VELA Podcasts

In this episode, Jason Boudreau speaks with Dennis Serre, President and CEO of Serre Financial, a company providing expert advice to financial professionals, new and existing business owners, and executives to navigate and fully mine the complex benefits of the Canadian Income Tax Act.

Dennis shares his passion to help entrepreneurs and business owners through advantageous tax structures and talks about the change in clients’ priorities, the positive impact of using consulting services, individual pension plans, private health service plans, and much more.

 

 

About the Guest – Dennis Serre

Since 1990, Dennis Serre and his wife Lisa have built and curated a team of leading tax experts with one truth in mind — every client’s situation is unique. With the Income Tax Act as their playbook, Dennis and his knowledgeable team have provided expert advice to industry professionals and business owners alike, all to find value with a net benefit to the end client. Over the past decade, the Serre Financial team has grown to include many talented tax experts, each crafting superior solutions for each of the several thousand clients. To read more, please visit the Serre Financial 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:

    

Read the transcript of the Polestar Podcast here.

 

Disclaimer

The information expressed in the podcast 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.

 

The Podcast Transcript

 

Jason Boudreau:

Welcome everybody back to another episode of the Polestar Podcast by VELA Wealth. Today I have the pleasure of spending a little bit of time with someone I’ve gotten to know fairly well in this industry over the last number of years – Mr. Dennis Serre. He is the Founder, President and CEO of Serre Financial.

Good morning, Dennis. How are you doing? It’s great to have you here. Thank you so much for spending the time with us and I’m looking forward to the conversation.

 

Dennis Serre:

Great. Thank you. Likewise.

 

Jason Boudreau:

You and I usually see each other at different industry events, and we always have interesting conversations and, of course, we do work together as well on the business side.  So, I’m looking forward to unpacking some of that here, hearing more about what you’ve been up to, what you’re up to for the future and informing our listeners on some of the neat stuff that you do over at Serre Financial.

So, for a start maybe you can give the listeners a bit of context about you, Dennis. How have you gotten into the financial services business? I know it’s very unique because your clients are firms like ours
(VELA Wealth) and you are helping us serve our clients. Can you tell us a little bit about that sort of evolution of Serre Financial and then tie that into your vision for the future of the business?

 

Dennis Serre:

Certainly. Serre Financial has been created over two decades ago. We are working with people like yourself, as you mentioned a financial advisor platform.  How did we get into it? My background is from Revenue Canada Pension and trust services. Over time working with people like yourself and asking many questions at some point we were asked to provide more services. So, many years ago we started a firm and started to work directly with clients and realized that it was not the right approach. We wanted to work with the people who had a relationship with the client. We changed the model within three months. We need to work with financial advisors to really grow the business and understand how we can become part of the team versus competing with the financial advisors. So, becoming a component of the team as a further resource is critical.

We have grown from just myself to the 15 staff members that we have right now. Over the years, through legislative change, industry changes, and the advisors’ evolution, we have focused on certain areas of tax planning and tax solutions for business owners, the entrepreneurs, and professionals. We always focus on working with the financial advisor who truly has a relationship with these clients.

 

Jason Boudreau:

Right. Just sort of pulling on that a little bit Dennis. What are some of the challenges that you see that advisors and their clients experience? In today’s environment, what are some of the things that are coming up that you and your team are seeing?

 

Dennis Serre:

Well, there are two fronts to these.  Let’s talk over the last decade about what has happened in the industry and the tax changes that had happened. We all know that we had advisors who either were mutual fund advisors or insurance advisors and over the last decade, a lot of them became cross-licensed, cross-providing services to become a one-stop shop for their clients. However, most advisors are totally independent and have relatively small-businesses themselves (one to three industry people). The challenge they’ve been facing is having the resources to address concerns of their clients, understanding what the true challenges of the client are and becoming a partner with their clients versus just managing money or selling insurance. So that has been a big challenge.

