Buy real estate, be aggressive—and always keep your first wife. Planners tell all.
WHAT I WISH I'D DONE
Buy real estate, be aggressive—and always keep your first wife. Planners tell all.
BY JASON KIRBY • The typical way to become a financial adviser is to study hard, earn a designation and land an entry-level job at a firm. David Ingram took the rock ’n’ roll route instead. Back in the mid-1960s, Ingram managed a Winnipeg coffee house where the likes of Neil Young and Burton Cummings, along with other rising performers, cut their chops. Bringing acts up from the States required reams of paperwork, and Ingram found he had a knack for cross-border tax issues. By the 1980s, he’d built a small empire of financial consulting offices across Canada, written two dozen
self-help books, and acquired a fleet of yachts and cars. But as happens with so many soaring rock stars, Ingram’s fortunes flamed out. Revenue Canada levelled a mas-
sive tax bill at him in 1985, and after a lengthy court battle, forced him into bankruptcy four years ago. “If I had to do it again,” the semi-retired Ingram is fond of telling people, “I would have walked into a bankruptcy trustee’s office 15 years ago and would have been able to get on with my life.”
Regrets. Who hasn’t had a few? Millions of Canadians rely on a host of financial experts—tax consultants, insurance agents, investment advisers—to help them chart a path to their golden years that will avoid those bitter moments. Yet in retirement, many advisers themselves find they wish they’d done some things differently. Hindsight, of course, is 20/20. But, for today’s hapless worker staring at her paycheque and wondering how she’ll transform it into the utopian post-work lifestyle flogged on TV commercials, there are lessons to be learned from the experiences of financial planners who have already been there.
Ingram may seem an extreme case, but not once you realize that debt levels for many Canadian households are near all-time highs. The average family owes more than it earns,
a trend that’s led to record levels of bankruptcies. Today, Ingram, 64, lives as he has almost continuously since 1969, in a quaint North Vancouver home that clings to the side of a mountain overlooking the city. He eases his heavy frame into a chair, pushes aside several unopened cans of Chef Boyardee, and shares his tale of boom, bust and recovery.
Ingram’s troubles had a very ordinary start. His Cen-ta Group, which oversaw both his tax consultancy and real estate businesses, was audited in the early 1980s. Officials informed him he owed more than $1 million in back taxes, a figure that eventually swelled to nearly $5 million with interest. Ingram claims it was just a case of his accountant depositing a sizable cheque into the wrong account. Revenue Canada, and a federal tax court, disagreed, with one judge accusing Ingram of being “a victim of his own sloppy
ROBERT WILDMAN paid off his first house in three years, then sold it to buy another. 'That was the stupidest thing I ever did.'
bookkeeping.” But rather than submit to the taxman, Ingram fought on. “I was thumbing my nose at them, trying to make an example of opposing the tax office,” he says. Looking back now, it’s not a move he recommends to others facing a similar situation. “I should have sat down, sooner than later, and gone bankrupt to salvage my family and children. It was too hard on my wife.”
Which brings Ingram to his other area of
expertise—divorce, another rising trend to which he has contributed. By Ingram’s count he has been married 5V2 times. “One of them disputes whether we were together long enough to be common law,” he explains. Early on—sometime between marriages one and two—Ingram developed a unique approach to retirement planning for young couples that starts with the assumption that marital bliss won’t last. To illustrate his theory, he says, take 100 men and 100 women in their mid20s. Ingram calculates that either through divorce or death, fewer than 10 per cent will be with the same partner past age 65. Yet most newlyweds plan their retirements assuming they’ll be together. His advice, both jaded and pragmatic, is that married couples should own two properties to prepare for the eventual split. “Before you buy any RRSPs, have that second property,” he says. “It allows you to have a formal, pleasant divorce.” While the notion may seem absurd, especially with most couples struggling to afford just one home, there’s no denying that a divorce can pulverize even the best-laid retirement plans. “I was divorced 25 years ago,” says Robert Wildman, a 68-year-old retired insurance salesman from Toronto. “One smarter thing I would say to people is ‘keep your first wife.’ ” Wildman is being facetious, but his divorce came as a financial blow for a man who had been thoroughly prudent when it came to his finances. To a fault, he now admits.
