer at 26 and how this battle has brought him to where he is today. They talked about Imerman Angels’ impact on the cancer community with their one-on-one free community support system that ensures nobody goes through cancer alone. They also discussed the incredible journey of CLŌZTALK, a B-Corp Certified T-shirt company co-founded by Jonny, specifically designed to help non-profit organizations grow by making comfortable ethically made shirts.

 

 

Podcast Highlights:

  • The inspiring journey of Jonny Imerman, fighting and beating cancer and co-founding Imerman Angels to help the cancer community with ongoing support.
  • The impact of Imerman Angels and how it’s helped approximately 38,000 people through their cancer journeys.
  • Dive into the creation of CLŌZTALK; a B-Corp-certified T-shirt company Jonny co-founded with his brother Jeff, with the mission to help more nonprofit organizations share their message through meaningful and ethical T-shirts.
  • Celebrating CLŌZTALK’s achievement of helping nearly 500 nonprofits get noticed.
  • Jonny shares his advice on starting and building meaningful businesses and initiatives with passion at the center for ultimate success.

 

About the Guest – Jonny Imerman

Jonny Imerman fought testicular cancer for 2 years in the Detroit area in his 20’s. He had a loving family and friends, but he never met another young adult who beat the same cancer. Jonny and a group of like-minded advocates and supporters co-founded Imerman Angels in 2006, a nonprofit that introduces someone fighting cancer to another person who fought the same cancer. Since 2006, Imerman Angels has made over 34,000 matches in more than 110 countries and facilitated endless honest conversations about living with cancer.
In 2017, Jonny Imerman and his brother Jeff Imerman co-founded CLOZTALK to raise brand awareness for great nonprofits. CLOZTALK is an online clothing and apparel company that produces and sells high-quality, made-on-demand, charity-branded apparel for nonprofit causes at CLOZTALK.com. Reach out to Jonny through his LinkedIn page.

 

About the Host – Kevin Parson

Kevin Parton, CFP professional, specializes in personal and business financial planning, tax reduction, and estate planning. Kevin diligently concentrates on client education as a powerful strategy for building financial certainty. As no financial situation is the same, Kevin and his team monitor clients’ plans and implement personalized strategies to reduce their personal and corporate taxes, and protect their income, assets, and loved ones against the financial consequences of a serious illness, injury or death, ensuring clients maintain financial certainty and peace of mind. To read more, please visit the VELA team page.

 

The episode is also available on:

  

  

 

 

The Podcast Transcript:

 

Kevin Parton:

Hello, I’m Kevin Parton and I’m here on the Polestar Podcast with the wonderful Jonny Imerman. How are you doing today?

 

Jonny Imerman:

Hi buddy. I was going to say you’re wonderful! I think you’re more wonderful than I am. Great to see you.  I love that you’re rocking the Imerman Angels’ T-shirt. Thank you, sir, we appreciate the love.

 

Kevin Parton:

We don’t record the videos here, just the audio. But I wore my Imerman Angel’s shirt to represent you and the organization. And I see you’ve got the CLŌZTALK T-shirt on! I know you walk around with that shirt on all the time.

I’d love the opportunity to share with our listeners a little bit about you. I’m going to try to do you some justice.

You and I met at the Summit event in California several years ago, you were a highlight of that trip, you were the center of everybody. I think you connected me with 100 other people, and it seems that that’s the impact you have on the lives of people around you and speaks volumes about who you are.

But back to your story. You started, at least as far as I know, all the way back when you were 26. You’ve got a foundation that you’ve built up, which is phenomenal. You’ve got a subsequent not-for-profit organization called CLŌZTALK, and that’s been your journey for years. There are so many more pieces in there that I want to get to, but I’m going to turn it over to you because it was great hearing the story from you. Tell me a little bit about yourself. Tell our listeners who are you. What is Imerman Angels? How did this all come to be?

 

Jonny Imerman:

Well, Kevin, you’re one of those great energy guys, it was a pleasure seeing you [at the conference]. We’re similar in that we love people and we’re inspired by what makes people tick and what makes them go. I mean, what’s more exciting than human beings that are alive? I think you and I both loved that event. It was like an idea festival, as I like to call it. But there are so many ideas and visionary people there, and it was just fun connecting with you and seeing all these other people and how everybody connects.

Our quick background is: that life takes crazy turns, and you sort of have to learn and do something with it that’s positive. That’s part of the goal. I was diagnosed with cancer at 26 in the Detroit area. I grew up 20 minutes from Canada, in Detroit, we’re right over the border. So even though I live in New York now, I have to come back to my core from time to time, which is a much calmer vibe. You were in New York not too long ago and you know that we got to escape because we need more of that good Detroit or Canadian vibes.

 

Kevin Parton:

And you were just in Vancouver!

 

Jonny Imerman:

Just in Vancouver, at the B-Corp conference at the Convention Center, it was incredible. So many good people and a lot of speakers were local Vancouver people, which was really cool. One of my favorites was the presentation by Sonia Strobel, Co-founder & CEO of Skipper Otto. She was incredible and she created an amazing B-Corp in Vancouver.

But my quick back story on how I got involved in social impact was that I got diagnosed with pretty advanced cancer at 26, and I went through chemo and surgeries. At the end of it, I thought, what’s the positive here? What’s the meaning? What’s the purpose?

A group of young survivors and I met randomly at the hospital, as we were all finishing our treatments. And we realized the positive was our story. We know a journey that we didn’t know before. We should be giving this back to somebody. Going through the same thing, and we should be a Big Brother or a Big Sister. We were scared, but now we’re on the other side of it! We know more. So, we created this thing, Imerman Angels, which you are beautifully representing today. I appreciate you, Kevin.

So, anyone, anywhere on the planet, any age, any cancer, any stage level, anyone living touched by cancer, we can introduce you to another person who’s had a similar journey and fought the same cancer, and let you know that hope it’s on the other end of it. Or reassure you that they’re thriving for 10-15 years with it because maybe it’s incurable. That’s okay too. But if you’re doing okay in 10-15 years, you’re living with the cancer, you still have a voice to be a Big Brother or Big Sister to somebody sick.

So, that’s the goal. It’s a one-on-one buddy system. No one fights cancer alone. There’s a survivor out there to help every person that’s sick with the same thing today, we just needed a system. A nonprofit that’s called Imerman Angels to match them up. So, everybody’s connected to somebody who’s been there. It’s always free.

Even if language is a problem, we have people who are interpreters who can help with interpretation. But we do have survivors in Switzerland who speak 7 languages. We always find a way to make sure people can connect and communicate.

 

Kevin Parton:

That’s awesome. I love that it’s grown over time and this has been your life’s work and continues to be. But where it is today, I was looking on your website, there are more than 38,000 people [about twice the seating capacity of Madison Square Garden] that have had a diagnosis and have been paired with someone who could advocate for them or speak with them. That doesn’t happen overnight and most certainly isn’t how it started. So, I’d love to hear that story, so what you had said, there were four of you who had got this idea of “how do we give back?”. Can you talk a little about the journey of taking that idea and turning it into what Imerman Angels is today?

 

Jonny Imerman:

Absolutely, Kevin. It’s always a team and I think anyone who’s a Co-Founder who says, “I built this”, well it’s never only one person. So, it was a group of us, and we were all in the hospital, and we all realized that every one of our stories if matched to the right person at the right time, could move a mountain for them emotionally. So, we all banded together, and we thought, let’s just keep recruiting survivors, and then it became this community of thinking, let’s get more survivors in this state, the next state, in Canada, in Europe, wherever. And we just started to snowball, saying “Hey, here’s what we’re doing, if you know any survivors, they should be in the network. They can be an Angel with Imerman Angels.” And the snowball just kept growing, and so now we’re a community of over 14,000 cancer survivors worldwide, and we have thousands of people over the years that we’ve matched. But the goal is that no one goes through cancer unaware. The goal is that people are aware that programs like this are free and that there are survivors out there who really want to help them.

 

Kevin Parton:

That’s beautiful. One of the things you said is a realization that no matter the support network that you often have, it can still feel very much like a lonely experience because if you’re not talking to someone who’s walked that walk before, even if the intentions are great, it’s a different feeling. I’m sure that makes it even more conflicting to try and have a conversation with someone who’s supporting you as family and say, “I still feel alone”. So, you’d look to fill that gap there for people. It is amazing.

One thing that I’m curious about is regarding the actual structural organization itself. How does it scale? You started as four people, and now you’re all over the world. How did you take it from level to level? I would imagine like any organization you have to have tiers of people and communication and technology. Were you prepared for all of that? Was it “fake it until you make it”, learn as you go? What has that journey been in allowing it to expand with the demand?

 

Jonny Imerman:

We’re still faking it until we make it. I feel like you just keep trying things and see what works. I think most entrepreneurs feel that way. When things work, you just keep going with it. But we learned at an early day though, Kevin, that if this person, for example, Amy in Michigan has stage 3 cervical cancer, and there is a woman in Toronto named Susie has beat Stage 3 cervical – if you put them in the same room, we knew the connection would be immediate. And both sides usually would reach back to us and say “Thank you, what a great introduction. Suzie’s incredible, her story was motivating. I know I can beat this. I know what’s coming.” And then Susie says, “Oh my gosh. I talked to Amy for two hours last night. What a similar story we have. It was great to be able to share what I know to help her. I feel so much better about myself.” And the takeaway is, that everybody benefits. It’s a mutually beneficial thing.

So, we held on to that. That was the only thing we knew when we made these intros. The feedback loop was short, and they would tell you how much it helped them, Kevin. So, we thought let’s just keep doing it. Since then, it’s kind of been faking it till we make it.  Just keep building a structure.

We’ve gone through four different iterations of migrations of our tech system and we’re constantly updating the tech. Right now, we use Salesforce, and it works really well. I don’t think we’re going to have to do it again, but you never know. I’ve learned after doing four migrations that anything is possible.

We keep doing it, growing and recruiting volunteers, survivors, board members, and supporters – great people like you, who wear the T-shirt and talk about us, we know we help more people because of people like you. This way we try to keep touching as many people as we can, raising awareness, and then when things could be better, we’ll just keep trying to fix the system. But you know, it’s always hard. We always make mistakes. We hired a CEO who runs it, that’s a lot smarter than I am. Thank God! She is great.

And I’m still involved every day to some degree, I do a lot of external stuff. But the team really is running the day-to-day operations, and if you really care enough about the mission, you hire the best people who can make the most matches, quality matches, that are best for people. That’s really what it’s all about.

 

Kevin Parton:

Which is a very valid point. I spoke with someone the other day who talked about having worked themselves out of their position. They had a start-up, scaled it, and then recognized that their skill set didn’t take them beyond that. So, to what you just said there, that’s my next question. What exactly is your role now? What do you spend your time doing to represent the foundation?

 

Jonny Imerman:

Thanks for asking. Today it’s about mentoring people, which is why we started. I love talking to other younger guys going through testicular cancer or other cancers. I have one guy here in New York who has a totally different cancer. But we’re friends of friends and we just bonded, and he can get a mentor with Imerman Angels. I’m still going to talk to him, we became buddies quickly. So being that Big Brother is probably my favorite part of what we do. Also, as a board member on the team I am helping with advice, and helping open doors. I’m going down to Virginia in a little bit to do a speech at a group called Sentara Health. They have a group of hospitals all through Virginia and North Carolina, so I’ll take trips and I’ll do external work. The goal is to spread the word to the hospitals or give speeches to a company that really wants to have us in their system to be able to send employees when they get diagnosed. Anyone that wants to know more about what we do; I do external stuff like that. Then I flip them to the team and let them manage the operations of everything. So, it’s part-time and a lot of my time is now spent on the CLŌZTALK. We have about 500 nonprofits that we’re passionate about making their T-shirts like the one you’re wearing and making them cooler. And that’s what we do.

That’s why I was in Vancouver for the B-Corp conference last week. We learned with Imerman Angels is if people are talking about you, if you can bring up in the conversation a mission, an important nonprofit, it’s going to grow. Whoever’s listening, they’re going to know someone who needs it. So, maybe they want to be a donor, maybe they want to volunteer. But if people are talking about a nonprofit, they’re winning, and that’s our goal. Is just to create conversations about nonprofits through cooler logo apparel.

 

Kevin Parton:

Very interesting point. I remember when you were telling me about CLŌZTALK, one of the things you mentioned is there are a lot of organizations out there who will have shirts, but they’re not made well.  I can tell you, having spent a ton of time volunteering last year for the Alzheimer’s Society, I did a big campaign for the Leukemia & Lymphoma Society, I’ve done charity runs, I had a closet full of the starchy cotton shirts that, of course, mean well, but I wouldn’t wear them outside of volunteering and I wear this Imerman Angel shirt all over the place because it’s so comfortable and it’s just that little gap, right? Go a little bit of the extra mile and make it something nice. To your point, now you’ve got people wandering around advertising something they’re proud of, and you can merge those two. People love wearing good, comfy clothes and they love to have something that they represent. Well, if you can merge them, what better fashion statement could it be? Instead of having a name brand or something else, you’ve got that not-for-profit organization, that you’re passionate about, that you can walk around representing.

 

Jonny Imerman:

You’re exactly right, KP. We’re going to wear clothes anyway; you’re going to the gym anyway. You can wear a plain shirt, or you can wear a logo for something bigger, that matters, helps other people, saves the next animal, or helps someone with cancer. There are so many ways to use this as a tool for good versus just wearing it.

In addition, I would say, we’re a B-Corp. So, our whole mission is to be more sustainable and more eco-conscious. So, making the T-shirt with four recycled water bottles in every shirt, a long-sleeved shirt, and a tank top, it’s not perfect, but it’s greener than a lot of the other stuff out there.

 

Kevin Parton:

So, let’s go back a little bit. What was the pivot that happened? You’re building Imerman Angels. Where did that idea come from of CLŌZTALK and how did that start?

 

Jonny Imerman:

It happened right from our nonprofit. We thought we had to get the word out for Imerman Angels to recruit more survivors. We wanted to raise awareness that “we’re here, survivors join us!”, because we needed survivors first, to get them plugged in to help somebody sick with cancer. You don’t want people who are sick with cancer coming to Imerman Angels and saying, “Do you know a survivor like me?” and respond with, “Well, we only have seven. We don’t have one like you.” So, we had to recruit first.

So that was our strategy. We were in Chicago at the time, I was there for about 15 years. The whole team and I came up with this idea: let’s make our T-shirts cooler so people are proud to wear them. They’re nice and comfortable, people wear them at the gym, at a Cubs game, walking their dog in the city, a city like Vancouver is great for it. I love that you wear it all the time, dense urban centers are the best because most people see it and then some people ask, and I think Canadians and people in the South in the US are the best, maybe the West Coast too, because they tend to ask, they’re just friendlier.

New York is a great city and I do love it, but a lot of people have their heads down, you know. So, it’s not as much. It’s a little harder here, no doubt about it. But the goal is to get people to talk about it. And that’s what we notice with Imerman Angles. If our friends wore them and people asked about it, all of a sudden, people were joining us and helping us, and survivors were finding us. Everything just started to roll. If we could get our friends to wear the T-shirt, then we said, let’s do this for all nonprofits. And we have about 500 nonprofits total that we partner with. They’re all US-based now, but one day we, of course, want to be in other countries like Canada and Europe and so forth.

 

Kevin Parton:

That’s where this conversation started, at least around the shirts, is I was looking to get some great comfy Leukemia & Lymphoma Society of Canada shirts, and you’re not in Canada yet, so I got an Imerman Angels shirt.

Where is the future for CLŌZTALK? We talk about big visions and missions. What do the next 10 years look like in your mind for CLŌZTALK and where it grow?

 

Jonny Imerman:

We’d love to be worldwide. We would love to have nonprofits everywhere to be able to have a page with us that doesn’t cost them any money. We don’t require them to spend money or do anything. Most of them see this as value. So, they take our page that we build for them, our designs, and the whole system of making them on demand and drop-shipping. But it’s up to them how they want to promote it when they want to promote it. We realize every nonprofit is different and we never want to be pushy with how they do it, but we do believe if they see the value in getting their logo on more ambassadors and more bodies, their awareness is going to grow, and their impact is going to grow.

 

Kevin Parton:

How do you do that? How are you finding success? You’ve got 500 organizations. That’s no small feat, but how do you then expand outside of the US and start to get more global reach?

 

Jonny Imerman:

We’ve had some Canadian companies reach out to us, which is great. But I think a lot of it is going to be us reaching out to them saying, “Hey, we’re able to be in Canada now, we’re able to be in Europe now. We can build you a page.” We’re going to have a lot to figure out on our end because of logistics and shipping internationally. There are more costs on that because we shipped from Milwaukee, WI, which is very close to Canada, and that’s where everything comes out of and it’s made on demand.

And then there’s the vetting process. We are very clear on our website that every one of our nonprofits is a vetted 501(C), so they’re all in good standing with the government. And every country has different levels of what you need to be a registered nonprofit. So, we’re going to have to figure out how all that works. We want people to come to our site and trust that any nonprofit they find on CLŌZTALK is going to be vetted and legitimate and the money is going to the right place and that it follows the traditional norms of nonprofits and that it’s not anything that they’re going to regret supporting. We want people to trust every brand and nonprofit that’s on our site.

 

Kevin Parton:

All right. Well, I mean, Imerman Angels is great, and I love hearing that story, and we’ll get back to that in a minute. And CLŌZTALK is awesome, but I do want to focus on you a little bit and hear more about your journey. So, at 26 years old, to have a diagnosis, a serious one, and to go through two years of treatment, I think it’s safe to say that changed the trajectory of your life.