One of the things that we have realized over the last 20 to 24-months of Covid is that client priorities have changed over that time. There is a realization that they need to look at their business affairs and personal family affairs differently. They see that they are intertwined. Clients are no longer content to forecast over seven to ten years like we used to see a few years ago. Now they want to forecast over 02, three, five year periods. Timelines have shortened so much as people have re-evaluated their priorities.

 

Jason Boudreau:

Interesting. That’s true. That’s a really good point. I’ve definitely seen that with our clients where we deal so much in long-term planning. The smaller, more incremental bite-size chunks of that long-term planning have certainly become front and center for people over the last couple of years as to your point they’ve indeed reprioritized. It’s good to hear it from you as we also have had the same experience with clients regarding the integration of life and business. They’re inexplicably interconnected, right? Even something as simple as working from home. Now, all of a sudden people are working from home and their business and their personal lives are basically integrated and that definitely had people not necessarily shift priorities but bring their true priorities into real focus.

Being an entrepreneur and obviously, you work with entrepreneurs, how do you define success in your life and in your business?

 

Dennis Serre:

Well, in the beginning, success was badly defined by how much money you’re making and how successful you are becoming which I think is a common thing that’d occurring among young entrepreneurs. However, as you mature and become better at what you do over the years you define success in a whole different way. When you look at the company you will see individuals trying to get to the top as fast as they can and that’s how they’ll measure success. As you grow up and your family members are getting older and eventually move on from the home you define success by interacting with people and providing the right solution for them. That’s where the pleasure of helping people has become a way to measure success. Yes, we all get paid for a service and everything that we do. However, that said, for me success is more about making a difference every day versus setting targets, accomplishing them, and reflecting back on them and saying “well, we’ve met our quota but where do we go from here?” Those are things of the past to me.

 

Jason Boudreau:

Yes, definitely. It feels like it’s a more personally meaningful measurement of success for you, isn’t it?

 

Dennis Serre:

Yes, for me and for the company. That’s why we want to make sure that every email that reached our company is acknowledged within 12 hours, within business hours obviously. Also, we don’t have an interacted phone system. We have a live voice, and we want to make sure that people can get to someone and get the answer they’re looking for instantly. If not, it will be researched, and somebody will get back to them as quickly as possible with those answers. To me, that is the touch. That is important.

 

Jason Boudreau:

Yes. No doubt. We have a very similar approach here. High touch, people talking to people. In this world of everything evolving to technology we have looked at it through the lens of “We are a human-first business supported by a great technology. We are not a technology-led business that has some people scattered in the background somewhere”. We’re in an advice-based business and humans giving the advice is definitely what we’re geared for.

I want to dive in a little bit into some of these solutions that Serre provides. Obviously, over the years that we’ve worked together, we’ve gotten to know each other, and we have an understanding of all of that. Can you share with our listeners some of those key services that you provide that ultimately have a positive impact on the lives of the business owners that they all are going to be implemented in the end?

 

Dennis Serre:

Well, why don’t we talk about an area of business which has been very busy the last few years—consulting? As the pandemic grew, it changed many people’s priorities as we mentioned earlier. One priority that has really grown in prominence has been really understanding the current situation. The current situation is more about the business: understanding the business structure and getting into what we call analysis of the roadmap. We all know the word “roadmap” has become more of a buzzword in the industry in the last three to five years. That said, today it’s becoming more “show me the goods”. Let me explain. We have recurring revenue as well as we have clients that are recurring. We have the income coming in… but what about the tax minimization? Where should I be putting my money? What does that mean when I retire? Talking about retirement -what do I do with my business? There are a lot of tax implications if I’m not prepared.

So, you manage my money, you help me with my insurance, my risk management… but what about all the rest?

We’ve been working very closely with financial advisors and end clients (business owners and professionals) and really peeling back the layers to really understand the client’s situation and help them understand what it means. From time to time you may have clients saying that they have the perfect structure with a family trust and a holding company and we ask them how this works for them? Often clients simply defer to their consultants.

You may understand what you do for your business, but if you don’t know why you have a certain structure in place and the benefits of having it – do you understand the overall picture of your business? Not really.

That’s what it is. That’s what we call a roadmap. It’s defining the right roadmap for each client.

