Almost famous; always tax-efficient

Tepner’s point of differentiation lies not in the type of client he serves, but in the service he offers: tax-efficient financial planning strategies, based on expertise acquired through his training and experience as an accountant.

“What I do best is dealing with individuals and families with complex financial situations,” he says. “A lot of the complexities come from someone receiving a financial windfall of some sort – because that isn’t just managing money. There is so much psychology and sociology involved.”

When a client inherits assets that his or her parents worked their whole lives to accumulate, Tepner says, that client often feels emotional about those assets. And sometimes, when the inheritance is a significant amount, other people may be pressuring the client for a share of those assets.

“Coaching the recipient to protect themselves from those – let’s call them ‘financial leeches’ – is really important,” Tepner says. “So, it’s not just the financial management that starts with the financial plan. It’s also dealing with the often intense emotions and strong personal interactions that go on in that type of situation.”

Still, financial planning is at the heart of Tepner’s approach. He goes beyond investments, examining all aspects of a client’s financial life, including income, insurance, cash needs, banking services, retirement planning, pensions, education planning and estate planning.

And as a former accountant, Tepner emphasizes the importance of tax efficiency.

He asks all new clients for permission to speak to their accountant and other advisors, such as lawyers. “I want to create a relationship with that [other advisor],” he says. “I want the client’s accountant to know that he or she can call me with any question, because we speak the same language.”

Regarding investments, Tepner likes to keep things simple. He doesn’t invest clients’ assets in individual stocks; he prefers managed money. And he likes to use a small number of investments to meet asset-allocation needs in a tax-efficient way. His favoured mutual fund company is Dimensional Fund Advisors Canada ULC, a family of low-cost, diversified funds, the investment management of which is based on academic research.

Born in Montreal, Tepner studied economics at Carleton University in Ottawa, then acquired his MBA at Queen’s University in Kingston, Ont. During that time, he secured an enviable position as a rock music critic, interviewing musicians and reviewing concerts for the Kingston Whig Standard newspaper and, later, various weeklies in Montreal and the Toronto area. The critic’s job was a music fan’s dream come true: free albums, backstage passes and conversations with such music legends as the Bee Gees, Leonard Cohen, Graham Nash and Ann Wilson of Heart. Tepner kept up the music journalism over the next decade as a part-time activity while pursuing his accounting career.

He joined a firm in Montreal and acquired his chartered accountant’s designation. Then, he worked for a couple of large firms in Toronto and Ottawa. He took the Canadian Institute of Chartered Accountants’ Indepth Tax Course and became a tax specialist. But he wasn’t happy in his job.

“I felt it was a bit too corporate for what I wanted to do,” Tepner says. “I liked working with the individuals more than the big corporate boards. I liked the hands-on aspect, when I was able to get more creative with things I was doing, both in terms of creative strategies and marketing the practices.”

Financial planning seemed to offer more of what Tepner was looking for. In 1991, he joined investment dealer Midland Walwyn Capital Inc. in Toronto. (That firm was later acquired by new York-based Merrill Lynch and in turn, by Canadian Imperial Bank of Commerce, which then merged Merrill Lynch Canada into CIBC Wood Gundy.)

When Tepner first entered the financial advisory business, he recognized that media exposure could raise his profile without requiring a big marketing budget. He offered his time and expertise to journalists and was quoted often in newspaper articles about personal finance and asked to comment on the radio. He produced a newsletter entitled The Educated Investor and attended consumer trade shows such as the Financial Forum.

In 1995, Tepner’s media strategy paid off in spades. Attendees at the Financial Forum received a free copy of the daily Financial Post newspaper. That edition of the Post contained a column by personal finance columnist Bruce Cohen extolling Tepner’s newsletter. Readers were invited to call Tepner’s office for a free copy. “We received 775 requests for a copy,” Tepner recalls.

The continuing flood of inquiries prompted Tepner to hire Michael Appt as a “warm caller” to follow up on leads. Appt later became an associate advisor in Tepner’s practice.

Appt still works with Tepner’s team as an investment advisor, handling about 200 of the practice’s 300 client families, while Tepner focuses on the office’s high net-worth clients and others with more complex needs. Tepner prides himself on staff loyalty; advisor assistants Ambrene Bana and Alice Zhao each have been with the team for 10 years.

Tepner has never lost sight of his roots as a tax specialist. “I think everybody in the industry should try to find a way to differentiate themselves,” Tepner says, adding that when he started in the financial advisory business, he hoped to “be the ‘tax guy’ in the investment industry.”

His approach to tax efficiency borrows a motto from the real estate business: “location, location, location.” For Tepner, “location” refers to the type of account in which an asset is held – whether that’s an RRSP, a registered retirement income fund, an investment account or a TFSA, for example. This location of assets can determine the tax consequences for a client. Tepner’s strategies often involve shifting assets among family members to reduce taxes.

“Different forms of returns are taxed in different ways in Canada,” Tepner says. “We want to find the optimum location for each investment to minimize the taxes.”

To illustrate this point, he describes a tax-saving strategy he set up for an elderly new client couple who had just sold their house and needed to invest the proceeds. The challenge was to find a way to take advantage of the husband’s capital loss carry-forwards, which were substantial, while adhering to the clients’ request to invest primarily in low-risk vehicles, such as interest-paying GICs and bonds. The capital loss carry-forwards could be used only to offset taxable capital gains during the husband’s lifetime. The couple had little else invested in non-registered accounts.

Tepner devised a plan whereby the wife made a 1% prescribed-rate, spousal loan to her husband from her half of the proceeds from the house. Tepner invested much of the loan proceeds, plus all of the husband’s money, in carefully selected bond funds that paid their earnings in the form of capital gains, which would be offset by his capital loss carry-forwards – effectively becoming tax-free income.

Tepner’s plan netted substantial tax savings for the couple while accommodating their low risk tolerance.

Tepner is married, with two stepsons, ages 31 and 29, and an 18-year-old son who is about to graduate high school and begin university. Tepner and his wife, Marcy, enjoy travel, and are anxiously anticipating becoming “empty nesters.”

Tepner has for 18 years been a volunteer with the Hearing Foundation of Canada, a non-profit organization that aims to prevent hearing loss. That activity earned Tepner, who has a hearing impairment, a CIBC Community Volunteer Award in 2013.

Tepner enjoys the occasional aerobics workout, and was an aerobics instructor for 11 years in the 1980s and ’90s.

His record collection stirs fond memories: “It was so much fun because it was outside of my normal [experience of] being an accountant. I was an accountant by day; rock critic by night.”

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