 

Jonny Imerman:

It really did change me in every way. Like I quit my corporate job. I used to work in commercial real estate in Detroit. I moved from Detroit to Chicago. I was there for 15 years, I’m so glad I did. It was an incredible journey there, I started something I never thought I would. Never thought I’d be a co-founder of an organization; I would have been too scared to do anything like this. But then you go through cancer and you’re like, wait, I could die. Or I could start this, and I still won’t die. Even if it fails. It’s not that bad. Everything seemed in perspective to be not that scary anymore. I think it’s very common for young adults who go through cancer, or any trauma, it can be a lot of different traumas. But your tolerance for risk and doing what you love really changes. They both go up a lot. People can do what they love because they realize life is not forever. You’re able to tolerate more risk because I’m not going to die if this whole idea turns out to be a dream that just can’t really work. And so, I changed a lot. I was also dating someone for a while. We broke up. Great girl. She’s now married, lives in Detroit, and has three kids. But, you know, it wasn’t the right girl.

Everything sort of became clear in my mind what I wanted out of life at that time, and I think a lot of us as young adult survivors, feel if you go through it younger, it’s actually better because you have more of your life to live differently and enlightened. At least we feel we have more percent of our life to live a little more grateful.

 

Kevin Parton:

I’m kind of glad you used the term better because I was going to ask if there’s a silver lining in it. You talked about realizing there’s nothing as grave as death and so you can be a founder, you can start something. There are many people who don’t have a cancer diagnosis, who don’t have a near-death experience and who live their lives in perpetual fear of whatever the biggest thing is that could happen to them, relatively speaking. So, when you said it’s better that it happened younger, and well, you’ve had almost half your life now, which still baffles me. If anyone looks you up and sees how good you look, they’ll realize that what you’ve done for your body since 26 years old, is astounding. You look younger than me and have more energy than five of me.

 

Jonny Imerman:

No, listen, you’re taller, faster, and stronger. Have better hair than I do!

 

Kevin Parton:

So, what would the lesson be to take away from you? And I won’t put words in your mouth but having gone through this diagnosis and the experience you’ve had for the last 20 years, talking to anybody who’s maybe feeling stuck or is fearful of making a decision because that’s too scary for them at this point in their life. What would you tell them?

 

Jonny Imerman:

One of my favorite words to answer this question, Kevin, is the word: Connect. I think you just got to connect when you’re going through life’s hard times. Connect with other people who are further down the road, maybe a mentor, other founders, or other creators, and learn what they’re about. Explore what that’s like and meet other people that have been through similar traumas or journeys, but that are just further along. I’m such a believer in the power of humans connecting where everybody benefits. Because at some points in life, when we were younger for example, we were mentees, we needed to learn and there are people further along that we connect with to figure out our trail.

As you get older, you realize being the mentor feels equally as good, maybe even better in some situations. Where you can give knowledge back and steer the younger or newer people to something better. And so, when you’re in doubt or there’s a trauma, or you’re considering making a big life change, I think it’s all about having conversations and connecting with other similar people who’ve had similar journeys and learning from them.

And a lot of the time doing this gives you the courage if you want to be a co-founder, or whatever it is you want to pursue. It sometimes gives you courage to know that can be done and you realize “Whoa, look at all these other people, look what they’ve built. Maybe this is possible?”

I was definitely scared when we started Imerman Angels and I was scared years again when I co-founded CLŌZTALK because I thought, it was scary again and I had to get myself back in a mindset that in some ways I’d forgotten. And I realized when I was sick, I wasn’t scared. But that fear of starting something new can still creep back in over all the years just because you’re separated from it. It had been 22 years since 2001 when I was diagnosed. Being a Co-Founder I think is scary, at least for me it is. But I’m so glad I’m doing it. It’s not for everyone, it’s scary. There are some people out there that love that risk right away. But I think the goal in life is if you’re able to do what you love and overcome your fears, that’s the greatest life because you get to wake up every day and do what you want to be doing. I think life is too short to live in other ways unless you have to for other reasons, but I try not to live that life.

 

Kevin Parton:

You’re right. and that advice seems so much more impactful coming from someone who’s had a serious cancer diagnosis like you’ve had. That internal dialogue with yourself of “What if this is it?” and then you made the choice to start two separate organizations and now you travel the world, you see so many things, and that advice of do what you love and follow that passion is so important. And you’re a living example, you did two things that maybe you weren’t phenomenal at the beginning…

 

Jonny Imerman:

I’m still pretty bad at it. I found a good team. That’s the key. You have to be bad at some things and own that you’re bad at things sometimes, as a co-founder. I think we are all bad at the beginning because we’ve never done this before, it’s hard.

 

Kevin Parton:

A lot of our listeners are entrepreneurs and are also philanthropic and want to give back or maybe start their own foundation, and you’ve kind of done both. You’ve created a not-for-profit foundation, and you now have another organization. For someone who’s looking to start a start-up or found a company, what’s the biggest takeaway you could give them at that stage of branching out and starting something new?

 

Jonny Imerman:

The number one thing I tell people before you ever try to be a co-founder or build something is you have to pick the right idea. You have to love the idea. I don’t mean for like a week or a month or even 6 months, it should be around a year. You got to think about this idea for about a year and then a year later, two years later, if you’re still passionate about that idea after you’ve looked at other ideas and still feel like “No, I’m coming back to this idea”. That’s how you know that it’s the one for you. Because there are many founders out there, unfortunately, where it’s a flash in the pan, I can be like that. I get too excited about an idea, but two weeks later, you realize I like this other idea better.

It has to be an idea that you are more passionate about than anything else and you have to also understand that you’re going to be working – which is great, again, if you picked the right idea – but you’ll be working seven days a week, all the time. And I’m so impressed with people like you Kevin. I’m single, I don’t have any kids. I’m impressed Kevin, that you’re married, have children, run a company, take care of the family. I mean, I think it’s so hard to do without those things, but for people like you who do that in addition to having a life outside of work, and still get it all done, I give big props. Because when you’re starting something especially, you got to be all in and the ones who can juggle all of it, those are much bigger people than me. I’ve never had to do that part. And you want to be a great dad, involved, you’re still a super healthy guy, and you go to the gym. I mean getting it all in and being a co-founder is tough. You better love the idea because it’s going to be hard to get it all in, but you can do it, again, if you pick the right idea.

 

Kevin Parton:

That’s great advice. It reminds me of the story of how sometimes you feel like your time is fully taken up. The image I have in mind is a glass jar with rocks in it, and you can’t fit any more rocks in it, so you try to pour some sand in, and then you think it’s full and you pour some water in. So, you’re as busy as you are until something else comes along and fills your cup further. I thought I was busy till I had kids, then I thought I was busy until I owned the business. But you just have to grow with it. And what jumps to mind is you must be willing to do whatever it takes. Rarely will you have to do everything that you could conceive of. But if you’re willing to do whatever it takes to make that special thing succeed, and if you’ve got the passion for it, then you’ll be able to take it as far as it needs to go.

 

Jonny Imerman:

How did you know that this business was the right one for you? Was that a quick decision? Did you take your time? How did that whole process happen?

 

Kevin Parton:

It took 14 years to get my feet wet. Where I was working before, there was a little bit of entrepreneurship but not to the extent that I think I learned I loved, but it was still in the finance industry. My passion for finance came from my upbringing and seeing how money is at the epicenter of everyone’s life in different ways. It means different things to different people, and there’s a psychological component to it and it just fascinated me. And there isn’t a ton of education out there about it in the standard avenues. And one of my core values is leadership and another core value is education. So, this profession offers me an opportunity to lead by example, to lead in life, and to educate.

But then to leave where I was before and become a partner in an independent financial wealth management firm and build that, that scratched another itch as well. Because the things that I think are most important in this industry, to the average person, and to business owners; which being one myself makes it easier to help. I can have the largest impact on the environment I am in now. It’s been a labor of love. I need to educate, it’s something that I want to do, and I have been willing to do whatever it takes.

You can talk to my wife about it. We still negotiate when I should be checking emails and replying to things. There isn’t necessarily an off switch. And I walk that line trying to make sure that it’s not to the detriment of my mental health. But when you don’t feel like something is work because it’s the only thing you could see yourself doing, then it just becomes this constant feeling of as long as I’m giving my attention to everything else that’s important; as long as my daughters and I get to connect and I can create a life with them, as long as my wife and I can connect, as long as I get to spend “me time”. Then it doesn’t feel like I’m punching in and punching out of a job. It’s just the ebbs and flows.

So, I think you’re right. Everything is a spectrum and at some points in my day or the week I spend more time with my kids, there are other times when I spend a lot more time doing work-related things, but you have to be passionate for all that to make sense.

 

Jonny Imerman:

That is a great answer and I love how you’ve been at this for 14 years. You’re the perfect example of knowing what you were getting into and making sure it was something you love. You gradually had the buildup and then ultimately made the decisions. That to me is a well-thought business owner where it wasn’t rash because it’s really easy to think, this idea is cool, then two weeks later, you’re jumping for it. And I’ve unfortunately seen too many friends of mine do that and then six or eight months later, they shut down and it’s not because it wasn’t going to work, it’s because they didn’t love it enough.

 

Kevin Parton:

Well, I could talk to you literally forever, and I hope that there’s not nearly as much time in between. I want to end with one question because purpose has come up a lot over the course of this conversation. You may have had more time to think about this, and if not, then Jonny on the spot; when you are gone, what do you hope people remember most about you?

 

Jonny Imerman:

Thanks for the question and I’d love to hear your answer to that too. When I’m gone, I hope that the people served by my friends, my family and the people that co-founded these social impact movements have built. I hope that they continue to get help. To me, that’s what it’s all about. You can take out any one single piece of the wheel, but the wheel keeps turning. Hopefully, these missions with CLŌZTALK and Imerman Angels are so much bigger than any one person, and that’s the goal. And that’s how I hope that I’ll be remembered. Let me ask you the same question. It’s a good question.

 

Kevin Parton:

I’ve done a lot of reflecting on something like this over the last little bit. So maybe it’s unfair that I asked you the question, but six months ago I would have answered that question based on what I wanted people’s opinions of me to be and I heard somebody say something recently where they said, “if they were to be remembered, it was to be unapologetically themselves”. I don’t necessarily know exactly what I’m going to love to do in five, ten, or twenty years, but when I’m gone, if someone was to remember me by saying, “he cared immensely about the things that he cared about, and he was more concerned with pursuing those than making everybody happy”. I think that was that would be a life well.

 

Jonny Imerman:

Well said. It’s just authentic, right, and pure. You’re a good person. Your intentions are pure, Kevin. I can tell in the first 3 minutes we hung out. But you just keep doing you and be unapologetic about it. I think that’s beautiful.

 

Kevin Parton:

Jonny, thank you so much for taking the time to share your story. You’re doing amazing things for people who deserve it so much. Take care and I’ll catch you soon.

 

Jonny Imerman:

You too, keep spreading the love and I’ll be back there in Vancouver soon. L

Take care, brother. Stay well, hug your kids. Thanks, buddy.

 

Kevin Parton:

Thank you. Cheers.

#21 Innovative Legal Solutions with Digby R. Leigh

Friday, May 17th, 2024

In the latest episode of the Polestar Podcast by VELA Wealth, host Jason Boudreau speaks with Digby R. Leigh about the challenges in the current legal system. They explore solutions Digby has initiated that put clients first, providing price certainty by switching away from the standard hourly model and implementing an alternative fee structure.

 

 

Podcast Highlights:

  • The inspiring journey of tenured Lawyer Digby Leigh and his family.
  • Dive into Digby’s remarkable 40+ year legal career and his visionary quest to revolutionize efficiency and pricing structures in the legal industry.
  • The creation of the “Frank Fee” model – a step away from the traditional hourly legal pricing model.
  • How the Frank Fee model has built confidence and transparency for clients that are looking for legal services.
  • The AltFee platform’s evolution and its transformative impact on digital pricing models in the global legal industry.
  • AltFee’s victory in the start-up tech award at the Legal Tech Conference, one of the largest conferences in the United States hosted by the American Bar Association, marks a significant milestone for this innovative idea.

 

About the Guest – Digby R. Leigh

Digby started his 40+ year career at a large downtown Vancouver law firm. When the time was right, he opened his first law firm with his partner in 1992 and then founded Digby Leigh & Co in 2005.

He’s passionate about making things around him a little bit better every day. Life and the practice of law have been varied and exciting for Digby over the last years, but no matter what the issue, Digby brings a practical, cut-to-the-chase, people-oriented approach to any solution. The experience of acting on very significant transactions lends itself to solving any issue.

Digby is focused on building and maintaining relationships as he genuinely enjoys meeting new people and learning about what makes them unique. Learn more about Digby, his work and follow his newsletter Let’s Be Frank on LinkedIn.

 

About the Host – Jason Boudreau

Jason has built VELA Wealth into an established life and estate planning firm, guiding families as they make meaningful choices at the intersection of life and wealth. Jason’s areas of expertise include intergenerational wealth transfer and estate planning with a focus on advanced insurance-based solutions that incorporate philanthropy and legacy planning. Leveraging these specialties, Jason brings a fresh perspective and outside-the-box thinking to the strategic planning process. To read more, please visit the VELA team page.

 

The episode is also available on:

  

  

 

 

 

 

The Podcast Transcript:

 

Jason Boudreau:

Welcome everybody to the Polestar podcast by VELA Wealth. I’m your host, Jason Boudreau, and I’m excited to have a longtime friend and our trusted legal counsel, Digby Leigh, on the call today. Debbie, thanks for being here.

Digby R. Leigh:

My pleasure. Looking forward to it, Jason.

Jason Boudreau:

We go back quite a ways, I guess, 13 years or so.  We met and connected through the UBC football community. I’m excited as today we get to talk about you, your profession, and in particular the experience you’ve had being a lawyer for decades, and how you’ve taken this approach towards the future of the legal profession. What I’m hoping we could start with, Dig, is you taking us back from when you sort of had this “aha” moment about the legal industry itself and what led you to get to where you are today with the current offering at Digby Leigh and Co., I know it’s called Frank Fee. So, we’ll talk a little bit about that and then lead of course, into AltFee as well.

 

Digby R. Leigh:

That’s well. It’s a topic that I have spoken about many times and I’m passionate about it, believing that it is fundamentally changing the legal industry. Let me take you back even further than where Jason started. I’ve been practicing law for 41 years as of May 11th of this year [2024] and that’s actually a long time. For a guy in his 40s, it’s incredible.

 

Jason Boudreau:

You started practicing the year after I was born!

 

Digby R. Leigh:

Isn’t that crazy? Just to start with when you called me “Dig”, it took me back to my youthful days. I’m not called “Dig” so much anymore, I get “Pops” now, as I have grandchildren! So, it puts a big smile on my face, and it shows how close we are.

 

Jason Boudreau:

Definitely!

 

Digby R. Leigh:

So, I started my career practicing law at a large traditional downtown Vancouver firm with just about 100 lawyers and I had a great experience. And that was a traditional hourly model system. Then I went and started another business called Hobbs and Leigh in 1992 with a friend of mine, just after Jason was born!

And then again, I started another business a third time in 2005 called Digby Leigh & Co. So, I’ve had a few iterations in my profession, and I was always one who was not doing things the way others have done it, just trying to be thoughtful and forward-looking.

So that takes us to the current matter; I’ll go back to maybe 10 years ago. I came to the conclusion that the legal industry was broken. And I felt it was broken because of the hourly billing model, which is simple math: You figure out how many hours everybody works plus what their hourly rates are, add it up at the end to charge the service. This traditional model means a client should pay based on how long it took you and how senior you were. To me, that didn’t make sense at all.

And it didn’t make sense for all three stakeholders; 1) clients had no price certainty; they never knew what they were going to end up paying, estimates were not promises, 2) I feel like it didn’t make sense for the people working into the industry either, lawyers and paralegals especially. Because when your financial worth is only determined by how many hours you put in, it’s not scalable! It’s a grind-away way to exist. And 3) I believe even for the law firm as the third stakeholder, it doesn’t make sense. Because if you went away from the hourly model, you would be incentivized to create efficiencies which would make you more profitable in the end. And in turn, clients are going to pay for what they get, you’ll build great systems, and you’ll have the advantage because of these great systems.

 

So, I believed in my idea, even though I didn’t know it would be good at the time, and I had a student do some research for me on what firms worldwide were doing this.

 

We found one in Australia that was out there, it was a firm called Moores, and they continue to do it. So, I saw a video on their website, and it was the staff speaking about how much they enjoyed it [the new fee system]. They spoke about how the conversations with the clients were so good now and that really caught me.

And then I did what we often do as entrepreneurs or business people. I put the idea in a drawer and left it in a drawer!

I get back to everyday life thinking: “What am I going to do today”? “What tasks are more important”? “What do my clients need”? “What do I actually have to do”? It wasn’t until March 16th of 2020 that I was flying back from our place down in the desert at the very start of COVID-19. Everybody was being told to come back to Vancouver!

So, I’m sitting on an airplane with my wife and I’m talking to myself and the moment is still so crystal clear in my mind, and I say “You know, now’s the right time. Now’s the right time to convert away from hourly billing. Now is the right time to give price certainty.”

And what a great sound bite for clients, to be honest, so much certainty in these uncertain times. So, I did what a lot of entrepreneurs will do in times like those – I just decided to change. At that moment, in seconds, I was determined to go and do that.

 

Jason Boudreau:

And that was the start of Frank Fee, right?

