Episode 385: A Case Study on Pension Benefits vs. Commuted Values cover art

Episode 385: A Case Study on Pension Benefits vs. Commuted Values

Episode 385: A Case Study on Pension Benefits vs. Commuted Values

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 In this episode, we feature two conversations that highlight PWL's culture, values, and intentional approach to advice. We first sit down with Trevor Daigle and Brett Watt, founders of EB Wealth in Halifax, to talk about why they chose to merge their thriving independent practice with PWL — PWL's first acquisition in Atlantic Canada. Trevor and Brett open up about what they saw in PWL's infrastructure, culture, and client-first philosophy, the internal hurdles they had to clear (including their own egos), and the moment they realized they "couldn't unsee" what PWL had built. Then, in the second half of the episode, PWL Portfolio Manager and Financial Planner Phil Briggs walks us through a remarkable real-world case. A podcast listener's father decided to take the commuted value of his defined benefit pension… and the family approached PWL to invest it. Rather than simply execute the plan, Phil stepped back to rigorously analyze whether that decision made sense at all. The result is one of the most compelling demonstrations of evidence-based financial planning we've featured on the show — covering risk pooling, tax implications, Monte Carlo results, survivor benefits, and the emotional side of decision-making. Key Points From This Episode: (0:00:51) Welcoming Trevor and Brett — and why their practice, EB Wealth, aligned so closely with PWL's holistic philosophy. (0:02:30) How long-term cultural fit, infrastructure, and research depth drove their decision to join PWL. (0:04:57) "We can't unsee that": The moment a visit to Ottawa convinced them PWL's values were real at every level. (0:07:45) Their biggest concern: giving up control after years of running an independent practice — and how that shifted. (0:09:43) Setting aside ego: How thinking long-term and client-first changed their perspective on joining PWL. (0:11:35) What excites them most about the future: growth, learning, and being surrounded by experts who prioritize client outcomes. (0:13:17) Seeing PWL's collaborative culture in action — and why industry-typical "sales meetings" were nowhere to be found. (0:14:43) Transitioning clients and feeling the immediate impact on conversations and relationships. (15:05) The setup: A podcast listener reaches out after his father already decided to take the commuted value of a DB pension. (17:25) Why Phil was surprised — and the questions he wanted answered before talking about investing. (17:25–18:49) The benefits of staying in a DB pension: risk transfer, inflation protection, and mortality pooling. (19:07) The risks: employer insolvency, underfunding, and historical examples like Sears Canada and Nortel. (20:10–22:04) Evaluating pension solvency: sponsors, surplus status, funding ratios, diversification, and regulatory filings. (23:49) Reasons someone might take the commuted value: investment preferences, life expectancy concerns, and survivor benefits — the central issue in this case. (25:15–30:52) The tax trap: how the "excess amount" of a commuted value can trigger immediate taxation — in this case at the 53.53% marginal rate — and how RRSP room and PARs interact. (31:26–33:53) Modeling the decision: building retirement scenarios in financial planning software, including spending, inflation, CPP/OAS, rental income, and Monte Carlo analysis. (34:00–37:54) Results: 60/40 investment after commuting: overfunded plan but with significant volatility. 100% equity: higher legacy, similar failure rate. Leaving the pension with the employer: similar retirement score but dramatically higher Monte Carlo success (96%) due to guaranteed income, inflation hedging, and tax smoothing. (38:32–40:55) Why the pension's stable income floor and deferred taxation made such a big difference — even in a shortened-life-expectancy scenario. (41:05–41:37) Other firms simply accepted the commuted-value plan; PWL was the only firm to fully analyze the decision. (43:50–44:53) How personal values, risks, and emotional comfort interact with data in real financial planning decisions. (45:00–47:28) The next decision: choosing between a higher pension with a 2/3 survivor benefit or a lower pension with a 100% survivor benefit — and how break-even analysis (age 81) informed the client's choice. (47:44–48:31) Why planning software provides clarity people can't get through gut feel alone. (48:31–49:59) Trust and incentives: why turning down a large investable sum was the right decision — and why PWL celebrates that. (50:08–51:01) Culture + incentives: how PWL's structure allows advisors to prioritize clients without sales pressure. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin ...
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