 

Jason Boudreau:

Right. How that structure can serve you, what your goals are today, what they are in the future, and why it was all set up. I could also see that not just with Covid and people getting really doing a check-in or a gut check or maybe an accelerated a future-based plan. If we put Covid aside and just think about demographically where we’re at as a country. We are an aged population as a country and I’m sure that a lot of what your company is seeing in the consulting side of the business probably also has to do with the life stage that a lot of these entrepreneurs are at, right?

 

Dennis Serre:

Definitely. That is a valid point. We have a lot of entrepreneurs that are getting older and that want to have more time for retirement. Then it comes down to a successor, family member, or is it time to start looking at selling the business. It’s like having a large home without children; now it’s just my wife and me. Do we need to downsize and take some chips off the table? That’s where a lot of the people are saying “I don’t know. Jason, help me. Do you have a tool to help me?”. That is what we have found in the few years that it has become very important that people want to better understand.

 

Jason Boudreau:

Right? Of course! One of the strategies that I’m hoping you can share a little bit about just at a high level that I know is relevant to business owners and we certainly take advantage of for clients within our firm is the individual pension plan. That’s something that obviously has been around for a number of years but it’s not something that every entrepreneur out there is aware of, and I know that it’s something that you specialize in designing and help manage and there’s some sort of creative things beyond that I know you get involved with as well. So, just sort of pulling a little bit on that thread about the more aged population and business owners in that stage of life. Can you share a little bit about that type of structure and why it’s beneficial? Also, why it’s beneficial towards the end of selling a business? For example, when it comes to things such as terminal funding.

 

Dennis Serre:

Definitely. Those are great questions. So, the individual pension plan (IPP) you’re referring to is a defined benefit. The defined benefit has a much higher limit contribution than a regular RSP which is under the money purchase provision. When we look at the IPP for entrepreneurs that have been in business for several years, getting older and the cash flow now is not becoming as much of a concern, an accumulation of assets is becoming more forefront thinking and tax minimization oriented. For a lot of people, that’s where the vehicle of an individual pension plan makes a lot of sense because they can put more away using business dollars and they can benefit from having a pension. Just like someone is working for an institution such as a government having a pension for life. So, you can have a similar pension for yourself with your own business that you control, and you can have the contribution being so much higher than a regular RSPs.

There’s also an additional provision that you’ve mentioned – selling your business and different type of planning that you can do around it. The individual pension plan has also a few fronts that you can deduct your management fees that are being paid by bank, institution, or fee-for-service based on the type of application that’s been utilized. What happened if there is a shift in the market? Suddenly you can do a catchup contribution and you can get a tax deduction. Yes, you’ll tell me while you know the market will readjust but should it be in a downward where the person has extra cash and can take the tax deduction in the company? It may make a great strategy for them.

Also, if proper planning has been done with their holding company and with their family members it’s a way to do terminal funding upon selling the company – meaning that you will extrapolate the number all the way to age 71 which is a maximum age you can have a pension plan before starting to convert it to some sort of a payment schedule. You can make a very large payment into it depending on when you sell the company, obviously. You will have it within your own control, within your own family control which can eventually be converted to what we call an FPP (Family Pension Plan) which can be utilized to be used to fund the retirement.

In the event that the parents pass the pension plan can continue on a tax basis with the next generation which is significant as we know.

 

Jason Boudreau:

Right? Yes, totally. So, it may become a way where a family who has a significant amount or even just a good amount of wealth is locked up in a corporate environment and they want to provide certain income streams to their kids or their grandkids.

 

Dennis Serre:

Definitely.

 

Jason Boudreau:

They can set up a tax-advantageous structure to do so. Thank you for sharing about that.

Dennis, one of the things that we talked about before this podcast was you sharing a little bit about your experience. What are some of the things or even the most important thing in your mind that business owners can do today to help enhance their financial performance? I know that you’re coming at it more from the lens of tax minimization strategies which we love because that’s a guaranteed return on a dollar for a business owner without putting it at risk in the markets or any other kind of investment. So, from your perspective, what is the most important thing business owners can do to enhance their financial performance?