 

Digby R. Leigh:

Exactly! But, of course, it wasn’t quite the birth of Frank Fee. It was the idea, the concept. There was not a manual on how to do it, so I made it up.

I guess that’s what entrepreneurs do, right? I knew what it was to practice, I knew a lot about pricing, and I knew about market rates. So, I had a really good starting point just with all my experience. But I didn’t know how we were going to convert the firm away from one that was primarily based on an hourly model into one that was not going to do any hourly billing any longer.

So that’s when the Frank Fee came along, and it was part of what happened in the next six months. I was lucky in some ways that my son Scott was leaving the legal industry as a practicing lawyer – because of the grind. So, even though he worked for a great boss, apparently not good enough!

 

Jason Boudreau:

Yes! I bet.

 

Digby R. Leigh:

So, with that, Scott had experience in the legal industry, he practiced law for five years. We decided that he would come and work for us and create the manual to implement this model shift.

This was a paper manual. Of course, we had it digitally as well. It was 40 pages long, and it took us six months to produce.

The first thing we did was move away from the traditional concept of billing and we set out to divide all our work into practice areas. Because there’s a ton of different work you do under corporate law or real estate, family law, etc. we divided it into 40 different project types.

 

Jason Boudreau:

Wow!

 

Digby R. Leigh:

We then created base amounts for each of those project types – which were basically what a person should pay for the simplest of these types of transactions – then we considered factors that were intended to be mostly value-based factors depending on a client vantage point considering a little bit about the work that has to be done at our end to produce the result at the end of the day.

 

So, I like to use corporations as a simple example because it’s just got a few things in there that are worth pointing out. So if you’re a single person with a numbered company and you’re incorporating one class of shares, one director, etc. It’s going to be the base price. But if you’re going to have three or four shareholders, if you’re going to have a name that you need to reserve, a trademark for example, etc. Those are all factors that increase the price slightly.

 

Jason Boudreau:

Right.

 

Digby R. Leigh:

It’s a different value you’re delivering, and if you have a robust class of shares as opposed to a simple “plain Jane” set of common shares, there’s value being delivered for that, therefore the price is a little bit more. So that’s the whole concept.

Jason, you mentioned the name “Frank Fee”, so I wanted to touch on that really quickly.

 

Jason Boudreau:

Yes.

 

Digby R. Leigh:

So, we decided a couple of things early on. We decided that first of all, we had to own it. We had to jump into the pool, and really go for it. We also needed it to be internally messaged and externally messaged. This was a very top-down driven initiative, and we had to go for it.

 

Jason Boudreau:

Yes, definitely. And how was it received when you guys communicated it?

 

Digby R. Leigh:

We hired a branding company that we’ve done a lot of work with to help us name the new initiative. They came up with about 40 names, and we ended up settling on Frank Fee because we thought it was partially descriptive – it was about fees and it was about being honest and frank, but it was also kind of cute. Now, many years later our client phones up and says, “Can I get the frank fee for that?” Like it’s second nature.

I laugh because that didn’t exist five years ago! So, we launched on the day after the Labour Day in 2020 with our manual and we just flipped the switch and started to do things differently.

The other thing I really believed in was that this had to be data-driven. So, we initially created an “outlier” program. This was where every file would go to that was over or under a certain dollar amount every month. These were the “outliers”. These were cases where either our billing realization rate was greater than we might expect or less than we might expect.

We then would debrief the people that worked on it and say, “This is why we think it happened”. The billing realization rate is the time cost of doing a project, so that’s all the old hourly billing model, who worked on it, what was the hourly rate, etc.

We wanted to know, percentage-wise, what the billing realization rate was, so we had demarcation points. As I recall they were between 110% and under 80%. So, we started thinking and we noticed that 84% was the industry average at the time (84% recovery on time cost), so we picked a middle point thinking 90% was a good middle point after looking at both sides. So, we really studied that data so that we could also have sort of a continuous learning and a dynamic process to how we looked at [creating the new fee structure].

 

Jason Boudreau:

Interesting! And obviously, we’ve done a lot of work together over the years as clients and with mutual clients. I can speak about our experience of it [as clients] in a minute, but I’m curious about how the client response was and did you pilot anything ahead of the launch with clients to get some feedback in real-time as you were refining the model?

 

Digby R. Leigh:

Yes, that’s a really interesting question. Because of course, you should pilot things!

Well, we flipped the switch from the get-go, and I think it was because I was so confident from a client perspective that certainty would be better and that we would be collaborative in our approach that it wouldn’t be an issue.

 

I think there are a few people who feel like they’re paying more for the price certainty, but it is so rare t. I think people value price certainty and they find our prices are mainly dictated by the market and we understand the market. So, we understand what’s an acceptable rate for a transaction, what’s an acceptable rate for an incorporation, and so forth.

So, the pricing really hasn’t been an issue. The real business issue at our end is just to keep getting more efficient and be able to produce the results we want and find ways to spend less time doing it. That’s how we become more profitable.

As of today, I have not had any pushback. And we rarely lose new engagements because of the price. If we lose it, it’s because it’s not a good fit on both ends; for example, somebody’s looking for something we don’t provide.

To answer your question, Jason. No. We didn’t pilot it. But we were very mindful of the client’s response, and right out of the gate, the response was positive. It couldn’t have been any better than it is.

 

Jason Boudreau:

I would say when I think about it from our perspective [as clients] and working with you on some recent engagements, as you know, having certainty around the pricing, there’s definitely value to that. It allows us to do budgeting and do it accurately, which is important for us, especially as we’re growing the company at the pace we are. We want to be as tight as we can be on our numbers and our forecasting. So, it helps with that.

One of the things that I was sort of comparable to when you have that dialogue where you say; “Hey listen, here’s our Frank Fee for this engagement. If you were to do this traditional way with the hourly rate in the market, it should end up being in the X, Y, Z price range.” I’m asking this because this is a new concept for people and it’s what they have to compare to. So how do you tackle that conversation?

 

Digby R. Leigh:

Right, so I don’t do it quite that way. I do tell people that we’re being fair to everybody. In other words, if we’re doing a project for the first time, it’s going to be billed at the same amount as if we do it the second time, even though the first time we’re investing more of ourselves. Our prices are based on the market. We have lots of conversations about what success looks like for the client. Those types of conversations are scoping. It’s funny, I was just talking to Maddy, one of our lawyers, today – We have a very small transaction that we’re doing, but it’s got a fair amount of complexity and what we’ve done is we’ve built a model where we review the scope and say “We can do A, B, and C. We could do these other things, you tell us, and we’ll make the price work accordingly.” So, I feel like because of the collaborative nature and because people have choices, that starts to dictate the market to some extent. I haven’t had hardly any conversations where people are saying, “Boy, if I went and got that done on an hourly basis, I think it would be a lot less.” It just doesn’t happen.

 

Jason Boudreau:

Right. Well, then there would be the uncertainty that comes with that, which is, like you said, a big part of the value prop, right?

 

Digby R. Leigh:

Yes. From a customer’s point of view, it seems to be only positive responses. The point you’ve made that price certainty is valuable, well, I think we’re also dictated by the market. In our minds, we don’t charge just for price certainty even though that has value for the client.

We’re dictated by the market, and we create our base amounts around the market, and we create most of our factors around a client-centric basis to be value delivered. We think about deliverables a lot, we think very little about inputs; how much and how long it’s going to take to run a business. You need to understand that.

 

Jason Boudreau:

What about the legal industry? How has this approach been received from other lawyers that you either are on shared engagements with or know about it or know you and what you guys are up to?

 

Digby R. Leigh:

That is such a cool question because I thought that I would get pushback. So, I write a regular article on LinkedIn called “Let’s Be Frank”. Anybody who doesn’t listen is welcome to sign up. I look at pricing from every different perspective and I’m very careful on how I do it. I try not to tell people that the bill by the hour is wrong. I try to be more of a thought sharer instead of a thought leader, and because I’m just trying to get the idea out there and share what I’ve learned, I invite people to disagree with me but nobody ever wants to disagree with me because I think what they’re thinking and doing makes sense!

They think, “I don’t think I want to do it. I’m too late in my career. Why would I want to fix something that isn’t broken in my mind and seems to be okay”. And I think in that part is where we’re a little bit forward of where the industry is.

 

But I’m going to tell you, and this is me being strong in my opinion, you better get on board. Because I go to a lot of conferences and I speak at a lot of places. One thing that everybody in the legal industry knows is that AI is a buzz.

Legal tech is a buzz and not a lot of people are talking about this yet. We’re unique in talking about it. And that’s something we’ll get to later and why it’s more than just me.

They’re all about using AI and becoming more efficient. But if you do that, what does that mean? Is it going to affect compensation models within large firms at some point? Why should somebody be paid less money because they have built great systems and invested in all that?

So, I think the compensation model is going to change, but so is the pricing of legal services. Why would somebody that’s competing with other people, doing the same work, don’t adopt a different pricing model, bill by the hour, take way longer, and pay more? Why should you be paid a lot less?

One of the themes that we feel since we started, is that the vision we had is like a big heavy ball we’re pushing up a mountain and people were saying, “I don’t know if what you’re doing sounds great”. But now it feels like we’re more on the crest of a wave, an AI wave, if you will. And the amount of people that want to talk about it is completely different than it was even a year ago.

 

Jason Boudreau:

Amazing. On the pricing side then, I’ll segue that into the creation of AltFee.

This is unique and we use it as a firm. It helps us price our planning engagements with the flat fee value-based model. With all these nuances underneath as you’ve talked about, our team has done a cool job of utilizing that tool and customizing it to what we need, which is great.

Tell us about AltFee and how you guys developed that. I’m sure that’s part of the “we” story, and I know you’re a legacy-focused guy, which is why you think a lot about this kind of stuff, part of that legacy is, of course, involving two of your three kids in it, I’m sure everybody’s involved to some extent, but I know Scott and Dig Junior are heavily involved in that. So, talk to us about AltFee and what you guys are up to there.

 

Digby R. Leigh:

So, I’ll go back chronologically. In September of 2020, we launched our new manual system. Just before that, maybe a couple of months before that, I had another client, a friend, a colleague who’s in the tech industry and he said to me, “Digby, you are going to turn this into an SAS product, right”?

I almost wanted to say, “What is an SAS product?” But I didn’t say that. Instead, I said, “Of course”! So, the idea was really generated by somebody who said it to me almost as the most obvious thing that you will do. So once we launched manually, Scott converted from working in our firm and helping our firm launch Frank Fee to incorporate a company called AltFee Solutions in October 2020. We embarked on turning this manual system into a SaaS product, a software product, where it would be available for the entire legal industry. That has been an incredible journey and what we had was a very unique experience in the industry, but what we didn’t have is tech. Most of the startup software companies have great technicians and developers, and they can do all that stuff, but they don’t understand the industry. We understood the industry at a deep level, but we didn’t have the tech support, so there’s been many pros and cons in that. We hired a lot of developers along the way. We’ve had our CTO from close to day one, which is great. So, between October of 2020 and October of 2021, we developed the beta version and the pilot – we did pilot this one.

Now it’s a very interactive program called AltFee and there’s all kinds of data in there about prices, projects, how many, and which projects. It’s a tool that works inner dynamically and interactively within our firm to price projects. So as an example, most of our pricing now is done by paralegals and junior lawyers. They’ll get the project, they’ll dig in on it, they’ll have conversations with the client perhaps, and then they’ll put it into AltFee by the project type and by factors. Then they can share that with whoever they want. I often don’t get very involved in pricing projects unless there’s a uniqueness to it or there are large sums of money involved or people want my input.

But it reminds me of a family lawyer that I was speaking to when we introduced the product several years ago, she said, “It’s always kind of hard because someone says how much is that going to cost?” And she says that for a divorce that’s going to be $5,000, it doesn’t become very granular. It doesn’t get broken down into, you know, what are non-resident properties, etc.

Jason, remember a transaction we did for you recently which was very long, had a whole bunch of things we’re going to do, and AltFee had all those things in there. What we find is people go, “Oh yes, that’s right”, like they can see what we bring to life. The value of what we’re going to do, and that is all generated from the thinking process and the recording process that we go through in putting the project into AltFee, allows us to communicate the start of our proposal.

We often have different scoping and pricing choices and one of the fundamental differences that’s come up as a result of this change is that it is a highly collaborative process. Clients have a huge say in what they’re going to pay. We don’t use terminology such as “we charge for our services.” It’s agreed-upon pricing upfront. Our whole language has changed. Our relationship with our clients has changed, and all for the better. Now we have been at it for a few years and it’s being used in 4 different countries, we’ve had people invest in our company, which is amazing! Very brave of them, to be honest, as we still have a lot of startup qualities.

To watch Dig [Junior] and Scott, my two boys, be in business and to learn and grow, to fall on their faces a bunch and pick themselves up, has been very rewarding. It’s not failure, it’s just another learning opportunity. I’m a big believer in the expression “action, learning, recalibration, action. Rinse and repeat.”

Life isn’t about failing or winning. It’s about really learning from the opportunities that arise.

Another expression for that in sports is relaxed focus. That means that you should be very focused on preparation, execution, and everything you’re about to do but relaxed about the outcome. If you’re Michael Jordan and you’re taking the last shot, it’s going to go in less than half the time. But you’re going to want to know you’ve done everything to prepare. You’re ready to take that shot. You believe in your preparation and then you go, oh, it went in. We should celebrate. We just won the NBA! Or we take a step back and think that it didn’t go in. That is okay, could I learn anything from that?

 

Jason Boudreau:

Of course!

Well, we got a couple of minutes left, and I just wanted to wrap up where you’re at now with all this. I know you got great recognition recently. So, please tell us about where you believe they’re headed, just overall in the legal industry and also in particular with what you are doing with AltFee.

 

Digby R. Leigh:

So, I’m going to go back again, because it makes me reflect on why we do this and so many people listening who are entrepreneurial feel this, and we all have balances of it. Sometimes we get into the “I don’t know if that’s going to work, I better research it” and sometimes we get more over to the other end of the continuum where we think we’re just going to go for it.

I have lots of good people around me that slow me down a bit, but I never realized where it came from [the entrepreneurial spirit], it probably comes from my father, who I didn’t know well for all kinds of reasons. Both parents split up and he died fairly early in life. But he was someone who believed that anesthesiology at the time needed to be reinvented and he brought certification of anesthesiology out to VGH here in Vancouver. Then they couldn’t keep up with him, so he moved down to LA to Children’s Hospital, and he invented new values.

He actually was incredibly entrepreneurial and I didn’t get to know him really well, but I know more of him. It sounds kind of funny to talk about it that way, but that’s true. And I think I have that in spades.  I’m a believer in making decisions, assessing pros and cons, and just going for it, I don’t have a fear of failure and I feel very fortunate. You just have to be mindful of the downfall or the downside to what you’re doing. So, that all goes back to where the journey started and how we ended up right now.

So, we’re now in 2024, you heard me say we launched in 2021. We’ve sold to several firms worldwide. Our data is starting to get really good. And we’re starting to see ways of using the data for our client’s benefit. So that’s where we are in the product.

I already alluded to the fact that this is so topical right now and the boys went to the legal tech conference in Chicago that the American Bar Association (ABA) puts on, and we’re in the startup category. We started competing with 25 other businesses for the Startup award, I don’t remember exactly what it’s called, but we competed for that award.

That got narrowed down to 15 companies that were at the Chicago Conference, and we ended up pitching at that. We did a 3-minute pitch and we really focused on the AI equals efficiency, which doesn’t equal the hourly model, etc. That was our theme.

And we won!

We won! And apparently going away, I think what people were intrigued about was a lot of people were thinking about AI and trying to incorporate it into what they’re doing. But very few people are thinking then what? And we stood out as the ones that were thinking about then what? And it was really cool.

Have that happen, the recognition, the number of connections and relationships, as well as being a start-up in business is hard and it’s like you’re always looking for the moment where you think, how did that all happen? This will be one of those things that happen in our journey that we’ll look back at and that was one of our demarcation points.

 

Jason Boudreau:

Amazing validation point for you guys!

 

Digby R. Leigh:

Yes! And validation by a huge organization too! All the lawyers in the United States, well not all were there, but there were lots of people and it’s their legal tech gathering that they have every year and to be recognized there, was a big win.

One interesting thing for those of you in Vancouver is that several of the top firms were from Vancouver. It seems like it must be the water we’re drinking here like we are producing legal tax products at a rate like nowhere else in North America. It’s interesting.

 

Jason Boudreau:

Really? Wow!

 

Digby R. Leigh:

And out of that, we’ve created a community in Vancouver of legal tech entrepreneurs and now we’re all communicating because we’re not competitive, we’re more aligned. If one does well, then the others probably do well, and somebody can be a referral source for us just like we can for them. So, it’s a real community.

 

Jason Boudreau:

Totally! Support the ecosystem.

Well, Dig, why don’t we leave it at that? That’s a high note for sure. And I appreciate you taking the time to be here today and sharing your story and the story of Frank Fee and AltFee. I’m looking forward to seeing how this all unfolds, and we’ll continue to use it and continue to experience that as clients of the firm as well. We’ll definitely have you back on in the next while for an update.

 

Digby R. Leigh:

Sounds great. I’m in. Always great to chat with you, Jason. Thank you for including me in your podcast. I’m looking forward to seeing how it turns out.

 

Jason Boudreau:

Happy to have you here and thanks again, Dig, for being here.

 

Digby R. Leigh:

My pleasure.

