How top advisor seeks portfolio excellence with an after-tax edge

An early passion for stocks and tax planning was the beginning of David Poliquin's pursuit of innovative financial solutions

How top advisor seeks portfolio excellence with an after-tax edge

David Poliquin manages a book of business exceeding $1 billion, which is impressive considering he’s been a portfolio manager for just a little more than a decade. But his passion for his work – watching the stock markets, crafting tax strategies, and financial planning – stretches back much further.

“In high school, I was already doing projects about it. I took a course with H&R Block just for fun,” recalls Poliquin, portfolio manager at BGY, Services financiers intégrés with iA Private Wealth, who is also the top advisor among Wealth Professional’s list of Top 50 Advisors for 2022. “As a college student, I would watch the bids and asks on the TSX, and I did over 1,000 stock transactions in one year.”

By the time he was doing his Master’s at Universite Laval, he already had a very clear vision of how he could help people manage their financial situation using a holistic approach. Impressed by his keenness and enthusiasm, one of his professors told to him about BGY, resulting in a fateful meeting between Poliquin and the firm’s partners.

“They let me talk for half an hour, and after that I recognized we had the same approach,” Poliquin says. “That led me to get a job with BGY after graduation, because I realized we had the same values.”

In explaining the secret to his professional success, Poliquin begins with the phrase “it might be a cliché.” But then again, some things become cliché for a reason: as obvious as they may sound, they actually work.

“You have to work hard, and never cut corners,” he says. “Be professional with your work; dive deep into analytical details. Never start a relationship by trying to sell to the client. Be an advisor with a long-term view, with a real interest in helping clients improve their financial situation and reach their goals. From there, the rest comes naturally.”

Beyond that, he emphasizes the importance of being surrounded by people who are not just very competent, but also have the same values and goal of putting the client first, along with complementary expertise. That’s what he has come to appreciate at BGY; rather than being compensated based on sales commissions, he and his colleagues are paid more like accountants and lawyers, with a focus of providing good service to clients.

The work Poliquin does revolves around finding innovative financial strategies to help clients achieve their financial objectives. No matter who he’s working with, his driving ambition is to come up with an investment solution that’s not offered anywhere else in the industry.

“Our portfolios are almost 100% tax-efficient, and that’s very important for us in Quebec. For the last decade, the tax rates for corporations and individuals in the province has increased each year,” he says. “Just as an example, the maximum non-eligible dividend tax rate for individuals in 2012 was 36%; this year, it’s 48.7%.”

The rules around taxation, Poliquin says, have evolved differently in Quebec compared to Ontario. Looking at its progressive system of corporate taxation, the Quebec government has been lowering the tax rate on the first $500,000 of profit earned within a corporation, and offsetting it with a higher tax rate on dividends paid when it exits.

However, it has not changed the tax rates on revenues from the portfolio held within the corporation. The net effect on his high-income clients with corporations, Poliquin says, has been a decrease in their after-tax income.

“Honestly, a lot of people in our industry here in Quebec are doing finance, but they aren’t doing taxes, so people aren’t seeing this,” he says. “At our firm, we analyze each investment from an after-tax perspective, and I think it’s been a reasonably successful approach that’s very important for us to stay ahead.”

In Poliquin’s view, the need for his firm’s services is more urgent than ever. With their tax-efficient approach, an entrepreneur who set out a plan 10 years ago to retire this year would potentially have been able to avoid the negative surprise of an extra 12 percentage points added to tax rates for non-eligible dividends. Beyond that, he says the firm has developed a fund of alternative investments designed to reduce investors’ exposure to traditional bonds, but replacing the fixed income lost with alternative yield of about 7%.

But what he considers the most exciting strategy in his toolkit is the use of flow-through shares, which when applicable to the tax situation of a client is the best asset class.

Under that approach, which is only open to certain high-income clients and entrepreneurs, he recommends investments in junior mining companies that come with substantial tax advantages. And with the use of proprietary software, he says BGY is able to optimize their advice so that they can tell how much a client should buy and at what price to sell for the most efficient returns.

“Every client has at least four professionals working with them. We constantly talk with accountants and lawyers, so we’re continuously aware of their financial situation, the decisions they have to make, and everything else,” Poliquin says. “It's really like we're the CFO of the client.”