Peter Ficek helps new immigrants get established in Canada. But before he starts building a client’s portfolio, he focuses on building trust.
The certified financial planner and insurance advisor with Business Financing Corp. in Calgary knows exactly how it feels to be a newcomer to Canada. He was an immigrant at age 14, when his family moved from Poland in 1981.
“I know first-hand what it is like. I was the only English-speaking person in the family,” says Ficek. “So, I was translating for my parents —everything from immigration documents all the way to today. Now, I manage their money.”
This experience laid the groundwork for Ficek to build a business around helping other new arrivals by introducing them to the complex landscape of Canadian personal and business finance.
Ficek is just one of many financial advisors who are reaching out to Canada’s population of new immigrants, which is burgeoning. According to the 2006 census, one in five Canadian residents were born outside Canada.
Biljana Manojlovic, a CFP with RBC Wealth Management in Vancouver, agrees: getting acquainted with a new financial services system is a challenge for some immigrants. She is well aware of those challenges, having immigrated from Croatia in 1991. Immigrants may not even know what questions to ask to take advantage of the opportunities, services and products available to them, she says. For example, immigrants may not even be aware of the benefits of establishing RRSPs and RESPs.
Once newcomers learn about the registered savings plans, says Valerie Chatain-White, a CFP with VCW Financial in Winnipeg, an affiliate of Mississauga, Ont.-based Investment Planning Counsel, they’re keen to set them up. But it takes time, and the right connections, to learn about all these opportunities.
“There’s a huge learning curve,” says Chatain-White, whose book includes immigrants. “If you’re going to a different land, with a totally different language, that’s huge.”
New immigrants can also feel the strain of sending money back to their native countries. The family home of one of Chatain-White’s clients was destroyed in the war in the former Yugoslavia. The client’s relatives in Bosnia were using her credit card to buy home-building materials, but because the arrival of goods was so sporadic, the client could never predict her monthly bill.
“It was very humbling to work with [her] and realize how much we take for granted,” says Chatain-White. The young client had “pretty much sacrificed everything” to put her sister through university, Chatain-White adds.
Big learning curves also usually include big culture shocks for newcomers. Immigrants accustomed to a more relaxed regulatory regime are often surprised to learn how much scrutiny they’ll undergo as a result of Canada’s money-laundering regulations. Clients are surprised when Chatain-White turns away cash deposits. “You’d be surprised,” she says, “how much cash people come across the border with in their jeans pocket.”
Other clients can get touchy when asked about the source of their income, or for information on spouses back home.
It’s even harder to bridge these gaps when language is a barrier. Ficek goes to great lengths to ensure his clients fully understand his message. “A financial planner,” he says, “should not take for granted that immigrants understand what is being said to them.”
Chatain-White agrees: “Because they are nodding and agreeing doesn’t mean they understand.”
One way to address this at meetings is to encourage the client to bring along a trusted friend or relative who speaks the same language but is already established in Canada. This will help solidify the business relationship more quickly, says Ficek. His strategy for building a business with immigrant clients is simple: he chooses clients who, he thinks, show promise as entrepreneurs and starts by helping them navigate the myriad Canadian regulations and procedures. His first priority is to explain the Canadian banking system.
“I do that for a nominal fee, in hopes of them working with me in the long term,” Ficek says. “And then I grow with them. I have clients who have started businesses seven, eight years ago, for example, who are now turning $2 million in revenue. So, they’re no longer the painter or the baker or the blue-collar guy, because I’ve taken them from A to Z.”
While Ficek focuses on helping clients in the early stages of building a business, he is not educating rookies. Many of his clients have experience in business in their countries of origin. But cultural differences make it likely that some systems work differently here. For example, how does a Canadian business owner develop a relationship with a bank? How do chequing and savings accounts work here, compared with back home?
@page_break@Many immigrants make ideal entrepreneurs because they are used to taking a gamble, Ficek says: “Most immigrants took an unprecedented risk to come to Canada and leave everything behind.”
Besides careers, family and friends, immigrants also leave behind their credit histories. It’s critical that immigrants, who arrive without an established Canadian credit history, immediately begin to build a track record so they’ll be prepared when they apply for a car loan or mortgage. A financial advisor should also take time to explain how mortgages are structured and what fees are associated with them. Ficek points out that even missing a payment or two on a cellphone bill can affect the client’s credit record.
In particular, Ficek emphasizes to newcomers that they should not finance a new business with credit cards and personal loans, which would make them personally liable for the debts of the business.
“They can’t afford to lose it all again,” he says.
Immigrants should make sure they get coverage for disability insurance. Many are self-employed and not covered by workplace plans. And they are less likely to have their parents to fall back on.
Advisors can help new arrivals make short-term plans, such as budgets, and longer-term goals, such as saving for retirement. This is particularly critical for new immigrants who arrive later in life and may not even qualify for the Canada Pension Plan.
“For newcomers, it is especially important,” Ficek says, “because of the shortened time horizon.”
Many advisors spend time learning about setting up immigration trusts, which allow new arrivals to hold assets offshore tax-free for several years. But newcomers with these trusts are few, Ficek says, because the average immigrant comes to Canada with little.
Manojlovic, however, does deal with newcomers who have high net-worth; many of her new clients are professionals who have come to Canada to work in the booming mining industry.
A couple of new arrivals got caught out when they exercised stock options but didn’t keep money aside to cover the taxes, she says. It’s just an example of how, despite their wealth, highly educated foreigners often have much to learn when they arrive.
Says Manojlovic: “It’s just learning about how Canadian society functions.” IE
Immigrants have special financial planning needs
Many new arrivals know little about the programs available to them; learning a new financial services culture is a challenge
- By: Laura Bobak
- May 30, 2008 May 30, 2008
- 13:53