 

The Rise of Alternative Investments: Navigating New Opportunities for Diversification

Thursday, April 25th, 2024

By Kevin Parton, Partner, Senior Advisor

 

In the ever-evolving landscape of investing, a significant trend has emerged that captures the attention of both individual and institutional investors alike: the shift towards alternative investments. This movement is not just a fad but a strategic pivot to diversify investment portfolios beyond the traditional confines of stocks, bonds, and cash.

 

Understanding Alternative Investments: What Are Alternative Investments?

Alternative investments encompass a wide array of assets that fall outside the traditional categories of stocks, bonds, and cash. These include:

  • Commodities: Tangible products such as gold, oil, and agricultural goods.
  • Real Estate: Properties that can generate rental income or capital appreciation.
  • Private Equity: Investments in companies that are not listed on a public exchange.
  • Derivatives and Hedge Funds: Complex financial contracts and investment strategies that allow for hedging risks or achieving higher returns by betting on the movement of asset prices.

These types of investments provide an opportunity for substantial diversification. They typically behave differently from standard stocks and bonds, often remaining unaffected by fluctuations in the stock market.

 

Strategic Incorporation of Alternative Investments

Balancing Risk and Reward

The decision to include alternative investments in a portfolio is calculated and tailored to fit individual risk tolerances and financial goals. While these investments can offer higher returns, they also come with their own set of risks such as lower liquidity and higher volatility. Financial advisors typically recommend allocating between 8% to 12% of an investor’s portfolio to alternative investments, depending on their risk appetite and investment timeline.

Democratization of Investing

One of the most noteworthy trends is the democratization of these sophisticated investment strategies. VELA Wealth’s partners are pioneering efforts to make high-value assets like private equity, private debt, and real estate accessible to retail investors. Through the unitization of these assets, barriers that once restricted access to affluent individuals or institutional entities are being dismantled, paving the way for a more inclusive investment landscape.

Conclusion: Embracing the Shift

The integration of alternative investments into financial planning marks a significant shift in wealth management. It opens up new pathways for investors to diversify their portfolios and enhance potential returns. As the financial landscape continues to unfold, the importance of being informed and adaptable to emerging investment opportunities becomes more pronounced.

VELA Wealth is at the forefront of this shift, providing clients with broader access to a spectrum of investment options that align with their unique financial objectives.

As we continue to witness this evolution, embracing alternative investments could well be a key strategy for those looking to spread their risk and potentially increase their returns in these turbulent times.

This exploration into alternative investments highlights the importance of strategic diversification and the role of key financial entities in facilitating access to complex asset classes. For investors looking to navigate this sophisticated terrain, partnering with adept financial managers who can guide them through the intricacies of regulatory compliance, risk management, and portfolio optimization will be crucial to achieving long-term financial success.

 

If you’d like to explore more about alternative investments, tune in to one of my recent interviews with Keith Allan, Portfolio Manager at Harness Investment Management, where we discuss the behind-the-scenes look at how VELA Wealth and its partners collaborate to unlock unique investment opportunities.

 

Disclaimer: The information provided in the article is designed for general informational purposes only and is not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.

Commentary on the Federal Budget 2024

Wednesday, April 24th, 2024

On April 16, 2024, the Deputy Prime Minister and Finance Minister, the Honourable Chrystia Freeland, presented Budget 2024 – Fairness for Every Generation, to the House of Commons.

Our commentary on the tax initiatives in Budget 2024 follows.

 

A. Personal Measures

Capital Gains Inclusion Rate

Currently, one half of capital gains are included in a taxpayer’s income. Budget 2024 proposed to increase this inclusion rate to two thirds of the actual gain, effective for capital gains realized on or after June 25, 2024. Similarly, the deduction available for some employee stock option benefits will be reduced from one half to one third of the benefit. This adjustment to the inclusion rate will also apply to capital losses applied to offset capital gains.

Only half of the first $250,000 of capital gains (net of gains offset by capital losses, the lifetime capital gains exemption and the proposed employee ownership trust exemption and Canadian entrepreneurs’ incentive) realized by an individual will be included in their income each year. Two thirds of capital gains in excess of this amount will be included in their income. Other taxpayers, such as trusts and corporations, will be required to include two thirds of all capital gains realized on or after June 25, 2024 as income.

For taxation years that straddle June 25, 2024 (calendar 2024 for individuals), capital gains will be segregated between gains realized on or before June 24, 2024 (one half included in income) and gains realized on or after June 25, 2024 (two thirds will be income). For individuals, only half of the first $250,000 realized on or after June 25, 2024 will be included in their income.

Budget 2024 estimated that this change will impact only 0.13% of individual taxpayers and 12.6% of corporations.

Lifetime Capital Gains Exemption

Individuals are eligible to offset up to $1,016,836 (2024; indexed for inflation annually) of capital gains on qualified small business corporation shares and qualified farm or fishing property. Budget 2024 proposed to increase this lifetime limit to $1,250,000 for dispositions taking place on or after June 25, 2024. This amount would be indexed for inflation commencing in 2026.

Canadian Entrepreneurs’ Incentive

Budget 2024 proposed to reduce the capital gains inclusion rate on capital gains realized on the disposition of qualifying shares by an eligible individual. The inclusion rate would be halved, resulting in one third of such gains being taxable under the inclusion rates proposed in Budget 2024. This reduced inclusion rate would apply to gains not offset by the lifetime capital gains exemption.

There would be a lifetime limit on gains eligible for this reduced rate, set at $200,000 commencing in 2025, and increasing by $200,000 annually until reaching a total of $2 million in 2034.

To be eligible for this reduced inclusion rate, several conditions would be required to be met, including the following:

  • the shares were directly owned by the taxpayer at the time of sale;
  • the shares meet the asset tests required to be qualified small business corporation shares (generally, at the time of sale, all or substantially all assets were used in an active business carried on in Canada, and throughout the 24 months preceding the sale, more than 50% of the assets were so used);
  • the taxpayer was a founding investor at the time the corporation was initially capitalized;
  • the shares were held by the taxpayer for a minimum of five years prior to the sale;
  • at all times from the initial share subscription until immediately before the sale, the taxpayer directly owned shares accounting for more than 10% of the votes and 10% of the fair market value of the corporation;
  • throughout the five years immediately preceding the sale, the taxpayer was actively engaged on a regular, continuous and substantial basis in the activities of the business; and
  • the shares were acquired for fair market value consideration.

This incentive would not be available where the shares sold represented a direct or indirect interest in any of the following types of corporations:

  • a professional corporation (that is, a corporation that carries on the professional practice of an accountant, dentist, lawyer, medical doctor, veterinarian or chiropractor);
  • a corporation whose principal asset is the reputation or skill of one or more employees;
  • a corporation that carries on a business operating in the financial, insurance, real estate, food and accommodation, arts, recreation or entertainment sector; or
  • a corporation providing consulting or personal care services.

Employee Ownership Trust (EOT) Tax Exemption

Last year, Budget 2023 proposed tax rules to facilitate the creation of EOTs. An EOT is a form of employee ownership where a trust holds shares of a corporation for the benefit of the corporation’s employees. EOTs can be used to facilitate the acquisition by employees of their employer’s business, without requiring them to pay directly to acquire shares. These proposed rules are currently before Parliament in Bill C-59.

The 2023 Fall Economic Statement proposed to exempt the first $10 million in capital gains realized on certain sales of a business to an EOT from taxation. Budget 2024 provided further details on this proposed $10 million exemption.

The exemption would be available in respect of capital gains realized by an individual (whether directly, as a beneficiary of a trust, or as a partner in a partnership) on the sale of shares to an EOT where the following conditions are met:

  • the corporation is not a professional corporation;
  • the sale is a qualifying business transfer (QBT; meeting several requirements in the proposed rules for EOTs discussed below);
  • the trust acquiring the shares is not already an EOT or a similar trust with employee beneficiaries;
  • throughout the 24 months immediately prior to the QBT (the holding period), the shares were owned by the individual, a related person or a partnership in which the individual is a partner;
  • throughout the holding period, over 50% of the fair market value of the corporation’s assets were used principally in an active business;
  • at any time prior to the QBT, the taxpayer, or their spouse or common-law partner, was actively engaged in the qualifying business on a regular and continuous basis for a minimum period of 24 months;
  • immediately after the QBT, at least 90% of the beneficiaries of the EOT were resident in Canada; and
  • no disqualifying event (see below) occurs within 36 months of the QBT.

If the above conditions are satisfied, an exemption for up to $10 million in capital gains from the QBT would be available. If multiple individuals disposed of shares to an EOT as part of a QBT and met the conditions described above, they would be required to share the $10 million exemption. The taxpayers would be required to agree on how to allocate the exemption.

The exemption would be available for dispositions that occur between January 1, 2024 and December 31, 2026.

Qualifying business transfer (QBT)

The rules proposed in Budget 2023 require both the EOTs themselves and the QBTs by which they acquire businesses to meet numerous complex requirements. These subsections describe the general rules that would apply to EOTs.

A QBT would occur when a taxpayer disposes of shares of a qualifying business for proceeds that do not exceed fair market value. The shares must be disposed of to either a trust that qualifies as an EOT immediately after the sale or a corporation owned 100% by the EOT. The EOT must own a controlling interest in the qualifying business immediately after the qualifying business transfer. At the time of transfer, all or substantially all of the fair market value of the qualifying business’s assets must be attributable to assets used in an active business carried on in Canada. The business cannot be carried on through a partnership.

A qualifying business would be required to be a Canadian-controlled private corporation. No more than 40% of the corporation’s directors can be individuals that were significant owners of the qualifying business prior to the QBT, or were related to, or otherwise not dealing at arm’s length with, such owners.

Employee ownership trusts (EOT)

To be an EOT, a trust would be required to be resident in Canada and have only two purposes. First, it would hold shares of qualifying businesses for the benefit of the employee beneficiaries of the trust. Second, it would make distributions to employee beneficiaries, where reasonable, under a distribution formula that could only consider an employee’s length of service, remuneration and hours worked. Otherwise, all beneficiaries must generally be treated in a similar manner.

At least one third of the trustees would be required to be employees of a qualifying business controlled by the trust. Trustees of the EOT would generally be elected by the beneficiaries every five years. If any trustee is appointed (other than by such an election), no more than 40% of all trustees can be persons that sold shares of a qualifying business to the EOT (or be related to, or otherwise not act at arm’s length with, such individuals).

Trust beneficiaries would be limited to, and include all, qualifying employees (potentially including former employees and the estates of deceased employees). A qualifying employee would be an employee of a qualifying business controlled by the EOT. Employees could be excluded as beneficiaries until they complete a reasonable probationary period. Individuals, and persons related to, or otherwise not acting at arm’s length with, them who hold, or held prior to the QBT, a significant economic interest in the qualifying business would be excluded from being qualifying employees, and therefore could not be beneficiaries of the EOT.

Disqualifying event

If a disqualifying event occurs within 36 months of the QBT, the exemption would not be available. Where the individual has already claimed the exemption, it would be retroactively denied.

A disqualifying event would occur if an EOT loses its status or if less than 50% of the fair market value of the qualifying business’ shares is attributable to assets used principally in an active business at the beginning of two consecutive taxation years of the corporation.

If a disqualifying event occurs more than 36 months after a QBT, the EOT would be deemed to realize a capital gain equal to the total amount of capital gains in respect of which the vendors claimed the exemption. The normal reassessment period of an individual for a taxation year in respect of this exemption is proposed to be extended by three years, so CRA would have six years from the date of initial assessment to reassess in respect of any exemption claims under these proposals.

A claim for this exemption would require the EOT (and any corporation owned by the EOT that acquired the transferred shares) and the individual to elect to be jointly and severally liable for any tax payable by the individual as a result of the exemption being denied due to a disqualifying event within the first 36 months after a QBT.

Other matters

Under the proposed amendments to the alternative minimum tax (AMT), 30% of capital gains eligible for this exemption would be included in income for AMT purposes.

Budget 2024 also proposed to expand QBTs to include the sale of shares to a worker cooperative corporation. The worker cooperative would generally need to meet the definition set out under the Canada Cooperatives Act. Provided the relevant requirements are met, this would allow access to the same tax benefits as a QBT to an EOT, including the $10 million exemption. Budget 2024 indicated that additional details on this proposal will be released in the coming months.

Alternative Minimum Tax (AMT)

Individuals will owe AMT if the tax amount calculated under the AMT regime is greater than the tax calculated under the ordinary progressive tax rate regime. Under the legislated rules, the calculation of AMT allows fewer deductions, exemptions and tax credits than under the ordinary income tax rules. In 2023, the government proposed changes to AMT that would focus on high-income individuals and certain trusts by amending the following:

  • the AMT rate would be increased from 15% to 20.5%;
  • the exemption would be increased from $40,000 to the start of the fourth tax bracket (for 2024, this is $173,205); and
  • the AMT base would be broadened by further limiting tax preferences (i.e., exemptions, deductions and credits).

Budget 2024 proposed to make further changes to the AMT regime, such as the following:

  • to allow 80% of the donation tax credit (the 2023 proposals only provided for a 50% claim);
  • to fully allow deductions for the guaranteed income supplement, social assistance, and workers’ compensation payments;
  • to fully exempt employee ownership trusts from the AMT; and
  • to allow certain disallowed credits under the AMT to be eligible for the AMT carry-forward (i.e., the federal political contribution tax credit, investment tax credits, and labour-sponsored funds tax credit).

Budget 2024 also proposed to provide exemptions for certain trusts established for the benefit for various Indigenous groups. Interested parties can send comments to the Department of Finance Canada, Tax Policy Branch at consultation.legislation@fin.gc.ca by June 28, 2024.

All proposed AMT amendments would apply to taxation years that begin on or after January 1, 2024 (that is, the same day as the 2023 AMT amendments).

There were no broad-based changes to address concerns that many smaller trusts would be subject to AMT under the 2023 proposals. There was also no change to the 2023 proposal that only 50% of interest and financing costs incurred to earn income from property would be deductible for AMT purposes.

Volunteer Firefighters and Search and Rescue Volunteers Tax Credits

Budget 2024 proposed to double the credit amount for the volunteer firefighters tax credit and the search and rescue volunteers tax credit to $6,000. This would increase the maximum tax relief to $900. This enhancement would apply to the 2024 and subsequent taxation years.

Mineral Exploration Tax Credit

As announced on March 28, 2024, the government proposed to extend eligibility for the mineral exploration tax credit for one year to flow-through share agreements entered into on or before March 31, 2025.

Canada Child Benefit (CCB) – Death of a Child

Budget 2024 proposed to extend eligibility for the CCB for six months after the child’s death (the “extended period”) if the individual would have otherwise been eligible for the CCB in respect of that particular child. The extended period would also apply to the child disability benefit, which is paid with the CCB in respect of a child eligible for the disability tax credit. This measure would be effective for deaths that occur after 2024.

Disability Supports Deduction

The disability supports deduction allows individuals who have an impairment in physical or mental functions to deduct certain expenses that enable them to earn business or employment income or to attend school.

Budget 2024 proposed to expand the list of expenses recognized under the disability supports deduction, as follows:

  • where an individual has a severe and prolonged impairment in physical functions, the cost of an ergonomic work chair, a bed positioning device and purchasing a mobile computer cart;
  • where an individual has an impairment in physical or mental functions, the cost of purchasing an alternative input device to allow the individual to use a computer and purchasing a digital pen device to allow the individual to use a computer;
  • where an individual has a vision impairment, the cost of purchasing a navigation device for low vision; and
  • where an individual has an impairment in mental functions, the cost of purchasing memory or organizational aids.

Budget 2024 also proposed that expenses for service animals would be recognized under the disability supports deduction. Taxpayers would be able to choose to claim an expense under either the medical expense tax credit or the disability supports deduction.

This measure would apply to the 2024 and subsequent taxation years.

Home Buyers’ Plan

Budget 2024 proposed to increase the withdrawal limit from the home buyers’ plan from $35,000 to $60,000. This measure would apply to the 2024 and subsequent calendar years for withdrawals made after Budget Day.

Budget 2024 also proposed to temporarily defer the start of the 15-year repayment period by an additional three years for participants making a first withdrawal between January 1, 2022, and December 31, 2025. Accordingly, the 15-year repayment period would start the fifth year following the year the first withdrawal was made.

Qualified Investments for Registered Plans

Budget 2024 invited stakeholders to suggest how the qualified investment rules could be modernized on a prospective basis. Issues under consideration include the following: whether and how the rules relating to investments in small businesses could be harmonized to apply consistently to all registered savings plans; whether annuities that are qualified investments only for RRSPs, RRIFs, and RDSPs should continue to be qualified investments; whether and how qualified investment rules could promote an increase in Canadian-based investments; and whether crypto-backed assets are appropriate as qualified investments for registered savings plans.

Stakeholders are invited to submit comments to QI-consultation-PA@fin.gc.ca by July 15, 2024.

Indigenous Child and Family Services Settlement

Budget 2024 proposes to exclude the income of the trusts established under the First Nations Child and Family Services, Jordan’s Principle, and Trout Class Settlement Agreement from taxation. This would also ensure that payments received by class members as beneficiaries of the trusts would not be included when computing income for federal income tax purposes.

This measure would apply to the 2024 and subsequent taxation years.

Deduction for Tradespeople’s Travel Expenses

Eligible tradespeople and apprentices in the construction industry can currently deduct up to $4,000 in eligible travel and relocation expenses per year under the labour mobility deduction for tradespeople. A previously tabled proposal provided for an alternative deduction for certain travel expenses of tradespeople in the construction industry, with no cap on expenses, retroactive to the 2022 taxation year.

Budget 2024 announced that the government will consider bringing forward amendments to provide a single, harmonized deduction for tradespeople’s travel that respects the proposal.

