I was saddened recently to hear of the passing of one my mentors, Fraser Smith. I had actually just finished recording my first video about his classic strategy, the Smith Manoeuvre when I heard the news.
I first met Fraser 10 years ago at the CFP conference in Ottawa where he was a guest speaker. He was a down-to-earth, folksy speaker, which was quite different from all the typical financial speakers in suits. I was immediately struck by the brilliance of his idea and what a great benefit this could be for many Canadians struggling to save for their retirement.
Our clients often found that planning for their retirement was difficult because it was often a tradeoff between their lifestyle today and their lifestyle after they retire. Being able to invest from their home equity instead of using their cash flow was a great idea. It was a “simple, elegant” strategy with cool extras, such as capitalizing the interest.
His talk was the beginning of a journey for me. I soon learned that the implementation was a bit tricky. Fraser was generous in comparing notes about which Smith Manoeuvre mortgages worked best. We discussed meetings we each had with different banks. We started doing Smith Manoeuvre seminars, researched all the tax issues, learned about who is and is not suitable for, constantly worked on better ways to do it, and developed 7 different Smith Manoeuvre strategies. It all started with that one talk from Fraser.
During a speaking trip to Toronto, I met him for a long lunch and he told me his story. He had a wide-ranging, interesting career. He got his idea for the Smith Manoeuvre by noticing that mortgages are tax deductible for Americans and that some wealthy Canadians were able to achieve it. He inspired a credit union CEO to create a mortgage that would work by manually making all the adjustments each month (readvanceable mortgages did not exist in the 80s). What drove him was his desire to “give every Canadian mortgage holder the opportunity to make their mortgage interest tax deductible.”
Fraser was always very open and generous in sharing his knowledge. He had a straightforward, common sense way of thinking and was a huge inspiration for me. His strategy has made a huge difference in the lives of many of our clients. We are indebted to him.
We will keep his name alive.
About the Author: Ed Rempel is a Certified Financial Planner (CFP) and Certified Management Accountant (CMA) who built his practice by providing his clients solid, comprehensive financial plans and personal coaching. If you would like to contact Ed, you can leave a comment in this post, or visit his website EdRempel.com. You can read his other articles here.