 

 

Dennis Serre:

Well. First of all, they should reach out for help, right? They’re good at what they do for a living, but we all know we have a certain array of expertise, the rest we should really reach out for help. This is a part where people like yourself and firms like VELA Wealth has the capability of helping clients beyond just managing money. It’s really understanding their situation and helping them to get to the next level and to achieve the goal that they’re trying to accomplish.

One of the key parts is to really understand not only how they are managing the risk but their business. How they’re running their business? Who do they believe will be taking on their business down the road or who’s looking after their business affairs while they’re away? Understanding all these key things but at the same token managing the risk.

A lot of people are getting to an age now when they want to slow down. Covid made them appreciate the priority of life and family and made them want to take a bit more time off.  The question is – who would be behind the scenes running the show and what have they put in place to make sure these people and businesses are protected so it can still move forward. It’s like a business plan and a lot of people are afraid to discuss their business plan. However, interactions and relationships the client has with a financial advisor help them to look at the business from a different angle, not necessarily just from a tax standpoint, but really from a day-to-day perspective or from where they see themselves in a number of years from now, to discuss what do they have in place to make sure they can get there or to have a plan in the event something happened. Those all are important to me.

 

Jason Boudreau:

Yes, I hear you there. That’s a really neat perspective as a lot of us think about what can we do to increase our margins or increase our revenue or get more market share. But very few people are probably thinking about what if something goes wrong. Well, I’m in that growth mode. What you’re sharing are important things to consider allowing the enhancement of that financial performance to be sustainable and solid, to have some kind of continuity plan in place should something happen.

 

Dennis Serre:

Definitely. I’m going to share a little bit of my own situation. So, three years ago before the pandemic, I was thinking who does really understand my business. I work with a lot of financial advisors across the country, but who can I have as second-in-command should something disrupt my business or me or whatever the situation is. What are the key things I need to do? After looking at different angles, I realized that the best person who understood my business was my corporate banker. UltimatelyI was able to hire my corporate banker to come and work for me.

 

Jason Boudreau:

No way!

 

Dennis Serre:

Yes! It really made a change to have someone from the outside look at your business not just from a banking standpoint but really understand the business. Well, she had an understanding of our business because she helped us a lot from a banking standpoint and not just from the lending aspect as we process a lot of pension and benefit payments. You have to have the right platform to pay and to move all these things and we’re not a large insurance company that has a multilayer platform that way.  That person was able to come in and look at it from a different angle and bring processes that really make… I don’t want to say our stress level, but our operations so much smoother because as you do it on a daily basis you may not realize the key things that you’re missing. That was a great insight for me to see how I could dramatically enhance my business.

 

Jason Boudreau:

I love that. Wow, I didn’t know that. That’s really fantastic that you were able to approach somebody who is a team member from the outside and bring them in and they accepted that offer and that challenge.

Most of our listeners are entrepreneurs and incorporated professionals. I was hoping that you can share with them some insights about the private health services plan (PHSP) because as abundant as it is it still blows me away how little people actually know about it and its benefit.

 

Dennis Serre:

Okay. Well, I am aware that unfortunately a lot of entrepreneurs believe that they only have the option of using a large insurance company while they have other flexibilities. The same belief is that the business owner could only use the bank for managing their money, but we all know that there are so many other options such as your firm to provide those services.

A private health service plan is a vehicle that allows eligible medical expenses (no different from a medical expense being submitted to an insurance company) to be submitted to their own administrator for the private health service plan and that is a service that Serre Financial provides. We call it a third-party administrator, TPA for a short name, for adjudicating the medical expenses.

What the client needs to understand is that if a medical expense is qualified for an expense on the personal tax return it will qualify for the private health service plan deduction for their corporation or their businesses if they’re not incorporated or partnership.

For employees, it’s a vehicle to turn medical expenses that they paid for into reimbursement from the employer without getting a taxable benefit or without having to pay a significant premium that they may use or may not use. That’s one of the differences that Serre Financial provides is that we take on the liability of what we adjudicate to make sure it’s a qualified medical expense.