B. Business Measures

Accelerated Capital Cost Allowance (CCA)

Productivity-Enhancing Assets

Budget 2024 proposed to provide immediate 100% CCA expensing for new additions of property in respect of the following three classes, provided that the property is acquired on or after April 16, 2024 and becomes available for use before January 1, 2027:

  • class 44 (patents or the rights to use patented information for a limited or unlimited period);
  • class 46 (data network infrastructure equipment and related systems software); and
  • class 50 (general-purpose electronic data-processing equipment, such as computers and systems software).

This expensing would only be available for the year in which the property becomes available for use. The claim would be prorated when the taxation year is less than 12 months.

Purpose-Built Rental Housing

Budget 2024 proposed to provide an accelerated CCA of 10% for new eligible purpose-built rental projects that begin construction on or after April 16, 2024 and before January 1, 2031. The property must be available for use before January 1, 2036. Eligible property would be residential complexes with at least four private apartment units or 10 private rooms or suites. At least 90% of the units must be held for long-term rental. Conversions of non-residential real estate, such as an office building, into a residential complex would be eligible. While renovations of existing residential complexes would not be eligible, the cost of a new addition to an existing structure would be. All the normal rules applicable to CCA would apply.

Restrictions

Property that has been acquired on a tax-deferred “rollover” basis, or from a non-arm’s length person, would not qualify for this acceleration of CCA.

Interest Deductibility Limits – Purpose-Built Rental Housing

Rules were previously proposed that would limit the amount of net interest and financing expenses that may be deducted by certain taxpayers in computing taxable income (the EIFEL rules). These proposed rules are currently before Parliament in Bill C-59.

The EIFEL rules provide an exemption for interest and financing expenses incurred in respect of arm’s length financing for certain public-private partnership infrastructure projects. Budget 2024 proposed expanding this exemption to also include situations in which arm’s length financing is used to build or acquire eligible purpose-built rental housing in Canada.

Canada Carbon Rebate for Small Businesses

In general, the federal government has intended to return 90% or more of the fuel charge collected in a province to individuals in that province through the Canada carbon rebate. A portion of the remainder is returned to farmers via a refundable tax credit. The government has committed to return the remainder of fuel charge proceeds to Indigenous governments and small and medium-sized businesses. The participating provinces include Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

Budget 2024 proposed an accelerated and automated process to provide direct carbon rebates (a refundable tax credit) to Canadian-controlled private corporations (CCPCs) in provinces where the federal fuel charge applies. The rebate will be calculated by multiplying the number of persons employed in the province during the calendar year in which the fuel charge year begins, by a payment rate to be specified by the Minister of Finance. For example, the number of persons employed in the 2022 calendar year would be used to calculate the rebate in respect of the 2022-23 fuel charge year. To be eligible for the rebate, the corporation would need to have had no more than 499 employees throughout Canada in the calendar year. The payment rates for each applicable province for the 2019-20 to 2023-24 fuel charge years will be determined once sufficient information is available from the 2023 taxation year.

The tax credit would be paid automatically, with no application required. CRA would automatically determine the tax credit amount for an eligible corporation and pay the amount. It appears as if the number of employees would be determined by reference to the number of T4s filed.

With respect to the 2019-20 to 2023-24 fuel charge years, the rebate would be available where a tax return for the 2023 taxation year is filed by July 15, 2024. Budget 2024 indicated that this would deliver over $2.5 billion directly to 600,000 small- and medium-sized businesses.

Clean Economy Investment Tax Credits

Budget 2024 included a new 10% electric vehicle supply chain investment tax credit on the cost of buildings used in key segments of the electric vehicle supply chain, for businesses that invest in Canada across three supply chain segments:

  • electric vehicle assembly;
  • electric vehicle battery production; and
  • cathode active material production.

The credit would apply to property that is acquired and becomes available for use on or after January 1, 2024 (it would be fully eliminated by the end of 2034).

Budget 2024 also proposed that the clean technology manufacturing investment tax credit would be adjusted to incorporate polymetallic projects (projects engaged in the production of multiple metals; draft legislation will be released for consultation in summer 2024 and the government targets introducing legislation in fall 2024).

More details on the clean electricity investment tax credit were also provided (draft legislation was not included).

Mutual Fund Corporations

Budget 2024 proposed to preclude a corporation from qualifying as a mutual fund corporation where it is controlled by or for the benefit of a corporate group (including a corporate group that consists of any combination of corporations, individuals, trusts, and partnerships that do not deal with each other at arm’s length). This measure would apply to taxation years that begin after 2024.

Non-Compliance with Information Requests

Budget 2024 proposed several amendments to expand CRA’s ability to gather information. They are intended to enhance the efficiency and effectiveness of tax audits of uncooperative taxpayers and facilitate the collection of tax revenues on a timelier basis. The proposed measures included the following:

  • CRA would be permitted to issue a “notice of non-compliance” to a taxpayer that fails to comply with a requirement or notice to provide information;
  • where a notice of non-compliance is issued, a penalty of $50 per day ($25,000 maximum) would apply until the request is complied with;
  • CRA would be permitted to require that information (oral or written) or documents included in a requirement or notice be provided under oath or affirmation;
  • when CRA obtains a compliance order against a taxpayer from a court, the taxpayer would be subject to a penalty equal to 10% of the aggregate tax payable by the taxpayer for each related taxation year for which aggregate tax payable exceeds $50,000; and
  • various extensions of the time limit for reassessments would apply, generally providing CRA with additional time equal to the period of non-compliance, or of any legal dispute related to a requirement or notice.

C. International Measures

Crypto-Asset Reporting Framework

Budget 2024 proposed to impose a new annual reporting requirement on crypto-asset service providers that deliver business services effectuating exchange transactions in crypto-assets (e.g. crypto exchanges, crypto-asset brokers and dealers, and operators of crypto-asset automated teller machines).

Crypto-asset service providers would be required to report to CRA, in respect of each customer and in respect of each crypto-asset, the annual value of:

  • exchanges between the crypto-asset and fiat currencies;
  • exchanges for other crypto-assets; and
  • transfers of the crypto-asset, including the requirement to report information in respect of a customer of a merchant where the crypto-asset service provider processes payments on behalf of the merchant and the customer has transferred crypto-assets to the merchant in exchange for goods or services with a value exceeding US$50,000.

Reportable crypto-assets would exclude central bank digital currencies and specified electronic money products (e.g., digital representations of fiat currencies), which would be reportable under proposed amendments to the Common Reporting Standard included in Budget 2024.

In addition to information on crypto-asset transactions, crypto-asset service providers would be required to obtain and report information on each of their customers, including name, address, date of birth, jurisdiction(s) of residence and taxpayer identification numbers for each jurisdiction of residence. If a customer is a corporation or other legal entity, the same information would need to be collected and reported in respect of the natural persons who exercise control over the entity. Reporting would be required with respect to both Canadian resident and non-resident customers.

Withholding for Non-Resident Service Providers

Budget 2024 proposed to provide CRA with the legislative authority to waive the 15% withholding requirement on payments to non-residents for services provided, over a specified period, if either of the following conditions are met:

  • the non-resident would not be subject to Canadian income tax in respect of the payments because of a tax treaty between its country of residence and Canada; or
  • the income from providing the services is exempt income from international shipping or from operating an aircraft in international traffic.

D. Sales and Excise Measures

Extending GST Relief to Student Residences

In 2023, the government announced that it would temporarily remove the GST from new purpose-built rental housing projects, such as apartment buildings, student housing and senior residences built specifically for long-term rental accommodation.

Budget 2024 proposed to apply the normal GST/HST rules that apply to other builders (i.e., paying GST/HST on the final value of the building) in respect of new student housing projects such that they can claim the enhanced GST rental rebate. Budget 2024 also proposed to allow universities, public colleges and school authorities that operate on a not-for-profit basis to access the rebate with respect to new student housing. This would not be available to universities, public colleges and school authorities that operate on a for-profit basis.

The proposed measures would apply to student residences that begin construction after September 13, 2023 and before 2031, and that complete construction before 2036.

GST/HST on Face Masks and Face Shields

Budget 2024 proposed to repeal the temporary zero-rating of certain face masks or respirators and certain face shields under the GST/HST. This measure would apply to supplies made on or after May 1, 2024.

E. Other Measures

Housing Plan

Budget 2024 included a variety of proposed initiatives to stimulate home construction. In addition to tax-related measures discussed elsewhere in this document, a variety of non-tax measures were proposed, including the following:

  • first-time homebuyers will be permitted to obtain CMHC-insured mortgages with a 30-year amortization period if they purchase a newly built home, commencing August 1, 2024;
  • the Canada Mortgage Charter will include an expectation that permanent amortization relief will be provided to allow existing homeowners to reduce their payments by extending their mortgage term in order to facilitate homeowners being able to retain their homes; and
  • expanded efforts will be undertaken to unlock government-owned real estate to be used for home construction, including the use of land held by the Department of National Defense and converting underused federal offices into homes.

Canada Pension Plan (CPP)

Budget 2024 proposed to coordinate with provincial partners to make amendments to the CPP, including the following:

  • enhance the death benefit for certain contributors;
  • add a children’s benefit for part-time students whose parent is deceased;
  • extend eligibility for children’s benefits where a disabled parent reaches age 65; and
  • end eligibility for survivor’s benefits to people who are legally separated after a division of pensionable earnings.

Canada Disability Benefit

Budget 2024 provided additional details on the launch of the Canada disability benefit. Payments under this benefit are intended to commence in July 2025, following the successful completion of the regulatory process and consultations with persons with disabilities. A maximum annual benefit of $2,400 would be available to low-income persons between the ages of 18 and 64 eligible for the disability tax credit. The benefit is expected to support over 600,000 individuals.

Student Loan Forgiveness

Forgiveness of student loans for health care and social services professionals working in rural or remote areas would be expanded from its current coverage of, doctors and nurses to also be available to early childhood educators, dentists, dental hygienists, pharmacists, midwives, teachers, social workers, personal support workers, physiotherapists and psychologists.

Canada Learning Bond

The Canada learning bond is a government contribution of up to $2,000 per year to registered education savings plans (RESPs) for children in low-income families. In order to increase the receipt of these amounts, Budget 2024 proposed the following initiatives:

  • commencing with children born in 2024, RESPs would be opened automatically for children eligible for these payments in the year they turn four years of age;
  • caregivers of older children eligible for these payments will be permitted to apply for the creation of a similar RESP, and the automatic deposit of these funds; and
  • the maximum age to retroactively claim the Canada learning bond will be increased to 30 from 20.

Charities and Qualified Donees

Budget 2024 proposed several amendments relating to the charitable sector, including the following:

  • modernizing the way in which CRA provides services and communicates information relating to registered charities and other qualified donees;
  • amending certain rules for qualifying foreign charities;
  • removing the requirement that official donation receipts contain:
    • the place of issuance of the receipt;
    • the name and address of the appraiser, if an appraisal of the donated property has been done; and
    • the middle initial of the donor; and
  • updating the regulations to expressly permit charities to issue official donation receipts electronically, provided that they contain all required information, they are issued in a secure and non-editable format and the charity maintains an electronic copy of the receipts.

The above measures, other than those related to foreign charities, apply upon royal assent.

Canada Revenue Agency (CRA) Funding

Additional funding will be provided to CRA for initiatives including the following:

  • ongoing efforts to identify non-compliance in real estate transactions;
  • pilot new automatic filing services SimpleFile Digital and SimpleFile by Paper to increase filings by low-income taxpayers; and
  • improve the efficiency of its call centres.

Consultations and Reviews

Budget 2024 also announced the following areas proposed to be reviewed, some with formal consultations:

  • modernizing the scientific research & experimental development tax incentive program, with an intention to increase annual funding by $150 million;
  • implementing a tax on residentially zoned vacant land; and
  • issuing draft legislation to limit non-sufficient funds (NSF) charges to $10, and restrict their application in various other ways.

F. Previously Announced Measures

Budget 2024 confirmed the government’s intention to proceed with the following previously announced tax and related measures, as modified to consider consultations, deliberations and legislative developments, since their release.

  • Legislative proposals released on March 9, 2024, to extend by two years the 2% cap on the inflation adjustment on beer, spirit and wine excise duties, and to cut by half for two years the excise duty rate on the first 15,000 hectolitres of beer brewed in Canada.
  • Legislative proposals released on December 20, 2023, including with respect to the following measures:
    • the clean hydrogen investment tax credit and clean technology manufacturing investment tax credit;
    • bona fide concessional loans;
    • denial of expenses for certain short-term rentals;
    • vaping excise duties; and
    • international shipping.
  • Legislative and regulatory proposals announced in the 2023 Fall Economic Statement, including with respect to the following measures:
    • the Canadian journalism labour tax credit;
    • proposed expansion of eligibility for the clean technology and clean electricity investments tax credits to support generation of electricity and heat from waste biomass;
    • the addition of psychotherapists and counselling therapists to the list of health care practitioners whose professional services rendered to individuals are exempt from GST/HST;
    • proposals relating to the GST/HST joint venture election rules;
    • the application of the enhanced GST rental rebate to qualifying co-operative housing corporations; and
    • proposals relating to the underused housing tax.
  • Regulatory proposals released on November 3, 2023, to temporarily pause the federal fuel charge on deliveries of heating oil.
  • Legislative and regulatory amendments to implement the enhanced GST rental rebate for purpose-built rental housing announced on September 14, 2023.
  • Legislative proposals released on August 4, 2023, including with respect to the following measures:
    • carbon capture, utilization and storage investment tax credit;
    • clean technology investment tax credit;
    • labour requirements related to certain investment tax credits;
    • enhancing the reduced tax rates for zero-emission technology manufacturers;
    • flow-through shares and the critical mineral exploration tax credit – lithium from brines;
    • employee ownership trusts;
    • retirement compensation arrangements;
    • strengthening the intergenerational business transfer framework;
    • the income tax and GST/HST treatment of credit unions;
    • a tax on repurchases of equity;
    • modernizing the general anti-avoidance rule;
    • providing relief in relation to the GST/HST treatment of payment card clearing services;
    • extending the quarterly duty remittance option to all licensed cannabis producers;
    • including revised luxury tax draft regulations to provide greater clarity on the tax treatment of luxury items; and
    • excessive interest and financing expenses limitations.
  • Legislative proposals released on August 9, 2022, including with respect to the following measures:
    • substantive Canadian-controlled private corporations;
    • remaining legislative and regulatory proposals relating to the GST/HST,
    • excise levies and other taxes and charges announced in the August 9, 2022 release;
    • legislative amendments to implement the hybrid mismatch arrangements rules announced in Budget 2021; and
    • regulatory proposals released in Budget 2021 related to information requirements to support input tax credit claims under the GST/HST.

 

#20 Q1 2024 Market Outlook with Keith Allan

Friday, April 19th, 2024

In the latest episode of the Polestar Podcast, financial experts Kevin Parton and Keith Allan delve into the current market conditions and provide valuable insights for investors. The discussion revolves around the impact of interest rate movements and strategies for navigating market volatility.

 

 

Podcast Highlights:

  • Explore how market sentiment reacts to speculation about interest rate movements and its influence on investor decision-making.
  • Learn the importance of staying resilient during market pullbacks, maintaining a long-term perspective, and seizing opportunities to acquire discounted assets.
  • Discover the significance of disciplined investing habits like dollar-cost averaging and diversification in mitigating risk and maximizing returns.
  • Understand the necessity of removing emotion from investment decisions, and how it contributes to long-term investment success.
  • Gain insights into the mindset needed to navigate market fluctuations, focusing on long-term goals rather than short-term market movements, for sustained investment growth.

 

By understanding the dynamics of interest rates and adopting disciplined investment strategies, investors can weather market volatility and position themselves for long-term success. Tune in to gain further insights into navigating today’s ever-changing financial landscape.

 

About the Guest – Keith Allan

Keith Allan is a Portfolio Manager with Harness Investment Management. Harness has engaged in a strategic partnership with VELA Wealth and provides discretionary portfolio management for many of VELA’s clients. With more than 15 years of buy-side investment management experience, Keith brings a wealth of knowledge and experience to provide insight and guidance to clients regarding their investment portfolios. At Harness, Keith is responsible for developing and maintaining investment portfolios for VELA clients. Keith is dedicated to fostering long-term relationships with high-net-worth individuals and families by providing a clear and transparent vision to help them achieve their investment goals. To learn more, please visit Harness Investment Management team page.

 

About the Host – Kevin Parton

Kevin Parton, CFP professional, specializes in personal and business financial planning, tax reduction, and estate planning. Kevin is diligently concentrating on client education as a powerful strategy for building financial certainty. As no financial situation is the same, Kevin and his team monitor clients’ plans and implement personalized strategies to reduce their personal and corporate taxes, and protect their income, assets, and loved ones against the financial consequences of a serious illness, injury or death, ensuring clients maintain financial certainty and peace of mind. To read more, please visit the VELA team page.

 

The episode is also available on:

  

  

 

#19 Morgan Housel: On Wealth, Wisdom & the Pursuit of Happiness

Thursday, April 11th, 2024

In this episode of the Polestar Podcast, host Jason Boudreau speaks with Morgan Housel, author of “The Psychology of Money” and “Same as Ever.” Morgan shares insights from his unique journey from a ski-racing youth to a leading financial writer, emphasizing hard work, curiosity, and the realization that personal inadequacy led to greater efforts in his education and career.

Morgan explores the balance between optimism and pessimism in wealth management, drawing from his professional experiences and his writings. He highlights the critical role of understanding human behavior in financial decisions and discusses the complexities of entrepreneurship, the pursuit of happiness, and parenting in the age of social media.

