What Are Tactics?

Tactics are methods of solving some strategic problem or opportunity – strategy being the over-arching vision. Each vision has parts that must be addressed, sometimes in a particular order.

Strategy organizes by priority.

Tactics answer “How?”

Many tactics are tools. A financial tool is one that has been in use for decades, often centuries. They have been refined and made specific so a particular problem can have a a dedicated solution.

For example, second to die life insurance is ideally suited to the problem of estate liquidity. In most cases, no tax is due at the first death of a couple. The second death triggers the problem.  It is often seen as a monthly premium that pays the ultimate very large sum needed to pay income taxes at the estate level. Because it is priced based on a combined life expectancy it is usually substantially less costly than a single life policies.

This form is often used to provide cash to equalize shares or to provide for charitable contributions.

Tactics include:

For accumulating capital

  1. Investment funds
  2. Index funds
  3. Exchange-traded funds.
  4. Deferred annuities
  5. Rental properties
  6. Bonds, mortgages and notes receivable
  7. Bank accounts and term deposits
  8. Options

Containers that have specific tax characteristics

  1.  Registered Retirement Savings Plans (RRSP)
  2. Registered Education Savings Plans (RESP)
  3. Registered Disability Savings Plans (RDSP)
  4. Tax Free Savings Accounts (TFSA)
  5. Registered Pension plans (RPP)
  6. Deferred Profit Sharing Plans (DPSP)
  7. Retirement Compensation Agreements (RCA)

Agreements, contracts, and other instructions

  1. A will and sometimes wills
  2. Powers of attorney for finance and personal care
  3. Partnership and shareholder agreements
  4. Pre and post nuptial agreements.
  5. Trusts

Insurance

  1. Life
  2. Disability
  3. Critical Illness
  4. Health and Dental
  5. Home – Fire, vandalism, wind, water damage, Personal liability
  6. Business – Errors and missions, general liability, product liability
  7. Long term care
  8. Vehicles – liability, theft and vandalism, collision, comprehensive
  9. Boats, motorcycles, and recreational vehicles

Techniques and structure

  1. Debt reduction
  2. Operating corporations, partnerships, limited partnerships, and joint ventures.
  3. Holding corporations
  4. Family trusts
  5. Tax plan
  6. Creditor proofing
  7. Risk management and parameters

Command and Control

  1. Day to day administration. – paying the bills
  2. Annual cash flow budget
  3. Long term plan
  4. Pre-estate distribution plan

Organizing appropriate tactics is not as easy as people think. Many particular tactics rely on the application of several of the tools. The key issue though is there should be a template to attach them to. That’s where the vision and strategic definitions come in.

Case in point

Many years ago I had a client who wished to transfer part of his business to his two children who were active in the business, and gradually retire over the next five years. It took some time to clarify the management structure that would result and then evolve to his being involved in strategic decisions but not in operations. Thorny tax issues were present. The use of capital gains, dividends, salaries, an individual pension plan, were all considered. Life insurance was organized and particular attention was paid to the risk of a child dying first. Manageability of the assets for his wife was important should he die first. Will design and use of secondary wills for the business assets were designed. Not entirely trivial.

Clearly there is a particular strategic objective and tactics available.

How did the presentation go?

Client: I have set aside the morning and then lunch. Is that enough time?

Me: Probably more than we need, but reasonable.

Client: Is there anything in there that is contrary to what I am trying to do and what money I can use to do it with?

Me: No

Client: Good. we both know I am going to understand about 5% of the detail and that doesn’t matter anyway. You know what I want to accomplish. We both know I am going to do what you think is in my best interest, so let’s use the time productively. I made a tee time for half an hour from now. Let’s go play a round.

If he was not certain I knew and understood the strategic plan he wanted and had just appeared with the package as a good idea, do you think he would have done it?

Bits to take away.

Learn to isolate strategy from tactics. The two do not connect until much later. The way you think about the “W” questions is dissimilar to how you think about How?

Don’t start with How

Use people who can sort out the available choices and choose ones that fit.

Look for a tactic that is flexible and durable. Best is an illusion. Something that is best now may not be in a year.

Be careful with one way tactics. It is difficult to undo some of them. Know which.


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I build strategy and fact-based estate and income plans. The plans identify alternate ways and alternate timing to achieve both spending and estate distribution goals. In the past I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning, have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email to don@moneyfyi.com

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