You’re in your early 30s, a lengthy post-secondary stay is now in the rearview, and it’s time to make some serious money as an independent contractor.
Sounds great, right?
But what happens when the taxman cometh? How do you pivot should you choose to start a family? And what to do if your health takes a turn?
Thankfully, Louise Lee is in the business of providing precisely those answers.
An auditing and accounting partner with Baker Tilly, Lee provides expert and timely guidance for independent contractors wherever they find themselves in their professional lives, from those in their early thirties who’ve just begun their career arc to others contemplating retirement and beyond.
Multifaceted knowledge meets tailored client solutions
Lee’s diverse client pool comprises working professionals making six figures and above across several industries, including the medical, dental and legal fields.
“A lot of these clients are really concentrating on their careers, and they’re so focused on growing their business or practice, they don’t even have time to think about money matters,” she explains. “All of a sudden, they realize they don’t have money to pay their taxes and have very little in their savings.”
An ever-evolving process, Lee begins her client’s financial journey by instilling trust, answering questions and encouraging fiscal discipline.
To that end, the process begins with a basic snapshot to highlight monthly cash outflow, rent, mortgage, groceries and other budgetary needs that draw a baseline from which to work forward.
Picking the right plan
Lee then encourages clients to view RRSP contributions as pension plans, for independent contractors specifically, as many of her clients experience severe sticker shock in the first year on their own should they not contribute. Others are perplexed by Canada Pension Plan (CPP) payments that are double what they were when working in a corporate environment.
“Let’s say you’re a doctor making $10,000 a month, you need to set aside 10 per cent of your earnings a month to save for tax time,” Lee says. “That can be a total surprise to many clients, and that’s why we need to start building these relationships early on.”
Lee then moves the conversation towards themes of risk tolerance and forecasting through a portfolio review that concentrates on a client’s age and future plans.
Someone in their mid-20s, for example, may want a portfolio that swings for the fences with an 80/20 split of equities versus bonds. On the other hand, those nearing the end of their lives will likely opt for a more conservative 50/50 split.
“Are you putting your money into a GIC that pays you two per cent, or are you willing to find the next Tesla or Apple?” Lee says. “If you’re in your mid-20s, you have time to recover should there be a downfall in the market.”
CPP questions also arise as clients progress through their 50s. Lifestyle, genetics and longevity all come into play when Lee advises clients on the implications of whether to collect before the age of 65, or defer to when they’re 70.
“I help clients to understand where they spend their money, how they spend their money and what’s a necessity versus what is a wish,” Lee says.