This episode is a deep dive into Morgan’s philosophy on financial psychology, the importance of self-awareness, and the challenges of navigating success and satisfaction in today’s digital and materialistic world.

 

 

Key highlights of this episode:

  • Morgan Housel’s unique journey to acclaimed financial writer, highlighting the value of hard work and the impact of early life experiences on career choices.
  • The importance of balancing optimism and pessimism in wealth management.
  • Insights into behavioral finance, emphasizing the psychological aspects of money management and the power of understanding human behavior in financial success.
  • The role of entrepreneurship and the realities of managing a business, addressing the challenges and rewards of navigating the business world.
  • The impact of social media on happiness and self-comparison, with a focus on the challenges of parenting in the digital age and fostering a healthy relationship with technology.
  • Morgan’s perspectives on the pursuit of happiness, success, and fulfillment, offering listeners a guide to navigating life’s financial and emotional complexities.

 

About the Guest- Morgan Housel

Morgan Housel is a partner at The Collaborative Fund.

He’s the New York Times Bestselling author of The Psychology of Money and Same As EverHis books have sold over five million copies and have been translated into more than 50 languages.

Morgan is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, and winner of the New York Times Sidney Award. In 2022, MarketWatch named him one of the 50 most influential people in markets. He serves on the board of directors at Markel.

 

 

About the Host – Jason Boudreau

Jason has built VELA Wealth into an established life and estate planning firm, guiding families as they make meaningful choices at the intersection of life and wealth. Jason’s areas of expertise include intergenerational wealth transfer and estate planning with a focus on advanced insurance-based solutions that incorporate philanthropy and legacy planning. Leveraging these specialties, Jason brings a fresh perspective and outside-the-box thinking to the strategic planning process. To read more, please visit the VELA team page.

 

The episode is also available on:

  

  

 

#18 Alternative Investment Insights with Keith Allan

Friday, March 1st, 2024

In the new episode of the VELA Wealth Polestar Podcast, Kevin Parton, Partner and Senior Advisor, and Keith Allan, Portfolio Manager at Harness Investment Management, explore the world of alternative investments, offering a behind-the-scenes look at how VELA Wealth, Harness Investment Management, and Purpose Investments collaborate to unlock unique opportunities. They challenge listeners to rethink traditional portfolio strategies, emphasizing the importance of diversification with private assets like equity, debt, and real estate.

 

 

In this episode of the Polestar Podcast, you’ll learn:

• how VELA Wealth, Harness Investment Management, and Purpose Investments collaborate to unlock unique opportunities,
• why traditional portfolio strategies are being challenged,
• how alternative investments can revolutionize your portfolio,
• the power of diversification with private assets like equity, debt, and real estate.

 

About the Guest – Keith Allan
Keith Allan is a Portfolio Manager with Harness Investment Management. Harness has engaged in a strategic partnership with VELA Wealth and provides discretionary portfolio management for many of VELA’s clients. With more than 15 years of buy-side investment management experience, Keith brings a wealth of knowledge and experience to provide insight and guidance to clients regarding their investment portfolios. At Harness, Keith is responsible for developing and maintaining investment portfolios for VELA clients. Keith is dedicated to fostering long-term relationships with high-net-worth individuals and families by providing a clear and transparent vision to help them achieve their investment goals. To learn more, please visit Harness Investment Management team page.

 

About the Host – Kevin Parton
Kevin Parton, CFP professional, specializes in personal and business financial planning, tax reduction, and estate planning. Kevin is diligently concentrating on client education as a powerful strategy for building financial certainty. As no financial situation is the same, Kevin and his team monitor clients’ plans and implement personalized strategies to reduce their personal and corporate taxes, and protect their income, assets, and loved ones against the financial consequences of a serious illness, injury or death, ensuring clients maintain financial certainty and peace of mind. To read more, please visit the VELA team page.

 

The episode is also available on:

  

  

 

 

The Podcast Transcript

 

Kevin Parton:

Hello. This is Kevin Parton from VELA Wealth, and this is the Polestar podcast. I am lucky enough to be back here in the interview seat with portfolio manager Keith Allan. How are you doing today?

 

Keith Allan:

Doing well, Kevin, thank you for having me.

 

Kevin Parton:

All right. I’m excited about what we’re talking about today – alternative investments for a variety of reasons. In the last couple of years, it’s become quite a hot topic and I think there’s much to be explored both in the scheme of where alternative investments fit and how it relates to the average person. But, firstly, I want to talk about three different entities: VELA Wealth, Harness Investment Management, and Purpose Investments. Can you please provide some helpful context and explain the relationship between the three companies?

 

Keith Allan:

I can understand from a client’s perspective how it can get a bit confusing and convoluted at times when we’ve got several entities all commingling. I’d be happy to shed some light on each entity and explain what they provide and how they fit into the client’s overall financial landscape.

VELA Wealth is the wealth manager in the sense that they are the relationship manager for the client. They focus on planning the client’s entire financial landscape, including insurance and all other types of needs. Purpose Investments or Purpose Unlimited, as it’s called now, is the portfolio management entity and Harness Investment Management is the registrant under that umbrella. So, Harness acts as the fiduciary. As the portfolio manager, while I work exclusively with VELA clients, my licensing is through Harness Investment Management as the registrant. So that way I’m licensed with the Securities Commissions across Canada through Harness, which falls under the Purpose Unlimited umbrella. So, you can think of Purpose almost like a Black Rock or a Vanguard. Their whole MO is to bring products to market, ETFs, funds, and portfolios. They’re separately managed account portfolios, which are the same accounts we use for our clients. So, Harness was branched off from Purpose to provide these products to high-net-worth or ultra-high-net-worth clients and the retail landscape, which is where VELA comes into play. VELA has entered into a relationship or a strategic partnership with Harness to allow its clients the opportunity to invest in Purpose’s product through Harness. I’m hoping clients aren’t more confused after I explain that than they were before I explained it. I did my best to hopefully demystify the whole relationship between the three entities.

 

Kevin Parton:

From where I’m sitting, I think you did a pretty good job. It’s unique right now in the Canadian landscape, but this sort of platform makes what VELA is doing more and more accessible to the Canadian market. Historically, there have been large entities where everything was under one umbrella, but to operate in that space, you had to kind of preexist as a massive entity. And we’re in the age now of more boutique-style firms that can tailor and cater more specifically to their clients. This is the mechanism by which it’s done at a level people are familiar with.

 

Keith Allan:

Yes, exactly. I think the whole thing about the relationship and how this is structured is to give the clients the best of all worlds because it allows each person to focus on what they do best and to give that to the clients in context so that clients are ultimately enhancing not just their portfolio but their overall financial situation, whether it’s planning insurance investments, which are the three main entities of the family balance sheet. We want to be able to give our clients the best in class and this is the relationship that allows us to facilitate that.

 

Kevin Parton:

“Aces in their places” comes to mind as you are saying that this allows us to ensure that we have the best people for the job. This brings me to the next point and the purpose of this conversation – alternative investments.

So, as I was saying, alternative investments have become a common word or term these days to sort of fad level after 2022 when stocks and bonds went down in the same year and one of only a few historical years in which that’s been the case.  It began a big conversation around the different assets you can invest in what are the alternatives? What do you do? I think a problem with it becoming such a common term is that it loses its meaning and where it originally came from, what it describes starts to sort of take on a mind of its own. And sometimes far worse as it gets used so commonly that that people think that they’re supposed to know what it means and then they don’t do the research into exactly what it is, or they try and delve into things themselves.  This is where I want to start. What exactly is an alternative investment so that our listeners can be clear on the definition before we dive a little bit deeper into this subject?

 

Keith Allan:

So, alternative investments can be described or defined as an investment asset class outside of your traditional bonds and equities in cash. So, anything that doesn’t fall in that traditional stock blue chip equity, small cap, large cap stock, or your traditional bond, your fixed income, corporate bonds, government bonds, GICs, cash, or other money market instruments, would be considered an alternative investment. It can be anything from commodities to real estate to derivatives, private equity, private debt or private real estate, hard real estate infrastructure, or synthetic instruments that mimic real estate and provide a yield. Many different types of products can be defined as alternative investments, but the reality it should be something to be looked at outside of your traditional asset classes. And for us, that’s what’s important and what we feel will help drive returns for our clients moving forward.

 

Kevin Parton:

It sounds like there’s quite a large array of things that fall under the alternative asset classes, which kind of make and I think sort of lends itself to where the conversation 2022 is going is stocks, bonds, and cash are traditional, but a much smaller shelf relative to everything that falls under alternate assets. Then the next evolution is well, how are alternative assets being included in the design of a portfolio to sort of work in conjunction with the traditional non-alternative assets and who makes those decisions?

 

Keith Allan:

Traditionally, if you go twenty-thirty years back, alternative investments weren’t a part of the portfolio. Everyone talks about your classic 70/30 portfolio, 70% equities, 30% bonds, or your classic 60/40 portfolio, 60% equities, 40% bonds. Set it, forget it, move in. In our opinion, that type of portfolio structure is a very antiquated approach to investment management because the reality is we want to achieve alpha for our clients, and alpha is defined as the excess return above and beyond your benchmark. To do that in today’s environment, you need to be able to have other asset classes, uncorrelated asset classes to your traditional equities and fixed income. That’s how we look at alternative investments. And now it’s peeling back the layers of what type of alternative investments we want to use to achieve that alpha that we’re looking for. Like I said before, there are many different layers there, but for us, we want to drive return for our clients.

There’s an efficient market hypothesis where all available information is priced into the market at any given time. So, to truly achieve alpha, it’s almost impossible because all the information is showing in the market at that specific point in time. So, portfolio managers are somewhat obsolete if you believe this because there’s no chance to add alpha if you’re looking at public markets and traditional markets. If all the information is there. So, whether we believe that efficient market hypothesis or not, that’s a whole other discussion. But what we do believe is that we are not obsolete as portfolio managers, and we indeed can achieve that excess return. But we need to do it in non-traditional asset classes like alternatives. So, I just wanted to throw that little tidbit in there because I think it’s important that people listening to this understand -if you are a believer in efficient market hypothesis and all information is truly reflected in public markets, there is still a chance for us to return that alpha to clients and earn our keep, so to speak. We believe we can and we believe we’ve done that. So that’s a little bit of a sidebar, but I want to throw that in there.

 

Kevin Parton:

I appreciate you throwing that in there because of that. That is a common conversation around index investing and what people want to do with their money, and I think this is where alternatives play a role as it opens up the portfolio to sort of a litany of other as you said noncorrelated assets that are important and something that again keeps coming up now with sort of the big seven tech companies.  Nvidia (NVDA.O) just almost reaching or passing 2 trillion as these indexes are made up by fewer and fewer companies or the moves that occur in there are as a result of what’s happening in fewer and fewer companies. So, I think to your point, the opportunity to add value is starting to grow because of the fewer and fewer companies in these indexes… but that is a conversation for another podcast.

 

Something that I know to be true at least, and maybe this is more of a question than anything, but alternative investments used to be only accessible to pension funds or institutional investors maybe because of technology or just sort of necessity has changed. I think that’s also why it’s become a more common discussion as alternative investments are becoming more and more accessible to retail investors. Can you talk a little bit about why that evolution has happened?

 

Keith Allan:

So that’s a great point, Kevin. And what we’ve done with Purpose and Harness is we’ve been able to bring product to market that normally to your point would only be offered in the biggest pension funds or the biggest money managers in the world managing billions and billions of dollars in a pension fund or a hedge fund. So, why should it just be the largest funds in the world getting access to these types of investments? We feel that our clients should be able to get access to those, maybe not in the same direct manner, but certainly very close in terms of how they hold it, and how it represents the overall asset allocation for their portfolio. So, what we’ve done is we’ve taken private assets, private equity, private debt, private real estate and unitized it to our clients so they can gain access to these types of investments. We feel very grateful that we’re able to do that through our partnership with Purpose and Harness and VELA because not a lot of investment managers out there can offer this to their clients in the unitized form. So, that again separates what we’re able to do for our clients outside of a lot of other investment managers.

Kevin Parton:

Which brings up two interesting points. The first one is – is this sort of a unique offering through Purpose, some different alternative assets that are available in this unitized mechanism? Is that unique for Purpose or unique with VELA or are these accessible at a litany of different firms in the market?

 

Keith Allan:

The answer to your second question is no. They are not readily available to other outside firms in the market. There are other private investments. If your portfolio is being managed by another firm, you may have access to other types of private investments.

Because of the strategic partnership we have, we’re able to gain access to these particular funds, but also at a price point that is very accessible for clients and they’re not paying unreasonable management fees to get access to this. I think that what separates us from other firms is that we’re able to get access to them, but at a price point that is very enticing for clients and they’re not paying a gigantic management fee like they would be elsewhere.

 

Kevin Parton:

Fair enough. I guess that the barrier to entry into these products as far as a dollar amount isn’t so high that it limits who can access them.

 

Keith Allan:

Yes, exactly.

 

Kevin Parton:

I know that Purpose has a relationship now with three different alternative investments. Are you able to speak a little bit to those three at this point?

 

Keith Allan:

Yes, absolutely. So, Purpose has partnered with three firms based in the United States that specialize in private assets. In that partnership, they’ve launched three separate funds, private equity, private debt, and private real estate. Purpose has now been able to bring this to the Canadian marketplace for clients that are partnered with Purpose, Harness, or VELA, and provide these funds for them.

The private equity fund is partnered with a firm called Pantheon in the United States, the private debt is with Apollo and the private real estate is with a firm called Blue Rock. So, together with each of those three firms, Purposes has created a fund that is sub-managed by those aforementioned firms, but available to Canadian retail investors. The track record for all these firms is remarkable which is why Purpose decided to partner with each of them respectively, for that particular asset class. Due diligence has been done and the companies have been vetted after a lot of research, it was decided these were the best partner firms to go with to provide these private assets for the clients.

 

Kevin Parton:

If I’m hearing you’re right, when we started talking about alternative investments, there was a very large array of available things that fit under that category and what Purpose is done is to acknowledge all the options that exist and kind of distill it down through a rigorous process and now said, “So, these sort of three options are the best that we want to offer on our platform or to our clients within the alternative asset space?”

 

Keith Allan:

Yes, exactly. So, I think there is a huge appetite from investors for private assets. I know in the beginning I talked about how commodities, derivatives, and other types of assets could be deemed alternatives. However, the largest appetite amongst retail investors is for private equity, private real estate, and private debt. It is difficult to be able to access that in the Canadian landscape. So, Purpose knowing that there is a huge demand for this from investors across Canada, focused on the initiative to be able to establish 3 funds in those private assets and be able to bring them to market for retail investors.

So, we feel that the private equity, the private credit or private debt, and the private real estate sort of tick all the boxes in terms of increasing diversification for clients from traditional asset classes, as well as providing a reliable income stream because all of these funds pay a distribution quarterly and enhanced returns or achieve the alpha that I spoke about earlier. Those three funds do all three of those things, which is why these are the ones that we feel are best suited for our clients moving forward.

 

Kevin Parton:

Right, okay. Now that we talked about that, how do you decide what fits into a portfolio? You talked about the traditional 60/40 or 70/30 portfolio structures earlier. What the mix is supposed to be if you incorporate alternative assets in there?

 

Keith Allan:

I think ultimately it comes down to each client, their appetite for risk, and their ability to take on risk because undoubtedly these private assets do carry more risk than perhaps your traditional equities and bonds, which is why they’re able to ultimately achieve higher returns. It’s a direct correlation between the risk you’re willing to take and the return you are getting. Now there is some volatility and there are certain restrictions within these funds in terms of being able to get your money back, being able to put money in, and withdrawing it. They’re not overly restrictive. It’s not like you put your money in and you’re never going to get it back, but there are some restrictions in place and clients need to be aware of that when they do invest in these types of funds as they aren’t as liquid as traditional public equity or public debt. So, we are being able to weigh that for clients. What is their appetite for risk? What is their asset allocation? What are they looking for? And for some clients, it might not be appropriate. We feel that for most clients it is because again, we want to be able to drive return for clients, and to do that, we need to be able to diversify the portfolio. Certainly, for clients that rely on taking income out of their portfolio every month or have a huge upcoming purchase, we may not look to go private as much as we would for a client that has a long time horizon and does not require true liquidity needs at this point. So, every client has looked at it on a case-by-case basis to truly understand if these types of investments are appropriate for them.

You asked me what is the traditional or the new asset mix that we should be looking at. Well, I can’t answer that because as I said, every client is different. We feel that it’s entirely appropriate, or else being equal, for clients to have roughly between 8% and 12% in private assets just given the current climate, and for some clients, it will be less. I don’t necessarily know if we would ever go more than that, but 8% to 12% is what we look at in terms of private assets and alternative assets. Right now, those alternative assets are made up primarily of private equity, private debt, and private real estate.

Kevin Parton:

Great. I guess with the change in interest rates, cash is a little bit more of something you’d consider in a portfolio. So, the traditional mix was equity fixed income and now it looks like alternatives and cash can be in positions three and four within the building of a portfolio. I only mentioned that to say that when you talked earlier about alpha and adding the values of portfolio manager, well, when you double the assets, you tend to consider putting in a portfolio that adds a little more complexity. Can you tell us what sort of the changing environment both in bringing alternatives into portfolio management more readily and fluctuating interest rates does when you’re looking at portfolio construction?