 

Jason Boudreau:

Right, I know that from experience with Serre Financial.

 

Dennis Serre:

You have to make sure that it is a properly qualified medical expense. We charge an administration fee, and we make the process as easy as possible for both the entrepreneur as well as their employee. The retention for employees is to provide various vehicles such as benefits. One of the key things for employees is to make sure that they receive their money back into their personal bank account as soon as possible without being a taxable benefit.

 

Jason Boudreau:

Right.  Yes, it’s a wonderful structure and something we’ve been a big fan of for many years. The thing I love about it is that it’s so flexible for the business owner. They can decide what they’re going to give to every employee, one or two thousand dollars a year, whatever that number is. And employees will be able to utilize that money towards any qualified expense, whereas it is an insured plan there’s an allocation of a certain dollar amount and once you’ve used all that up you don’t have any more left. So, for example, my health priority is I need to get physio every month. Let’s say I’ve got an ailment and it requires ongoing treatment. I might get $500 from my insured plan but I could use that full thousand or two thousand dollar for physio if I needed to through the private health services plan. So, it’s the flexibility of it, cost control, and the predictability for the business owner and then, of course, the benefit to the employee including the owner. Getting that money as a non-taxable amount and full utilization of that dollar. We love it. We utilize it as a firm and individually as well. Thank you for sharing about that and I hope the listeners who are out there will want to learn more about the private health services plan.

We’re nearing the end of our time together Dennis. There’s one question that I have for you to just round out our conversation. It’s about your hope for your clients. You have a purpose behind your business, and I really want to know from you as the visionary and the leader of that business – what is your hope for your clients?

 

Dennis Serre:

Well, the hope for the client is really to get the best structure they can have to make it seamless for them to do business. To have an understanding. And when they sell their company or unfortunately when they pass on to make sure that they minimize tax liability. What people don’t realize is that in Canada we have a book called the income tax act. It’s the playbook telling you what you are eligible to utilize as a tax deduction. Unfortunately, maybe less than 1% of the population understands that they have those options, and a lot of people always think they have to pay their share of taxes.

Well, if you can keep your wealth within your own family and your loved ones, you should be able to operate at a level that you want to operate. I always say to my staff and anybody else that I provide the service just like I’d like you to provide service to me and treat others the way you’d want to be treated. That’s very important. That’s a piece of mind for the business owners. It’s a peace of mind for yourself as a relationship manager and for us as the provider of the solution. So, it’s a win-win-win situation. The clients are happy and have what they need, you (Jason) have the solution provided to your clients and keep the relationship with them, and we are providing the solution to you and being in a great relationship and at the same token earn a living from it.

 

Jason Boudreau:

Yes, for sure. Thank you. The last thing I want to just sort of end on is your vision for Serre. It was great to hear you brought in your banker as a key number Two or next in charge. What is your vision for the future of Serre and where it’s going to be in maybe three to five years from now?

 

Dennis Serre:

Well, as you know I have moved up north to a resort area which I do enjoy. There are various types of activities from skiing to golfing, cycling to hiking. I wanted access to these types of activity but I also realized that for me it was important to use my brain every day too!

I am in very good physical health, so I hope I will be able to be around helping people like yourself for many years to come. I enjoy what I do and earning a living helping others is the enjoyment is amazing. So, I hope I will be still working at reduced hours maybe twenty to twenty-five hours a week but be around another 3 to 10 years minimum. I’m young, I’m fifty-five years old and I don’t see myself fully retiring. Finding the right balance will enable me to do what I do for years to come.

 

Jason Boudreau:

Right! Well, it’s certain that Serre Financial is great at helping people and we’re grateful for our relationship with you Dennis, and your company. Thank you for your time today and for being with me on the Polestar Podcast here. It’s been a pleasure getting to know you better. I really enjoyed the conversation and learned some new things from you today that I didn’t know before. Thank you for joining me.

 

Dennis Serre:

You’re very welcome.

 

Disclaimer

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