Clearly, Wildman got over it; he’s not exactly hurting in his retirement. He’s built a new Sl-million condo near Toronto’s Old Mill and spends half his on Florida’s
Gulf Coast. “There’s not a cloud in the sky,” he says in a phone interview from his Florida complex. “It’s tough.” But it’s also true that Wildman’s conservative nature led him to shortchange himself over the years. Wildman says that when he was a teenager, his father lost his job at the age of 53. Without a roof over the family’s head, his old man was forced to work until well into his 80s. “I watched that and said that would never happen to
me,” recalls Wildman.
So, at just 28, he bought his first house for $28,000, saved every penny he earned, and paid it off within three years. He sold that house, bought a second home, and repeated the feat again. He’d never be caught dead carrying a mortgage for very long. “That was the stupidest thing I ever did,” he says now, after owning a total of five homes. “I should have stayed in the first house, bought
another, then another, and let someone else pay off my debt.” Wildman says he couldn’t shake the spectre of his unemployed father. But looking back he also didn’t realize how quickly the mortgage would fly by. “I was young and didn’t realize how short 20 years was,” he says. As if he needed a reminder of what a different strategy might have accomplished, his new condo is just a short drive from his first home, which today is worth nearly
DAVID INGRAM says married couples should own two homes to prepare for an eventual split. 'Do that before you buy any RRSPs.’
$800,000. “I’d have been miles ahead.” Wildman isn’t alone. Other retired financial advisers feel they could have had more now if they’d have taken greater risks back then. Part of it is demographics. Many grew up at a time of high unemployment and economic uncertainty. Shaped by their parents’ hardships, they were loath to gamble their savings on anything but the surest of investments. “I was a depression baby, so I was very conservative,” says Rayner McCullough, a 76-year-old retired financial planner from Barrie, Ont. “Looking back, on the RSP side of it, I could have probably been more risk tolerant.” McCullough says when he started
out, the range of investment options were limited. But as mutual funds gained prominence, he stuck to a simple rule of thumb: in an investment portfolio, keep a percentage equivalent to your age in guarantees like government bonds, and put the rest into riskier securities like stocks. “As you get older,” he says, “you naturally have more guaranteed income.” But he stops short of regretting his investment decisions. “I don’t know
if I could have lived with any more risk,” he admits. “I might have had a bigger return, but I could also have ended up with a smaller return. I can’t
However risk averse McCullough was, it hasn’t hampered his retirement. From the day in July 2000 that he woke up at the crack of dawn and decided this was his last day of work, he’s gone to Bermuda 10 times. He’s taken trips to the United Kingdom and France. If he does have one regret, though, it’s that until very late in his career, he didn’t find a successor to take over the business he had built up. It’s a pressing issue for any business owner who wants to see his company thrive after he’s gone. McCullough was hampered, in part, by existing insurance industry laws that restricted him from taking on a partner. But it still took him until he was 65 to find the ideal candidate. “I wanted to stop at the top of my game,” he says. “I know a lot of guys who are still sitting in dark, dusty offices trying to keep going. Maybe they didn’t do their planning.”
Ingram, for one, is still at it. Each day he fields dozens of tax and immigration questions from Canadians and Americans through his website, and distributes a newsletter to subscribers with his advice. One in 10 queries leads to a client, he says. It’s an ad hoc business. On every flat surface in his home office there are piles of papers, envelopes stuffed with cheques and clients’ tax returns. His main form of advertising, aside from the Internet, is a collection of old cars and a Winnebago that bear his company’s name, which he parks randomly throughout the city’s north shore. Still, with the bankruptcy settled, he’s been able to move on. “I got my house back, my sailboat back, sole custody of my kids and I’m still doing some work,” he says. “It’s been a wild ride.” M
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