Keith Allan:

Well, we’ve said for some time now that cash is an asset class, whereas before it was kind of just a sidebar, right? We always hold a little bit of cash in client’s portfolios, but we did not truly look at it as an asset class because there was virtually no yield on it. But now when you’re seeing banks offering very high interest rates and we have our cash product that we offer for clients that yields well north of 5% you can say that this is an asset class for clients. When we build out a portfolio, we’re looking at equities and fixed income, but cash falls right next in line to that, and again, alternatives, private equity, private debt, and commodities. Are we going to go ahead and hold 20% cash for clients? Well no. That will not be a good job as portfolio managers If we’re just going to say, “We’re going to hold 20% cash across the board”. We might hold a little bit higher than normal in client’s portfolios in cash to provide us the opportunity to act when there’s an asset or a particular name we like and we want to be able to deploy that money easily and readily. You’ll be getting a 5% yield on that, while a lot of bonds weren’t offering that. So, we can put that money there, get the tidy yield on it, and have it readily available for us to deploy, right? But again, it’s not stagnant and it’s always dynamic. We’re always thinking about what are we going to do in two to three months from now, do we want to have cash available, and what other types of assets are we looking at to enhance the return and drive return for our clients. So, yes, cash is an asset class. It’s not always going to be an asset class.

I think to your point about interest rates, we’ve seen interest rates drop to historical lows during COVID-19 and now they’ve jumped back up to highs that a lot of the population haven’t seen in their lifetime. What’s going to happen next? Well, inevitably, interest rates will come down. I know they haven’t yet. The Bank of Canada has gone on record saying that probably at some point this spring, the US Fed same deal. So, as the interest rates come down, fixed income is going to rise, and the value of fixed-income assets moves inversely to what the interest rates do. So, there may be an opportunity to hold more fixed income or other types of assets that are going to increase in value. But right now, we’re still active in holding cash for clients and we think it’s prudent to do so.

Kevin Parton:

Great. I’m going to try and summarize some of the points we went over today. So, we started with talking about alternative assets, which are effectively anything outside of cash, stocks, or bonds. The list was quite large, but we sort of narrowed that down to where the appetite is, which is private debt, private equity, and private real estate. Purpose has done its due diligence and found three big players in each of those spaces such as  Apollo, Pantheon, and Blue Rock, which have been unitized to give our clients access to really good quality private assets as a part of their portfolio, especially through 2022. It’s become apparent that the traditional mix of stocks and bonds isn’t necessarily what’s going to be advantageous going forward. So, it’s becoming more and more prudent to include alternative investments or private assets in the portfolio. That is a decision that’s made on a case-by-case basis based on clients, but being somewhere where you can gain access to that type of advice is what’s going to become a differentiator or a difference maker.

So, I think that’s kind of where we can summarize everything we’ve talked about so far. I’m going to turn it back over to you, Keith. Can you please give one or two bits of advice or talking points to your perspective on alternatives before we wrap this up?

Keith Allan:

Thanks, Kevin. Everything you said there is a perfect summary of what we spoke about. The one piece of advice I would give is to be open-minded and be able to think outside the box and outside of the antiquated 70/30 or 60/40 portfolio. If you’re looking to drive value moving forward and enhance return in your portfolio the 70/30 portfolio will do its thing but ultimately you need to be able to look outside traditional assets to truly drive return. We as a team have done a lot of work on this and really done our due diligence in terms of understanding what private assets mean in portfolios, and how they can diversify portfolios and provide uncorrelated returns to traditional asset classes. So, I think for people that don’t know a lot about private assets or have a negative connotation as they have heard a friend who got into some private fund and lost all… Well, no, that’s not the private assets we’re looking to add, it doesn’t work like that as these have been vetted, due diligence has been done and we truly believe that they are going to drive value for our clients.

Kevin Parton:

Awesome. I appreciate it. I think this is great information for our listeners so that they can get a little bit of an inside scoop and understand more about alternatives and private investments. We’re always available if there are additional questions. Thank you for your time and I look forward to talking to you again soon.

 

Keith Allan:

Absolutely. Thank you for having me, Kevin.

 

 

Disclaimer

The information provided in the podcast transcript is designed for general informational purposes only and is not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.

#17 Kevin England – A Life Steered by Passion And Community

Thursday, February 15th, 2024

Kevin England, President of the England Group, shares his journey from a dairy farm upbringing to a successful career in real estate and philanthropy on the recent Polestar Podcast by VELA Wealth. Raised with strong family values and a work ethic, Kevin’s early experiences taught him the importance of integrity and community involvement. His transition to the real estate sector led to innovative approaches to property management, emphasizing long-term thinking and transparency. Kevin’s passion for making a difference is evident in his philanthropic endeavors, including organizing car shows to raise funds for cancer research and hospice care, showcasing his commitment to giving back.

 

 

Key highlights of this podcast:

  • Childhood Lessons: Discover how Kevin’s upbringing on a dairy farm instilled in him strong values of work ethic and community involvement, shaping his approach to business and life.
  • Career Evolution: Learn about Kevin’s transition from working in construction and the tar sands to a successful career at IBM, where he honed his skills in communication and long-term thinking.
  • Real Estate Innovation: Explore Kevin’s innovative strategies for property management, including his focus on transparency, long-term planning, and adding value to properties through amenities and services.
  • Philanthropic Passion: Hear about Kevin’s deep commitment to philanthropy, from organizing car shows to raise funds for cancer research and hospice care to supporting recovery centers for young men in need.
  • Building Trust: Gain insight into Kevin’s approach to building trust and rapport with clients, emphasizing integrity, transparency, and a long-term perspective in all his dealings.
  • Legacy of Impact: Discover how Kevin’s dedication to giving back has created a lasting legacy, inspiring others to follow their passions and make a difference in their communities.

 

About the Guest – Kevin England

Kevin England: A conservative, innovative, and bold entrepreneur with over 30 years of success. From his roots on a Pembroke farm, he embodies hard work and determination. After graduating from Carleton University, he honed his skills at IBM Canada Ltd. and Qualico Developments before founding the England Group in 1986. Based in Vancouver, Kevin England leads with integrity, ensuring everyone wins in the deal. To learn more, please visit the England Group website.

 

 

About the Host – Jason Boudreau

Jason has built VELA Wealth into an established life and estate planning firm, guiding families as they make meaningful choices at the intersection of life and wealth. Jason’s areas of expertise include intergenerational wealth transfer and estate planning with a focus on advanced insurance-based solutions that incorporate philanthropy and legacy planning. Leveraging these specialties, Jason brings a fresh perspective and outside-the-box thinking to the strategic planning process. To read more, please visit the VELA team page.

 

The episode is also available on:

  

  

 

 

 

The Podcast Transcript:

 

Jason Boudreau:

Welcome, everybody to the Polestar Podcast by VELA Wealth. Today we have the pleasure of having Kevin England. Kevin is the President of the England Group, the company focuses on a diverse portfolio of real estate assets and has been around for many years. Welcome, Kevin. Thank you so much for being here today.

 

Kevin England:

Hey, Jason.

 

Jason Boudreau:

Great to have you here and looking forward to the conversation.

I know you have lots of neat things on the go today with exciting projects you’re involved with and your non-profits and your passion around that. I’ll lead into that a little bit later in the conversation. What I’m hoping we could do today is start way back as far back as you can remember. I want to hear about the journey of Kevin England and how you got to where you are today if that works for you.

 

Kevin England:

Sure, Jason. Let’s do it.

Well, I was the fifth child of 10 and I was raised on a dairy farm just outside Pembroke, ON. In the early years, everyone had a job, everyone pitched in. So you learned work ethic and family values very early on. My grandparents were farmers as well. Interestingly enough, my grandfather and his brother, my uncle, had bought a steam engine in 1922, and we’ll be talking later about my passion for vintage cars… so they bought a massive 22-horsepower Sawyer-Massey steam engine machine and they went around to the various farms to help them do the threshing.

As a child, I remember that it was a big part of our family culture – my grandfather was doing that. As I said I had nine brothers and sisters. I was boy number 5 and then there were two sisters, a boy who took over the farm, my brother, and then two younger sisters. What’s a bit unique was being raised on a farm in Renfrew County, I went to a one-room schoolhouse. So, I had grade one all the way to grade eight in one room. We just had a school reunion for one of the teachers who taught there. She had 35 kids in this class at one time and she was 18 years old. She was a very capable person. Having had many siblings, I had brothers and sisters all across the classroom, so it was a unique way to start. We would walk to school in the farming community and then eventually by grade eight, we started to be bused to the larger schools. But that was the beginning of how we were getting educated.

When you grow up on a farm you learn a lot of things. You witness a lot of things – my dad and my mom were very involved in the community, very involved in the church, and very involved in helping neighbors. I got to see my dad do many things for neighbors that he would not want anyone to know about, he wanted to keep it private. We knew all our neighbors, their parents, and the grand their kids, so you grew up with a strong sense of self-identity in that community. Of course, they did not realize it at the time.

I was fortunate enough to hang out with a group of guys who went on to university. So, I took a gap year and went to Europe, which at that time was a big deal. I went to Europe for six months with a buddy and came back and decided to not just do a trade, but then I would go to university. I went to Carleton University, Ottawa, Canada.

I was fortunate to get hired by IBM on a career day at the university. It wasn’t my intent. I had just decided to have this interview for the experience, and they decided that I was probably a good rainmaker. They decided to hire me and that kind of surprised me as well because I was just enjoying the interview. I remember it was the third day of interviewing and I was the very last interview. And I said to the interviewer “Let’s go get you a coffee.” So, I took him to the university coffee shop. My friends were there, they saw me there with the interviewer from IBM, who was the Senior Manager, and they knew I had the job. They said you had him laughing and eating out of your hand and they said, “Who takes the interviewer to the coffee shop to do the interview?” So, that was very fortunate for me. They sent us to Toronto for training and that is where a lot of my business success came from learning communication skills, the approach to thinking long-term, and thinking bigger.

 

Jason Boudreau:

How old were you when you started at IBM?

 

Kevin England:

I was 25 when I started at IBM. At that time, I had already started the business on the side. I have worked in construction. I remember in my high school days I had hitchhiked out to Fort McMurray and got a job in the tar sands. I was making like two and three times more money than you could make in my hometown. The next year there were 17 of us. So, I was alone there for the first year and then I told all my friends from high school. The next year there were seventeen of us in Fort McMurray. That was pretty cool, we kind of owned that town, and it was a pretty special and spectacular time. So that’s how I got my university money. I was there for two summers and got my university money. Also, I got experience driving a gravel truck, and I had farm experience already, right? So, I got the job.

While I was in university, I got a loan from two of my brothers and bought a diesel gravel truck which I was operating in the summer. I hired a family man to drive it while I was back at university finishing my credits. So, when I went into the IBM interview, what made me different was that I already had an operating business. So, that made me kind of unique, because they interviewed hundreds of young people at the time who, I thought, had much better degrees. And of course, I ended up with the job because of my personal and practical experience. That probably changed the course of my life.

I won the Gold Pen for the Top Sales Award at the end of the six-week training in Toronto. All the students were competing for the top sales award. I won what’s called the Gold Pen – an award that recognizes building relationships, rapport, trust, and connection with someone in just five minutes. Turns out I had a natural aptitude for that.

So, then I had friends leaving IBM and going into the real estate sector and making a lot more money with a lot more upside there in their future. Those were the guys I worked with every day. And I thought “They’re doing it, I can do it.” So, I went into the real estate field, first with a company called Imperial Group as a Branch Manager and then they transferred me from Vancouver to Edmonton. After  I came back to Vancouver and worked with a company called Qualcomm for two years. There I learned a lot. I try to always make a lot of extra contributions to the company that weren’t in my job description, but where I could learn as much as possible from the other divisions and the other people. That paid off when I decided to start my own real estate syndication investment company. That paid off in spades.

At that time the opportunity was to buy real estate in Texas, US. You can’t be an expert in every market, so I decided that Texas would be a market I would get to know inside out.

 

Jason Boudreau:

Anywhere in particular in Texas?

 

Kevin England:

In the North and the Northwest, in Plano.  I decided to go into a more expensive white-collar area because I felt it would be safer. If something did go wrong, you had an asset and you could get out and break even, right? It was in the early 90s when those markets went through a huge crash, a huge recession, and a huge overbuilt situation. We’re buying properties that were eight, ten, or twelve years old for half price. Of course, going in the North and the Northwest of both Dallas and Houston – those areas came back first. That’s where all housing prices came back.

I preferred to buy conservatively. So, I prefer not to build but to buy existing ones, so, we could know what our mortgage was going to be in advance of buying it. We had a good idea of the rent and we knew that we could make improvements and make a big visual impact. We’re buying the nicer properties that were gated communities and had tennis courts and if they didn’t have a gym, we would add a gym. We would add lots of amenities because I know people will pay for quality and they will pay for

the extra bells and whistles. We would buy a property only 85-90% occupied and we would increase the service. The rent would be more than our neighbors but we would be full. We added simple things such as having a young family of police officers move in for half-price rent, just so people would feel that it was a safe and secure community and all those little.

I remember we had a property of 502 units on the waterfront in Toronto. We were in a situation where there was a vacancy problem, and we were always at 10% vacant. As we would fill them up, we would end up with another 50 notices, so we would always be behind the game. So, I came up with the idea that we would give away a car. We figured out that the rent for a one-bedroom for a year was going to bring in about $17,000 or $18,000, and while I was having coffee in Toronto, there’s a brand new 4-door Saturn for sale, for $17,000. So, I reckon that if we took the revenue from a one-bedroom unit, we could have a contest. So, we said that for the next 50 one-year leases, one person will win a car. It created so much excitement among our onsite staff and amongst the public that we got 50 leases almost in the first weekend because we’re doing something entirely different.

We got a local politician to come and do the draw. That got us ahead of that cycle where we’re always chasing the vacancy. We always tried to be creative and bring more services. Always add full gyms, tennis courts, volleyball courts, adding padding greens. So, we were making ourselves nicer as opposed to trying to cut costs. Right. We were bringing more value and making ourselves unique. We had signature services: people could drop their dry cleaning off at our front leasing office and pick it up the next day. We just make life easy for our tenants and all those things paid off.

The other thing, I said to my investors, “I manage your properties as if you were family. So, instead of paying you out dividends to make myself look good, we spend more money on those properties to make sure there’s no deferred maintenance to keep them in pristine condition.” That paid off when we went and sold the portfolio because we had no deferred maintenance. You run a property and you can get more cash out but then eventually you have to pay the piper, right? You’ll have deferred maintenance and that can sneak up on you and be a big problem.

That was part of the philosophy, the conservative approach. There were some years when the properties were going into a recession, especially in 2008. So, I would defer my management fees and no one else was doing that in the industry, but I would just not take management fees so that the properties would have more cash flow. Then I could be paid back in the future when the property is sold.

Another thing I did that was kind of unique is I had what was called a cash flow loan. We set money aside when we did each deal and we mastered about $1,000,000. We kept an account at the Royal Bank. So anytime a property needed improvements, it could be borrowed interest-free from that pool, so I didn’t have to go and do any cash calls to my clients. And then when the property would be refinanced, that money could be paid back.  Even through tough times and some of the properties being in trouble, we’re able to get ourselves out of trouble and turn it all around and eventually sell the portfolio and make my clients a lot of money. When they went in, they were leveraged into loans at the bank but the tax write-off and the cash flow would cover their interest payments for their loan at the bank. Of course, the ultimate security was an asset that looked good and in a good location. So, always keep the risk to the minimum, and at the same time, we ended up with a tremendous upside.

I had a formula that if the clients had to get all their money back at a 10% return, then as a general partner I could start to share in the profits. So, we are all in the same boat. I have just as much focus and attention on my first properties as on my last properties because I’m in all of them, whereas I had seen other syndicators – they would just keep moving on to the next property. They don’t care about the original ones, because they’ve already gotten their profit out and moved on. This was a much better formula that became a win-win for everyone. So, we ended up with something like a cash-on-cash return of just over 19% annually over the 25 years. It was very gratifying for me to be in a room with several 1,000 investors who are older than myself, but who were telling me that that was probably the best investment experience of their life. Because when things were tough, I would tell them that things were tough and that we would work to solve the problem right and turn it around.

 

Jason Boudreau:

Just being transparent about it.

 

Kevin England:

Yes. Another thing we did differently was that we audited financial statements every year and the audits were in our books and on site. So, always the transparency the keep everybody real and honest in the deal. It ended up being very gratifying for me.

One of the best ideas I ever had was when we were selling the portfolio. I got involved in a recovery center that helps young men who find themselves on the streets and find themselves with an alcohol or drug problem. I wanted to raise money for that so we could do more good, especially in the province of British Columbia. I came up with the idea that we would ask the investors that 1% of the gross of the deal could go into a foundation that would help these young men who wanted to turn their lives around. We made a benchmark that we would get $20 million more than the last appraisal for the properties before the 1% would kick in. Well, in the end, we ended up getting $68 million more than the last appraisal. So, in the end, we raised $4 million with this 1% formula.

We’ve gone to this recovery farm that has had 1300 young men go through it. It is non-profit. We work with government agencies, we have private donations, and it is free and holistic. There are farm animals and people can stay there for a year. We helped these young men who have gone to many other treatment centers that didn’t work, but because of our formula, it worked for them. Now they’re out, having regained their lives and being productive citizens personally as well as helping other young men who struggle with the same kind of demons.

That’s been very gratifying and that’s where I got the bug that it’s fun to do properties to make money, but it’s a lot more fun to go out and bring people together and do good in the community. That has become my passion. I get a bigger charge out of that.

That led me to my work with Canuck Place. As I mentioned earlier, my grandfathers and their steam engines sparked my interest. Well, I got the bug to start collecting vintage cars.

 

Jason Boudreau:

When did that start for you?

 

Kevin England:

Well, that was about 12 years ago. The first car was a 1931 Model A. I’m buying these cars that are primarily Fords and Lincolns, that are called bread and butter cars. Nothing too fancy, but those are the cars that can be mechanically restored. The second car I bought was called the Sears Horseless Carriage one of the original cars that were essentially horse buggies with a motor under the seat. This car has an air-cooled 12-horsepower motor which I rebuilt, with wooden buggy wheels. It’s a buggy, but in the early 1900s, almost every car on the road looked like a horse buggy with a motor. That was how the car industry started. And then, of course, Henry Ford came along and started to make cars. He went into mass production with his Model T in 1908. So, I have 3 Model T’s and I like the older cars. I have a 1908 Model S. That’s given me great pleasure and along the way, I got invited to go out to Canuck Place to take a young family for a ride in my Model T. My 4-seater convertible Model T, it’s 1911, bright red. It was a profound experience for me because this young family has three boys and the youngest boy was a patient at Canuck Place. I took the dad and the older two boys, 8 and 10 years old, for a ride in the Model T.  They got a break from the stress and burden this family was going through. They got to go into this other space including the dad. When we came back the boys were climbing underneath the car looking at the drivetrain and involved in it. It was amazing.  I have a conversation with the dad as father to father. My youngest grandchild, Leo, was the same as the young 3-year-old Sawyer at that time. The young Sawyer was a patient and had a very rare form of cancer and basically, there was not a lot that could be done for him. So, he was having his last weeks at Canuck Place. The dad was telling me the boys keep asking why this happening and what is going on. And while talking with him I realized the huge support that Canuck Place brings to these families that have a child that’s struggling with cancer. Canuck Place not only helps that child, but they help the whole family because it’s life-changing for the siblings to go through this.

I was driving away from having had this amazing experience as I got invited into the family journey thinking “Thank God, there’s Canuck Place to be here for families that have this challenge in their in their lives.”

That inspired me. I saw the pleasure that this car brought to this family and decided that we should do a car show. My good friend Luigi worked with Canuck Place at the time. He had invited me out and he was encouraging me to do it. I said “Ok. I know other people with vintage cars. Let’s do a car show and put them to work to help children, and raise money for Cancer Research, raise money for the Hospice.” So, that was the idea and we put together the first car show in five weeks.

 

Jason Boudreau:

Great. When was the first show?

 

Kevin England:

It was in September 2021. We were just coming out of COVID. We were one of the very first events. We had a full crowd on a Saturday afternoon in Ambleside Park, North Vancouver, and we were unique, no one was doing this kind of car show. We were under the tent with the red carpet. It was an invitation-only event, and we people would not have to pay an entry fee or purchase food, as it was donated. There was no silent nor live auction. It was all done on the basis: come in, see the cars, hear the story about the good work Canuck Place is doing, and then we just asked you to pledge towards the cause. Our goal was to raise $100,000 and we raised $600,000.

Since then we’ve done two more car shows and now we do them every June on the Saturday before Father’s Day. This year, it will be Saturday, June 15th. So, the second year we raised $900,000, and last year we raised $900,000.

What’s notable is we give away a Cup. We have a People’s Choice where people who go to the car show decide which card is the most impressive car for them and they get to vote and put their vote in a ballot.  The car will be chosen by the most votes and it will win the Cup and the Cup will be on display at Canuck Place for the year.

What’s interesting here is that young Sawyer passed away the morning of the first car show. That was uncanny. We did not have a name for the Cup that we giving away and I got the idea to name it after Sawyer. So now we have the Sawyer Cup. In essence, this young boy inspired this car show that we can do every year now and hopefully, we can make it better each year. I’m in close touch with the family. They spoke at the last two car shows they attended and it’s been huge for them and their healing journey that their son was able to bring something really, really positive.

 

Jason Boudreau:

…and create a legacy in his name.

 

Kevin England:

…and create a legacy at his early age and you know. I said to them “he’s almost the same age as my youngest grandchild, so I could relate and put myself in that position. What would I do? Where would I turn if my family was in that same situation, right?”

This car show is quite a fun event. I went to my friend, Dave Lede, who also has a passion for vintage cars, and asked him if he would put a car in. So, he said, “Why wouldn’t I Co-Chair? ”. He is one of my best friends and we get to do something and work together and bring a lot of good. So, it is about having real meaning – it creates meaning in our lives, children’s, and families’ lives. It does a lot of good. We also have a lot of fun because of our passion for these cars.

We’re working on having Jay Leno. He’s a car guy and my goal is at some time have him attend and give the Sawyer Cup to the winning car. So, that’s where we are at.

 

Jason Boudreau:

Thank you, Kevin. Thanks for sharing that story and such a neat journey. Early on conversation, you mentioned when you worked for IBM you learned about building trust and rapport. Can you share a little bit about that? What are all those attributes and how do you deliver on that?

 

Kevin England:

Well, building credibility and trust with people it’s something that was ingrained in my childhood because I was raised in a small farming community and you were as good as your work. Your reputation was everything. So, no one had to teach it to me. I didn’t even know I had it.  I would always bring that to the table. I remember being with the purchasing agent at UBC and having a frank conversation with him, and he said “You are different. Your whole approach is different.” We became quite good friends and he had a very important role there, but I brought that to the table – “I’m not here to make a sale. I’m here to create a relationship. And if making the sale isn’t right for you, then we’re not going to do it.” With my clients, I would say “We’ll just buy one unit.” They would get excited and want to buy two, but I would say “Just buy one now, there’ll be more properties.”

It is a long-term relationship and if you think long-term you’ll never go wrong. Never worry about the financial reward or the financial payback. If you do a good job and you bring your integrity to it, and quite frankly, if you’re having fun doing that, everything else will happen organically. It will happen automatically and that is the story of my life, I guess.

 

Jason Boudreau:

I was going to say that earlier, Kevin. While I was listening to your story especially about how you built the portfolio and even the little things such as deferred maintenance and advising clients that this is the best way for it to go. It sounds like you’re playing the long game and clearly, that’s paid off.

 

Kevin England:

Absolutely. Especially with the real estate. When we brought the investors in, the idea was that we would flip the properties in five years and make some money, right? We realized we could refinance, improve the properties, improve the cash flow, increase the mortgage, give back money to our investors tax-free, and think long-term as opposed to making a profit and paying taxes on it.

Pretty much all these properties when we sold them, the client had received all of their money back, got it, and we hadn’t figured any taxes per se, right? And, of course, when you hold real estate long-term and you keep it well maintained, you’re going to do quite well financially. Also, of course, we were doing U.S. dollar play. We got lucky along the way when we sold the portfolio, oil was $104.00 per barrel. I was telling people we were the prettiest girl at the dent. So, it became a bidding warrant, which is what you always want. Then we went and locked the deal down with an $8 million deposit. And three weeks later, oil started dropping $10 a barrel. It wasn’t long before it was down to $47 a barrel, but we had a committed deal with a very strong purchaser. As Canadians, we’re getting U.S. dollars. The Canadian dollar got weaker, but we were paid U.S. dollars. So, my clients made another 20% return on their investment. Besides that, they were part of this legacy of raising $4 million for a recovery firm. We are going to expand our efforts globally, not limited to just one recovery firm, but also to engage in various other initiatives to assist our governments in addressing the homelessness and addiction problem.

 

Jason Boudreau:

Got it.

 

Kevin England:

So that’s it’s something everyone involved should be proud of because we get to take a good situation and make it even better.

 

Jason Boudreau:

Thank you for sharing, Kevin. Just to close our conversation today, if you were speaking to the younger generation and maybe it’s your kids or your grandkids or just people you meet, specifically around philanthropy, and obviously, this is something that’s been woven into your DNA for many years about the sense of community and giving. What sort of advice or words of wisdom would you give people today who are maybe building towards something in the future and may want to get back but don’t know how or where to start? What would you share with them about that consideration?

 

Kevin England:

Go with your passion. Pick something that you’re passionate about, that moves you and you will be able to galvanize others to come together with you to make a difference. If you go with your passion, it will manifest and all will come around.

 

Jason Boudreau:

Love it. Well, thanks again, Kevin. I appreciate your time today. It was great to connect and hopefully, we can do this again someday.

 

Kevin England:

Thank you for the opportunity, Jason.

 

A Candid Conversation with Kevin England

Monday, February 5th, 2024

The interview is hosted by Jason Boudreau and published in Iconic Concierge, Winter 2023/2024

 

Kevin England

The England Group |Director and Founder of New Hope Recovery Foundation |Chair of BC New Hope Recovery Society |Co-Chair of Classic & Contemporary Car Invitational

 

Greetings and welcome to the winter edition of Creating Impact! I’d like to start by wishing you a joyous New Year filled with warmth, health, and happiness for you and your loved ones throughout 2024.

Recently, I had the fortunate opportunity to meeting Kevin England, President of the England Group, through a mutual connection. Throughout our interactions, I was met with enthusiasm for life and a passion for vintage cars, right down to the intricate art of cranking and firing up one of his proudest assets – the Ford Model T. As I delved into Kevin’s life, his passion for community and family became more and more evident, offering insights into his remarkable journey and the values that define him.

Kevin’s narrative begins in the rural heartlands of Pembroke, Ontario, where he was born as the fifth of ten children on a bustling dairy farm. This early environment was more than just a place of residence; it was a crucible where the values of hard work and family solidarity were deeply ingrained. Kevin fondly recalls the influence of his grandparents, particularly a 1922 steam engine owned by them, which not only symbolized their hard work but also ignited Kevin’s lifelong fascination with machinery.

Kevin’s educational journey was as unique as his upbringing. He attended a one-room schoolhouse, a setting that not only provided academic learning but also reinforced his understanding of community and collective identity. This early exposure to diverse age groups and the need for cooperation undoubtedly laid the groundwork for his later success in team environments and business collaborations.

After completing high school, Kevin embarked on a gap year adventure in Europe. This experience broadened his horizons, instilling in him a sense of independence and a global perspective.

His journey into the professional world began with humble experiences that forged his character. Hitchhiking to Fort McMurray, Alberta, seeking better job opportunities, Kevin engaged in various roles, from construction to driving gravel trucks. Amidst these experiences, a serendipitous interview with IBM altered the course of his life.

At 25, Kevin embarked on his career with IBM, where he not only honed technical skills but also developed crucial interpersonal talents, fostering relationships that would later shape his trajectory. Kevin’s time at IBM was marked by a thirst for knowledge and an unrelenting work ethic, immersing himself in diverse projects, learning the intricacies of technology and business dynamics.

Kevin’s journey into the realm of real estate began as a branch manager with Imperial Group. His career trajectory took an intriguing turn when a transfer whisked him away from Vancouver to Edmonton. Upon returning to Vancouver, he delved into a two-year stint with Qualico, immersing himself in many roles that extended beyond his job description. This approach, characterized by an insatiable appetite for learning from diverse company divisions and individuals, laid the groundwork for his eventual foray into establishing his own real estate syndication investment company, The England Group.

The decision to venture into this new territory proved to be a turning point of immense significance. Recognizing the potential in the real estate landscape, particularly in Texas, Kevin embarked on a path to familiarize himself extensively with this market.

His strategic approach during the early ’90s, a period marred by market crashes and overbuilding, was unconventional yet astute. “We focused on purchasing existing properties in those areas, preferably gated communities,” Kevin elaborates. “Our emphasis wasn’t on building; it was on enhancing what was already there.”

Understanding the intrinsic value of amenities and quality living, Kevin’s team didn’t just invest in properties but in experiences. “We enhanced these properties with amenities like tennis courts, gyms, and more,” Kevin says, “as opposed to trying to cut costs, we were actually bringing more value.”

Through treating investors’ properties like family assets, he ensured no deferred maintenance, even deferring his management fees during economic downturns. His innovative financial tactics, like the cash pool loan, and fortified properties, resulted in an impressive 19% annual cash-on-cash return over 25 years. His emphasis on transparency, evident through audited financial statements, built trust and led investors to claim it was one of their best investment experiences ever.

Kevin’s approach wasn’t just about profits; it crafted a legacy of success and satisfaction for all involved. In 2014, he proposed that if the final sale of the portfolio exceeded $20 million above the appraised value, investors would donate 1% of the proceeds to the B.C. New Hope Recovery Foundation. This foundation’s initial focus was to support Baldy Hughes, a therapeutic addiction treatment community and farm, in Prince George, B.C. The portfolio value surged to an astounding US$288 million (initially appraised at US$220 million), and with an additional CA$52 million sale of a property in Toronto, a CA$4 million donation was made to enhance support and addiction services.

Kevin shared, “helping young men who struggle with demons has been very gratifying and that’s where I realized that it’s fun to do properties to make money, but it’s a lot more fun to go out and bring people together and do good in the community. That has become my passion.”

In recognition of his unwavering commitment to community service, Kevin received a Medal of Good Citizenship from the Premier of British Columbia on September 14, 2016. This prestigious award stands as a testament to his dedication and outstanding contributions to the well-being of society.

Today, Kevin remains focused and committed to supporting young men and women who are battling addiction, sharing, “my most important and impactful work is still ahead, where I am a strong advocate for individuals in need of a solution for their disease of alcoholism and addiction, in the province of British Columbia and across Canada”.

A deep-rooted passion for vintage cars, stemming from his childhood memories of his grandparents’ steam engine, has evolved into a significant aspect of Kevin’s life. His vintage car collection is not just a personal love; it serves as a conduit for his charitable work, most notably through hosting car shows after a moving experience at Canuck Place Children’s Hospice.

His convertible Model T ride for a family staying at the hospice, led to the idea of organizing a car show to raise money to support Canuck Place and cancer research. Kevin was beaming when he shared about his passion for this event, “Helping others enhances my personal life so much because I have been blessed with so much. When I see these other people struggling and I get to help them, that re-grounds me, resets me, and that’s a blessing.”

Since its inception three years ago, the Classic & Contemporary Car Invitational has been able to raise over $2.5 million, with the next one upcoming on June 15th, 2024, taking place the day before Father’s Day.

Speaking with Kevin about the car show being centred around Father’s Day, led to me then learn about his role as a family man being central to his identity. He speaks of his children and grandchildren with immense pride and joy, cherishing the moments spent with them, especially through sharing his love for vintage cars at the car shows, or by taking rides together around the city. For Kevin, these moments are not just familial bonding but opportunities to instill in the younger generation the values of hard work, passion, and the joy of giving back.

Kevin’s zest for life extends beyond his professional and philanthropic interests. He is an avid kite surfer and enjoys electric foiling, activities that reflect his love for adventure and the outdoors. These hobbies, while providing personal satisfaction, also offer him a sense of balance and rejuvenation, essential in sustaining his high-energy lifestyle. Travel forms another crucial element of Kevin’s life. His trips are not just vacations; they are journeys that offer cultural exposure, adventure, and opportunities to meet diverse people. His experiences in places like New Mexico, Brazil, and Thailand have enriched his perspective, enabling him to embrace a more holistic view of the world.

As we closed out our candid conversation, I asked Kevin to share some words of wisdom, particularly to younger people, regarding philanthropy and giving back. “Go with your passion, pick something that truly moves you and you’ll be able to galvanize others to come together with you to make a difference!”

Kevin England’s life story is a compelling narrative and serves as an inspiring example of how a life driven by purpose, passion, and a desire to make a positive impact can truly create a lasting legacy. He hopes his journey will serve as source of inspiration, motivating individuals to pursue their aspirations with unwavering dedication, confront challenges with resilience, and, most importantly, leverage their achievements as a foundation for fostering a positive and enduring influence on society.

#16 VELA Wealth: Navigating Wealth, Legacy, and Financial Innovation

Wednesday, January 24th, 2024

In this Polestar Podcast episode, Kevin Parton engages in a dynamic conversation with Jason Boudreau, unraveling the unconventional journey that laid the foundation for VELA Wealth’s creation and evolution. From Jason’s diverse professional background to VELA Wealth’s distinctive approach to wealth management, the discussion navigates through the pivotal role of mentors, the firm’s dedication to Canadian private business owners, and the importance of independence in financial services.

 

 

Key highlights of this episode:

  • The VELA Wealth story.
  • The transformative power of mentorship and coaching.
  • VELA Wealth’s trailblazing approach.
  • The importance of independence in financial services and curation of platforms and partnerships.
  • Commitment to client fulfillment.
  • Declaration approach instead of a traditional mission statement.
  • What future unfolds for VELA Wealth.

  

About the Guest – Jason Boudreau

Jason has built VELA Wealth into an established life and estate planning firm, guiding families as they make meaningful choices at the intersection of life and wealth. Jason’s areas of expertise include intergenerational wealth transfer and estate planning with a focus on advanced insurance-based solutions that incorporate philanthropy and legacy planning. Leveraging these specialties, Jason brings a fresh perspective and outside-the-box thinking to the strategic planning process. To read more, please visit the VELA team page.

 

About the Host – Kevin Parton

Kevin Parton, CFP professional, specializes in personal and business financial planning, tax reduction, and estate planning. Kevin is diligently concentrating on client education as a powerful strategy for building financial certainty. As no financial situation is the same, Kevin and his team monitor clients’ plans and implement personalized strategies to reduce their personal and corporate taxes, and protect their income, assets, and loved ones against the financial consequences of a serious illness, injury or death, ensuring clients maintain financial certainty and peace of mind. To read more, please visit the VELA team page.

 

The episode is also available on: