IPC Business and Market Insights Blog

Markets Under Pressure: Risks, Repricing, and Resilience

Mon, 13 Apr 2026 13:02:34 GMT

Summary

Markets have been volatile so far this year, shaped by several competing forces unfolding at the same time. According to Blair Setford, Assistant Vice‑President, Product Management at Canada Life Investment Management, investors have had to navigate shifting leadership in equity markets, evolving trade policy, and heightened geopolitical risk—all against a backdrop of inflation and growth uncertainty.

Equities rebounded sharply at the end of March as oil prices retreated, driven by optimism that the U.S.-led conflict with Iran—which had disrupted global energy supplies—may be moving toward resolution. Earlier in the year, however, large technology stocks that led markets in 2025 came under pressure following fourth‑quarter earnings and scrutiny around rising artificial intelligence spending. Trade policy also re‑emerged as a market concern after a U.S. Supreme Court ruling paved the way for a broad 10% tariff on imports.

Both stocks and bonds declined over the quarter as inflation concerns intensified and growth expectations softened. Investors reduced exposure to areas that had performed well earlier, including gold and emerging markets, while the U.S. dollar strengthened. Commodity markets stood out as the exception, with oil and gas prices surging after damage to energy infrastructure and disruptions to shipping through the Strait of Hormuz, pushing crude oil to its largest monthly gain in decades.

Bond markets were particularly volatile as energy-driven inflation fears shifted expectations from rate cuts to potential rate hikes, though slowing growth remains a key concern for central banks. In this environment, Blair emphasizes the importance of diversification. High‑quality bonds may still provide stability, while re‑priced equity sectors—including technology—could offer renewed opportunities if geopolitical tensions ease.

As always, investors are encouraged to review their portfolios with a financial advisor to ensure they remain aligned with long‑term goals and risk tolerance.

The content of this material (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it.
This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of April 13, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Canada Life Investment Management and design are trademarks of The Canada Life Assurance Company.

A Pause, Not an End

Fri, 10 Apr 2026 16:42:14 GMT

Executive summary

The ceasefire between the U.S., Israel, and Iran is a meaningful de-escalation, but remains fragile and conditional
Markets have responded positively, though risk premia suggest investors had already been looking through the conflict
Energy prices are likely to ease, but remain elevated enough to keep pressure on inflation and growth
The more important shift is structural, not cyclical, geopolitical fragmentation is becoming embedded
Markets are still pricing this as a contained shock, not a regime change

A pause, not an end

The announcement of a ceasefire is the clearest signal so far that the conflict may be moving toward de-escalation. Markets have responded accordingly.

But the agreement itself is incomplete.

It hinges on unresolved issues, most notably the reopening of the Strait of Hormuz and the terms under which energy flows resume. At the same time, key elements of the proposed framework, including sanctions relief, uranium enrichment, and the withdrawal of U.S. forces, remain difficult to reconcile without meaningful compromise.

There is still a credible path where this breaks down.

That is the starting point, not the risk case.

Markets were already looking through it

What stands out is how little damage was done to risk sentiment during the escalation.

Across equities, rates, and credit, risk premia moved only modestly and remain low relative to history. Even before the ceasefire rally, markets were not pricing a sustained deterioration in financial conditions.

That tells us something important.

The drawdown we did see was not driven by a loss of confidence. It was a repricing of oil and, by extension, a repricing of monetary policy expectations.

In other words, this behaved more like a macro shock than a financial one.

Energy still does the work

The ceasefire matters because of what it means for energy.

Prices have come off their highs, but the path from here is unlikely to be a straight line back to pre-conflict levels. Disruptions to shipping and infrastructure, even if partially resolved, leave a residual premium in place.

Our baseline view reflects that:

Oil prices fall, but remain elevated through the year
Brent averages around $95 per barrel in Q2 before easing toward $80 by Q4

Even the mechanics of reopening the Strait of Hormuz introduce frictions. Transit fees alone could add roughly $1 per barrel, modest in isolation, but indicative of a more complex operating environment.

The transmission is familiar.

Higher energy prices feed into inflation, which in turn shapes expectations for policy and growth. Our current estimates, inflation in developed markets still moves higher from here, peaking between roughly 3.5% and 4.5%, while growth slows but holds.

This is not a benign shock. It is just not a systemic one. The shock is real but is just not a destabilizing one.

Volatility is rising, but risk is not being repriced

There is a disconnect building beneath the surface.

Volatility has picked up, not just during this conflict, but across a series of recent geopolitical events. Yet investors have not demanded materially higher compensation for risk.

Historically, that combination does not tend to persist.

Either volatility fades, or risk premia adjust.

For now, markets are assuming the former. The working assumption appears to be that these are isolated events rather than part of a broader shift.

That may prove too optimistic.

The structural story is still in place

Even if the ceasefire holds, the broader backdrop has not changed.

The global economy is becoming more fragmented. Tensions between major blocs, particularly the U.S. and China and their respective spheres of influence, are not cyclical.

They are persistent.

What that means in practice is straightforward:

Supply chains remain exposed to disruption
Energy markets retain a geopolitical premium
Policy responses become more reactive

Over time, that should be reflected in higher risk premia.

Markets are not there yet.

Portfolio perspective

The shift in narrative has been quick. It usually is.

Markets move from pricing escalation to pricing resolution far faster than the underlying economics adjust. That has been the pattern again here.

From our perspective, a few things stand out.

First, the resilience in risk assets tells us that positioning was never built for a prolonged shock. Investors were already inclined to look through it.

Second, energy continues to be the dominant transmission channel. That has implications not just for inflation, but for how policy expectations are formed and repriced.

Third, the frequency of these episodes is increasing. Even if each one is treated as temporary, the cumulative effect is not.

We continue to approach this from a portfolio construction standpoint that prioritises resilience over precision.

That means maintaining exposure to growth assets but ensuring that the sources of return are not overly reliant on a single macro outcome. It also means recognising that volatility may remain elevated, even if markets are slow to reprice risk.

In this environment, the objective is not to react to each development. It is to ensure that portfolios can absorb them.

Closing thought

The ceasefire reduces the immediate pressure on markets.

It does not resolve the forces that created it.

Markets are increasingly treating this as the end of a conflict. It may instead prove to be another step in a broader transition toward a more fragmented and less predictable global system.

That distinction is where the real risk sits.

Sincerely,

Corrado Tiralongo (he/him)

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management Ltd.

The views expressed in this commentary are those of Canada Life Investment Management Ltd. as at the date of publication and are subject to change without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Prospective investors should review the offering documents relating to any investment carefully before making an investment decision and should ask their financial security advisor for advice based on their specific circumstances.

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of April 9, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

Trust and Focus: Separating Great Advisors from Good Ones

Thu, 09 Apr 2026 17:21:08 GMT

Trust is built through clarity, consistency, and care.

In today’s wealth‑management landscape, clients aren’t just choosing products, portfolios, or planning tools - they’re choosing people . Two qualities they’re constantly evaluating, consciously or not, are Trust and Focus .

These aren’t soft concepts. They shape culture, client experience, and long-term scalability. They are the foundation of every scalable, durable, client‑centric advisory business, and they’re the two core pillars I explore in my new book, The Six Circle Strategy .

The formula is simple:

Build trust through clarity, consistency, and care.

Protect focus by simplifying and finishing what you start

Circle TWO of The Six Circle Strategy: Trust

#1 Trust Starts With You:

Clients can sense when an advisor is steady, grounded, and confident and when they’re not. The second circle of the Six Circle Strategy is all about trust.

Trusting yourself means:

Knowing your strengths and blind spots
Staying consistent in your behaviour and communication
Regulating your emotions, especially during market volatility
Making courageous decisions without perfect information

Take away: When you trust your own judgment and are strong with your beliefs , clients trust you with theirs.

#2 Ask Questions That Build Trust

Trust doesn’t begin with answers. It begins with curiosity.

Advisors who ask open, exploratory questions:

Uncover what clients really value
Reduce assumptions
Demonstrate humility
Create a more collaborative planning environment

Take away : Strong, thoughtful and questions with depth are the fastest path to client trust.

#3 Trust Your Team or You Can’t Scale

One of the biggest blocks to advisory growth is a leader who can’t let go.

When you trust your staff:

You get more time for ideal clients
Decisions happen faster
Morale improves
Accountability strengthens across the practice

Takeaway:

Ask Yourself: “Is this my job - or your job?”
If everything becomes your job, growth stops.

#4 Trust Must Be Established Early

Today’s clients arrive with:

High skepticism (thanks, internet)
Shorter attention spans (and decreasing by the second)
Past experiences that make them cautious

Trust must be built intentionally and quickly through:

Transparency
Clarity
Reliability
Empathy

Take away: In wealth management, trust is your competitive advantage.

#5 Transparency and Accountability Matter

Clients don’t expect perfection.
They expect honesty, clarity, and ownership.

Being transparent means:

Naming issues early
Speaking directly
Explaining the “why” behind decisions

Take away: Being accountable means owning missteps and correcting them quickly.
That’s leadership and clients notice it.

CIRCLE THREE: FOCUS

#1 Advisors Love Complexity but It Slows Them Down

The third circle in the Six Circle Strategy is all about focus.

Complexity often feels like progress: more tools, m ore analysis, more meetings.
But complexity usually hides indecision and diffuses responsibility.

Focus, by contrast, forces clarity and commitment.

And clarity is what clients — and teams — crave.

#2 The Power of Saying No

Saying “no” isn’t limiting.

It’s liberating. "Saying no opens space to protect your time and your focus. When you say no, you have the ability make better decisions, which delivers improved results in your work."

When you narrow your priorities, you gain:

Speed
Quality
Resource efficiency
Better execution
A clearer client experience

Take away: Do fewer things. Do them better.

#3 The Danger of Chasing Two Rabbits

If everything is important… nothing is.

Trying to pursue multiple strategies leads to:

Mediocre results
Confusion among staff and clients
Strategic drift
Time wasted on nonideal clients
Slow execution

Take away: Clarity is a growth multiplier.

A question to ask yourself: “What is the one outcome that, if achieved, would make everything else easier or irrelevant?” This immediately exposes what truly matters and what doesn’t.

#4 Growth Mindset Enables Focus

A fixed mindset says, “Failure is dangerous.”
A growth mindset says, “Failure is information.”

Leaders with a growth mindset:

Aren’t paralyzed by choosing
Adapt quickly
Allow their teams to experiment
Don’t need perfection to make progress

Focus becomes easier when learning is valued more than “being right.”

# 5 Outsource Everything That Isn’t Your Superpower

Advisors get paid for a few high-value activities.
Everything else creates drag.

Outsourcing non-core tasks reduces:

Cognitive load
Operational clutter
Cost
Distraction

Your team should spend their energy on the work only you can do.

Understanding Your Investment Costs Through Total Cost Reporting (TCR)

Thu, 09 Apr 2026 17:11:47 GMT

Total Cost Reporting (TCR) is a new disclosure standard introduced by Canadian securities regulators to help you, as an investor, clearly understand the full cost of your investment products and the services you receive.

Starting Dec. 31, 2026 , investment firms across Canada must follow new TCR requirements for investment fund contracts. As a result, your first statement showing these new cost details will arrive in January 2027 .

The goal of TCR is simple: to give you greater transparency about what you pay for your investments. You’ll see embedded fees expressed in both dollar amounts and percentages in your Annual Report on Charges and Other Compensation (ARCC). With this information, you can make more informed decisions about your investment strategy.

What You’ll See on Your 2026 Annual Statement

For investment funds and ETFs

TCR builds on the cost and compensation disclosures introduced under the Client Relationship Model 2 (CRM2). One of the key new pieces of information you’ll see is:

Fund Expense Ratio (FER)

This is a new calculation that combines:

Management Expense Ratio (MER)
Trading Expense Ratio (TER)

Together, these represent the total cost of running and trading within a fund . FER hasn’t been shown on statements before and will now appear clearly beginning in January 2027.

What FER looks like in dollars

If the MER is 2.2% and you have $10,000 invested:

2.2% × $10,000 = $220

This $220 reflects the cost of:

professional fund management
operating expenses
administration
taxes

These costs are already built into the fund’s daily pricing. TCR simply makes them visible in dollars.

If your fund has a TER of 0.15% and you have $10,000 invested:

0.15% × $10,000 = $15

This reflects the cost of buying and selling securities inside the fund.

On your new statement, the MER and TER fees will appear as:

FER (2.35%)
Total cost in dollars: $235 for the year

This $235 is not an additional fee—it's simply now being shown directly so you can better understand the costs already embedded in the fund.

How TCR benefits you

TCR is designed to give you a clearer picture of the fees and costs within your investment portfolio. With better visibility, you’ll be empowered to:

Understand exactly what you’re paying
Evaluate the value you receive
Make more informed decisions as you work with your advisor toward your financial goals

What This Means for Your Relationship With Your Advisor

Understand the value of the advice you receive

As these changes roll out, you may notice new information on your year‑end statement. Your advisor can walk you through these details and help you understand what each cost reflects. While the fees themselves are not new , showing them directly on your statement is.

Ask questions—your advisor is there to help

With more transparency, it’s natural to have questions. Your advisor can help explain:

How your investment products are selected
How fund managers manage risk and adjust portfolios
Why certain products align with your goals and risk tolerance

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

Interconnected risks are rising, but this isn’t 2008

Fri, 20 Mar 2026 16:53:01 GMT

What’s driving the current concern

A recent opinion piece in The New York Times (1) argues that the global financial system is becoming increasingly fragile, not because of a single risk, but due to a network of interconnected vulnerabilities.

The author highlights three key areas:

Private credit, now a roughly $2 trillion market, with limited transparency and illiquidity that could amplify stress if investors rush to exit.
Equity market concentration, where a small group of large technology companies now represents a disproportionate share of index returns.
Geopolitical and physical risks, including tensions involving Iran and Taiwan, which could disrupt energy supply and semiconductor production.

The central argument is that these risks aren’t isolated. They’re linked through the same financial system, meaning that stress in one area can quickly spread across others.

In this framework, the concern isn’t simply what goes wrong, but how quickly and broadly shocks can propagate.

Framing today’s risks

It’s tempting to anchor today’s risks to history.

To the 1970s for energy
To the dot-com era for technology
To 2008 for credit

But the current environment does not fit neatly into any one of these periods.

Instead, it reflects a combination of all three:

Geopolitical pressures influencing real-economy inputs
Elevated concentration and expectations in equity markets
Growing reliance on less liquid forms of financing

Each of these in isolation is manageable. What matters is that they now coexist within the same system.

This doesn’t necessarily point to a crisis.

But it does suggest a market environment where shocks can travel faster, correlations can rise more quickly, and diversification may be tested when it is needed most.

Systemic risk is rising, but the transmission mechanism matters

This framing is directionally correct.

We believe that we’re operating in an environment where cross-market linkages are increasing, and where financial markets are more exposed to geopolitical and real-economy shocks than in the past.

However, the key question for investors isn’t whether risks exist, but how those risks translate into market outcomes. Not all systemic risks become systemic crises.

What’s different from 2008

The comparison to the global financial crisis is intuitive, but incomplete.

In 2008, the system was highly leveraged, opaque and concentrated within the banking sector. Once losses emerged, forced deleveraging created a rapid and self-reinforcing collapse.

Today’s risks are different:

Private credit introduces liquidity risk, but not the same level of system-wide leverage.
Large-cap technology companies are concentrated, but financially strong with robust balance sheets.
Geopolitical risks are elevated, but partially reflected in current market pricing.

This suggests a different regime, one that may be less vulnerable to sudden systemic collapse, but more exposed to rolling shocks and periods of instability.

Private credit: a liquidity pressure point

The concerns around private credit are valid, particularly around transparency and liquidity. The key risk is behavioural and liquidity driven:

Investors can’t easily sell private assets.
In periods of stress, they sell what they can.
That often means liquid public equities.

This creates a transmission channel between private and public markets.

However, unlike 2008, this is less about solvency risk and more about liquidity-driven repricing, which tends to result in volatility rather than systemic failure.

Equity concentration: a structural vulnerability

The concentration of returns in a small number of technology companies is one of the defining features of today’s market.

This isn’t just a valuation issue. It’ss a portfolio construction issue across the entire system. When concentration increases:

Passive and active portfolios become more aligned.
Crowding intensifies.
Market moves become more sensitive to a small number of names.

This increases market sensitivity, particularly if combined with:

Liquidity stress
Positioning unwinds
External shocks

Geopolitics and the rise of “physical risk”

One of the more important observations in the article is the shift toward physical and geopolitical risk. Energy markets, supply chains, and semiconductor access are increasingly central to market outcomes.

This aligns with our broader view:

Markets are transitioning from being primarily driven by financial conditions to being increasingly influenced by geopolitical and real-economy constraints.

However, markets do not ignore these risks. They reprice them, often unevenly and abruptly.

A more connected system, not necessarily a more fragile one

The most important takeaway is the idea of shared transmission channels:

Private credit financing → AI infrastructure → public equity markets
Energy shocks → input costs → corporate margins
Geopolitical disruptions → supply chains → global growth

This connectivity increases the speed at which shocks move through the system. But it doesn’t necessarily mean the system is more fragile in the same way as 2008. Instead, it points to a different environment; one that’s more complex, more interconnected and more prone to episodic volatility.

If the defining feature of this environment is how risks transmit rather than where they originate, then portfolio construction must focus on resilience rather than prediction.

Portfolio implications: focusing on resilience

From a portfolio perspective, we believe the objective isn’t to position for a single outcome, but to manage how portfolios behave across a range of scenarios.

Reflecting this view, our current positioning has emphasized the following:

Maintaining exposure to equities, while actively managing concentration risk within a narrow set of growth-oriented names
Increasing diversification of return drivers through multi-factor strategies that explicitly balance return and risk exposures
Incorporating liquid alternative strategies, including managed futures and risk parity, which may provide diversification during periods of market stress
Placing greater emphasis on liquidity-aware portfolio construction, recognizing that market drawdowns may be driven as much by flows as fundamentals

These positioning decisions reflect our assessment of current market conditions and may evolve as those conditions change. Outcomes aren’t guaranteed, and these approaches may behave differently across market environments.

This isn’t about avoiding risk. It’s about ensuring portfolios are structured to absorb shocks without requiring reactive decisions.

Bottom line: fragile dynamics, not a broken system

The risks identified in the article are real and worth monitoring. But this doesn’t appear to be a direct repeat of 2008.

Instead, we’re operating in a regime characterized by:

Periodic, liquidity-driven market dislocations
Higher correlations during stress
Greater dispersion beneath index-level performance

For investors, the implication is clear:

The focus shouldn’t be on predicting the next crisis, but on building portfolios that remain resilient regardless of how it unfolds.

Sincerely,

Corrado Tiralongo (he/him)
Vice President, Asset Allocation & Chief Investment Officer Canada Life Investment Management Ltd.

[1] Opinion | I Predicted the 2008 Financial Crisis. What Is Coming May Be Worse.

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of March 20, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

Succession Planning Checklist

Thu, 19 Mar 2026 15:26:51 GMT

Where are you in your succession planning journey?

Most advisors wait too long to plan their succession, putting both continuity and business value at risk. Our quick-read checklist outlines the key steps to assess your readiness and build a transition strategy that protects your clients and your future.

No matter where you are in your journey, we can help. Connect with us .

10 Ways to Grow Your RRSP

Wed, 11 Mar 2026 20:51:00 GMT

Are you looking for tips on how to make the most of your RRSP?

It’s no secret that Canadians are increasingly relying on their own resources to fund their retirement. Here are ten strategies to help your RRSP grow and increase your retirement capital.

The Circle of Value: Why Real Success is Always Shared

Thu, 05 Mar 2026 21:59:09 GMT

What does it mean to create something valuable ?

It’s not about what you think is brilliant. It’s about what others perceive as meaningful, useful, or transformative in their own lives.

That starts with a shift: from pushing ideas outward, to listening inward.

Real value comes from tuning into what people truly care about. Their needs. Their desires. Sometimes even their unspoken pain points—the ones they haven’t named, but feel every day. To uncover these, you need to listen closely, ask better questions, and be willing to dig beneath the surface.

And once you’ve created value, your job isn’t finished. You have to keep recreating it. Over time. With consistency. With care. Not just for your customers, but for your colleagues, your community, and your partners.

Because here’s the truth: reciprocal value, and not just revenue, is the engine of lasting business success.

When you give genuine value and also value others in return, you stop thinking in funnels. Funnels are linear. They imply a beginning, middle, and end. It’s a transaction that’s closed, a customer journey that’s over. But that’s not how real growth works.

The best businesses think in circles.

Circles are continuous. They invite return, reciprocity, and renewal. That’s why circular thinking generates compounding value.

Here are three reasons why:

1. Circles allow you to invest in people.
Value isn’t built by extracting as much as you can from a single transaction. It’s created by investing in the relationships behind the transaction. When you treat people as partners in value creation, whether they’re clients, employees, or collaborators, you plant the seeds for trust, loyalty, and long-term impact.

2. Circles provide you with excellent timing.
Linear thinking assumes “once and done.” But in reality, timing matters as much as the offer itself. Circles allow you to re-enter at different points, to meet people where they are today, not where they were yesterday. That means your value evolves alongside the shifting needs of your ecosystem.

3. Circles create valuable feedback loops.
In a funnel, feedback is an afterthought. In a circle, feedback is the core mechanism of growth. Every conversation, survey, and interaction becomes a source of insight. That insight fuels better solutions, which fuels deeper trust, which fuels even more feedback, and the cycle continues.

The Circle of Value is simple but powerful: when you share success, you multiply it.

If you want to build something truly enduring, don’t just ask:

What’s valuable to me?

Ask:

What's valuable to us?

Because when value is shared, success stops being a one-time win—and becomes an infinite return.

Want to learn more? Grab your copy of The Six Circle Strategy here. And, if you have any questions, we'd love to hear from you!

U.S. and Israeli Strikes on Iran

Tue, 03 Mar 2026 15:49:41 GMT

Executive summary

On the evening of March 1, Brent crude traded at USD $78.15 per barrel, up approximately 17% over the past two weeks, reflecting a geopolitical risk premium that markets had already begun pricing.

The critical distinction from here is between a contained conflict, which would likely keep oil in the $80 range, and a sustained supply disruption, which could push prices toward $100.

At current levels, the inflation impact is incremental and manageable. A sustained move toward $100 would materially complicate central bank easing paths, particularly in emerging markets.

Early market reaction in Asia reflects an orderly repricing of risk.

We’d reassess our portfolio positioning only if energy prices remain elevated long enough to tighten financial conditions and impair growth. That isn’t the base case today.

Our portfolios remain positioned through diversification, real asset sensitivity, multi-factor exposures and liquid alternatives designed to manage volatility across regimes.

U.S. and Israeli strikes on Iran, which began on Feb. 28, have crystallized risks that markets had been gradually repricing for weeks. Markets anticipated escalation. Oil moved first.

The question now is whether this remains a geopolitical premium event or evolves into a genuine supply shock with broader macroeconomic consequences.

We frame the situation through three transmission channels: oil, inflation and regional spillovers.

Oil markets: premium priced, disruption not yet

Iran accounts for approximately 4.7 million barrels per day, or roughly 4% to 4.5% of global oil suppl y (1). That makes it material, particularly given the strategic importance of the Strait of Hormuz.

Over the past two weeks, Brent has risen 17%. This reflects a political risk premium that had been building amid rising tensions.

During last year’s 12-day conflict, oil infrastructure was largely spared, and Brent rose roughly $10 per barrel at its peak. The current move is comparable in magnitude. From here, two scenarios matter:

Contained escalation

Oil drifts toward or slightly above $80 as uncertainty persists. No meaningful supply is lost. This remains a repricing event.

2. Supply disruption

Iranian production is impaired or shipping through the Strait of Hormuz is disrupted. Oil could move toward $100 per barrel. Natural gas prices would likely rise as well. That would represent a genuine supply shock.

OPEC+ policy becomes critical in the second scenario. Heightened supply risk increases the probability of a production increase at upcoming meetings, potentially beyond the rumoured 137,000 barrels per day. That response would moderate, though not eliminate, volatility.

Inflation and central banks: manageable for now

Oil is the primary transmission channel into global inflation.

We believe a useful rule of thumb is a 5% year-over-year rise in oil prices adds roughly 0.1 percentage points to headline inflation in advanced economies.

At $78 oil, the inflation impact is incremental and manageable.

A sustained move toward $100 could add more than one percentage point to developed market inflation and would likely delay or reduce expected rate cuts by major central banks.

Emerging market policymakers are typically more sensitive to commodity swings. Higher oil and gas prices could tighten financial conditions more quickly in those economies.

For now, this is an inflation bump. It isn’t an inflation regime shift.

Regional economic implications

Retaliation from Iran has begun. The scale and duration will determine regional impact. Israel’s economy is vulnerable to renewed disruption. During last year’s 12-day conflict, Israeli GDP fell 1.1% quarter over quarter in Q2 (2).

Elsewhere in the Gulf, risks include:

Threats to U.S. military bases in Bahrain and Qatar
Airspace closures affecting travel and trade
Business disruptions tied to regional security concerns

Within Iran, sustained escalation raises the probability of regime change or policy shifts. Long-term reintegration into the global economy is conceivable. Near-term instability is more likely. Globally, the dominant transmission channel remains energy.

Market reaction: early signals from Asia

As of the evening of March 1 EST, early market reaction in Asia reflected a measured risk adjustment:

The Nikkei 225 was down 1.53%.
The Hang Seng Index was down 2.23%.

These moves are consistent with a geopolitical risk repricing rather than disorderly selling.

It wouldn’t be surprising to see European and North American markets open lower on Monday, March 2, reflecting a similar adjustment in risk appetite. The magnitude of moves will depend on whether energy prices extend higher and whether escalation signals intensify.

Importantly, at this stage, the reaction remains orderly. We aren’t observing signs of systemic stress or liquidity disruption .

Our portfolio implications

In our “reverse murder mystery” framework, we begin with outcomes and work backward to drivers.

The outcome that would materially alter positioning is clear: a sustained physical supply disruption that pushes oil toward $100 and tightens financial conditions globally.

We’re not observing that today.

Brent is up 17% over the past two weeks. Risk has been repriced. Asian markets are adjusting in an orderly fashion. Credit spreads remain contained. Liquidity conditions remain stable.

This suggests markets currently view this as a contained geopolitical risk, not systemic stress.

Growth

Oil at $78 trims real incomes at the margin but doesn’t derail global growth. Our base case for continued, albeit uneven, global expansion remains intact.

We’d reassess only if energy prices remained elevated long enough to compress margins and materially impair demand.

Inflation

Higher oil lifts headline inflation temporarily. It becomes a policy concern only if it feeds into services inflation and expectations. That transmission hasn’t yet occurred.

Central banks are likely to look through a temporary energy shock. A sustained move toward $100 would change that calculus.

Positioning and risk management

We’re not reacting to headlines. We’re evaluating transmission channels. Across our multi-asset portfolios:

Diversified equity exposure remains appropriate.
Real asset sensitivity provides natural ballast in higher energy environments.
Multi-factor allocations reduce reliance on narrow market leadership and enhance resilience.
Liquid alternatives remain valuable tools for managing volatility and correlation shifts during geopolitical stress.

This episode reinforces why our portfolios are constructed around diversification, risk budgeting and scenario analysis rather than binary macro calls.

If sustained supply disruption materializes, we’ll adjust deliberately and systematically. Until then, discipline remains the appropriate response.

Sincerely,

Corrado Tiralongo (he/him)
Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

Sources:

2025 OPEC Annual Statistical Bulletin
Capital Economics

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of March 3, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

First Home Savings Account Infographic

Wed, 25 Feb 2026 14:57:00 GMT

Wondering how the First Home Savings Account (FHSA) works with existing programs to help you save for a home?

Gain a better understanding of Canada’s government sponsored plans for supporting home ownership by downloading our timely new infographic.

Tariff Policy Resets, but Protectionism Persists

Mon, 23 Feb 2026 20:06:58 GMT

Executive summary

On Feb. 20, 2026, the U.S. Supreme Court ruled that the administration’s use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping reciprocal tariffs was unlawful. Within hours, President Trump announced a 10% global tariff under Section 122 of the 1974 Trade Act, alongside expanded product-specific investigations. On Feb. 21, that rate was increased to the maximum 15% permitted under the statute.

The legal framework has shifted. The effective tariff burden has not meaningfully declined.

For Canada, the probability of abrupt, discriminatory tariff escalation has diminished ahead of the CUSMA review. Importantly, USMCA-compliant goods, representing roughly 85% of imports from Canada and Mexico, remain tariff-free. However, protectionism remains embedded and sector-specific measures appear likely to intensify.

At the same time, recent data show that Canada’s export diversification remains heavily concentrated in metals and minerals, particularly gold, rather than broad-based manufacturing strength.

Trade risk has evolved from episodic shock to structural friction. Market leadership is rotating. Cyclical considerations remain central.

The U.S. Supreme Court ruling and immediate policy pivot

The Supreme Court decision removes IEEPA as a tool for broad, discretionary tariffs. Since “Liberation Day,” the U.S. Treasury had collected roughly $ billion in customs duties 1 . Approximately $110 billion collected under IEEPA may now face extended legal dispute over repayment 2 .

However, the administration responded quickly.

President Trump announced:

A 10% global tariff under Section 122
Expanded Section 232, 201 and 301 investigations
No commitment to refund IEEPA collections

Section 122 provides firmer legal grounding but introduces constraints:

Tariffs capped at 15%
Duration limited to 150 days without congressional approval
Non-discriminatory application across trading partners

The non-discriminatory nature of the tariff reduces the administrations flexibility to apply targeted bi-lateral pressure during negotiations.

Based on import shares, the effective tariff rate now sits near 12%, only modestly lower than the prior 13 to 14% range.

The structure has changed. The protectionist orientation remains.

Implications for CUSMA and North American trade

The CUSMA joint review remains scheduled for mid-2026.

Three outcomes remain possible:

Extension for another 16 years
Rolling annual reviews without extension
Withdrawal with six months’ notice

A full withdrawal scenario could reimpose tariffs of roughly 35% on Canada and 25% on Mexico, likely pushing both economies into recession.

The Supreme Court ruling reduces the likelihood of abrupt, discriminatory tariff escalation. However, the new 10% global tariff applies universally. Canada does not receive preferential treatment under Section 122.

Expanded Section 232 and 301 investigations suggest sector-specific measures may intensify through mid-year.

Policy uncertainty has shifted from a single shock scenario to rolling sectoral pressure and a 150-day policy clock.

Canada’s trade reorientation: Progress, but concentrated

Recent trade data show that non-U.S. goods exports rose 5.8% month-over-month to a record C$21.4 billion. The share of exports destined for the U.S. declined to 71.7% from 75.9% the prior year 3.

However, composition matters.

Of the C$28.8 billion rise in non-U.S. exports over the past year, C$17.2 billion came from metals and minerals, largely reflecting elevated gold flows.

Country level trade balances also show that diversification gains have been concentrated in a narrow set of markets, with limited offset from major partners such as China and the European Union.

Sectors most affected by declining U.S. exports, including chemicals, motor vehicles and forestry, have not yet demonstrated meaningful diversification.

Manufacturing remains soft. GDP growth likely remained modest in the fourth quarter. Trade reorientation is occurring, but it remains commodity-driven and narrow.

Broader macro context

A universal 15% global tariff restores effective tariff levels to those seen prior to the Court’s ruling. While exemptions moderate the direct impact, the broader environment remains characterised by elevated trade friction.

Expanded sector investigations create rolling uncertainty into mid-year. At the same time, equity markets are rotating. Small caps, value and defensive sectors have begun outperforming large-cap growth leadership.

Historically, such shifts often emerge during later-cycle transitions and periods of rising dispersion.

Trade uncertainty has been restructured. It hasn’t disappeared.

Our portfolio implications: Positioning for structural fragmentation and broader participation

The legal reset did not reverse the protectionist shift. A 15% global tariff remains in place. Sector investigations are expanding.

This reinforces our core positioning framework.

We continue to believe markets are transitioning from a narrow, concentration-driven phase toward broader participation. The AI investment cycle remains durable. Earnings leadership is expanding beyond a small group of dominant growth companies.

Our allocations reflect structural fragmentation and rising dispersion.

Overweight U.S. equities

Exposure to U.S. equities remains a core allocation.

The U.S. continues to demonstrate relative earnings resilience, innovation leadership and capital market depth. While tariffs introduce margin considerations, the effective rate remains manageable relative to historical episodes.

Importantly, participation is broadening across sectors and factors rather than remaining concentrated solely in mega-cap growth.

Underweight Canadian equities

Canadian equity exposure remains moderated relative to global benchmarks.

Export diversification has been concentrated in metals and minerals rather than broad-based manufacturing strength. Manufacturing sectors most exposed to U.S. tariffs remain under pressure.

While reduced discriminatory tariff risk is constructive, a universal 10% tariff persists. Canada remains sensitive to U.S. growth and sector concentration limits diversification benefits.

Selectivity remains important.

Underweight international developed markets

Developed markets outside the U.S. continue to face structural growth constraints and sensitivity to global trade drag.

A 15% global tariff environment introduces headwinds for export-oriented economies. Relative earnings visibility remains comparatively stronger in the U.S.

Overweight emerging markets

Emerging markets continue to present relatively compelling valuations and earlier-stage earnings cycles in select regions.

Supply chain realignment and regional trade adjustments may support incremental opportunities over time. Dispersion remains elevated, reinforcing the importance of active selection.

Broadening participation remains central

Market leadership is rotating. Concentration risk is moderating.

Positioning reflects:

Broader market participation
Factor diversification
Reduced dependence on narrow growth leadership
Participation across sectors and regions

This isn’t a defensive posture. It’s an adaptive one.

The role of liquid alternatives

Rolling tariff adjustments, sector investigations and mid-year policy uncertainty increase variability in returns.

Liquid alternative strategies can enhance diversification and help moderate volatility during policy-driven market shifts.

Resilience is constructed deliberately.

Closing thoughts

The Supreme Court ruling altered the legal pathway for tariffs. The administration’s rapid pivot to a 15% global tariff confirms that protectionism remains embedded.

For Canada, discriminatory escalation risk has declined. However, export diversification remains narrow and growth momentum modest.

Trade friction is now structural. Market leadership is broadening. Dispersion is rising. In this environment, disciplined diversification, factor balance, and integrated alternatives remain central to resilient portfolio construction.

Sincerely

Corrado Tiralongo (he/him)
Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management Ltd.

1 Capital Economics

2 Capital Economics

3 Statistics Canada: The Daily — Canadian international merchandise trade, December 2025

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of February 23, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

Are You Building a Business, or Building a Future?

Wed, 11 Feb 2026 17:55:54 GMT

There’s a big difference between running toward a vision and running away from a job.

A lot of people step into entrepreneurship to escape something: a toxic boss, rigid hours, the feeling of being boxed in. That’s valid. But if escape is your only motivation, you’ll eventually recreate the same limitations in your business—burnout, pressure, and misalignment—just under a different name.

True entrepreneurship isn’t just freedom from something. It’s freedom for something.

Here are five questions to reflect on:

What do you want to spend time doing every day?
What are the things you do now that you never want to do again?
Are you creating something you’d be proud to grow—or just trying to make money at any cost?
Do you feel pulled by purpose—or pushed by fear?
Are you currently getting the results you need from the time you’re spending?

The most successful entrepreneurs aren’t just avoiding employment. They’re choosing alignment with a future that they themselves have designed. They’re taking steps towards that future in every call they make.

So pause and ask yourself: What are you really building—and why?

If you're looking to learn more and want to dive into entrepreneurship, get Chris's book The Six Circle Strategy here.

TFSA & RRSP

Wed, 11 Feb 2026 14:57:00 GMT

Wondering where to put your money?

Find out whether a TFSA or an RRSP or a combination of both are best for achieving your financial goals, taking into account your priorities.

Market Volatility Returns to Canada as Metals Unwind Sharply

Tue, 03 Feb 2026 18:13:51 GMT

Insights from Corrado Tiralongo, Chief Investment Officer, Canada Life Investment Management Ltd.  

Executive summary

Canadian equities declined today, with the S&P/TSX Composite Index down 3.31%, driven almost entirely by a steep selloff in metals and mining equities, which declined 11.26%. The equity move closely tracked an aggressive unwind in precious metals futures, with gold, silver, platinum down approximately 11%, 31% and 19% respectively.

While the magnitude of the decline was notable, the drivers appear concentrated rather than systemic. The move reflects a repricing of crowded precious-metals exposures following an extended momentum-driven rally. As highlighted in my earlier gold commentaries, elevated retail participation and FOMO-type behaviour had increased the risk of abrupt reversals once sentiment shifted. Today’s move is consistent with that framework and does not, in our view, signal a deterioration in broader Canadian or global economic fundamentals.

What happened in markets today

The Canadian equity market weakened steadily through the afternoon before accelerating lower into the close. Sector performance was highly uneven. Outside of materials, market declines were comparatively modest. The materials sector, and within it precious metals producers, accounted for the overwhelming majority of the index-level decline.

This pattern suggests that today’s move was not a broad-based risk-off event, but rather a sector-specific adjustment following a prolonged period of strong performance. The selloff appears to have been driven less by new macroeconomic information and more by a rapid reassessment of positioning within a narrow segment of the market.

Precious metals: from macro hedge to momentum trade

In prior commentaries on gold and commodities, we noted that while precious metals were supported by legitimate macro considerations, including fiscal sustainability concerns, geopolitical risk, and debates around central bank credibility, price behaviour had begun to reflect additional, less durable forces.

Specifically, we highlighted signs of:

rising retail participation
momentum-driven buying behaviour
narrative reinforcement across digital and social channels
diminishing sensitivity to valuation and real-rate dynamics

As positioning becomes increasingly narrative-led rather than valuation-anchored, liquidity can prove thinner than it appears. In these environments, reversals, when they occur, tend to be abrupt and nonlinear. The scale of today’s decline across gold, silver, and platinum futures is consistent with that dynamic.

Linking today’s move back to earlier gold commentaries

In earlier gold and commodities commentaries, we noted that while precious metals were supported by credible structural themes, the rally was becoming increasingly dependent on momentum-driven flows. That dynamic raised the risk of sharp reversals once sentiment shifted. Today’s price action is consistent with that assessment and reflects a repricing of positioning rather than a change in the underlying macro backdrop.

Portfolio positioning context

In recent commentaries, we had noted that Canadian equities appeared increasingly challenged on a relative basis within the prevailing macro and geopolitical environment. While headline index performance had been supported by strength in gold and other metals, the underlying drivers of return were becoming progressively narrower and more dependent on momentum rather than broad-based earnings growth.

Against that backdrop, and prior to yesterday’s selloff, our multi-asset portfolios had been positioned with reduced exposure to Canadian equities, alongside increased exposure to U.S. equities and liquid alternatives. This positioning reflected an assessment that the relative return potential for Canadian equities had become less compelling, particularly given index concentration, sensitivity to commodity price swings, and the opportunity set available elsewhere within diversified portfolios.

Liquid alternatives were viewed as increasingly valuable portfolio components in this environment, both as diversifiers and as potential sources of return less reliant on traditional equity beta. This positioning was not a reaction to near-term market movements, but an extension of a broader portfolio construction framework focused on managing concentration risk and improving risk-adjusted outcomes.

Policy expectations and the catalyst for repricing

The selloff was likely catalysed by renewed focus on U.S. monetary policy leadership, following reports that Kevin Warsh is expected to be nominated to succeed Jerome Powell as Chair of the Federal Reserve.

While reactions across equities, rates, and currencies were relatively contained, the implications for precious metals were more pronounced. Warsh is generally viewed as emphasizing balance-sheet discipline and institutional credibility, rather than advocating materially looser financial conditions. Against a backdrop of crowded positioning, even a modest reduction in perceived policy tail risk can be sufficient to trigger a sharp reassessment.

It is also notable that precious metals had already begun to weaken prior to these reports, reinforcing the view that positioning and momentum, rather than new information, were the dominant drivers of the move.

Canada’s market structure amplified the decline

Canada’s equity market composition magnified the impact of the metals unwind. With a higher exposure to resource equities, particularly precious metals producers, the S&P/TSX tends to reflect commodity-specific adjustments more acutely than many global peers.

As a result, what was fundamentally a global repricing of precious-metals risk translated into a disproportionate index-level decline, despite limited change in domestic macro data, earnings expectations, or financial conditions.

Portfolio implications and observations

From a portfolio construction perspective, today’s market action reinforces several observations that have featured prominently in our prior work.

First, assets often viewed as diversifiers can behave differently when flows become momentum driven. Precious metals can play an important role in portfolios over full cycles, but short-term behaviour can diverge meaningfully during crowded trades.

Second, market concentration matters. Canada’s experience today underscores the importance of understanding not just asset class exposure, but the underlying drivers of returns within those exposures.

Finally, sharp, sentiment-driven drawdowns tend to create dispersion rather than uniform outcomes. Maintaining diversification across regions, asset classes, and return drivers, while being mindful of concentration and momentum risk, has historically contributed to improved portfolio resilience across cycles.

Closing thoughts

Today’s decline in Canadian equities was notable, but also highly specific. It reflected a rapid unwind of precious-metals positioning following a period in which retail momentum and narrative reinforcement had become increasingly influential, a risk previously highlighted in earlier commentaries.

As markets continue to navigate shifting policy frameworks, evolving productivity narratives, and geopolitical uncertainty, portfolio outcomes are likely to be influenced as much by structure and positioning as by headline returns. Distinguishing between structural signals and momentum-driven noise remains central to disciplined portfolio management.

Sincerely,

Corrado Tiralongo (he/him)

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of February 3, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

Market Monitor: Our Sub -advisor Outlook for 2026

Thu, 29 Jan 2026 16:43:33 GMT

Canada Life Investment Management Ltd. recently sat down with some of their world-class sub-advisors to discuss what they're excited about and how they have positioned their portfolios for 2026.

Despite ongoing concerns about U.S. trade polices, the market outlook for 2026 remains cautiously optimistic. Discover how these sub-advisors are positioning their portfolios in today’s environment, and what investment opportunities they are considering for the year ahead in the following videos:

Canadian Markets Outlook

U.S. & Global Markets Outlook

Private Markets Outlook

The content of these videos (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it. Prospective investors should review the offering documents relating to any investment carefully before making an investment decision and should ask their financial security advisor for advice based on their specific circumstances.

This should not be construed to be legal or tax advice, as each client’s situation is different. Please consult your own legal and tax advisor.

This video may contain forward-looking information which reflect our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of January 21, 2026 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

Putnam Investments is the brand for the asset management business of The Putnam Advisory Company, LLC and Putnam Investments Canada ULC. J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. JPMorgan Asset Management (Canada) Inc. and JPMorgan Asset Management (Canada) Inc. are the sub-advisor to the funds mentioned herein.

Certain Counsel Portfolios may invest in Private Vehicles managed by our affiliates, including by Sagard Credit Partners, a wholly owned subsidiary of Power Corporation of Canada Canada Life Mutual Funds and Counsel Portfolios are managed by Canada Life Investment Management Ltd. They are distributed by Quadrus Investment Services Ltd., IPC Investment Corporation, and IPC Securities Corporation, and may also be available through other authorized dealers in Canada.

NorthLeaf Capital Partners are underlying fund managers of the Canada Life Allocation Funds. A description of the key features of the segregated fund policy is contained in the information folder. Any amount allocated to a segregated fund is invested at the risk of the policyowner and may increase or decrease in value. These funds are available through segregated funds policies issued by Canada Life.

Canada Life Investment Management and design are trademarks of The Canada Life Assurance Company. Other marks displayed in this video are trademarks of their respective owners and used under licence or with permission.

Publication dates: January 29, 2026 & February 12, 2026.

The Circle of Vision: Why Loving Your Work Is the Real Key to Entrepreneurial Success

Wed, 28 Jan 2026 20:47:40 GMT

Building wealth doesn't start with strategy. It starts with connecting the dots between self-awareness and vision.

Let’s be honest: If you’re not fully in love with what you do for a living, you won’t last as an entrepreneur.

Why? Because entrepreneurship isn’t just about starting a business. It’s about running one.

To achieve true entrepreneurial success, you have to start with a vision. But not just any vision—a vision that’s rooted in self-awareness and anchored in joy.

Often, entrepreneurs get stuck chasing “success” on someone else’s terms. The fancy title. The seven-figure exit. The hypergrowth strategy. But if that business doesn’t align with what you want to do each and every day, then what’s the point?

Self-awareness is the key to avoiding that trap. It’s how you get radically honest about what you love, what you’re good at, and what kind of life you actually want your business to support. Are you energized by deep connection or fast-paced innovation? Do you crave creative space or collaborative momentum? Are you building toward freedom—or just building a busier cage?

This is what I call the Circle of Vision: a living ecosystem of emotional clarity, creative flow, and financial freedom. When you see your work as an expression of who you are, you stop chasing other people’s dreams. You start building the scaffold for your own success.

When your business is aligned with the kind of life you actually want—when you love what you do—it’s not just more joyful. It’s more effective. You have more stamina, more creativity, and more clarity. You attract better clients. You recover faster from setbacks. You become magnetic—not because you’re trying to impress anyone, but because you’re aligned.

This is what most business advice misses. We’re told to focus on strategy, scale, and systems—but those are the outer rings. The inner ring is you. If you’re building from a place of obligation, burnout, or fear, it will show up in your brand, your leadership, your results. If you’re building from a place of alignment, it’s a whole different ball game.

The Circle of Vision asks you to make one bold decision:

Don’t settle.

Don’t settle for a business model that drains you.

Don’t settle for clients who don’t respect you.

Don’t settle for the lie that loving your work is optional.

It’s not. It’s foundational. In fact, the Circle of Vision is part of a new series of ideas I’ll be rolling out over the next few months called The Six Circle Strategy. You’ll want to stay tuned for more.

In the meantime, if you’re feeling stuck, ask yourself: Do I love this? Does this business bring me alive? Is this vision really mine, or is it someone else’s? Is my business is built on a vision that reflects my joy, my purpose, and what I want for my future?

Because that’s the only kind of success worth building.

Money Dates

Wed, 28 Jan 2026 20:36:00 GMT

Here is a summary of all the important dates in 2026 to diarize in your annual financial planning calendar.

This guide will help you keep on top of important financial dates and deadlines for income tax returns, GST credits, registered plans, CPP/OAS benefit contributions, child benefit and more.

From Noise to Signal: Navigating Markets in 2026

Tue, 27 Jan 2026 21:20:57 GMT

Insights from Corrado Tiralongo, Chief Investment Officer, Canada Life Investment Management Ltd.

Executive summary

The start of 2026 has been marked by an unusually dense flow of geopolitical headlines with many events unfolding rapidly and over weekends. While these developments have contributed to short-term market volatility, their near-term macroeconomic impact has, in most cases, remained limited. With the notable exception of Japan, where bond market dynamics appear more structural, the underlying global economic outlook hasn’t materially shifted from expectations set at the start of the year.

As political noise intensifies, monetary policy is re-emerging as one of the more durable influences on market conditions. Major central banks are no longer moving in lockstep, with domestic growth, inflation, and labour market conditions increasingly shaping divergent policy paths. Upcoming central bank meetings are, therefore, more likely to reinforce policy differentiation than deliver abrupt surprises.

At the same time, recent events have highlighted a deeper structural change in the global order. Western alliances are not dissolving, but the forces that bind them together are shifting away from shared values and toward economic, financial, and security dependencies. Efforts by middle powers to hedge or diversify relationships face clear constraints, and expectations of rapid realignment or decoupling appear overstated.

For investors, the key challenge remains separating headline risk from structural risk. Markets have shown resilience in the face of political shocks, but narrow suggest greater sensitivity should future developments begin to alter policy frameworks or financial conditions in a more lasting way.

Head-spinning headlines and the limits of macro impact

The opening weeks of 2026 have delivered a barrage of geopolitical headlines with many events unfolding over weekends, leaving markets, policymakers, and my team reassessing the narrative with unusual frequency. Venezuela one weekend, Greenland the next, renewed trade tensions with Europe shortly after, all layered on top of political uncertainty in Washington. In isolation, any one of these developments might have dominated the macro conversation. Taken together, they have created an unusually frenetic start to the year.

Yet an important distinction has emerged between headline volatility and macroeconomic substance. With the notable exception of Japan, where developments in the government bond market suggest something more structural may be underway, most recent geopolitical flashpoints have had limited near-term macroeconomic consequences. Markets appear to be reflecting this assessment. Equity markets have rebounded following periods of de-escalation, reinforcing the view that investors are increasingly inclined to look through political noise unless it materially alters growth, inflation, or financial conditions.

This distinction matters. While political and geopolitical risks remain elevated, the broader macroeconomic backdrop for 2026 has not materially shifted from the baseline that we established at the start of the year.

Year 2 of Trump’s second term: volatility without a macro reset

As the U.S. administration enters the second year of its current term, markets continue to contend with an environment defined by unpredictability. Headlines have generated short-term volatility, but thus far have not been sufficient to alter the macroeconomic outlook in a lasting way.

The more relevant question isn’t what might generate the next bout of volatility, but what would be required to fundamentally change the economic trajectory. Extreme scenarios, such as a direct military conflict between major powers, would clearly overwhelm economic considerations. Recent developments, however, have stopped well short of that threshold.

Monetary policy remains one of the few areas capable of producing a genuine macro inflection. The U.S. Federal Reserve’s (“Fed”) leadership and policy direction therefore continue to matter, although recent signals point toward continuity rather than disruption. Absent a sharp and unexpected shift in the Fed’s composition or mandate, monetary policy risks appear contained relative to the geopolitical noise dominating headlines.

Central banks back in focus as policy paths diverge

As the calendar turns to the first major round of central bank meetings for 2026, monetary policy is re-emerging as a key source of differentiation for markets, even as geopolitical developments continue to dominate attention. Unlike the 2022 to 2024 period, when common shocks pushed major central banks to move largely in lockstep, domestic economic conditions are once again exerting greater influence over policy decisions.

In the United States, the Fed appears likely to remain on hold in the near term. While recent inflation data have softened and unit labour cost growth has moderated, economic activity has remained relatively resilient, and the unemployment rate has stabil ised. This combination reduces the urgency for further policy easing at upcoming meetings. At the same time, easing underlying inflation pressures suggest the Fed retains flexibility later in the year, particularly if productivity trends continue to offset wage growth. Near-term outcomes are therefore likely to centre on a pause, accompanied by cautious communication rather than a decisive policy shift.

In Canada, the focus is increasingly on growth momentum rather than inflation risks. Recent GDP data point to an economy that continues to struggle to gain traction, with weakness extending beyond temporary strike-related effects into goods-producing sectors such as manufacturing. While this softness reinforces the view that monetary conditions remain restrictive, it’s unlikely, on its own, to prompt an immediate policy response. The Bank of Canada has already indicated that it considers its easing cycle complete for now, reflecting concerns around labour supply dynamics and the risk of renewed inflation pressures. As a result, upcoming meetings are likely to emphasize data dependence rather than provide explicit forward guidance.

Elsewhere, policy divergence is becoming more pronounced. Growth prospects appear softer in parts of Europe and the U.K., where easing wage pressures may provide greater scope for rate cuts later in the year. By contrast, Japan and Australia face firmer domestic demand and more persistent underlying inflation pressures, pointing toward a different policy challenge. This divergence suggests that interest rate differentials, rather than a synchronized global cycle, may play a more prominent role in shaping currency and bond market dynamics in 2026.

Taken together, upcoming central bank meetings are unlikely to deliver dramatic surprises. Instead, they are more likely to reinforce a theme that is becoming increasingly important for investors: monetary policy is no longer moving as a single global tide, and domestic economic conditions matter more than geopolitical rhetoric when it comes to setting policy paths.

A changing Western alliance, from shared values to shared dependencies

One of the more consequential themes emerging from recent weeks isn’t the dissolution of the Western alliance, but a change in what binds it together. Under the previous U.S. administration, the transatlantic relationship was framed around shared democratic values and common political purpose. That glue has weakened.

This shift was articulated in recent remarks by Prime Minister Mark Carney , who described the current moment as a rupture rather than a transition in the international order. The distinction is important. A transition implies continuity with adjustment. A rupture suggests that some of the assumptions underpinning alliances, cooperation, and economic relationships are being reassessed.

In practice, what is emerging is an alliance increasingly held together by dependencies, and in some cases, explicit leverage. Technology, security, defence capabilities, and the central role of the U.S. dollar in global finance now form the core pillars of Western cohesion. This shift underscores the extent of U.S. leverage over allies and highlights the constraints faced by so-called middle powers, including Canada.

While there has been renewed discussion of middle powers coordinating more closely in response to this fractured environment, deep reliance on U.S. systems in areas such as security, technology, and finance continues to limit how far that independence can extend. What has changed, then, isn’t the existence of the Western bloc, but the mechanism of cohesion, moving from shared values toward a more transactional and, at times, coercive framework.

Hedging toward China, but only to a point

Against this backdrop, some countries, including Canada appear to be exploring more cautious hedging strategies, engaging selectively with China in response to uncertainty surrounding the U.S. relationship. Beijing has sought to position itself as a supporter of multilateralism, open trade, and the rules-based international order, particularly in contrast to the tone emanating from Washington.

However, there are clear limits to how far such a pivot can extend. Reducing dependency on one hegemon by increasing dependency on another offers limited strategic relief. For Europe in particular, China has shifted from being primarily an export opportunity to an increasingly direct economic competitor. Moreover, China’s domestic economic challenges and export dynamics risk intensifying trade frictions rather than easing them.

As a result, selective hedging appears more plausible than broad strategic realignment. While this may reduce U.S. influence at the margin, particularly in areas such as technology controls and supply chains, it does not signal the emergence of a China-centered alternative capable of replacing existing Western structures.

The limits of European strategic autonomy

The idea of Europe forming a distinct third bloc, independent of both the U.S. and China, resurfaces during periods of heightened geopolitical stress. Yet the constraints remain substantial. Defence spending faces fiscal and political limits across much of the continent, and even where spending increases are feasible, Europe remains heavily reliant on U.S. defence technology and industrial capacity.

Financial autonomy presents similar challenges. Proposals for jointly-issued European bonds have repeatedly failed to gain traction, despite multiple crises that might have served as catalysts (for example, Eurozone crisis in 2012, Russia invasion of Ukraine,. The primary obstacle has been political coordination across twenty-seven sovereign states. Even if progress were achieved, implementation would likely take many years.

As a result, expectations for rapid European decoupling from U.S. dependencies appear overstated. Structural change is possible, but likely to be gradual and uneven.

Market implications: separating signal from noise

The early weeks of 2026 have reinforced a familiar lesson. Not all shocks are macro shocks . Political developments can generate volatility, but unless they alter policy frameworks, financial conditions, or economic behaviour, their market impact often proves temporary.

The global system isn’t fragmenting neatly into geographic spheres of influence. Instead, it’s evolving into a more complex set of overlapping blocs, bound together by history, institutions, technology, and finance. These linkages remain durable, even as political relationships become more transactional.

From a market perspective, the key takeaway is the importance of distinguishing between headline risk and structural risk. Volatility may remain elevated, but the macro foundations have so far proven resilient. That said, the persistence of narrow risk premia and subdued volatility suggests markets may be less forgiving if future developments move beyond rhetoric and begin to alter policy frameworks or financial conditions in a more durable way.

Closing perspective: positioning for resilience and opportunity in 2026

Looking ahead, our outlook for 2026 remains constructive , particularly with respect to equities. The equity market backdrop continues to appear supportive, even as volatility persists, and the artificial intelligence theme remains a durable, multi-year influence on economic and market outcomes, rather than a short-lived cycle.

At the same time, attention has increasingly shifted toward the broadening of market leadership. As the AI investment cycle matures, market outcomes may increasingly reflect a transition from a narrow focus on who is spending toward a broader set of companies and sectors that are positioned to earn from that investment. This evolution supports greater diversification across regions, sectors, and factors, rather than reliance on a small group of dominant names.

Alongside equities, liquid alternatives, both as potential return enhancers and as diversifiers, may become increasingly relevant components of diversified portfolios. In an environment characterized by policy divergence, episodic volatility, and compressed risk premia, strategies that provide differentiated sources of return and diversification may play a more meaningful role in enhancing portfolio resilience.

Taken together, our approach for 2026 continues to emphasize discipline, diversification, and thoughtful portfolio construction . Rather than reacting to headlines, the focus remains on positioning portfolios to participate in long-term opportunities while managing risk through balance, diversification, and a forward-looking perspective.

Sincerely,

Corrado Tiralongo (he/him)

Vice President, Asset Allocation & Chief Investment Officer Canada Life Investment Management

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of January 27, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

From Tariff Shocks to Tech Momentum: What Drove Markets in 2025

Wed, 21 Jan 2026 15:29:25 GMT

In this four-minute video, Paul Punzo, VP Portfolio Strategy & CIO, IPC Private Wealth, discusses market resilience, shifting risks, and opportunities shaping the year ahead.

Paul notes that despite significant headwinds in 2025—including the April tariff shock, escalating geopolitical conflicts, and rising global fragmentation—markets posted strong results.

Canada led global performance with a 31.7% gain, followed by the EAFE index at 25.7% and the U.S. market at 17.9% in CAD terms. Bonds were positive, with the FTSE Canada Universe Bond Index up 2.6%. Equity valuations in the U.S. remain elevated, especially among mega cap technology names, but are not uniformly excessive, supported by a broadening rally as nearly 60% of S&P 500 companies now trade above their 200 day moving averages.

In Canada, the Bank of Canada maintained its overnight rate at 2.25% amid volatile GDP data, tariff uncertainty, and inflation sitting near target. The TSX rose 6.25% over the quarter, supported by strong precious metals, commodity momentum, and recovering oil and gas prices. Financials outperformed on the back of rate cuts earlier in the year. Economic data remained uneven, pressured by manufacturing softness, labour disruptions, and uncertainty around U.S. trade policy.

In the U.S., markets responded to shifting tariff expectations, solid corporate earnings, an AI driven tech rally, and three Fed rate cuts, even as inflation held between 2.7% and 2.9%. Europe saw improving momentum supported by fiscal policy and structural reforms.

Across our portfolios, increased growth and multifactor exposures aligned well with broad based equity strength while maintaining diversified risk through fixed income.

Looking ahead, we expect moderate global growth and easing inflation volatility. We continue to favour U.S. exposure, emphasize diversification across asset classes, and prioritize quality and liquidity within fixed income given ongoing geopolitical and policy uncertainty.

Watch our video to learn more.

This material is intended for use by accredited IPC Securities Corporation Advisors who offer IPC Private Wealth accounts. Neither this report nor the mention of individual investments within it is intended as a solicitation to purchase securities. The content of this report is for IPC Investment Corporation (IPCIC) Advisor reference only.

This report may contain forward-looking statements which reflect current expectations or forecasts of future events. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as: “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, “preliminary”, “typical” and other similar expressions. In addition, these statements may relate to future corporate actions, future financial performance of a fund or a security and their future investment strategies and prospects. Forward-looking statements are inherently subject to, among other things, risks, uncertainties and assumptions which could cause actual events, results, performance or prospects to differ materiality from those expressed in, or implied by, these forward looking statements. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, the volatility of global equity and capital markets, business competition, technological change, changes in government regulations, changes in tax law, unexpected judicial or regulatory proceedings, catastrophic events and the ability of the investment specialist to attract or retain key employees.

The foregoing list of important risks, uncertainties and assumptions is not exhaustive. Please consider these and other factors carefully and not place undue reliance on forward-looking statements. The forward-looking information contained in this report is current only as of the date of this report. There should not be an expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the Simplified Prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. The indices cited are widely accepted benchmarks for investment performance within their relevant regions, sectors or asset class, represent non-managed investment portfolios, exclude management fees and expenses related to investing in the indices, and are not necessarily indicative of future investment returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

Understanding Your Succession Options with IPC

Thu, 15 Jan 2026 18:09:22 GMT

From full retirement to a hybrid model that helps you grow, learn how IPC can help you build a plan that’s right for you

In the coming years, an estimated $400 billion in client assets is expected to hit the market as a generation of Canadian independent advisors reaches retirement. The question isn’t whether those businesses will change hands – it’s how.

Some owners will select an internal successor, others will strike a peer-to-peer deal, and a growing number of advisors are eyeing strategic buyers, like IPC, that can shorten the payout timeline and shoulder the operational load. If you’re considering this option, here’s what you need to know about how IPC provides expert guidance and tailored solutions to help advisors navigate every step of the succession journey.

A competitive payout on your timeline

Over the past five years, IPC Pinnacle – IPC’s corporate office program – has become one of the leading institutional buyers of advisory businesses, with more than 100 private acquisitions. IPC can deliver payouts more efficiently than the typical peer-to-peer deal, while also de-risking the transaction and letting you decide how much you want to be involved, says John Novachis, Executive Vice President, Advisor Growth and Succession at IPC. “Why wait seven to 10 years to get your money out if you can do it in two from somebody that can actually write a cheque?”

Guidance at every step

When you sell your business through IPC Pinnacle, you’ll be assigned a dedicated transition team that will take the time to talk to you about succession planning well before a sale. They’ll walk through different options, timelines and valuations – even discussing ways to increase the price of your practice before selling.

Your team will put a value on your business, devise tax-efficient ways to get your money out of your business and create client communications about the sale. This streamlined, end-to-end approach turns what can be an overwhelming experience into a seamless and transparent process.

Finding the right fit for you

IPC Pinnacle offers three options for succession, allowing you the flexibility to exit on your own timeline. Here’s how they work:

IPC Legacy:

This is the most traditional option and might resonate if you want to fully retire.

IPC buys your entire book at a competitive and fair price.
You gradually transition over a two-year period, remaining independent, with minimal disruption to your clients and staff.
You’ll monetize the value of the business you’ve built with dependable payments and confidently exit into retirement while IPC preserves your legacy.

IPC Growth:

This is the option for you if you’re looking to grow your book without the complexity of running a business.

You sell your book to IPC at a competitive price, while maintaining your client base.
You then become an IPC Pinnacle Advisor, delegating the operational burdens of running a business to IPC while you focus on growth and nurturing client relationships.
Now you’re earning a salary and will receive a share of the profits, a bonus and payment for net-new asset flow from existing and new clients.

IPC Optimizer:

If you want to optimize your book of business and focus on your higher net worth clients, this option is for you.

Sell your lower-value clients to IPC at a fair and competitive price.
You remain independent, but you can tap into IPC operational resources, freeing up your time to focus on target clients and growth.
IPC will work with you to develop a documented succession plan for your eventual retirement.

In every scenario, IPC shoulders the compliance and back-office load while ensuring clients enjoy the same experience they’re used to from you.

“We can’t replace you,” says Novachis, “but we can replace and install a consistent, world-class wealth-management experience.”

Protecting your legacy

A smooth succession process relies on continuity, which means ensuring your staff stay on after a sale. IPC prioritizes retaining your people, including the familiar faces who set appointments, process paperwork and are often the first point of contact when clients feel anxious about their portfolios. “No client wants to hear they’ve been sold, that’s a terrible thing,” Novachis says. “That’s why communication and continuity are so important.”

Maintaining your legacy also means establishing trust and credibility with your clients, not making immediate changes. The IPC Pinnacle program is a collaboration. You work with an advisor who shares your values and supports your client communication throughout your transition. “We offer an open shelf of products that are in our clients’ best interests,” Novachis says, whether it’s continuing to invest in the same products or discussing new options that might be better.

Empowering advisors

The IPC Pinnacle program is focused on helping advisors build better businesses in whatever way is best for them.

“W e would never get in the way of an IPC advisor wanting to buy another book of business,” Novachis explains. “We have lending programs in place to support advisors who want to do that.”

Often advisors say that other lenders don’t understand their business. To address this concern, IPC maintains a long-term partnership with a trusted lender that has specialized expertise in the wealth management space. Providing financing options is just one of the ways IPC supports advisors in their succession journeys.

Take the first step

If you’re ready to start thinking about your succession plan, connect with IPC to get a thorough assessment of your business and your plans. " We can help you build your business, maximize value and then exit on your terms,” says Novachis. “Nobody else in Canada can do that.”

Visit whatsstoppingyou.ca to book a call.

Money Facts

Wed, 14 Jan 2026 17:54:37 GMT

Important Facts You'll Want to Know

Tax rates, RRSP and TFSA contribution limits and CPP benefit amounts change every year. Learn about these changes with our handy new Money Facts guide for 2026 and keep your financial plans on track.

Closing Strong, Looking Ahead: Key Insights for 2026

Tue, 13 Jan 2026 19:30:33 GMT

In the following 5-minute video, Blair Setford, Canada Life Investment Management Ltd.’s AVP of Product Management, provides his take on the fourth quarter of 2025 and an outlook for 2026.

Blair notes that global equities closed 2025 on a strong note, despite a late-year rotation from growth sectors into more defensive areas. Canadian and U.S. markets hit record highs in December, underscoring investor optimism. U.S. strategists anticipate another solid year ahead, supported by easing inflation and three Federal Reserve rate cuts in the second half of 2025. In contrast, Canada’s softer economic backdrop has kept the Bank of Canada on hold at 2.25%, with some analysts even predicting a potential hike later this year, contingent on trade negotiations with the U.S. and Mexico.

Canadian equities outperformed U.S. markets for the first time since 2016, driven by resource-linked sectors—particularly gold—and strong bank performance. While Canada avoided a technical recession, underlying demand remains weak. In the U.S., markets posted a third consecutive year of double-digit returns, buoyed by dip-buying despite volatility from Big Tech valuation concerns, a hawkish Fed tone, and the longest government shutdown in history. Late-year gains broadened to include small caps and defensive sectors.

Looking ahead, synchronized global rate cuts, strong U.S. bank fundamentals, and improving commercial real estate trends could support continued equity gains in 2026. Risks remain—geopolitical tensions, fiscal pressures, and potential inflation surprises—but long-term opportunities in AI and industrial policy-driven investment persist. While uncertainty endures, disciplined investing and diversification remain key to achieving long-term goals.

Watch our Video to Learn More

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of December 30, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Putnam Investments is the brand for the asset management business of The Putnam Advisory Company, LLC and Putnam Investments Canada ULC.

2025 Q4 investment insights: 2026 market outlook

Mon, 05 Jan 2026 18:06:47 GMT

Five forces shaping the year ahead

As we look toward 2026, the investment backdrop continues to evolve around five powerful forces. The economic benefits of artificial intelligence (AI), the persistence of low growth in China, the durability of global trade tensions, the shift toward monetary easing, and rising fiscal pressures will all shape market behaviour. Each theme carries its own set of risks, but also opportunities for investors who remain disciplined and diversified.

AI will continue to deliver economic benefits while the market bubble continues to inflate

The link between AI and economic growth strengthened significantly through 2025. Investment in data centres, semiconductors, software and research expanded at double-digit rates. These trends are now visible in national accounts. Productivity gains became more evident in industries adopting AI, even as employment in those sectors softened. These developments point to a genuine economic transformation that is still in its early stages.

However, the market expression of this transformation remains uneven. Equity leadership is concentrated in a narrow cohort of firms and valuations continue to stretch historical limits. Investors are more attuned to the AI signal than to broader macro developments, a pattern typical of late-cycle environments. Market pricing now reflects the expectation that earnings growth will continue in a straight line, increasing the fragility of this phase of the cycle.

It’s important to recognise that a sharp equity-market correction on its own isn’t usually a recessionary event. Historically, even a 10% decline in share prices has only a modest impact on economic activity. What matters is whether weakness in equity markets spills into credit markets and tightens financial conditions more broadly.

The risk is that markets begin to extrapolate early productivity gains too aggressively. Even so, real investment linked to AI is likely to remain resilient. Transformative technologies often experience valuation resets. Yet the underlying investment cycle tends to recover quickly because capital deepening and efficiency gains continue even when prices adjust.

China will remain stuck in low growth and deflation

China enters 2026 constrained by structural headwinds. Economic momentum is slow, household demand remains subdued and the country continues to grapple with excess supply and persistent deflationary pressure. At the same time, policy continues to prioritise technological self-sufficiency, manufacturing scale and industrial upgrading over measures that would support households or rebalance the economy toward consumption.

This policy mix is unlikely to shift meaningfully in 2026. There’s little indication of a coordinated effort to raise household incomes or address excess capacity. As a result, China’s growth path will remain modest and driven by supply-side initiatives rather than domestic demand. Deflationary impulses from excess capacity will continue to weigh on global goods prices, supporting disinflation trends in advanced economies.

China will continue to contribute to global growth, but its influence is now more likely to be felt through prices than demand. Bond yields in China are expected to remain near historic lows, reflecting weak domestic conditions and a growing preference among households for fixed income over housing.

The trade war isn’t over

Global trade remains in a period of gradual fragmentation. The policy environment has shifted from multilateral partnerships toward industrial policy, investment controls, and regionally oriented supply chains. This trend will likely persist in 2026. Countries are restructuring trade and investment flows to strengthen national resilience, protect strategic industries and manage geopolitical risk.

The temporary calm between major trading partners in 2025 didn’t resolve deeper areas of strategic competition. Tensions remain elevated across advanced technologies, industrial capacity, critical minerals and energy-transition supply chains. Countries continue to use subsidies, tax incentive, and regulatory measures to secure domestic production. Supply chains are adjusting accordingly, creating new opportunities and challenges across sectors and regions.

For Canada, this environment carries particular importance. Our limited leverage in trade negotiations and our dependence on the United States make us sensitive to shifts in U.S. policy. The upcoming review of the North American trade framework may introduce stricter rules of origin or additional compliance requirements. Even without headline-driven tariff actions, trade will remain politicised and unpredictable.

This backdrop reinforces the value of exposure to sectors and strategies that are less reliant on global trade flows and more aligned with domestic demand, innovation, and structural growth themes.

Central banks will continue to ease, but not as aggressively as markets hope

The global monetary policy cycle has turned. Inflation has moderated and economic conditions have softened, giving central banks room to lower policy rates. However, the pace and extent of easing will differ across regions.

In the United States, inflation remains near 3% and labour markets, while cooling, remain resilient. These conditions limit the scope for meaningful easing. Only modest rate reductions appear likely in 2026. In contrast, weaker growth and more subdued inflation in Europe and the United Kingdom create room for a more sustained easing cycle. Japan remains an outlier, with rising wages and firmer domestic demand suggesting that gradual policy tightening may continue.

An important risk to the outlook is the possibility of an inflation surprise. Stronger-than-expected demand, renewed supply disruptions or wage dynamics that keep core inflation persistently elevated would limit the pace of monetary easing. While not the central expectation, such a development could shift the policy environment in ways markets may underestimate.

Investors should also expect monetary authorities to intervene more frequently to stabilise bond markets when financial conditions become disorderly. Subtle forms of intervention, such as liquidity operations, regulatory adjustments or a slower pace of balance-sheet reduction, may be used to limit abrupt increases in yields. These tools can help anchor volatility, although political considerations will increasingly influence policy decisions.

Fiscal pressures will continue to weigh on markets

The most persistent source of market risk in 2026 will be fiscal fragility. Many advanced economies face rising debt-servicing costs, slower nominal growth and ongoing spending pressures. What matters most now isn’t the level of debt itself, but the credibility of fiscal policy and investors’ confidence in the sustainability of public finances.

Fiscal stress often emerges from political rather than economic events. Markets respond when leadership changes, fiscal frameworks are challenged, or policy signals become inconsistent. In an environment of high public debt and rising interest costs, political clarity and credible fiscal anchors become essential. Abrupt shifts in policy direction or perceived politicisation of monetary institutions can trigger sudden increases in bond yields, tightening financial conditions and amplifying concerns over fiscal sustainability.

This is especially important for countries facing large refinancing needs where political uncertainty intersects with elevated debt levels. Markets in 2026 will pay close attention to fiscal signals, institutional stability and the credibility of medium-term policy commitments.

Governments may rely more heavily on tools that contain borrowing costs, such as regulatory adjustments that support domestic bond demand, slower reductions in central-bank balance sheets or enhanced liquidity measures during periods of market stress. While these measures can stabilise financial conditions, they don’t eliminate the need for credible long-term fiscal strategies.

A balanced view: upside potential

While many of the dominant themes for 2026 point to risk, it’s important to recognise that upside outcomes are also possible. Economies often perform better than expected. One meaningful upside scenario is that recent productivity gains in the United States prove to be an early signal of a broader and more durable upswing driven by the continued rollout of AI technologies. If these gains begin to diffuse across service industries and extend into other major economies, the benefits could be significant. A genuine productivity-led expansion would ease inflation pressures, support real incomes, improve fiscal dynamics, and strengthen the foundation for long-term growth.

This isn’t the base case for 2026, but it remains a constructive possibility. Productivity booms have a history of reshaping the economic landscape in positive and lasting ways.

Conclusion

The forces shaping the 2026 investment landscape are structural and persistent.

AI continues to reshape economic activity while stretching valuations .
China is locked into a slow-growth and deflationary path.
Global trade remains fragmented. Central banks are easing cautiously.
Fiscal pressures are building and will continue to test policy credibility.
Financial vulnerabilities, particularly in the fast-growing private-credit ecosystem, warrant close attention.

In this environment, portfolios benefit from broad diversification, thoughtful risk management, and maintaining exposure to long-term innovation while balancing areas that provide resilience during periods of market stress. Volatility will create opportunities, but a disciplined, forward-looking approach remains essential.

Sincerely,

Corrado Tiralongo (he/him)

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of January 5, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

Policy Divergence, Fading Inflation Pressures, and a Weakening Domestic Backdrop

Mon, 08 Dec 2025 17:19:19 GMT

Executive summary:

Global inflation continues to ease toward 2.5 percent, although regional divergence is widening. The United States faces persistent services inflation that is likely to keep core PCE (1) near three percent into 2026, while the euro zone is expected to undershoot target and China remains in deflation due to chronic over investment. Supply chain pressures are minimal, and energy prices are expected to provide a modest drag on developed market inflation.

The Federal Reserve enters December with one of its most divided committees in years. Limited data availability has deepened the split between hawks and doves, but recent communication suggests there is just enough support for another 25 basis point cut. Sticky supercore (2) inflation near 3.3 percent and persistent concerns among regional presidents raise the likelihood of multiple dissents and increase the probability of a policy pause early in 2026.

Canada’s economy is weaker than the headline GDP figures imply. Third quarter growth of 2.6 percent was driven entirely by an 8.6 percent annualised slump in imports, while domestic demand fell. Household consumption contracted for the first time since 2020, and business investment declined for a third straight quarter. October’s advance GDP estimate points to further underlying weakness.

Labour market conditions remain mixed. The Labour Force Survey shows strong gains, but these appear overstated given population scaling that has not yet adjusted to slowing immigration. In contrast, the Survey of Employment, Payrolls and Hours show cumulative job losses through September, concentrated in tariff exposed sectors, highlighting the fragility of underlying labour demand.

The Bank of Canada is widely expected to hold its policy rate at 2.25 percent in December. Weak domestic demand and moderating core price pressures, supported by the removal of counter tariffs, create the conditions for further easing in 2026 once inflation returns sustainably to target. Policymakers remain cautious for now but are likely to take the policy rate below neutral by mid 2026 if economic momentum does not improve.

Setting the Stage: A Shifting Macro Landscape Across Major Economies

Incoming data across major economies point to an environment where inflation is gradually normalising, but the underlying forces differ widely. For Canada, the combination of weakening domestic demand and fading core inflation pressures is creating a more challenging macro backdrop than headline growth suggests. In the United States, policymakers are navigating considerable uncertainty and internal disagreement, even as inflation remains above target. These dynamics will shape financial conditions as we move into 2026.

Global Inflation is Easing but Remains Uneven

Inflation is expected to hover near 2.4 to 2.5 percent globally through the year ahead, although the balance of risks varies significantly across regions. The United States continues to experience elevated services inflation, Japan faces persistent wage driven price pressures, the euro zone is likely to undershoot its two percent target, and China remains in deflation due to long standing excess capacity.

Across advanced economies, capacity utilisation remains low and reported shortages have fallen back toward pre pandemic norms. This reflects the broader easing of supply chain constraints. As highlighted in the Global Inflation Watch, energy prices are expected to provide a modest drag on inflation, reinforcing the disinflationary trend across developed markets.

United States: A fractured Federal Reserve Approaches a Contested Vote

The upcoming December FOMC meeting is shaping into one of the most divided decisions since 2016. The lack of timely official data has widened the gap between competing policy views, while mixed signals from the labour market and inflation datasets have added to the uncertainty.

Labour Market Ambiguity

The September payroll rebound is counterbalanced by softer private sector hiring and a rise in the unemployment rate to 4.4 percent. Inflation readings send mixed messages. Core PCE is holding near 2.9 percent and supercore services inflation remains around 3.3 percent, underscoring the stickiness in the most cyclical components of inflation.

Policy Outlook

While recent communication suggests a narrow majority supports another 25 basis point cut, concerns from several regional presidents raise the probability of multiple dissents. Forward guidance is likely to tilt more cautiously, emphasising the potential for a pause early in 2026. With inflation still above target and labour demand showing tentative signs of stabilisation, the Fed is unlikely to match the number of cuts currently embedded in market pricing.

Canada: Weak Domestic Demand and Moderating Inflation

Canada’s domestic economy continues to weaken even as headline GDP masks the underlying softness. The third quarter’s upside surprise was driven entirely by an unusually sharp decline in imports, with little contribution from domestic activity.

A Growth Profile Driven by Imports, Not Strength

Imports fell at an 8.6 percent annualised rate, contributing almost three percentage points to the quarter’s GDP figure. Domestic demand, however, contracted. Household consumption declined for the first time since 2020 and business investment fell for a third consecutive quarter. October’s advance GDP estimate of a 0.3 percent decline reinforces this weaker momentum.

Labour Market Signals Remain Mixed

The Labour Force Survey continues to show strong headline gains, but these figures appear overstated due to population scaling issues that have not yet reflected slowing immigration. In contrast, the Survey of Employment, Payrolls and Hours show cumulative job losses through September. These declines are concentrated in manufacturing, wholesale and retail trade, and transportation and warehousing, which tend to be more sensitive to tariff related conditions and provide a clearer view of underlying labour demand.

Bank of Canada: Easing Pause but Not the End of the Cycle

The Bank of Canada is expected to hold its policy rate at 2.25 percent at the December meeting. While policymakers emphasise that tariffs represent a supply side constraint that limits the impact of monetary stimulus, inflation dynamics are shifting. The Bank’s preferred core measures rose only 0.18 percent in October, the closest they have been to a target consistent pace in over a year. The latest business surveys show a continued decline in planned price increases, suggesting that inflation pressures will continue to ease.

If these trends continue and domestic demand fails to strengthen, the Bank will likely need to bring the policy rate below neutral by mid 2026.

A Period of Policy Divergence Lies Ahead

Monetary policy paths across North America are beginning to diverge. The Federal Reserve continues to contend with persistent services inflation, stickier wage dynamics, and a committee that remains divided on the pace and timing of future easing. By contrast, the Bank of Canada faces softening domestic demand and moderating inflation pressures that point toward earlier policy flexibility in 2026. This divergence carries implications for interest rate differentials, the Canadian dollar, and the relative performance of Canadian and U.S. fixed income markets.

As we move into 2026, the challenge for investors will be distinguishing cyclical volatility from deeper structural forces shaping returns. The United States continues to benefit from stronger underlying demand and a labour market that, although moderating, remains comparatively resilient. Canada faces a more fragile backdrop marked by weaker consumption, slower investment, and ongoing uncertainty around trade policy and tariff exposures.

Portfolio Implications in a Diverging Policy Environment

These evolving dynamics suggest several considerations for investors assessing multi asset portfolios:

Interest Rate Sensitivity May Matter More as Policy Paths Diverge

With the Bank of Canada likely to ease sooner and more decisively than the Federal Reserve, relative duration exposure between Canadian and U.S. fixed income markets may influence return dispersion. Investors may observe that Canadian yields could adjust more quickly to softer domestic conditions, while U.S. yields may remain anchored by a slower disinflation trend.

Currency Dynamics May Become a More Prominent Source of Volatility

A more accommodative Bank of Canada, paired with a cautious Federal Reserve, may place downward pressure on the Canadian dollar. For globally diversified portfolios, this environment may increase the contribution of foreign currency exposure to overall risk and return. Maintaining mandates with currency-aware strategies or built-in hedging flexibility could help manage these fluctuations.

Regional Equity Performance May Increasingly Reflect Macro Dispersion

A U.S. economy supported by stronger domestic demand and AI driven investment may continue to show relative earnings resilience compared with Canada’s more subdued environment. Investors may therefore focus on mandates that emphasise quality and earnings delivery in the United States, while in Canada they may seek managers who emphasise balance sheet strength, sustainable payout capacity, and exposure to sectors less sensitive to domestic consumption.

The Importance of Diversification is Rising, not Diminishing

A diverging policy backdrop increases the value of broad diversification across regions, styles, and asset classes. Exposure to alternative strategies that offer low correlation to traditional equities and bonds, such as systematic macro, managed futures, or multi strategy alternatives, may help reduce portfolio-level volatility during policy transitions.

Structural Forces Should Remain Central when Evaluating Long term Positioning

Policy divergence may dominate short term market narratives, but longer-term trends such as an ageing labour force, fiscal constraints, and investment in productivity enhancing technologies are likely to shape relative performance across asset classes. Maintaining exposure to mandates that systematically capture these structural growth drivers may help portfolios navigate beyond the immediate policy cycle.

Positioning for a More Complex Macro Landscape

In this environment, investors may benefit from maintaining portfolio balance while ensuring that each mandate contributes a distinct and complementary source of risk and return. As policy paths diverge further in 2026, differences in inflation trajectories, rate expectations, and growth momentum are likely to shape cross asset opportunities. Focusing on mandates that demonstrate discipline in risk management, diversification across factors and geographies, and the ability to adapt to shifting macro conditions may help support portfolio resilience.

Sincerely,

Corrado Tiralongo (he/him)

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

Core PCE, or core Personal Consumption Expenditures inflation, is the United States Federal Reserve’s preferred measure of underlying inflation. It tracks the prices of a wide basket of goods and services consumed by households but excludes food and energy, which tend to be more volatile. Core PCE is considered a more stable gauge of inflation trends because it reflects changes in consumer behaviour, adjusts for shifts in spending patterns, and captures the broad underlying momentum in prices. It is used by the Federal Reserve to assess whether inflation is moving sustainably toward its two percent target.
Supercore inflation refers to a narrow measure of services inflation that excludes both food, energy, and shelter costs. It captures the most cyclical and labour sensitive components of the inflation basket, such as medical services, transportation services, and personal care. Because these categories are heavily influenced by wage growth and domestic demand conditions, supercore inflation is often viewed as a signal of underlying inflation persistence and is closely monitored by central banks when assessing whether price pressures are easing.

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of December 8, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

Selling Your Business on the Fly

Wed, 26 Nov 2025 17:51:47 GMT

When a sudden emergency or a collapsed deal forces you to sell quicker than expected, you'll need to act fast to preserve the value of your business. Here's how to execute a successful sale – even if it's rushed.

Selling an advisory business is meant to be the final chapter of your entrepreneurial journey. But sometimes, life throws curveballs, and even the most thoughtful succession strategy can unravel if something unexpected happens. Sudden illness, a deal that falls through or another unforeseen event can force you to pivot or sell sooner than you’d planned.

In those situations, the long-term equity you’ve built can quickly slip away. “The value of your business literally declines every day that passes without someone looking after it,” says Ken Lofranco, IPC’s Vice President, National Advisor. “What someone will be willing to pay for your business starts falling fast.”

Here's what to consider if you have to sell your business faster than planned.

When you can't work:

There is no shortage of stories – inside and outside of the financial advisory industry – of business owners having to sell because they can no longer work. That often happens when someone faces a sudden illness , a debilitating disability or an unexpected death.

There's not a lot you can do if it gets to this point, says Lofranco – the value of your business will almost certainly decline if there's no plan in place to deal with an unexpected event. “There may be liquidity needs, trades that need to be placed or time-sensitive services to be performed on a client account,” he notes. “It’s pretty hard for a buyer to come in and repair what's gone wrong.”

It helps if you have an associate who can quickly step in, but even then, engaging in a sale can be challenging if you're not around. In this situation, it’s less about what you or your family can do after an incident – you’ll most likely have to sell at a lower price and quickly – and more about what you can do before an emergency occurs.

Solution: Create a business continuity plan

Long before you decide to sell the company, you’ll want to create a business continuity plan. This document will help protect clients and keep your business going if the unexpected happens.

It should include information on:

Who will run the business
How clients will be supported
How financial and human resources will be allocated
How value will be protected if you're unable to act

With this kind of guide, someone can step in right away and know exactly what to do to keep clients happy and the business running smoothly. That helps protect value and allows you or your family to sell when the time is right.

“We've had situations where an advisor suddenly became ill or had to step away, and our team was able to step in and help protect the value of the business,” Lofranco says. “The more we know ahead of time, the more help we can be. Ask yourself today: What would I need — in 10 years or three days — to prove to a buyer that my business is ready?”

When a Deal Falls Through:

Having a solid succession plan in place doesn’t guarantee that a deal won’t fall through. When that happens, retirement plans can go awry.

I’ve seen people who were ready to retire, but their plan fell apart,” Lofranco says. “They were relying on it for years, and suddenly they were stuck searching for a new successor.”

A buyer might lose financing, get cold feet or run into compliance issues. Sometimes it's the advisor who hesitates — maybe the timing feels off, the fit isn’t right, or they keep holding out for something better — and the deal never gets finalized.

A stalled transition doesn’t just put a damper on your plans; it can make your business harder to sell to someone else. Clients can start to lose confidence in your leadership, and prospective buyers may question whether the opportunity is worth pursuing. “It's not as though there is a ready market of qualified buyers who are prepared to buy your business in its current state right at the unplanned moment when you may need to sell it,” Lofranco says. “The buyer is in a position of power here.”

But the end of a deal doesn’t have to mean the end of your options. What matters is how you respond:

· Analyze the breakdown : Instead of jumping at the first new buyer, step back and consider why the first plan broke down. Financing, timing and fit all play significant roles, and missteps in any one of these areas can derail a sale. Learning from the experience is what makes the next attempt more likely to succeed.

· Define what matters most : Maybe you want a deal closed fast, the highest payout or ensuring client continuity (or, likely, all of the above). Without clear priorities, it’s easy to hold out for the “perfect” offer and end up with nothing, something Lofranco has witnessed more than once. Advisors become so focused on what might come along that they pass over buyers who could close the deal today. “You may not be able to be too choosy at this point,” he says. “I've seen advisors stall their own exits because they keep looking for something better. They end up missing what's right in front of them.”

· Execute immediately : If speed is a top priority, focus on finding a buyer who can close the deal quickly and reliably.

Understanding Your Quick Sale Options:

Whether you’re facing an unexpected inability to work or the collapse of a deal, most advisors will weigh three buyer options in a quick-sale scenario: An internal peer, an external peer or a corporate buyer. Peer deals can feel like a natural fit, especially when there's an existing relationship, but they come with their own set of risks. For example, financing can fall through. In other cases, share purchase agreements can consume unanticipated time and resources for due diligence, valuation and legal review, all with very little return on the effort. In many cases, sellers may be expected to stay involved longer than they'd like to support the transition.

When time is short, institutional buyers can often move faster than peers and can be more flexible about how long a seller stays involved. That flexibility helps advisors shape the transition in a way that works for them.

Lofranco recalls an instance when an advisor’s succession plan collapsed after his buyer backed out. The advisor, who believed his retirement was already secured, suddenly found himself without an exit plan. IPC was able to step in and provide an alternative path forward. “We had an offer in his hands within a week,” Lofranco says. “Three weeks after that, the deal was signed, and we were bringing on his staff and transitioning clients.”

Why fit still matters

Even if you're under pressure to sell, the buyer’s approach must still make sense for your clients. A strong offer won't mean much if the new fee model or service style drives people away. “Let’s say you didn't do your due diligence, and the buyer starts charging excessive or egregious fees , " Lofranco says. “You might not notice right away, but over time, clients will. And they’ll start walking.”

Communication is key

Think carefully about how to prepare clients for what’s ahead. Silence leaves room for worry, which is why communication is a vital part of the process.

Be honest and transparent. Let clients know why the change is happening and what they can expect from it.

Offer reassurance. Communicate what will stay the same and what will change.

“If you’re not giving your clients information, they’ll fill in the blanks with their own fears," Lofranco explains. “ If you communicate the plan and follow through, you prevent the introduction of cause for the emotional temperature to go up, and it makes it easier for them to feel good about the change.”

Expect the unexpected

No one wants an urgent exit, but proactive preparation can help you move quickly in an unforeseen circumstance. While it won't eliminate all risk, having a plan gives your business the best chance of maintaining its value and supporting clients while you navigate a difficult situation.

Echoes of Innovation: Lessons from Past Manias for Today’s AI Boom

Sun, 23 Nov 2025 17:48:05 GMT

Executive summary

Artificial intelligence remains the defining narrative of this market cycle. It is transforming how companies allocate capital and how investors price future growth. Yet the scale and concentration of investment around a handful of U.S. technology firms have reached levels that now test both financial and physical limits.

Global AI infrastructure spending is projected to exceed US $5–7 trillion by 2030 (12), approaching the scale of nineteenth-century rail expansions. Yet as Capital Economics highlights, current AI-related capital expenditure among the largest U.S. hyperscalers amounts to roughly 0.6 percent of U.S. GDP (about US $140 billion in real terms)( 20). While AI investment has risen by nearly 30 percent this year and is set to expand further in 2026, its direct macroeconomic footprint remains modest, more visible in valuations than in output.

To make this investment profitable, the world would need roughly US $2 trillion in new annual revenue , leaving an US $800 billion shortfall (3) even after accounting for expected productivity gains. This asymmetry, massive investment ahead of monetisation, is the hallmark of a fragile boom.

Edward Chancellor’s capital-cycle framework reminds us that high returns attract capital, competition erodes them, and falling returns eventually restore discipline. The AI build-out is following that same script: a genuine technological revolution financed at a pace and scale that may outstrip near-term cash-flow realities.

As Carlota Perez noted in Technological Revolutions and Financial Capital, every technological surge follows a familiar rhythm of installation, frenzy, and eventual renewal. Each phase reshapes the balance between finance and production, setting the conditions for either excess or sustainable progress.

The path of this boom will determine its economic impact. If it continues to be funded largely from free cash flow, its effects will be contained within the technology sector. If it increasingly relies on borrowing, leasing, and structured financing, the consequences will extend into the broader economy, with second- and third-order effects on credit markets, capital availability, and policy responses. Capital Economics adds that if AI investment is funded by retained earnings and profits, it may gradually lift equilibrium real interest rates by boosting potential growth. But if the expansion becomes debt-financed, higher leverage could tighten financial conditions, amplifying macroeconomic volatility.

What is Different Today, and What is Not

Recent earnings from major U.S. hyperscalers reveal both strength and strain. Revenue growth remains robust, but free cash flow has declined as capital expenditure has accelerated. Firms are turning to leasing, special-purpose vehicles, and new debt to sustain the AI arms race (1). Analysts estimate that these companies now represent 75 percent of S&P 500 returns, 80 percent of earnings growth , and nearly 90 percent of capital-spending growth since late 2022 (4) .

Global AI infrastructure investment is near US $400 billion this year (14). By 2030, cumulative spending could exceed US $5–7 trillion (2) . Roughly sixty percent of this capital will go to semiconductors and computing hardware, a quarter to energy infrastructure, and the remainder to construction and land (2). These are extraordinary numbers for a technology still early in commercial adoption.

The psychology is familiar. In Extraordinary Popular Delusions and the Madness of Crowds , Charles Mackay wrote that people “go mad in herds but recover their senses one by one.” Investors rarely err in recognising an idea’s potential; they err in extrapolating its immediacy and profitability. Kindleberger later formalised this as the “euphoria stage,” when optimism becomes self-reinforcing and credit expansion sustains valuations beyond fundamentals(11).

As Robert Shiller observed in Irrational Exuberance , financial booms are not simply valuation events but social epidemics of belief. Rising prices feed stories, and stories feed more buying. Each generation invents a new justification for why old valuation rules no longer apply. In that sense, AI is not just a technological theme but a narrative powerful enough to bend investment behaviour around it.

As Alphabet’s CEO Sundar Pichai put it, “AI is more profound than fire or electricity.”(17) Such statements exemplify the “new-era” narrative that Shiller described, a belief that the rules of valuation and prudence no longer apply when confronting a supposedly world-altering innovation.

Historical Rhyme and the Capital Cycle

The railway boom of the nineteenth century offers the clearest analogy, indispensable to economic development, but financed too much capacity too quickly. The 1990s telecom and internet build-outs followed a similar pattern. More than US $500 billion was spent laying fibre. (6)

Financial historians William Quinn and John Turner note that every major technological boom shares this pattern (6): innovation, abundant credit, speculative overshoot, and eventual consolidation. Bubbles often leave behind valuable infrastructure. The technology succeeds; the first wave of investors rarely does.

From a macroeconomic perspective, distinguishing between nominal and real investment is critical. Nominal capital expenditure may exaggerate momentum when falling hardware prices mask real volume growth, a dynamic Capital Economics identifies again today as computing costs decline. Corporate spending appears dramatic, but the macro effect is more muted, a reminder that productivity gains typically materialise only after broad adoption.

Capital Economics also estimates that AI could lift productivity growth by 1–3 percentage points annually over the next five years if adoption is broad-based, potentially the most significant acceleration in two decades(20). Yet these gains depend on efficient capital allocation and the ability of firms to translate technological promise into measurable output.

Edward Chancellor’s Capital Returns explains why (5). High returns attract capital, capacity expands faster than demand, and future returns fall. Firms with the fastest asset growth have historically underperformed those with more disciplined investment. AI leaders are entering that phase now: asset growth is surging, free cash flow is compressing, and competition is escalating as each firm races to defend its perceived moat.

Where the Fragility Lies

Balance-sheet Stretch

The financing model of the AI boom is evolving from self-funded to leveraged. Until recently, hyperscalers could finance expansion entirely from cash flow. Now, new debt issuance and long-term power-purchase agreements are becoming common (1).

Capital allocation now reflect conviction as much as competition.

Executives themselves are openly acknowledging the trade-off between prudence and survival. As Mark Zuckerberg, CEO of Meta Platforms, admitted, “If we end up misspending a couple of hundred billion dollars, I think that that is going to be very unfortunate, obviously. But what I’d say is I actually think the risk is higher on the other side.”(15)

Larry Page, Co-founder of Google / Alphabet, was even more blunt: “I’m willing to go bankrupt rather than lose this race.”(16)

Microsoft’s CEO Satya Nadella has echoed this sentiment, declaring that “we are in the race to build the world’s most powerful AI infrastructure and we will not be outspent.”(18)

The competitive impulse to dominate, rather than to optimise returns, has become a defining feature of this phase.

Funding the Boom Matters

The macroeconomic implications of this cycle will depend on how it is financed. For now, most hyperscalers fund AI capital expenditures from operating cash flow. Free cash flow has narrowed but remains positive, though rising use of leases and structured finance signals the first signs of leverage, a late-cycle dynamic that warrants attention.

If the boom remains self-financed, the risks will stay contained within equity valuations and corporate balance sheets. If it shifts toward borrowing, the effects will propagate through credit markets, tightening financial conditions and amplifying downturn risks when investment slows.

Turning Point and the Path to a Golden Age

History shows that financial manias and technological booms tend to follow a recognisable pattern, moving through stages of enthusiasm, disruption, and eventual renewal. As Carlota Perez observed in Technological Revolutions and Financial Capital (2002) , each major technological surge follows a four-phase pattern: installation, frenzy, turning point, and deployment.

The early installation phase introduces breakthrough technologies and supporting infrastructure, while the frenzy phase sees finance race ahead of production, driving speculation and overinvestment. The turning point emerges when markets and policymakers force a realignment between financial and real capital, and the deployment phase delivers the lasting productivity and social benefits that define a “golden age.”(19)

Perez’s framework suggests that the AI cycle has moved from installation to frenzy. The build-out of data centres, chips, and power systems has become self-reinforcing as firms compete for dominance, but valuation metrics and financing structures are now stretching beyond immediate profitability. The next turning point, as Perez described, will hinge on how quickly finance recouples with productive investment, a process shaped by funding sources, policy adaptation, and public confidence.

Capital Economics estimates that the current wave of AI investment has added roughly 0.2 percent to global GDP over the past year and could lift growth by 0.3–0.5 percent per year through 2027. Longer term, successful deployment could raise productivity growth by up to 1.5 percentage points annually (20) across advanced economies, a pattern consistent with Perez’s “deployment phase” of broad diffusion.

For policymakers, the turning point is a window to lay the foundations for a sustainable golden age. Aligning regulation, education, and infrastructure with the new technological paradigm helps diffuse benefits beyond early adopters. Failure to adapt, Perez warned, risks entrenching inequality and prolonging stagnation after the frenzy ends.

Asset-heavy Transition

The same companies once prized for asset-light scalability are now allocating 20 to 35 percent of revenue (5) to physical capital. Rising depreciation and reduced buybacks reflect this structural shift. Historically, sectors that become capital-intensive see declining returns on capital and compressed valuation multiples.

Duration Mismatch

Global AI compute demand is projected to reach 200 gigawatts by 2030 , roughly triple today’s capacity. To justify the required investment, annual data-centre revenues would need to rise from US $20 billion today to about US $2 trillion , leaving an US $800 billion shortfall (3). Even with expected efficiency gains, the gap illustrates how far current valuations depend on unproven revenue streams.

Market Concentration and Valuation Heat

The largest seven U.S. firms now account for more than a third of the S&P 500’s market capitalisation. Capital Economics notes that only about a quarter of S&P 500 companies have outperformed the index this year, the narrowest leadership in decades, reinforcing that market breadth has thinned to bubble-like levels. They describe current conditions as “a bubble starting to inflate but unlikely to burst for years,” sustained by genuine technological promise and concentrated capital flows.

Energy and Infrastructure Bottlenecks

AI-optimised data centres are exceptionally power-intensive. By the end of the decade, their electricity demand could rival that of Japan (13). Utilities are already warning of grid constraints and rising costs. The physical strain on power systems mirrors the financial strain on balance sheets, both symptoms of an overextended investment cycle.

Lessons for Canadian Portfolios

Canadian investors are indirectly exposed to this cycle through structural reliance on U.S. mega-caps. To access innovation, domestic portfolios have concentrated in the same narrow set of global growth leaders, effectively import U.S. balance-sheet risk.

AI is likely to reinforce U.S. economic dominance and widen productivity gaps across regions. For Canada, this concentration of technological capacity and market capitalisation heightens reliance on U.S. economic momentum and exposure to its eventual corrections.

This mirrors Canada’s trade dependence on the United States: when one counterparty dominates outcomes, flexibility erodes. If the AI complex stumbles, Canadian portfolios will move in tandem. Managing that correlation, not abandoning the theme, is the challenge.

What Advisors will be Asked

Is AI a Bubble?

Owen Lamont defines a bubble as a self-sustaining rise in prices over time that results in the speculative trading of an obviously overvalued asset (7). It requires three conditions:

Overvaluation — prices are broadly acknowledged as excessive;
Feedback loop — price gains attract new participants and amplify optimistic narratives;
Speculative trading — investors knowingly buy overvalued assets expecting to resell at higher prices.

By that definition, the AI cycle has not yet crossed into a fully developed bubble but clearly exhibits the first two elements. Valuations are stretched and feedback loops are evident: corporate spending drives enthusiasm, enthusiasm drives prices, and rising prices justify still more spending and executives’ own rhetoric reinforces this feedback. When industry leaders declare they are “willing to go bankrupt rather than lose this race” or that the risk of under-investing outweighs the waste of “misspending billions,” exuberance has clearly migrated from markets to boardrooms.

The dot-com era provides a useful parallel. When nominal information and communication technology (ICT) investment collapsed after 2001, real investment fell only modestly because falling equipment costs sustained capital formation. If history rhymes, a future AI correction would likely hit equity valuations far more than real economic activity.

A speculative boom funded by cash flow can deflate with limited macroeconomic fallout, as happened after the dot-com bust, when losses were largely confined to equity holders. A boom financed by borrowing, however, creates liabilities that spread through the financial system, transforming a valuation correction into an economic event. This distinction will determine whether this AI cycle ends as a market correction or a broader contraction.

Portfolio Implications

In my opinion, the way to manage these risks is to:

Maintain AI exposure and include mandates that broaden beyond infrastructure builders to include diversified beneficiaries.
Identify portfolio managers that emphasize capital discipline and free-cash-flow sustainability as key selection criteria.
Retain allocations to non-correlated and alternative strategies as protection against concentrated risk.
Remember the historical precedent: every major innovation has endured a correction before delivering lasting returns.
I believe that participating through the correction, not avoiding it, is the path to long-term success.

Closing Thought

Mackay wrote that “men go mad in herds but recover their senses slowly, and one by one.”(10) As Shiller later observed, speculative narratives rarely collapse overnight; they deflate as investors reconcile belief with experience.

The recovery this time will take the form of rediscovering valuation discipline after years of growth at any price. AI will reshape productivity across industries, but its financial cycle will follow the same human rhythm as every past innovation: overconfidence, excess, correction, and renewal.

As Perez reminds us, the true test of every technological revolution lies not in its frenzy but in its deployment. The challenge for investors and policymakers alike is to ensure that the AI boom transitions into a genuine golden age, one where capital and innovation reinforce, rather than exhaust, each other. History suggests that sustained productivity gains will depend on maintaining discipline between financial ambition and real investment capacity.

Sincerely,

Corrado Tiralongo (he/him)

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of November 23, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

Capital Economics (31 October 2025). Capital Daily – “What to make of the mixed reaction to this week’s big-tech results.” Observations on U.S. hyperscalers’ Q3 2025 earnings: rising capital expenditure despite strong profit growth; increasing reliance on leasing, special-purpose vehicles, and debt financing.
McKinsey & Company (2025). The Cost of Compute: A $7 Trillion Race to Scale Data Centres. Projects global AI-related data-centre investment between US $5.2 trillion (base case) and US $7.9 trillion (accelerated case) by 2030; roughly 60% hardware, 25% energy infrastructure, 15% construction and land.
Bain & Company (2025). 6th Annual Global Technology Report – “$2 Trillion in New Revenue Needed to Fund AI’s Scaling Trend.” Estimates 200 GW of global AI compute demand by 2030, US $500 billion annual capex, and US $2 trillion annual revenue required for profitable scaling; identifies an US $800 billion revenue gap under current projections.
J.P. Morgan Asset Management – Michael Cembalest (September 2025). The Blob. AI-related equities contributed approximately 75% of S&P 500 returns, 80% of earnings growth, and 90% of capex growth since late 2022; highlights increasing debt issuance and financing strain among hyperscalers.
Edward Chancellor (2016). Capital Returns: Investing Through the Capital Cycle. Palgrave Macmillan. Demonstrates that industries with the fastest asset growth subsequently underperform those with slower growth; outlines the “capital-cycle trap” where abundant investment precedes falling returns.
William Quinn and John Turner (2020). Boom and Bust: A Global History of Financial Bubbles. Cambridge University Press. Historical parallels across railway, radio, and internet bubbles; documents telecom and internet overinvestment exceeding US $500 billion during the 1990s.
Owen A. Lamont (2024). “No, We Are Not in a Bubble (Yet),” Acadian Asset Management. Defines a bubble as “a self-sustaining rise in prices over time resulting in the speculative trading of an obviously overvalued asset,” requiring three ingredients: overvaluation, feedback loops, and speculative trading.
Owen A. Lamont (October 2025). “Is the U.S. Stock Market in a Bubble?” Acadian Asset Management. Introduces “positive dumb alpha” — periods when retail investors outperform professionals as a sign of speculative excess; cites strong performance of retail-heavy ETFs such as the SoFi Social 50 (SFYF) and Samsung KODEX Investor’s Choice (473460).
Robert Shiller (2005). Irrational Exuberance, 2nd Edition. Princeton University Press. Discusses feedback loops, narrative contagion, and how speculative episodes resemble “naturally occurring Ponzi schemes” driven by media amplification and social imitation.
Charles Mackay (1852). Memoirs of Extraordinary Popular Delusions and the Madness of Crowds. London: R. Bentley. Source of the quotation: “Men go mad in herds, but recover their senses slowly, and one by one.”
Charles Kindleberger and Robert Aliber (2023). Manias, Panics, and Crashes: A History of Financial Crises, 8th Edition. Palgrave Macmillan. Defines the sequential stages of financial bubbles: displacement → boom → euphoria → distress → revulsion.
Edwin Lefèvre (1923). Reminiscences of a Stock Operator. George H. Doran Company. Source of the quotation: “The public makes money which it later loses simply by overstaying the bull market.”
International Energy Agency (IEA) (2025). Electricity Market Outlook 2025. Projects global data-centre power consumption reaching 5–6% of total global electricity use by 2030, roughly equal to Japan’s present demand.
Bloomberg Intelligence (2025). AI Infrastructure Capex Tracker. Estimates US $400 billion in global AI infrastructure investment in 2025.
Mark Zuckerberg, CEO of Meta Platforms — quoted in mlq.ai, September 2025. “If we end up misspending a couple of hundred billion dollars, I think that that is going to be very unfortunate, obviously. But what I’d say is I actually think the risk is higher on the other side.”
Larry Page, Co-founder of Google / Alphabet — cited in Barchart.com, October 2025. “I’m willing to go bankrupt rather than lose this race.”
Sundar Pichai, CEO of Alphabet – quoted at the World Economic Forum, January 2023. “AI is more profound than fire or electricity.”
Satya Nadella, CEO of Microsoft – remarks during Microsoft FY2025 earnings call, July 2025. “We are in the race to build the world’s most powerful AI infrastructure and we will not be outspent.”
Carlota Perez (2002). Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages. Edward Elgar Publishing. Introduces the four-phase model (installation, frenzy, turning point, deployment) used to describe the evolution of technological revolutions.
Capital Economics (November 2025). Global Economics Update – “How to think about AI investment.” Estimates that AI-related CapEx currently equals 0.6% of U.S. GDP (US $140 billion) and may lift global GDP growth by 0.3–0.5% per year through 2027, with potential long-term productivity gains of up to 1.5 percentage points annually.

Canada’s Budget Highlights 2025 - 2026

Wed, 05 Nov 2025 14:35:00 GMT

Canada’s Federal Government released its new budget for the year ahead providing key details on important support programs.

Our budget Infographic provides the key highlights:

Download as PDF

Télécharger en PDF

The Golden Dilemma: Valuation, De-dollarization, and What Comes Next

Mon, 03 Nov 2025 20:54:04 GMT

Executive summary

Gold’s surge above US$4,000 has reignited a familiar question: does this mark a new structural era or another cyclical overshoot?
The metal’s inflation-adjusted price now sits near historic extremes, a level that in past cycles has been followed by weaker real returns.
Structural forces, including financialization through ETFs, central bank diversification, and BRICS-led de-dollarization (the efforts by the BRICS nations, Brazil, Russia, India, China, South Africa and some other countries, to reduce their reliance on the U.S. dollar in international trade and finance are reinforcing short-term demand but not necessarily changing long-term valuation anchors.
For investors, gold remains a credible hedge within a diversified portfolio, but at these levels it increasingly resembles expensive insurance rather than a source of sustainable return.

A high-altitude view

A previous commentary examined how policy uncertainty, central bank accumulation and investor exuberance pushed gold to record nominal highs. Let’s take a look at why gold rose and whether such levels are sustainable.

On an inflation-adjusted basis, the real price of gold is now near all-time highs, comparable to the peaks of 1980, 2011 and 2020. In each of those periods, gold’s subsequent ten-year real returns were low or negative. Historically, high real gold prices have signalled diminished future purchasing-power protection, a pattern that Erb and Harvey first coined as the “golden dilemma.”

What is driving the ascent

Several medium-term forces continue to sustain demand. Over the past fifteen years, gold’s financialization through exchange-traded funds (ETFs), digital proxies and gold-backed stablecoins has changed the structure of ownership. ETFs have become a dominant vehicle for both institutional and retail investors. Shares and iShares Gold Trust, two of the largest funds, SPDR Gold Shares and iShares Gold Trust, has shown a strong correlation with real gold prices since their launch.

Recent research by Erb, Harvey, and Viskanta (2020) [i] finds that ETF ownership now explains almost 90% of the variation in the real price of gold since 2004, underscoring how financialization has amplified market moves. This dynamic has created what the authors call “massive passives”, large, price-insensitive investors whose flows can inflate real prices beyond fundamentals and potentially sustain periods of irrational exuberance.

In parallel, central bank and sovereign purchases have accelerated, particularly across emerging markets. China’s official holdings have risen by roughly 15% since 2022 [ii] as part of a broader effort to reduce exposure to the U.S. dollar. This process of de-dollarization, while gradual, has added a new source of price-insensitive demand even as traditional ETF inflows have moderated.

Interestingly, new data show [iii] that this once-stable relationship between ETF flows and gold prices, which held with more than 90 percent correlation through 2022, has broken down since 2023. The recent divergence suggests that newer structural forces, such as central-bank accumulation, de-dollarization and emerging regulatory shifts are now driving demand more than traditional investor flows.

Yet these tailwinds coexist with the same structural constraints that have historically limited gold’s upside. Global mine production remains steady near 3,300 tonnes annually, meaning any incremental demand must be cleared through higher prices. With physical supply largely inelastic, sentiment and policy shifts play an outsized role in near-term pricing.

The golden dilemma revisited

The concept of the “golden constant,” first articulated by Roy Jastram in 1978 and later expanded by Erb and Harvey, holds that gold’s purchasing power tends to revert to a long-run mean. In modern data, this is evident in the relationship between the real price of gold and subsequent real returns. When the real price is high, as it is today, future real returns tend to be low.

The current real price of gold, after adjusting for inflation, stands near record highs relative to its long-term purchasing-power average. Based on data from Erb and Harvey, gold is trading at roughly seven times its long-run real price, a level they describe as “very high by historical standards.” In 1982-dollar terms [iv] and using the current nominal price of gold at US$4030, this equates to roughly US $1,200 per ounce today, compared with an average nominal price of about US $375 in 1982. While the precise ratio depends on the time period used, the conclusion is consistent: gold is exceptionally expensive in real terms, and historically, such extremes have preceded low or negative real returns in the decade that follows.

Additional evidence from Erb, Harvey, and Viskanta (2020) [v] reinforces this conclusion. Following the real-price peaks of 1980 and 2011, gold’s nominal price declined 55% and 28%, while its real price fell 65% and 33% respectively. The authors note that today’s real price sits at a similarly elevated level, suggesting that gold once again represents an expensive inflation hedge with a low prospective real return.

Recent studies [vi] by Campbell Harvey and Claude Erb also show that the real price of gold behaves much like a valuation multiple in equities, where very high levels often precede subdued forward performance. The current environment therefore implies that while gold’s role as a diversifier remains valid, its prospective returns may be modest compared to prior cycles when real prices were lower.

This does not negate gold’s diversification benefits. Rather, it places them in context. Gold’s long-term correlation with global equities remains close to zero, but the metal’s volatility rivals that of the equity market itself. The historical record shows that gold can offer protection during severe drawdowns but may lag in stable or reflationary phases.

Insurance or illusion?

Gold’s reputation as an inflation hedge has always been more myth than mechanism. While it provided meaningful protection during the 1970s, its performance in subsequent inflationary periods has been uneven. Over shorter horizons, the mismatch between the low volatility of inflation (~2%) and the high volatility of gold prices (~15%) may make it an unreliable hedge.

Gold’s effectiveness as an equity hedge is also inconsistent. Our analysis shows that gold protects against equity declines roughly 21% of the time, provides no protection 16% of the time, rises alongside equities 30% of the time and falls when equities rise in about one-third of the observations. These results suggest that while gold can act as a crisis hedge, its relationship with equities is situational rather than systematic. It may protect during periods of market stress, but it can’t be relied upon to consistently offset equity risk.

Over the long run, gold’s average correlation with equities is close to zero. While that correlation has risen somewhat over the past 25 years, it remains low, less than 10% today. This weak relationship qualifies gold as one of several assets and strategies that can help cushion portfolios during market drawdowns, inflationary episodes and recessions. However, from my perspective, gold shouldn’t be the sole component of this protective sleeve. Diversified commodity portfolios, inflation-protected bonds and positive-convexity strategies such as long put options and trend-following approaches may offer complementary forms of downside protection.

Instead, gold’s appeal lies in its optionality, a form of insurance against policy error, geopolitical disruption or systemic loss of confidence. But, as with any insurance, the cost matters. At current real prices, gold’s insurance premium is steep. Its expected real return over the next decade is likely to be modest, if not negative, if historical relationships hold. Gold is best viewed as expensive insurance, valuable during periods of stress but costly over full cycles.

Positioning for investors

For multi-asset investors, the challenge is balancing gold’s protective qualities against its valuation risk. In my opinion, at these levels, strategic exposure should be modest and deliberate, sized to offset tail-risk scenarios rather than to generate return. Tactical flexibility remains essential. Gold can still play a role in a diversified portfolio alongside inflation-linked bonds, managed-futures strategies and other diversifiers that respond differently to shifts in real yields and policy uncertainty.

The recent outperformance of gold miners, up roughly 120% year-to-date [ vii], reinforces this caution. Their leveraged sensitivity to the gold price amplifies both upside and downside, and historically, such surges have tended to fade once spot prices plateau.

Concluding thoughts

The surge above US $4,000 has reawakened the timeless question of whether gold’s rise marks a structural revaluation or another cyclical peak. History suggests that this time is rarely different.

Financial innovation, de-dollarization and fiscal strain have undoubtedly altered the contours of demand, but they haven’t repealed the golden constant. High real prices have historically invited lower future returns.

A potential wild card lies in future regulatory treatment. If gold were to qualify as a Tier 1 high-quality liquid asset under Basel III, commercial banks could hold it to meet liquidity-coverage requirements. Erb and Harvey estimate [viii] that such a change could create a demand shock comparable to the one that followed the launch of gold ETFs in 2004, temporarily supporting prices even at elevated real valuations.

Gold’s role as a store of value endures, but at current levels, it functions less as a source of return and more as a symbol of uncertainty. Investors should treat it as a tool for resilience, not as a prediction of prosperity.

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management Ltd.

[ i] 'Massive Passives' and Déjà Vu by Claude B. Erb, Campbell R. Harvey, Tadas E. Viskanta :: SSRN

[ii] People’s Bank of China; IMF COFER data; World Gold Council Gold Demand Trends Q3 2025.

[iii] Understanding Gold by Claude B. Erb, Campbell R. Harvey :: SSRN

[iv] Campbell R. Harvey and Claude B. Erb define the real price of gold as the nominal gold price divided by the U.S. Consumer Price Index (CPI), normalized so that the CPI equals 1 in January 1982. The year 1982 serves as the base because it marks the beginning of the modern, market driven gold era, after the 1970s inflation shocks and following the stabilization of real interest rates under the Volcker Federal Reserve. Expressing prices in “1982 U.S. dollars” provides a consistent purchasing-power reference point for comparing gold’s valuation across time.

[v] Gold, the Golden Constant, COVID-19, 'Massive Passives' and Déjà Vu by Claude B. Erb, Campbell R. Harvey, Tadas E. Viskanta :: SSRN

[vi] Understanding Gold by Claude B. Erb, Campbell R. Harvey :: SSRN

[vii] Morningstar Direct

[viii] Understanding Gold by Claude B. Erb, Campbell R. Harvey :: SSRN

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of November 23, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

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Gold at US $4,000: What’s Driving It and Where Do We Go From Here?

Mon, 03 Nov 2025 20:17:24 GMT

Executive summary:

Gold has surged past US$4,000 per ounce, rising roughly 50% year-to-date. Driven initially by central banks and Chinese demand, this rise has more recently been renewed by investor inflows from Western markets.
The momentum reflects both fundamental and behavioural factors: falling real yields, fiscal anxiety and investor exuberance.
While prices may continue to grind higher in nominal terms, near-term risks of a pause or pullback have increased as parts of the rally detach from traditional macro drivers.
Over time, gold’s trajectory in real terms is more likely to resemble the prolonged 2008–2014 cycle than the explosive but short-lived rally of the late 1970s.

From central banks to investors: what’s behind the rally

Gold’s latest leg up has broadened and matured. Earlier this year, the rally was anchored in strong Chinese and central bank demand, but by late summer, Western investors took the lead. North American buyers accounted for roughly 60% of record monthly inflows into gold-backed ETFs in September, marking a clear shift toward renewed institutional participation.*

Central banks remain an enduring pillar of support. Net purchases continue to run well above pre-pandemic levels, and survey data suggests that reserve managers plan to keep diversifying away from the U.S. dollar in the years ahead. This reflects both rising concern about fiscal sustainability and a broader geopolitical reordering that has reshaped global reserve management since 2022.

The macro backdrop: lower real rates, higher uncertainty

Several forces continue to underpin gold’s appeal. Real interest rates are expected to fall as the Federal Reserve begins to ease policy while inflation remains near 3%. Historically, gold has had a negative relationship with real yields and the prospect of lower rates may be likely to keep the metal strong.

At the same time, fiscal and geopolitical risks remain elevated. Persistent U.S. deficits, recurring debt-ceiling disputes and renewed tariff tensions have reinforced investor demand for perceived safe-haven assets. Against this backdrop, gold’s role as a portfolio hedge, particularly within balanced or multi-asset strategies, has re-emerged, supported by both institutional and retail investors seeking diversification from policy and market risk.

When exuberance meets fundamentals

Not all of gold’s recent gains can be attributed to fundamentals. The 10% rise since mid-September occurred alongside a stable U.S. dollar and slightly higher real yields, indicating that sentiment, rather than data, has been driving the latest stage of the rally. In short, a fear of missing out has crept into the market.

The rally has also extended to gold equities, where major gold-mining indices have risen roughly 120% year-to-date, far outpacing gains in the underlying metal. This degree of outperformance highlights the leveraged sensitivity of miners to spot prices but also points to growing speculative participation. Historically, such sharp divergences between miners and bullion have tended to normalise once momentum fades.

That shift raises the risk of a short-term pullback if expectations around the pace of rate cuts are scaled back or if inflation moderates more quickly than expected. The Fed may be likely to cut more slowly than markets currently anticipate, which could temper gold’s near-term upside momentum.

China’s role: an uneven but enduring demand story

Another notable development has been the recent cooling of Chinese gold demand. The Shanghai gold price premium, a key gauge of domestic appetite, has turned negative, reaching a five-year low. This reflects stronger performance in Chinese equities, which has temporarily reduced the relative attractiveness of holding gold.

Still, the softness appears cyclical rather than structural. China’s long-term accumulation trend remains intact, supported by rising household wealth, currency diversification and the government’s strategic desire to hold less dollar-denominated assets. Historically, Chinese demand has tended to ebb during equity rallies but resumes once equity performance normalizes.

Positioning through the cycle

Looking ahead, gold’s current cycle may be likely to evolve more like the 2008–2014 rally, prolonged, but moderating, rather than the parabolic surge of the late 1970s. In this scenario, gold should remain well supported in nominal terms, even if real returns flatten out.

For diversified portfolios, gold continues to serve as a valuable stabilizer. The combination of slower global growth, policy divergence and ongoing fiscal uncertainty argues for maintaining some exposure, not as a speculative bet, but as part of a broader risk management framework.

Concluding thoughts

At US$4,000 per ounce, gold is testing the boundaries of valuation and psychology. The underlying drivers, central bank accumulation, fiscal anxiety and geopolitical tension, remain intact, but sentiment now plays a larger role.

Importantly, when viewed in real, inflation-adjusted terms, gold’s price now stands near its historical extremes. Periods of exceptionally high real prices have often been followed by lower real returns, a pattern that Erb and Harvey first described as the ‘golden dilemma’. The term refers to the tension between gold’s role as protection and the risk that investors overpay for it. Today’s elevated valuations, alongside strong ETF inflows and policy-motivated central bank buying, suggest that much of the recent performance may already be priced in.

While the long-term backdrop remains supportive, the near-term balance of risks calls for discipline over enthusiasm. Gold continues to serve as a form of portfolio insurance, valuable in times of policy and market stress but costly when confidence returns.

The Canadian equity market has benefited from this exposure, as gold miners have been among the market’s strongest performers in 2025, contributing positively to relative returns. From a total portfolio perspective, Canada Life Investment Management Ltd. has both direct and indirect exposure to gold through bullion futures and gold-mining equities. These exposures provide diversification and a modest inflation hedge.

Read a follow-up analysis exploring this valuation question in more depth: how high real prices, ETF behaviour, and ‘de-dollarization’ flows are reshaping gold’s long-term risk-return profile.

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment officer

Canada Life Investment Management Ltd.

* World Gold Council (2025). Gold Demand Trends Q3 2025.

Bloomberg Intelligence (2025). Commodities Update: Gold ETF Flows, October 2025.

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of November 3, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

Market Monitor: With Jyotsana Wadera, Putnam Investments

Wed, 29 Oct 2025 16:06:41 GMT

In the following four-minute video, Jyotsana Wadera, Senior Client Portfolio Manager with Putnam Investments, reflects on the evolving market land scape, highlighting several factors contributing to a positive outlook for U.S. equities.

Despite a volatile start to the quarter, strong corporate earnings—particularly among tech companies—have exceeded expectations, reinforcing investor confidence. The U.S. consumer remains resilient, supported by healthy balance sheets and sustained spending power.

A notable shift is the broadening of market performance beyond the usual high-flying names, offering encouraging signs for active managers and diversified portfolios. Investment momentum, especially in technology and AI, continues to accelerate. Jyotsana emphasizes AI as a transformative force, likening its impact to the early days of the internet. While volatility is expected, long-term growth potential remains compelling.

Moderating Federal Reserve policy is also seen as constructive for equities, influencing portfolio positioning and risk management. She stresses the importance of identifying enduring investment themes—such as personalized medicine and AI implementation across sectors—rather than chasing short-term fads.

Consumer strength is still evident, with banks reporting stable credit behavior and balance sheets. However, the potential impact of tariffs and rising prices is being closely monitored for signs of weakening demand. Overall, the tone remains cautiously optimistic, with a focus on long-term opportunities, disciplined portfolio construction, and vigilance around macroeconomic risks.

Jyotsana’s balanced perspective underscores the importance of strategic positioning in a dynamic market environment, encouraging investors to stay focused on fundamentals and emerging growth drivers.

View our video to learn more:

The views expressed in this video are those of Putnam Investments as at the September 17, 2025 and are subject to change without notice.

This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Prospective investors should review the offering documents relating to any investment carefully before making an investment decision and should ask their financial security advisor for advice based on their specific circumstances.

This video may contain forward-looking information which reflect our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of September 17, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Canada Life Mutual Funds are managed by Canada Life Investment Management Ltd. The funds are distributed by Quadrus Investment Services Ltd., IPC Investment Corporation, and IPC Securities Corporation, and may also be available through other authorized dealers in Canada.

Publication date: October 30, 2025.

Market Monitor: With Jack Manley, J.P. Morgan Asset Management

Wed, 29 Oct 2025 15:47:21 GMT

In this three-minute video, Jack Manley, Executive Director and Global Market Strategist with J.P. Morgan Asset Management, expresses cautious optimism about the U.S. economy, emphasizing that significant upside potential remains underappreciated in current sentiment.

Despite ongoing macroeconomic uncertainty—driven by shifting policy signals from Washington, fluctuating interest rate expectations, and volatility in equity and bond markets—there are several encouraging indicators.

Stock prices in the U.S. are at all-time highs, contributing to a wealth effect that supports consumer spending, a key driver of economic growth. Jack highlights that while downside risks dominate headlines, many positive developments are unfolding, including increased clarity on trade policy. The existence of trade agreements, regardless of quality, provides a framework for planning and stability.

Fiscal stimulus, including tax cuts and refunds from recent legislation, is expected to boost consumer activity in the coming quarters. Additionally, the U.S. consumer has shown resilience to higher interest rates, largely due to the prevalence of long-term fixed-rate mortgages, which have insulated households from rising borrowing costs.

This combination of strong asset values, stable housing markets, and wage growth paints a favourable picture for long-term investors. Jack concludes that while risks remain, the overall environment supports a cautiously optimistic outlook—particularly for diversified investors focused on fundamentals and long-term growth.

View our video to learn more:

The views expressed in this commentary are those of J.P. Morgan Asset Management as at September 17, 2025 and are subject to change without notice.

This video may contain forward-looking information which reflect our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of September 17, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

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Publication date: October 30, 2025

Market Monitor: With Leoni MacCann, Irish Life Investment Managers

Wed, 29 Oct 2025 15:10:46 GMT

In the following two-minute video, Leonie MacCaan, Head of Client Investment Solutions at Irish Life Investment Managers shares a cautiously optimistic view of the U.S. economy, highlighting resilience in both consumer and corporate sectors.

Despite earlier concerns, tariff uncertainty appears to be easing, with outcomes better than initially feared. Strong Q2 earnings have exceeded forecasts by approximately 8%, and many companies have revised their earnings outlook upward—an uncommon trend for this time of year.

Leoni notes that inflation is rising modestly, largely driven by tariffs, but remains controlled. The Federal Reserve and markets seem willing to treat this as a temporary effect. While U.S. growth forecasts have been revised downward from 2.3% to 1.6%, the economy continues to grow, albeit slightly below trend.

She emphasizes several risks investors should monitor: the long-term impact of trade policy, the potential for stagflation, and elevated equity valuations. Additionally, the recovery in U.S. markets has been narrow, concentrated in a limited number of sectors or companies.

Despite these risks, the overall economic backdrop remains robust. Leonie supports an overweight position in equities but advises caution, noting that not all of the risk budget is currently being deployed. This balanced approach reflects confidence in market fundamentals while acknowledging the importance of risk management in an uncertain environment.

Leonie encourages investors to remain vigilant, diversify exposure, and focus on companies with strong earnings potential and resilience to macroeconomic shifts.

View our video to learn more:

The views expressed in this commentary are those of Irish Life Investment Managers as at September 17, 2025 and are subject to change without notice.

This video may contain forward-looking information which reflect our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of September 17, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Publication date: October 30, 2025

Market Monitor: With David Ragan, Mawer Investment Management

Wed, 29 Oct 2025 14:23:48 GMT

In this three-minute video, David Ragan, Portfolio Manager with Mawer Investment Management provides an overview of current investment opportunities in a shifting economic landscape.

David discusses how recent and anticipated interest rate cuts are creating favourable conditions for investors by lowering the cost of equity and debt, effectively acting as a global tax reduction for businesses. These macroeconomic changes are encouraging investment and growth across various sectors.

A key theme discussed is the strategic approach to artificial intelligence (AI) investments. Rather than betting on which AI company will dominate, David advocates for investing in foundational infrastructure—such as chipmakers and data centre providers—that support the entire AI ecosystem.

The discussion also touches on consumer strength, industrial growth, and the potential normalization of tariffs, which could boost confidence and investment in sectors like commercial construction and pipelines. David emphasizes a bottom-up investment strategy, focusing on individual companies with strong valuations, competitive advantages, and attractive risk-reward profiles.

Overall, David provides a cautiously optimistic outlook, grounded in strategic positioning and adaptability to global economic shifts. David encourages investors to look beyond market trends and focus on companies poised to thrive regardless of broader uncertainties.

Watch our video to learn more:

The views expressed in this video are those of Mawer Investment Management Ltd. as at September 17, 2025 and are subject to change without notice.

This video is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Prospective investors should review the offering documents relating to any investment carefully before making an investment decision and should ask their financial security advisor for advice based on their specific circumstances.

This video may contain forward-looking information which reflect our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of September 17, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Counsel Portfolios are managed by Canada Life Investment Management Ltd. Counsel Portfolios are distributed by Quadrus Investment Services Ltd., IPC Investment Corporation, and IPC Securities Corporation, and may also be available through other authorized dealers in Canada.

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Publication date: October 30, 2025

Positioning for Resilience: A Global Market Perspective

Wed, 22 Oct 2025 13:57:27 GMT

In this five-minute video, Paul Punzo, VP of Portfolio Strategy at IPC Private Wealth, provides his year-to-date market update and outlook across Canadian, U.S., and international markets.

Paul notes that Canadian markets have performed strongly, with the S&P/TSX Composite Index up approximately 17%, led by materials, consumer discretionary, and financials. Rate cuts by the Bank of Canada and easing trade tensions have supported the economy, though growth is expected to remain below trend due to trade uncertainty and slowing household income.

In the U.S., the S&P 500 has gained approximately 10% (USD), rebounding about 16% from its April low. Performance has been driven by mega-cap tech and AI-related stocks, while small caps have lagged. The Federal Reserve’s rate cuts aim to balance inflation control with labour market support. Despite elevated valuations, especially in tech, corporate earnings have been resilient.

Internationally, markets have generally outpaced the U.S. year-to-date, though the U.S. has led since the April bottom. Europe faces sluggish growth and political uncertainty, while Japan shows strong momentum despite export challenges. Diverging central bank policies and geopolitical risks are key factors shaping global sentiment.

Paul notes that IPC Private Wealth portfolio positioning remains diversified, with an overweight to U.S. equities and exposure across styles and geographies. Fixed income allocations emphasize high-quality assets amid ongoing uncertainty.

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IPC Private Wealth is a division of IPC Securities Corporation. IPC Securities Corporation is a member of the Canadian Investor Protection Fund.

Resilience in Focus: Navigating Rate Cuts and Market Highs

Wed, 15 Oct 2025 13:57:16 GMT

In the following 4- minute video, Blair Setford, Canada Life Investment Management Ltd.’s AVP of Product Management, observes that markets rallied in the third quarter, with strong risk appetite driving North American and global equities to record highs.

Central banks, including the Bank of Canada and the U.S. Federal Reserve, resumed interest rate cuts, which bolstered investor confidence and are broadly viewed as a stabilizing measure rather than a signal of economic distress.

In Canada, the S&P/TSX posted solid gains, briefly surpassing the 30,000 mark, supported by strength in materials, gold, and financials. Canadian equities are on track to outperform U.S. counterparts for the first time in a positive year for both markets since 2016. In the U.S., the S&P 500 reached new highs, fueled by the Fed’s rate cuts and optimism around artificial intelligence, despite late-quarter volatility and ongoing concerns about inflation and employment.

Fixed income markets reflected easing recession fears, with corporate credit spreads at their lowest levels since the late 1990s. Globally, markets appear to be in a favorable position—experiencing steady growth alongside accommodative monetary policy.

Looking ahead, Blair thinks that the key question is whether rate cuts serve as a safety net or a rescue. Chief Investment Officer Corrado Tiralongo believes they will support further growth without signalling imminent risk. In this environment, diversification and resilience remain essential.

Blair suggests that investors stay invested, follow a structured strategy, and consult their financial advisor if their situation has changed or if they have concerns about portfolio resilience.

Watch our video to learn more:

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Balancing Resilience and Fragility

Wed, 08 Oct 2025 14:00:44 GMT

The third quarter of 2025 reinforced a central tension in today’s markets: resilience in the United States in contrast to weakness elsewhere.

While U.S. growth continues to surprise on the upside, Canada, Europe, and the UK remain close to stagnation. At the same time, central banks have begun to ease cautiously, inflation pressures are proving uneven and valuations in equity markets are increasingly demanding. For investors, this is a period in which staying diversified and resilient is more important than attempting to predict each short-term twist.

Global economy: resilience meets fragility

The U.S. economy has delivered another quarter of robust performance. GDP growth is tracking close to 3% annualized [1] , supported by strong consumption and business investment. Productivity growth is particularly striking, estimated at 1.7% [2] and higher by alternative measures, as artificial intelligence (AI) investment begins to show tangible benefits. This productivity strength is helping offset weaker payroll growth and revisions that reduced last year’s job gains.

Canada’s picture is less encouraging. The economy contracted in the second quarter and is barely positive in the third. Rising unemployment, combined with trade headwinds, leaves Canada close to recessionary territory. Europe and the UK face similar challenges, growing at only a fraction of the U.S. pace. These divergences highlight the unusual character of the current cycle: while the U.S. powers ahead, its peers struggle to regain momentum. For investors, the implication is that opportunity remains concentrated, but global fragility can’t be ignored.

Central banks: easing with caution

Policy has shifted from restraint to cautious easing. The Federal Reserve delivered a September rate cut, with Chair Powell emphasising “risk management” rather than any immediate deterioration in economic conditions. With core personal consumptions expenditure (PCE) inflation still running at 2.9% [3] and unemployment edging only gradually higher, the Fed has scope for modest easing, not an aggressive cycle. We expect about 75 basis points of cuts spread into 2026, fewer than the market currently prices.

The Bank of Canada also cut rates by 25 basis points, a move that was anticipated, given soft domestic data. Although markets are pricing in additional rate cuts, our base case is that the Bank of Canada is to deliver two cuts in this cycle, with the possibility of more only if unemployment rises faster than expected. Meanwhile, the European Central Bank and the Bank of England have opted to hold rates steady, constrained by persistent services inflation. Across economies, the tone is consistent: central banks are easing as insurance or normalization, not as emergency rescue. For markets, that distinction is crucial. Across economies, the tone is consistent: central banks are easing as insurance or normalization, not as emergency rescue. For markets, that distinction is crucial.

Inflation: muted goods, sticky services

A key concern in 2025 has been the effect of tariffs on consumer prices. So far, pass-through has been modest. Core goods inflation remains contained, while the larger services component is proving sticky. In the U.S., core inflation remains close to 3% [4] , suggesting only a gradual path back towards the target. In Canada and Europe, softer growth has moderated inflation pressures, but policymakers remain alert to risks of persistence in wages and services costs.

This uneven mix of muted goods inflation and stickier services reinforces the cautious stance from central banks. Inflation is not derailing growth, but neither is it fully vanquished.

Equities: optimism alongside red flags

Equity markets continue to reflect this balance between resilience and risk. In the U.S., earnings growth and AI-related investment have supported upgrades to the outlook. We now forecast the S&P 500 to reach 6,750 by the end of 2025 and 7,250 in 2026. Forward earnings per share are expected to rise to $290 in 2025 and $300 in 2026, leaving valuations at forward multiples of 23 to 24. These are below the dot-com peak of 25 but well above long-run averages near 17.

At the same time, warning signs are accumulating. Market concentration remains extreme, with the top ten firms accounting for nearly 40% of index weight. Investor sentiment surveys are approaching thresholds that in past cycles preceded bubble conditions. U.S. defined contribution pension plans and households now hold a record share of their assets in equities, the highest in at least 75 years [5] . Historically, such peaks have often been followed by weaker long-term returns, even if markets continue to rise in the short run.

Outside the U.S., the picture is more muted. Canadian equities have outpaced the S&P 500 this year, helped by strength in financials and materials, but the domestic economic outlook is weak. Emerging markets remain constrained by tariff headwinds and fragile financial conditions. The net result is that equity optimism rests disproportionately on the U.S., raising the importance of diversification.

Commodities: gold shines, oil softens

Commodities tell a story of divergence. Gold has surged above $3,500 per ounce, supported by expectations of U.S. rate cuts, fiscal concerns and strong central bank demand. Global official gold reserves are now close in value to U.S. Treasury holdings, underscoring gold’s re-emergence as a core reserve asset. The drivers of central bank demand suggest that gold strength will remain a structural theme.

Oil faces the opposite backdrop. OPEC+ has prioritised market share, raising supply even as demand softens. We expect prices to fall toward $60 in 2025 and $50 in 2026. The contrast between gold and oil reflects both economic fundamentals and shifting investor behaviour.

Fiscal backdrop: political constraints

Government deficits remain elevated, particularly in the U.S., where the shortfall is projected at 6% of GDP [6] , despite $30 billion per month in tariff revenue [7] . Europe faces its own challenges, with political instability in France already disrupting fiscal repair efforts. The constraint is less economic than political. Markets remain willing to fund deficits, but the absence of credible consolidation plans adds to long-term risk.

Portfolio positioning: resilience over precision

For investors, the challenge is to participate in U.S. resilience while managing the risks of stretched valuations, high concentration and uneven global conditions.

Our approach emphasises resilience over precision. Core U.S. equity exposure remains important, but we balance this with global diversification and multi-factor strategies that reduce dependence on narrow leadership. Within fixed income, we view alternatives such as private credit and mortgages as valuable sources of income and duration management, particularly in a higher-for-longer environment. Liquidity and flexibility remain central, allowing portfolios to absorb sudden shocks if risks around AI investment, funding markets or fiscal policy materialize.

Above all, the lesson of this quarter is that risks often build quietly and break suddenly. By maintaining balanced exposures, holding adequate liquidity and preparing for a wider distribution of outcomes, portfolios can remain positioned for opportunity while protecting against fragility.

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

[1] Bureau of Economic Analysis - U.S. GDP releases

[2] Bureau of Labor Statistics (BLS) – Productivity and Costs reports

[3] FRED - Core PCE Price Index

[4] FRED - Core PCE Price Index

[5] Federal Reserve Flow of Funds - Financial Accounts of the U.S. (Z.1) & Investment Company Institute - Retirement market statistics

[6] Congressional Budget Office (CBO) - Monthly Budget Review: August 2025

[7] U.S. Treasury – Monthly Treasury Statement

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of October 8, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

5 Ways to Keep Clients on Board, During and After the Sale of Your Advisory Business

Thu, 25 Sep 2025 19:04:48 GMT

The way you transition your business to a successor is important to your clients. Here’s what to consider and how to do it right.

Change can be uncomfortable, especially for your clients who have trusted you with their money and lives for years. But as much as you would like to be there for them forever, you should be allowed to one day enjoy retirement, too. When you do decide to exit, you will, of course, want to make sure the people you’ve helped will get as much care and attention from their next advisor.

Ensuring your clients are taken care of after a sale doesn’t just happen. It takes a lot of preparation before handing your business off to someone else. Here are five strategies that will help to keep your clients confidently on board before and after the sale.

#1 Codify the customer experience:

Formalizing the procedures that keep your clients happy not only makes it easier for your successor to deliver the same lev el of service and experience they’ve come to expect, but it can also increase the value of your business.

That means detailing everything – from how often you review portfolios to who calls clients when markets get bumpy.

By documenting your processes, you’ll create continuity for your clients and lay down a foundation that your successor can build on.

“You’re not replaceable, but what can be replaced is a consistent, world-class wealth management experience. Having the right policies and processes in place helps make that happen.”

- John Novachis, EVP, Advisor Growth & Succession, IPC

Tip: IPC’s Advisor Succession Planning Survey found that 63% of advisors prefer using a standard succession template over a fully customized plan, underscoring the value of proven, repeatable approaches.

#2 Start the conversation long before the sale

One of the more difficult aspects of selling an advisory business is letting go of the emotional connection you’ve forged with your clients. In fact, those relationships may prevent advisors from exiting. The IPC survey found that more than a third of Boomer advisors delay succession planning because “they’re sad about losing connections with clients.” Another 35% are afraid of talking about succession because they don’t want to raise concerns.

Of course, people understand their advisor may one day want to retire – they just want to know the plan. The survey found that 91% of Canadians who work with a financial professional say it’s important for their advisor to have a clear succession plan in place as they approach retirement. That’s why advisors must be open with their clients. “If you’re an advisor and you’re not having that kind of conversation with a client, that’s not a very loyal relationship,” says Novachis.

Tip: Ideally, succession conversations should begin a year or two before you sell your business to give people time to digest the news at a comfortable pace. One way to do this is broaching the subject after regular portfolio reviews. By normalizing the subject long before you sell, you can frame succession as a thoughtful, client-first process rather than a sudden handoff. “You have to be clear with your clients and give them comfort that they’re going to be in good hands when you’re gone,” Novachis notes.

#3 Keep the people your clients trust

The survey also found that most advisors consider client and staff continuity more important than maximizing their pay out from a potenti al sale . That’s not surprising when you consider it’s your staff who make clients feel comfortable and cared for when they book an appointment or arrive at your office for financial advice. Remove the people who make your business tick, and you risk giving your customers a reason to move on.

Tip: “We talk a lot about client continuity,” Novachis says. “Well, the way you keep clients is by keeping your staff in place. Any serious proposal should include details on how they intend to deal with those people. Do they intend to fire them or keep them on? That needs to be clear.”

#4 Stage a handoff and stay visible

Nearly half of advisors who say they have a succession plan in place expect to stay involved after selling some or all of their book . You might want to do the same – your presence will serve as the bridge that carries client trust from one advisor to the next.

“You want the selling advisor and the successor advisor to come together and have meaningful conversations with clients,” Novachis says.

“Eventually, the phone calls and emails will start to move away from the departing advisor and toward their successor. You’ll know the transition is complete when they stop calling you and start calling them.”

Tip: Start the transition process by introducing your successor as part of the team, and act as a guide while the relationship forms. Keep the spotlight where it belongs – on discovery meetings and planned updates that let the new advisor earn credibility – and stay present just long enough for clients to shift their day-to-day contact to the new advisor on their own.

#5 Let the new advisor earn trust

Trust isn’t given; it’s built up slowly over time. A successor shouldn’t come in and start changing your clients’ investments right away.

“If I were selling my business and my successor started doing that, it would make me look bad,” says Novachis. “They need to get to know each other first and build that relationship. Really good advisors talk less and listen more.”

Tip: Find a buyer who will try to understand your clients before tinkering with their portfolios. Clarify their approach to working with your clients, and be clear about your own expectations for every step of the transition.

Succession isn’t just about continuity – it’s about preserving the legacy you’ve built and ensuring that your clients keep thriving.

Download our Succession Planning Guidebook or reach out to learn more.

* All statistics from the 2025 IPC Advisor Succession Planning Survey. Survey methodology: 361 English- and French-speaking advisors from across Canada were sent an email invitation to complete an online survey. Each email contained a link to the survey, which was hosted on a secure website managed by Environics. *Conducted for IPC by Environics Research Group and Pollara Strategic Insights, 2025.

Succession Planning for Every Stage of Your Career

Wed, 17 Sep 2025 19:28:39 GMT

New research reveals just one in five advisors has an exit strategy. Here's what you should do in your early, middle and late career to maximize the value of your business.

Ask any financial advisor if succession planning matters, and you’ll get a resounding “yes.” Ask if they have their own plan in place, and the room will likely go quiet.

Nearly all advisors agree on the importance of an exit strategy, but just one in five has taken their own advice, according to a newly released advisor survey on succession readiness. In the survey, IPC found a stark generational divide among advisors who don’t yet have a plan: Millennials believe they have decades to decide, Gen X is consumed by other priorities and Boomers are reluctant to start difficult conversations with clients.

No matter where you are in your career journey, proactive succession planning can help to reinforce client trust, maximize the value of your business and secure the legacy you’ve worked hard to build.

Early career: Lay your groundwork

According to the IPC survey, 70% of Millennials say they're delaying succession planning because they feel "too young to start". While Copple says he understands the sentiment, he calls it a risky gamble. Life and health can change in an instant, and without a plan, even a thriving business can be thrown into turmoil.

That’s why every advisor should have, at the very least, an emergency transition plan or a business continuity plan. “It protects against the unforeseen, such as the sudden passing of an advisor or a disability that prevents them from working for a period of time,” Copple says. “It’s important to identify another advisor or an entity that can help in those situations.”

For younger advisors, those early years are a chance to refine the business they’re building to ensure it’s growing in the right direction. That can mean solidifying your investment philosophy, deepening relationships and aligning operations with long-term goals. “Early succession planning can help you focus on the right clients, identify your revenue drivers and define your exit plan,” Copple says. “It makes your business more valuable.”

Mid-career: Put the pieces in place for your business

For advisors in their peak earning years, the biggest obstacle to succession planning is sheer lack of time. The survey found that 32% of Gen X respondents listed “other priorities ” as the main reason they haven’t started planning. This reflects the pressures of this life stage, balancing the competing pressures of serving clients while keeping up with the demands of a thriving practice.

“The challenge for this generation is that it can feel like you’re being pulled in 20 different directions,” Copple says. “But now is the time to optimize the business and make it as tidy as possible.”

A good place to start is strengthening your internal processes. The goal is to ensure your business can function without you, which will make it more attractive to a potential buyer. You may also want to set a clear timeline for your exit, recognizing that a buyout can take five to seven years from start to finish. “If an advisor is just starting that process now, the time can go by fairly quickly,” Copple says. “They should be thinking about who they want to take over their business or be mentoring a junior advisor to take over for them.”

Learn more about finding the right buyer for your business .

Late career: Lock in your legacy

“The earlier an advisor starts having these conversations, the more control they’ll have over the outcomes they want for their clients and for themselves"

says Jon Copple, Regional Director, Advisor Growth and Succession for IPC.

Here’s what you need to know about succession at every stage of your career:

According to the survey, the top reasons Boomers delay succession planning are fear of unsettling clients or staff (35%), not knowing how to value their practice (33%) and lack of expertise (20%). But at this career stage, Copple says, the time for hesitation is over, and advisors must have a formalized, written plan.

He’s seen first-hand the cost of avoiding the inevitable. Not long ago, one late-career advisor he had known for years died suddenly without a succession plan. With no formal arrangements in place, his wife was left trying to sell the business, but its value dropped sharply because the advisor was no longer there to help transition clients. “It was, effectively, a fire sale,” Copple says. “That’s the last thing you want.”

When you’re this close to retirement , your succession planning demands urgency and precision. Now is the time to lock in your chosen exit path — whether it’s grooming a successor or selling externally — and assess the value of your book of business. Equally important is having frank conversations with clients to maintain stability and with staff to give them a voice in protecting the legacy they’ve helped build.

“The hesitation to discuss succession with staff and clients is a real thing, but it needs to be addressed,” Copple says. “If the advisor is thinking about it, so are their clients.”

There’s no time like the present.

Whether you’re new to the business or nearing your final chapter, one of the biggest barriers to succession is not knowing where to start. More than half of advisors without a plan say they would likely begin the process if they had access to the right tools and guidance.

Another significant hurdle: managing emotions around what comes next. The idea of retirement can be uncomfortable for many. According to the IPC survey, advisors aged 50-64 who haven’t yet completed a plan were more likely to mention losing a sense of identity and purpose as reasons for their hesitation. If you fall into this category, here's some food for thought on how to understand – and manage– these concerns.

The advantage of working with a strategic buyer , such as IPC, is that it has the resources to help you understand the value of your business and how you can maximize it when it’s time to sell. IPC offers a one-hour strategic business review that can provide a realistic assessment of your business’s value, potential successors and how to start aligning operations for an eventual handoff.

“It’s never too late to start the planning process,” Copple says. “We’re here to help.”

Contact us to speak with a succession expert and get the clarity you need.

*IPC Advisor Succession Planning Survey methodology: 361 English- and French-speaking advisors from across Canada were sent an email invitation to complete an online survey. Each email contained a link to the survey, which was hosted on a secure website managed by Environics. *Conducted for IPC by Environics Research Group and Pollara Strategic Insights, 2025

Create Dependable Cash Flow

Thu, 14 Aug 2025 19:42:35 GMT

When it comes time to turn a lifetime of diligent savings into cash flow to help fund your retirement years, you’ll want to know your money is managed conservatively without giving up on the prospect of long-term growth that offsets inflation. A cash wedge strategy can help you achieve these goals.

With a cash wedge strategy, you can:

Withdraw cash flow from a conservative investment to help maintain your current lifestyle.
Continue to grow your retirement nest egg to provide ongoing growth potential.
Maintain your peace of mind knowing you can access your money when you need it.

Here's how it works:

Allocate 1-3 year’s worth of cash flow to a “cash wedge” - typically a low risk investment such as the Counsel High Interest Savings Fund. The remainder of your savings is invested in a balanced solution like the Counsel Global Income & Growth Portfolio to help provide cash flow and long term growth.
Next, your advisor sets up a systematic withdrawal plan that can provide you with regular monthly payments from the cash wedge.
As you withdraw regular monthly payments, the cash wedge may replenish with any potential distributions from the Counsel Global Income & Growth Portfolio to help you keep 1-3 years worth of cash flow in a conservative investment. (1)

Advantages of a Cash Wedge Strategy:

Sets aside 1-3 years of cash flow in a solution that is not subject to market volatility (e.g. High Interest Savings Fund).
Once set up, it runs automatically to provide steady cash flow to you.

Two Solutions Working Together to Help Provide Cash Flow

Counsel High-Interest Savings Fund for Your Cash Wedge

The Counsel High Interest Savings Fund invests primarily in high interest deposit accounts, which provides it with a competitive interest rate on cash balances. (2) It is a low-risk investment solution designed to help meet your short term cash flow requirements and offers a compelling alternative to a traditional savings account or Guaranteed Investment Certificates (GICs). (3)

With the flexibility to withdraw your money at any time, the Counsel High Interest Savings Fund is an ideal investment to help deliver regular monthly cash flow from a cash-wedge strategy.

Counsel Global Income & Growth Portfolio for your Global Equity Balanced Solution

With changes in interest rates leading to volatility in the stock markets, you need a well-diversified solution that can provide cash flow from multiple sources along with total return potential. For the core of your cash wedge strategy, consider Counsel Global Income & Growth Portfolio to provide you with those diversified sources of return and the potential for long-term growth:

A blend of equities, fixed income, and alternative assets to help provide diversified return sources through price growth and income generation.
Multiple sources of cash flow that include Canadian and global dividends, higher-yielding fixed income, global real estate, and liquid alternatives.
Concentrated equity strategies for growth to to help your long-term capital continue to grow to offset inflation.

The asset allocation weights depicted above represent the target allocations for the fund and may differ from the current allocation. The target allocation may comprise a combination of investments in equities, fixed income securities, securities that are designed to track a market index or other securities. Canada Life Investment Management Ltd., the portfolio manager of the fund, has the discretion to change the allocation without prior notice.1 Firms listed are sub-advisor or manager of the underlying funds. For further information on the underlying funds, please see the investment objectives and strategies in their simplified prospectus or fund facts.

Minimize Your Retirement Income Risk

Implementing a cash wedge strategy by combining a long-term solution, such as the Counsel Global Income & Growth Portfolio, with the Counsel High Interest Savings Fund, can help you minimize the effects of short-term market volatility helping to ensure your longer-term funds can still grow for the future.

Call your advisor today to learn how implementing a cash wedge strategy can help you achieve your long-term investment goals.

(1) The payment of distributions is not guaranteed and may fluctuate. The payment of distributions should not be confused with a fund’s performance, rate of return or yield. If distributions paid by the fund are greater than the performance of the fund, your original investment will shrink. Distributions paid as a result of capital gains realized by a fund, and income and dividends earned by a fund, are taxable in your hands in the year they are paid. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, you will have to pay capital gains tax on the amount below zero.

(2) Interest is calculated daily on the total closing balance in the Fund’s investments on each day and paid monthly. The effective interest rate paid to unitholders may vary from the gross rate provided to the Fund depending on multiple factors including the fees of the series purchased, the settlement date of the purchase and the growth rate of the fund.

(3) Unlike mutual funds, the returns and principal of GICs are guaranteed.

The views expressed in this commentary are those of Canada Life Investment Management as at the date of publication and are subject to change without notice. Prospective investors should review the offering documents relating to any investment carefully before making an investment decision and should ask their advisor for advice based on their specific circumstances. The content of this material (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it.

Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Past performance may not be repeated.

Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations.

How to Find Purpose in Retirement

Wed, 13 Aug 2025 15:59:13 GMT

How financial advisors can smoothly navigate the emotional complexity of stepping away from a life's work

As a financial advisor, helping people plan for their futures is second nature. Calculating nest eggs, navigating the financial complexities of retirement, helping clients transition into their golden years – it’s all part of the job. When it comes to your own post-career transition, though, you may be worrying about what comes next.

According to our recent Advisor Succession Survey, 26% of advisors who don’t have a succession plan cite discomfort about the end of their career as a reason for their hesitation.* Without the daily structure and status that work provides, you’ll need intentional effort – and planning – to find a new purpose in life and reimagine who you are beyond your professional role. "It really comes down to identity" says Brian Lambier, a certified retirement coach with Career Vitality Services in Calgary.

“For many, work has been a central piece of their lives. When you’re so focused on one area, you tend to neglect developing the other parts of yourself.”

Who are you when the work stops?

Believe it or not, your entrepreneurial drive – the same force that propelled you to build your financial advisory business – might actually work against you when you’re finally ready to step down. You’re likely wired to solve complex problems, control outcomes and manage expectations. Retirement? It’s messier than that. It asks you to embrace the unknown, take some personal risks and find ways to measure success beyond building a business.

It’s exciting and scary. "You have this wonderful opportunity to pain the picture as you're doing it, and that's the way it should be." says Lambier.

“You don’t have to go into retirement fully briefed on what you’re going to do all the time. That leaves out the opportunity to grow.”

The challenge of separating yourself from your work identity becomes even more pronounced when your career has been so deeply intertwined with your sense of self. Retirement coaches see this struggle repeatedly.

“The first question I ask entrepreneurs when they come to talk to me about retirement is, ‘Who are you?’” says Roblynn Hunnisett, a certified retirement coach with My Life Counselling in Guelph. “Everyone, 100 per cent of the time, will automatically tell me what they do [for work] – and that’s not the question.”

When people dig deeper, something shifts. Try jotting down a list of what matters to you beyond your business. Move from describing your professional function to describing your personal roles and traits – about being loyal and compassionate, parents or grandparents, athletes, artists or someone longing to give back.

“It’s being able to stop identifying yourself by what you did, and start identifying yourself by who you really are,” says Lambier. “That’s a big difference.”

Planning for social connection

Concerns about social isolation may also pop up when retirement is on the horizon. These can be especially acute for business owners who have worked independently and built social connections and status primarily through professional contacts.

“People are often really worried that they’re not going to connect with anybody once they retire, and that’s a scary thing,” Lambier notes.

These feelings are normal for everyone approaching retirement, but as an independent advisor, you also face a unique emotional hurdle: the relationships you’ve cultivated with your clients. These connections often extend beyond mere business transactions, creating a web of personal investment that can make stepping away feel like abandonment.

“It can come with a lot of guilt and shame,” says Hunnisett of the transition process. “This is a relationship. It takes a lot for someone to trust you with their money.”

A well-planned succession allows you to effectively communicate your transition to your clients, introduce them to their new advisor and help them adjust to the change over time. A strong plan will keep you in control of the process, allowing your clients to feel more secure and reducing your guilt about stepping back.

Redesigning your day-to-day

Once you’ve worked through the emotional transition, you’ll face a practical challenge: reimagining your daily routine. Without the familiarity of your work-life routine, the prospect of filling your time might feel daunting. The temptation might be to replace work hours with an equally rigid schedule, but retirement offers the opportunity for exploration.

That doesn’t mean gentle structure won’t be helpful – regular exercise or volunteer commitments can give your days some shape without overwhelming rigidity. But Lambier recommends taking the first few months to allow new activities and friends to emerge organically as you begin your internal transition.

Use these early days to experiment with things you’ve always wanted to try. If you define yourself as artistic, try a life drawing class at your local art gallery. Miss analytical challenges? Non-profit boards often need financial oversight expertise.

The most fulfilling retirement activities often serve multiple purposes simultaneously: social connection, personal fulfilment and the opportunity to use your hard-earned life experience. It’s not about replicating your old job – it’s about channelling what you’ve learned over the years into pursuits that energize you.

Perhaps the biggest mindset shift involves getting comfortable with uncertainty. This may contradict everything your professional experience has taught you, but it opens possibilities you may never have previously considered.

“It’s about finding that awe,” Lambier says. Think of kids playing in a sandbox or with a couple of stones, and they’re happy. They’re looking at something for the first time and seeing it through new eyes. That’s what retirement is about – seeing life through new eyes.” Hunnisett frames it as the ultimate question:

“How are you going to live a joy-filled life, and what does that look like to you? You’re never too old to dream.”

Listen to stories from other advisors (like you) who have successfully navigated their succession: Ron Harvey, Retired and former IPC Advisor , Diane Groves, Retired and former IPC Advisor , Jason Simpson and Stephanie Power on Transitioning in Succession , Ken and Ryan White on Succession within the family , Succession Planning with Bill Black.

How To: Value Your Book of Business

Tue, 29 Jul 2025 19:33:33 GMT

Whether you're just starting to think about your succession plan or in the midst of it, here's what you need to know about getting book value:

For many financial advisors, their book of business isn’t just a collection of client accounts—it’s the culmination of years of trust, service, and strategic growth. It’s also one of the most valuable assets they own.

Yet, when it comes time to transition or sell, many advisors find themselves unprepared to answer a critical question: What is my business really worth?

Whether you’re thinking about retirement, planning a transition, or just want to future-proof your practice, understanding the value of your business is essential. But valuation is just the beginning.

In this short video, you’ll learn:

What factors influence the value of your book
What buyers are really looking for
How to start preparing now for a smooth, profitable sale

If you’re an advisor thinking about succession—even if it’s still a few years away—this is a must-watch. Watch the video now and take the first step toward a confident, well-planned exit.

No matter where you are in your journey, we'd be happy to support you. Let's connect over a confidential conversation. What's Stopping You?

Finding the Right Buyer for Succession

Tue, 15 Jul 2025 17:47:08 GMT

Ready to Retire or Transition Your Advisory Practice?

Here's What You Need to Know

If you're an independent advisor thinking about succession, the path you choose can shape your legacy, your clients' future, and your financial outcome. Whether you're grooming a junior advisor, selling to a peer, or considering a strategic buyer, each option comes with trade-offs. Some offer speed but lack valuation strength, while others bring resources but may compromise your firm's culture. The key is finding a buyer who aligns with your vision—and that's where IPC Pinnacle stands out.

With a 95% post-client transition rate , IPC Pinnacle offers a compelling solution for advisors ready to monetize their business and exit on their own terms. Built by advisors for advisors, IPC Pinnacle provides a fully funded transition, seasoned successors, and a proven framework that preserves continuity and your legacy.

If you're ready to explore a succession plan that puts your goals first, learn more at What's Stopping You .

The Importance of Diversification and Long-Term Investing

Mon, 14 Jul 2025 18:28:22 GMT

In his Q2 2025 market update, Paul Punzo, VP of Portfolio Strategy at IPC Private Wealth, highlights how markets faced significant volatility early in the quarter. On April 2—now referred to as “Liberation Day -

the announcement of new U.S. tariffs triggered a sharp market selloff, with the S&P 500 falling over 10%, its steepest drop since 2020. This decline was driven by growing concerns about deglobalization and its potential impact on global economic growth.

Despite the rocky start, markets showed resilience. By May, they had rebounded strongly, with many indices returning to near-record highs. Trade tensions eased following the announcement of new U.S.-U.K. and U.S.-China trade frameworks, and Canada set a trade deal deadline with the U.S. at the G7 Summit. However, new geopolitical tensions in the Middle East have raised fresh concerns about inflation and energy prices.

Portfolio Strategy

Turning to portfolio strategy, Paul explains that IPC Private Wealth continues to prioritize diversification to manage risk and uncover new opportunities. Portfolios remain overweight in U.S. equities and underweight in Canadian and international markets. While U.S. equities have underperformed recently, Canadian and international stocks have helped boost returns.

The Importance of Diversification

Some investors are questioning their U.S. exposure, often due to patriotic sentiment or economic uncertainty. But Paul emphasizes that the U.S. economy remains strong, supported by solid consumer spending, low unemployment, and leadership in sectors like AI, healthcare, and cloud computing.

Paul concludes with a key message: staying invested through periods of uncertainty is essential. Investors who remained committed after “Liberation Day” were rewarded by the market rebound. This reinforces the value of a long-term perspective and a well-diversified portfolio.

Watch Our Video To Learn More

IPC Private Wealth is a division of IPC Securities Corporation. IPC Securities Corporation is a member of the Canadian Investor Protection Fund.

2025 Q2 investment insights: Embracing the unknowable

Thu, 10 Jul 2025 14:30:47 GMT

From elevated geopolitical tensions to structural shifts in global trade, we’re potentially moving into an era where uncertainty tops risk.

As investors gain more time and experience in the markets, they’ve developed practical wisdom for navigating volatility. This not only includes risk that can be measured, but deeper uncertainties that can’t. Today, this distinction between risk and uncertainty is more relevant than ever. Markets, like nature, often follow unpredictable paths. It's not just about assessing measurable risk; it's about preparing for an increasingly unknowable world.

Risk is quantifiable. We can model it, assign probabilities and hedge against it. Uncertainty, on the other hand, eludes tidy distribution curves. It reflects a world where the range of outcomes is widening, and where shocks can be structural, not cyclical.

From elevated geopolitical tensions to structural shifts in global trade, we’re potentially moving into an era where uncertainty tops risk.

A few examples:

The outcome of U.S. trade policy remains highly path-dependent* and susceptible to unilateral executive action.
Fiscal uncertainty in the U.S. and major emerging markets has widened tail risks in sovereign bond markets.
Artificial intelligence (AI)-related earnings optimism is driving U.S. equity performance, yet the magnitude of AI’s real-world impact remains uncertain.

In such an environment, the priority needs to shift from predicting outcomes to building robustness into portfolios. We believe resilience, not foresight, is the defining trait of a successful investor.

Equities: Robust momentum in the U.S., uneven elsewhere

The near-term equity backdrop looks deceptively strong. With a Middle East ceasefire holding, inflation trending lower, and the S&P 500 at record highs, markets appear to be enjoying a temporary sweet spot. But beneath the surface, vulnerabilities persist. The U.S.-China trade détente remains fragile, and July 9 marks the expiration of the Trump administration’s 90-day pause on reciprocal tariffs. Countries without bilateral trade deals, including key U.S. allies, could soon face broad-based duties.

The tentative U.S.-China deal, reportedly linked to rare earth exports, lacks details and clarity. Meanwhile, tariffs on Chinese imports still average nearly 40%**, underscoring the persistence of structural trade tensions. The uncertainty extends beyond China, with potential implications for Canada, the European Union and Mexico, depending on how policy evolves, creating headline risks and potential market dislocations.

Despite recent volatility, the S&P 500 is nearing record highs and U.S. earnings growth expectations remain constructive. With inflation risks declining and a steady monetary policy, U.S. equities retain a favourable backdrop.

However, this optimism is not universal. European and Canadian equity markets face headwinds from muted growth prospects, fiscal drag and limited tech-sector exposure. In Europe, economic sentiment continues to point to flatlining gross domestic product (GDP), with Germany, France and Italy facing rising fiscal constraints from higher defense spending targets and weak productivity growth. The European Central Bank (ECB) faces a dilemma – how to support fragile demand without undermining the euro. Meanwhile, in Canada, recent data revealed a 0.1% monthly contraction in GDP for both April and May, largely driven by a 1.9% decline in manufacturing and tariff-related disruptions in transportation equipment and wholesale trade. While services provided a temporary boost, notably from NHL playoff-related activity*** , we believe these gains are unlikely to persist.

This recent data suggests Canadian growth was likely flat at best in the second quarter of 2025, reinforcing our expectations for additional Bank of Canada rate cuts later this year, beyond what’s currently priced by the markets.

In our view, equity risk premium continues to reward a tilt toward quality and structural growth, even as aggregate valuations appear elevated. By 'quality,' we mean companies with strong balance sheets, reliable earnings and consistent cash flows. 'Structural growth' refers to firms aligned with enduring economic trends such as digitization, artificial intelligence, demographic shifts or decarbonization, forces that can sustain performance even when cyclical tailwinds fade.

Fixed income: Caution on duration, selective in credit

The U.S. Federal Reserve (“Fed”) remains divided – no near-term rate cuts are expected, but growing noise around future leadership is unsettling markets. Political interference in Fed decision-making could risk higher-term premia instead of bringing down borrowing costs. As such, we remain cautious on duration, particularly at the long end of the U.S. treasury curve.

Government bond markets remain sensitive to policy ambiguity and shifting inflation expectations. We maintain a cautious stance on long-duration assets, particularly in the U.S., where the term premium has risen sharply amid concerns about fiscal sustainability.

While core yields may rise modestly, we continue to hold Treasury Inflation-Protected Securities (TIPS) and real assets for inflation protection and high-quality corporate credit where spreads remain tight but stable. Emerging market debt offers limited upside, given deteriorating fiscal fundamentals.

Liquidity considerations remain central. With rate cut expectations now delayed, flexibility is paramount. Our bond positioning reflects a bias toward resilience, not yield maximization.

Alternatives: Embracing disparate return streams

This environment highlights the value of differentiated strategies. We continue to build exposure to private credit, real assets and liquid alternative strategies to diversify portfolio return drivers.

Private markets, particularly in credit, offer compensation for illiquidity without the duration risk of public fixed income. Meanwhile, real assets, including infrastructure and real estate, provide inflation-linked cash flows and potential ballast during equity drawdowns.

We’ve also developed custom liquid alternative strategies designed to complement traditional asset classes and respond dynamically to regime changes.

Currency: Positioning for relative strength in the U.S. dollar

In the near term, the U.S. dollar benefits from delayed Fed cuts and global rate differentials. But behind this sits a growing fiscal risk premium. Ongoing U.S. tax and spending negotiations, combined with political noise around potential Fed leadership changes, could introduce greater volatility into dollar and U.S. treasury markets.

Despite its recent pullback, we believe the U.S. dollar is positioned to rebound modestly as the Federal Reserve delays rate cuts. Meanwhile, the Canadian economy's underperformance relative to the U.S., along with dovish expectations for the Bank of Canada, also support the case for the strength of the U.S. dollar versus that of the Canadian dollar. As the Federal Reserve delays rate cuts, rate differentials continue to favour the greenback, especially as policy remains dovish across Europe and Asia.

We remain unhedged to the U.S. dollar in globally diversified mandates. A stronger U.S. dollar and a weaker Canadian dollar can provide stability to Canadian portfolios during market drawdowns and times of uncertainty.

Accepting the limits of foresight: Positioning portfolios for rising uncertainty

Despite the appearance of calm, the global economy is muddling through. Economic sentiment in Europe remains flat, China’s growth continues to undershoot its targets and fiscal risks are building across the developed world. Even in the U.S., signs of economic slowdown are likely to emerge.

We’re not yet out of the woods, but our portfolios are structured to weather the uncertain climate.

Instead of trying to speculate where the next shock is going to come from, we’re building portfolios that can absorb a wide range of outcomes, through diversification, quality bias and structural flexibility.

When the path ahead is unknowable, the most valuable tools aren’t models or metrics, but discipline, humility and resilience. With those in hand, we’re not just prepared to endure uncertainty, we’re ready to navigate it with confidence and purpose.

Economic forecasts, no matter how sophisticated, are inherently vulnerable in a high uncertainty environment. Our approach is to accept this limitation and shift the focus from prediction to preparation.

*Path dependency in investing means that the value of an investment doesn’t depend solely on where it ends up, but also on the steps it took to get there. This can create habits or patterns that are hard to change and may keep the same people or systems in control. In practice, it helps investors guess how something might perform in the future by looking closely at how it behaved in the past.

** US-China Trade War Tariffs: An Up-to-Date Chart

*** https://www150.statcan.gc.ca/n1/daily-quotidien/250627/dq250627a-eng.htm

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of July 10, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Investment Planning Counsel and the Investment Planning Counsel logo are trademarks of Investment Planning Counsel Inc.

Staying Disciplined Amid Global Uncertainty

Mon, 07 Jul 2025 14:07:40 GMT

In his Q2 2025 market update, Blair Setford, AVP of Product Development with Canada Life Investment Management Ltd., highlights a volatile start to the quarter, driven by newly imposed tariffs that triggered a global sell-off in equities and bonds.

Despite this rocky beginning, markets rebounded in May, with the S&P 500 posting its strongest May performance since 1990. Still, the index remains flat year-to-date—one of its weakest starts in decades. ¹

Blair notes that U.S. equities are underperforming global peers, while Canada’s S&P/TSX and other global benchmarks reached new highs by mid-June. This recovery was supported by easing trade tensions and reduced recession fears.

However, he also emphasizes that uncertainty remains high. Inflation is still elevated, trade disputes are unresolved, and geopolitical risks—particularly in the Middle East—are intensifying. These factors suggest continued market volatility.

In Canada, the Bank of Canada held its policy rate at 2.75% for a second consecutive time. Blair explains that this reflects concerns over U.S. trade policy, a soft domestic economy, and the potential for inflation to return. The Bank has indicated it may resume rate cuts if conditions worsen. ²

Looking Ahead

Blair expects markets to remain headline-driven. Tariffs could reignite inflation and slow growth, while geopolitical tensions are pushing energy prices higher. Central banks are pausing rate changes as they await clearer economic signals.

Investment Strategy

Blair also stresses the importance of diversification. Canada Life Investment Management Ltd. Portfolio managers are maintaining a neutral portfolio allocation, avoiding concentrated bets and preparing for a return to more stable growth. This approach aims to balance risk and opportunity.

He concludes by encouraging investors to stay disciplined. Volatility is unsettling, but long-term success depends on sticking to a well-structured investment plan.

Sources: 1. Yahoo Finance. Friday May 30, 2025. Stock market today: S&P 500 marks best May in 30 years as Wall Street bets on tariff relief .

2. Source: Bloomberg

The views expressed in this commentary are those of Canada Life Investment Management Ltd. as at July 7, 2025 and are subject to change without notice. Prospective investors should review the offering documents relating to any investment carefully before making an investment decision and should ask their advisor for advice based on their specific circumstances. The content of this material (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it.

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of June 24, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

The Role of Multi-Factor Strategies in Counsel Portfolios

Tue, 24 Jun 2025 17:22:00 GMT

As investors, we seek to build diversified equity exposure with the objective of achieving higher returns with lower risk profiles and better diversification than broad equity markets.

We seek to do that by employing a broad array of strategies depending on the type of outcomes that we are looking to achieve for investors. Multi-factor strategies are one of the tools that we utilize, as they offer the potential for long-term attractive performance and diversification benefits compared to traditional cap-weighted or style-based equity solutions.

What are Factors?

A “Factor” is a generic term for characteristics of stocks that provide a common source of return across a broad universe of equity securities. For example, the Value factor identifies equities that are inexpensive relative to the broad market, while the Momentum factor identifies equities that have experienced recent persistent price acceleration. We are interested in factors because they are an identifiable source of returns common to both passive and active strategies. By isolating their exposure in our portfolios, we can target the return potential from any of the factors much more effectively.

“There is no free lunch attached to factor investing.”

There are just six factors that we consider robust in that they generate a long-term risk premium. There are many other published factors and factor strategies developed over the years, however, almost all of them are based on data mining and/or themes that lack robustness. The criteria used to determine if a set of characteristics constitute an actual robust factor include:

The factor is grounded in academic literature and vetted through the scientific method over decades;
The factor is robust across definitions and geographies;
The factor has a credible, economic rationale to offer a persistent risk-adjusted return premium.

The six common consensual factors that decades of research have shown to have the potential to deliver excess returns are:

Value
Low Volatility
High Momentum
Low Investment
High Profitability
Market Cap Size

“Diversification across factors has historically reduced the length of periods of underperformance by any one individual factor.”

Figure 1: The Six Factors

Value

Book-to-Market Ratio

High Momentum

Cumulative Return Over Last 12 Months excluding Last Month

High Profitability

Past Year Gross Profit / Total Assets

Low Volatility

Weekly Volatility Over the Past 2 Years

Low Investment

Growth of Total Assets Over Past 2 Years

Size

Free-Float Adjusted Market Cap

There is no free lunch associated with factor investing. While factor indices have exhibited excess risk-adjusted returns over longer periods, over shorter horizons factors exhibit cyclicality, including periods of underperformance.

Diversification across factors has historically reduced the length of periods of underperformance by any one individual factor. This is no different from the diversification investors get in their portfolios from different asset classes or geographic regions.

Utilizing Multi-Factor Strategies

In the Counsel Strategic Portfolios, our factor-based index partner Scientific Beta* manages three regional multi-factor strategies: Canada, U.S., and International. The strategies provide us with our desired multi-factor exposure in each of those geographic regions – helping our investors benefit from more effective diversification that may result in better performance.

Why Multi-factor Strategies are Especially Relevant Today

Market concentration has reached historically elevated levels, with a small number of large-cap stocks driving a disproportionate share of equity market returns. While this narrow leadership has benefited cap-weighted benchmarks in recent years, it introduces significant risks for long-term investors. The current environment resembles previous periods of extreme concentration, where a handful of stocks commanded premium valuations and dominated index performance—often followed by subsequent underperformance and broader market mean reversion.

Recent research by Scientific Beta highlights that the top 10 largest stocks in the U.S. now trade at price to earnings valuation multiples higher than 90% of the periods since the 1970’s.

These stocks not only exhibit higher volatility, but their return profiles are more closely tied to market-wide swings and idiosyncratic events. The implication is clear: portfolios heavily exposed to the largest stocks carry less diversification and more concentration risk than many investors may realize.

This backdrop reinforces the role of multi-factor strategies as a more balanced and risk-aware alternative. By design, multi-factor portfolios allocate across a broader set of companies based on persistent drivers of long-term returns—such as value, quality, and low volatility—rather than company size or past performance. This is designed to lead to better diversification across sectors, capitalizations, and sources of return, reducing reliance on the continued outperformance of a select few stocks.

For investors looking to build resilience into their equity allocations, multi-factor strategies help mitigate the unintended risks of cap-weighted approaches. In an environment where market leadership is increasingly narrow and valuations among mega caps are stretched, the case for factor diversification is even more compelling.

Conclusion

Our current research indicates we may obtain a higher long-term return compared to a market-cap-weighted index by tilting toward the six most rewarded factors. Second, we believe we achieve more effective diversification by avoiding reliance on any single strategy or dominant group of stocks to drive performance across market environments. This is especially important today, as market concentration has reached historically elevated levels and the largest stocks trade at stretched valuations. Lastly, employing multi-factor strategies may enhance the risk-adjusted performance of our portfolios by helping to minimize exposure to unrewarded risks. All in all, the addition of these strategies strengthens the resilience of our Counsel Strategic Portfolios and improves the probability of long-term investment success.

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management Ltd.

Disclaimers:

*Scientific Beta is the provider of the factor-based index strategy employed by Counsel Multi-Factor funds and Counsel Enhanced Global Equity sub-advisors and licensed to Canada Life Investment Management Ltd.

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of June 24, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise. Counsel mutual funds are managed by Canada Life Investment Management Ltd., a wholly owned indirect subsidiary of The Canada Life Assurance Company (“Canada Life”). Canada Life is a wholly owned subsidiary of Great West-Lifeco Inc. (TSX: GWO) and a member of the Power Corporation Group of companies.

The SciBeta Global CLIML CW Hist-Vol Adjusted Index, SciBeta Developed ex USA ex Canada CPS Core-E5G High-Factor-Intensity Diversified Multi-Beta MultiStrategy 6-Factor 4-Strategy EW Index, Scientific Beta Canada CPS Core-ESG High-Factor-Intensity Diversified Multi-Beta Multi-Strategy 6-Factor 4-Strategy EW Index, and SciBeta United States CPS Core-ESG High-Factor-Intensity Diversified Multi-Beta Multi-Strategy 6-Factor 4-Strategy EW Index are the intellectual property (including registered trademarks) of EDHEC Risk Institute Asia Ltd and/or its licensors, which is used under license within the framework of ERI Scientific Beta activity. The Counsel Enhanced Global Equity Fund, Counsel Multi-Factor International Equity Fund, Counsel Multi-Factor Canadian Equity Fund, and Counsel Multi-Factor U.S. Equity Fund that replicates fully or partially the SciBeta Global CLIML CW Hist-Vol Adjusted Index, SciBeta Developed ex USA ex Canada CPS Core-E5G High-Factor-Intensity Diversified Multi-Beta MultiStrategy 6-Factor 4-Strategy EW Index, Scientific Beta Canada CPS Core-ESG High-Factor-Intensity Diversified Multi-Beta Multi-Strategy 6-Factor 4-Strategy EW Index, SciBeta United States CPS Core-ESG High-Factor-Intensity Diversified Multi-Beta Multi-Strategy 6-Factor 4-Strategy EW Index is not sponsored, endorsed, sold or promoted by EDHEC Risk Institute Asia Ltd and its licensors and neither EDHEC Risk Institute Asia Ltd nor its licensors shall have any liability with respect thereto.

Le facteur émotionnel : Comprendre vos émotions est la clé de la planification de la relève.

Wed, 11 Jun 2025 19:38:49 GMT

Ne sous-estimez pas la puissance et la valeur de vos émotions lorsque vous planifiez de vendre votre entreprise. Nous faisons le portrait de ce à quoi vous pouvez vous attendre et la manière dont vous pouvez y faire face.

En tant que conseiller entrepreneur, la vente de votre entreprise est plus qu’une simple transaction : c’est un parcours émotionnel. Vous avez passé des années à établir et à cultiver votre clientèle, à collaborer avec les membres du personnel et à peaufiner votre philosophie de placement. Votre entreprise fait partie de vous, et il est normal de ressentir toute une gamme d’émotions à l’idée de la quitter.

« Il ne s’agit pas que de vendre votre entreprise. Il vous faut redécouvrir votre identité, surtout si vous arrêtez de travailler. « Vous pouvez vous attendre à avoir toutes sortes d’émotions partagées », explique Liz Doyle Harmer, une coach pour cadres supérieurs qui offre des conseils aux chefs d’entreprise et aux entrepreneurs.

L’âge moyen des conseillers au Canada est de 10 ans supérieur à celui de la population en général, mais seulement un conseiller sur deux a une voie claire vers la relève. Il y a plusieurs raisons pour lesquelles il peut être difficile de créer un plan, qu’il s’agisse de définir des objectifs, de trouver la bonne personne pour prendre la relève ou pour acheter l’entreprise ou de vous assurer que vous réalisez la pleine valeur de votre entreprise. Toutefois, les émotions peuvent également jouer un rôle important dans l’avancement du projet. Nous avons parlé à Mme Doyle Harmer des répercussions psychologiques de la vente d’une entreprise et de stratégies pour aider à composer avec cet important changement de vie.

Acceptez vos émotions

Il y a un vieil adage qui dit qu’on ne mélange pas affaires et émotions. Ce n’est pourtant pas la réalité de l’expérience humaine. En fait, des études ont montré que les émotions jouent un rôle important dans la prise de décisions d’affaires. « Il est tout à fait normal d’avoir des émotions et de prendre le temps de les vivre », explique Mme Doyle Harmer.

« Il est tout à fait normal d’avoir des émotions et de prendre le temps de les vivre » – Liz Doyle Harmer, coach pour cadres supérieurs.

Vous pourriez vous surprendre à avoir des émotions contradictoires quant à la vente de votre entreprise, mais n’essayez surtout pas de « vous contrôler ». Ignorer ces émotions pourrait faire dérailler considérablement la planification de votre relève et nuire à vos négociations. Après tout, il est difficile de prendre des décisions objectives avec un deuil non maîtrisé ou des regrets qui peuvent surgir à tout moment. « Vous prenez des décisions réactives en fonction de votre état émotionnel sur le moment, plutôt que des décisions fondées sur la valeur qui sont plus profondément liées à ce qui vous tient à cœur à long terme », explique Mme Doyle Harmer.

Nommez vos sentiments

La planification de la relève peut susciter différentes émotions, dont certaines sont contradictoires. La tristesse à l’idée de quitter l’entreprise pourrait se mêler à l’anxiété entourant ce qui arrivera à votre clientèle après votre départ. L’enthousiasme vis-à-vis des plans d’avenir et des possibilités pourrait se livrer une bataille contre la peur face au prochain chapitre de votre vie.

Ce que vous vivez est valide : des recherches ont révélé que le fait d’avoir des émotions contradictoires active le cerveau différemment de lorsque vous vivez une seule émotion pure. Ces regroupements d’émotions peuvent être particulièrement difficiles à comprendre et peuvent amener une personne à se sentir dépassée et paralysée.

« Il est difficile pour nous, en tant qu’êtres humains, d’observer une émotion. C’est d’autant plus difficile lorsqu’il s’agit de deux émotions ou plus », explique Mme Doyle Harmer. La première étape pour démêler les émotions contradictoires? Commencez à les reconnaître et à les nommer individuellement. Un bon outil pour ce processus est la roue des sentiments (Feeling Wheel), un diagramme développé par la psychothérapeute Gloria Willcox dans lequel on retrouve des cercles concentriques qui regroupent les émotions dans des catégories. On retrouve au centre du diagramme des émotions principales comme le bonheur, la tristesse, la colère et la surprise, qui se subdivisent en de multiples émotions connexes, comme la douleur, le vide ou l’impuissance. Utilisez la roue pour vous aider à déterminer exactement ce que vous ressentez et écrivez vos pensées au fur et à mesure. Ce processus peut vous aider à mieux comprendre vos émotions et leur incidence sur vous.

Faites preuve de curiosité

Une fois que vous avez déterminé ce que vous ressentez, vous pouvez comprendre pourquoi ces émotions surgissent et déterminer des mesures qui peuvent vous aider à les gérer. « Les émotions pointent vers nos besoins; ce ne sont pas que des sentiments aléatoires qui viennent de nulle part », note Mme Doyle Harmer.

« Les émotions pointent vers nos besoins; ce ne sont pas que des sentiments aléatoires qui viennent de nulle part » – Liz Doyle Harmer

Si vous vous arrêtiez tout de suite pour un moment, lequel des énoncés ci-dessous résonnerait le plus avec vous?

Si vous vous inquiétez de l’évaluation de votre entreprise, cela pourrait indiquer que vous devez évaluer vos processus actuels et apporter des changements pour améliorer votre prix de vente.
Le deuil causé par le fait que quitter votre entreprise pourrait être un signe que vous avez besoin de la quitter plus graduellement.
Si vous ressentez de l’anxiété par rapport au bien-être de votre personnel, cela pourrait signifier que vous devez l’inclure dans vos plans. « Il s’agit peut-être de s’asseoir avec les membres de votre personnel et de leur demander leur avis ou peut-être d’opérationnaliser les choses afin que votre entreprise soit facilement transférable », explique Mme Doyle Harmer.

Ce ne sont toutefois pas toutes les émotions qui sont un appel à l’action. Il peut parfois être utile de simplement observer ces sentiments, même s’ils vous rendent mal à l’aise.

Il y a une différence entre prendre des décisions émotionnelles et utiliser une évaluation réfléchie de vos sentiments pour vous guider tout au long du processus de relève.

Laissez vos émotions vous guider

Bon nombre de gens essaient d’aller à l’encontre de leurs émotions, surtout lorsqu’il s’agit de prendre une décision importante, comme celle de vendre leur entreprise. Il y a toutefois une différence entre prendre des décisions émotionnelles, qui peuvent être impulsives, et utiliser une évaluation réfléchie de vos sentiments comme outil pour vous guider tout au long du processus. Par exemple, explique Mme Doyle Harmer, vous morfondre pourrait vous empêcher d’élaborer un plan de relève, tandis que le fait de vous sentir triste à l’idée de vendre votre entreprise est un signe que votre travail a été significatif. Ces indications peuvent éclairer les choix que vous faites tout au long de votre processus de relève, qu’il s’agisse de choisir la bonne personne pour acheter votre entreprise ou de trouver des façons significatives d’occuper votre temps lors de la prochaine étape de votre vie.

La planification de la relève marque une étape importante dans votre vie. Le fait de reconnaître et de comprendre vos émotions en cours de route vous permettra d’effectuer une transition plus harmonieuse et réussie. N’oubliez pas que les émotions ne sont pas des signes de faiblesse, mais des forces qui vous guident vers la transition qui vous convient le mieux.

Chez IPC, nous nous engageons à vous aider à vendre votre entreprise selon vos propres conditions. Nous serons là pour en parler lorsque vous serez prêt. Fixez un rendez-vous pour un appel sans obligation pour en savoir plus. Qu’est-ce qui vous arrête?

The feelings factor: Understanding your emotions is key to succession planning

Wed, 11 Jun 2025 19:32:22 GMT

Don’t underestimate the power – and value – of your emotions when planning to sell your business. We break down what to expect and how to cope

As an entrepreneurial advisor, selling your business is more than just a transaction – it’s an emotional journey. You’ve spent years building and nurturing your client roster, collaborating with staff and honing your investment philosophy. Your business is a part of you, and it’s natural to have a lot of feelings about exiting.

“It’s not just selling the business, it’s this new identity around who you are, especially if you’re no longer working. You can expect to have a lot of mixed emotions,” says Liz Doyle Harmer , an executive coach who counsels corporate leaders and entrepreneurs.

The average age of advisors in Canada is 10 years older than the general population, yet just one in two advisors have a clear path to succession. There are multiple reasons why creating a plan can be challenging, from defining goals to identifying the right successor or purchaser, to ensuring you realize the full value of your business. But emotions can also play a big role in delaying your progress. We spoke with Doyle Harmer about the psychological impact of selling, and strategies to help navigate this significant life change.

Accept Your Emotions

There’s an old adage that says business and emotions don’t mix – but that’s not the reality of the human experience. In fact, studies have shown that emotions play a significant role in business decision-making . “It’s normal to have emotions, and it’s OK to spend time with them,” says Doyle Harmer.

“It’s normal to have emotions, and it’s OK to spend time with them.”

– executive coach Liz Doyle Harmer

Having mixed feelings about selling your business might catch you by surprise, but don’t tell yourself to snap out of it. Ignoring emotions could significantly derail your succession planning and get in the way of your negotiations – after all, it’s difficult to make objective decisions with unchecked grief or regret bubbling just below the surface. “You make reactive decisions based on your emotional state in the moment, rather than value-based decisions that are more deeply connected to what you care about in the long term,” Doyle Harmer explains.

Name the Feelings

Succession planning might elicit a slew of different emotions, some of them conflicting. Sadness at the thought of exiting might mingle with anxiety about what will happen to your clients once you’re gone; excitement about future plans and possibilities could be battling fear about this next chapter.

What you’re experiencing is valid - research has found that having mixed emotions activates the brain in ways that are unique from when you experience a single, pure emotion. These bundles of feelings can be especially difficult to navigate and lead to a general sense of overwhelm and paralysis.

“It’s challenging for us as humans to sit with one emotion, let alone two or more,” says Doyle Harmer. The first step to untangling mixed feelings? Start to identify and label them individually. A good tool for this process is the Feeling Wheel , a diagram developed by therapist Gloria Willcox that shows concentric circles that group emotions into categories. In the centre are primary emotions such as happy, sad, angry and surprised, which branch off into multiple related emotions, like hurt, empty or powerless. Use the wheel to help pinpoint what you’re feeling, writing thoughts down as you go. This process can help you gain a deeper understanding of your emotions and how they’re affecting you.

Get Curious

Once you’ve identified what you’re feeling, you can figure out why these emotions are popping up and identify actions that can help you manage them. “Emotions point to our needs; they aren’t just random things that come from nowhere,” Doyle Harmer notes.

“Emotions point to our needs; they aren’t random things that come from nowhere.” – Liz Doyle Harmer

If you were to stop right now and take a moment, which of the below do you identify with the most?

Worrying about the valuation of your business could signal that you need to assess your current processes and make changes to improve your sale price.
Grief over leaving your business might be a sign that you need a more gradual exit.
Anxiety about the well-being of your staff could mean you need to engage them in your plans. “Maybe it’s sitting down with your employees and asking them for their input, or maybe it’s operationalizing things so that your business is easily transferable,” says Doyle Harmer.

Not every emotion is a call to action, however. Sometimes just sitting with those feelings, no matter how uncomfortable they might be, can be helpful.

There’s a difference between making emotional decisions and using a thoughtful assessment of your feelings to help guide you through the succession process.

Let Your Emotions Guide You

Many of us try to work against our emotions, especially when it comes to making a significant decision like selling your business. But there’s a difference between making emotional decisions, which can be rash, and using a thoughtful assessment of your feelings as a tool to help guide you through the process. For example, says Doyle Harmer, while dwelling in sadness could stop you from making a succession plan, feeling sad about selling your business is a sign that your work has been meaningful. That information can help inform the choices you make throughout your succession process, from choosing the right buyer to finding meaningful ways to spend this next phase of your life.

Succession planning marks a significant milestone in your life. Acknowledging and understanding the emotions along the way will position you for a smoother and more successful transition. Remember that emotions are not signs of weakness but strengths guiding you toward the transition that works best for you.

At IPC, we’re committed to helping you sell your business on your own terms. When you’re ready, we’re here to talk. Book a no-obligation call to find out more. What's Stopping You?

Vendre votre entreprise de services-conseils : De la résistance à la préparation avec Greg Farries

Thu, 15 May 2025 19:48:06 GMT

Vous devriez prendre le temps de préparer la sortie parfaite.

Présentation du parcours de la relève

Savoir quand vendre votre entreprise peut être l’une des décisions les plus difficiles de votre carrière. Les signes ne sont pas toujours évidents : certaines personnes planifient pendant des années, tandis que d’autres font face à des circonstances inattendues qui accélèrent le processus. Pour que le tout semble moins intimidant, nous nous en sommes remis à la sagesse de deux conseillers qui ont vendu leur entreprise à IPC. Ils nous font part de leur parcours de relève unique et nous révèlent la manière dont ils ont su que c’était le bon moment de vendre.

Hésitations et défis initiaux

Lorsque Greg Farries a commencé à explorer l’idée de vendre son entreprise, il ne se sentait pas prêt. « J’avais de la difficulté à trouver quelqu’un pour me remplacer et je cherchais depuis au moins cinq ans. Il n’y avait personne à qui je faisais assez confiance pour confier ma clientèle et mon personnel », explique-t-il. Son partenaire d’affaires, son équipe et lui formaient un groupe uni et ils faisaient toujours les choses à leur façon. Il ne pouvait pas imaginer qu’une autre personne prenne les rênes.

Toutefois, à l’approche de l’âge de la retraite, Farries, un conseiller chevronné d’IPC, trouvait plus difficile d’attirer de nouveaux clients. Sa clientèle vieillissait et il ne pouvait pas promettre aux prochaines générations qu’il travaillerait encore 15 ans. « J’étais en mode “Attendre”, explique-t-il.

« Ne précipitez pas des choses que vous pourriez regretter plus tard. « J’ai mis deux ans à signer l’entente, et je n’ai aucun regret. »

Surmonter la résistance et trouver son aise

Néanmoins, lorsqu’IPC a approché son partenaire et lui pour parler de la vente de son entreprise, il a résisté. « Je savais que mon personnel et mon partenaire d’affaires n’étaient pas prêts, alors j’ai continué de créer volontairement des obstacles », se souvient-il. Petit à petit, au cours des deux années de conversation, Farries a commencé à se faire à l’idée. Il était à l’aise à l’idée qu’IPC prendrait son personnel en charge et ne changerait pas considérablement la philosophie de placement de sa clientèle. Il a apprécié la flexibilité que lui procurait le fait de pouvoir rester au service de l’entreprise pendant deux ans après la vente pour soutenir son personnel et sa clientèle pendant la transition. Il était également convaincu que le conseiller chevronné qu’IPC avait trouvé pour le remplacer maintiendrait le niveau de service auquel sa clientèle s’attendait. « Il est très compétent, beaucoup plus jeune et il a de nouvelles idées. « Je me suis donc senti à l’aise lorsque nous avons conclu l’entente. »

Le moment

décisif

C’est lorsque son partenaire d’affaires, Tom, lui a dit qu’il était temps de vendre, que Farries a vraiment réalisé que le moment était venu. « Tom a dit : “Nous pouvons le faire.” Il pouvait rester et continuer de faire ce qu’il faisait. Puis, financièrement, les chiffres ont atteint un point où nous trouvions tous les deux qu’ils avaient du sens. C’est devenu concret pour moi lorsque Tom m’a dit que cela allait fonctionner. »

Il n’a pas été facile de lâcher prise. Après 25 ans comme conseiller, la clientèle de Farries était devenue comme une famille. Aujourd’hui, quatre ans après la vente, l’homme de 64 ans dit qu’il ne changerait rien. Sa femme et lui ont pu construire leur maison de rêve juste au sud de Calgary et ils reviennent tout juste d’un voyage à Hawaii. Il passe également plus de temps avec ses enfants et son petit-fils, qui aura bientôt deux ans.

Conseils pour les conseillers

Farries aimerait dire aux conseillers en début de planification de la relève de prendre leur temps. « Ne précipitez pas des choses que vous pourriez regretter plus tard. « J’ai mis deux ans à signer l’entente, et je n’ai aucun regret. »

Lorsque vous serez prêt à aller de l’avant, envisagez ces solutions de relève, qui peuvent toutes vous aider, vous, votre équipe et votre clientèle à conclure une vente réussie.

Selling Your Advisory Business: From Resistance to Readiness with Greg Farries

Thu, 15 May 2025 15:50:24 GMT

You should take the time to craft the perfect exit.

Introduction to the Succession Journey

Knowing when to sell your business may be one of the most challenging decisions of your career. The signs aren’t always obvious – some people plan for years, while others face unexpected circumstances that accelerate their timeline. To make the process seem less daunting, we sought the wisdom of two advisors who sold their businesses to IPC. They share their unique succession journeys, revealing how they knew it was the right time to sell.

Initial Hesitations and Challenges

When Greg Farries first started exploring the idea of selling his business, he didn’t feel ready. “I was struggling to find somebody to replace me, and I’d been looking for probably at least five years. There wasn’t anyone I felt I would entrust my clients and staff to,” he says. He, his business partner and his team were a close-knit group, and they always did things their own way. He couldn’t fathom anyone else taking the reins.

As he got closer to retirement age, however, Farries, a seasoned advisor with IPC, found it more challenging to bring on new clients. His client base was aging, and he couldn’t promise their next-generation family members that he’d be working for another 15 years. “I was in a holding pattern,” he explains.

“Don’t rush into anything that you may regret later. I took two years to sign the deal, and I have zero regrets.”

Overcoming Resistance and Finding Comfort

Still, when IPC approached him and his partner to talk about selling, he resisted. “I knew my staff and my business partner weren’t ready, so I kept throwing up roadblocks,” he recalls. But slowly, over the course of two years of conversation, Farries started to come around. He felt comfortable knowing his staff would be taken care of and that IPC wouldn’t dramatically change the investment philosophy for his clients. He appreciated the flexibility of being able to stay on with the business for two years after the sale to support his staff and clients through the transition. And he felt confident that the experienced advisor IPC found to replace him would maintain the level of service his clients had come to expect. “He’s very competent, knowledgeable, much younger with fresh ideas. So, I felt comfortable when we entered into the deal.”

The Decisive Moment

But the moment that really made him realize it was time to make the sale was when his business partner, Tom, told him it was time. “He said, ‘We can do this.’ He could stay on and keep doing what he was doing, and financially, the numbers got to a place where they worked for both of us. It became real for me when he said it was going to work.”

Letting go wasn’t easy. After 25 years as an advisor, Farries’ clients had become like family. But now, four years post sale, the 64-year-old says he wouldn’t change a thing. He and his wife were able to build their dream house just south of Calgary, and they just returned from a trip to Hawaii. He’s also spending more time with his kids and grandson, who’s almost two.

Advice for Advisors

Farries’ advice for advisors at the beginning of their succession planning is to take your time. “Don’t rush into anything that you may regret later. I took two years to sign the deal, and I have zero regrets.”

When you’re ready to move forward, consider these succession solutions , all of which can help you, your team and your clients through a successful sale.

Préparation de la relève de votre entreprise, avec John Novachis

Mon, 12 May 2025 19:58:15 GMT

La planification de la relève est l’une des étapes les plus importantes du parcours d’un conseiller entrepreneur. La tâche de veiller à ce que votre clientèle, votre équipe et votre héritage soient bien pris en charge est au premier plan.

Lorsqu’on parle de planification de la relève, les conseillers doivent tenir compte de bien des choses : leur clientèle, leur personnel, leur famille et eux-mêmes. L’anxiété entourant le fait d’assurer le bien-être de leur entreprise dans son ensemble peut causer de l’insomnie. Dans cet épisode du balado « Turning the Page », Chris Reynolds et John Novachis, vice-président exécutif, Croissance et relève des conseillers, IPC, discutent de tout ce qui concerne la planification de la relève, de ce qu’il vous faut pour élaborer un plan de sortie solide à l’expérience personnelle de Chris, qui a vécu plusieurs fois l’expérience de vendre son entreprise. Ils mettent en évidence les questions récurrentes auxquelles chaque entrepreneur est confronté :

Trouver comment obtenir la pleine valeur de l’entreprise.
Veiller à ce que la clientèle reçoive le même niveau de soins.
Prendre soin du personnel loyal.
Élargir l’héritage de l’entreprise.

Contexte de la planification de la relève

Nous sommes à l’aube d’un énorme transfert de patrimoine et d’un changement dans l’industrie : les baby-boomers, qui ont bâti des entreprises prospères, cherchent à prendre leur retraite, mais il n’y a pas suffisamment de conseillers qui sont en mesure de les acheter.

Le défi des jeunes conseillers : manque de capital et coût d’entrée élevé dans le secteur de la gestion du patrimoine. Cela crée un fossé entre les conseillers principaux qui partent à la retraite et les nouveaux conseillers pour les remplacer. Il est estimé que les conseillers qui atteindront l’âge de la retraite au cours des trois à cinq prochaines années gèrent collectivement 400 milliards de dollars d’actifs, ce qui souligne l’urgence d’une planification de la relève efficace.

Principales préoccupations liées à la planification de la relève

Voici les principales préoccupations des conseillers entrepreneurs en matière de planification de la relève :

Service à la clientèle : Veiller à ce que la personne qui prend la relève offre le même niveau de soins et poursuive les relations solides établies au cours des décennies.
Prise en charge du personnel : Prendre soin des membres de l’équipe qui ont contribué au succès de l’entreprise, y compris les adjoints, les associés débutants et les membres de la famille qui participent à l’entreprise.
Équité économique : Recevoir une juste valeur pour l’entreprise, avec une évaluation transparente, des modalités de paiement raisonnables et des conditions favorables à l’impôt.
Défis émotionnels : Perpétuer l’héritage et trouver la bonne personne pour assurer la continuité du service peaufiné depuis des décennies.

Options de planification de la relève

En tant qu’acheteur, plusieurs options s’offrent à vous :

Transition entre pairs : Les conseillers principaux trouvent un pair, souvent plus jeune, pour prendre l’entreprise en charge.
Modèle d’associé débutant : Ce modèle consiste à faire appel à un associé débutant ou à un conseiller de la prochaine génération pour prendre progressivement la relève.
Acheteur stratégique : Une institution, comme IPC, acquiert l’entreprise, offrant ainsi une structure d’entreprise avec des directeurs des relations attitrés et un soutien complet.

Solutions émergentes

Le programme Pinnacle d’IPC offre des solutions novatrices aux conseillers qui veulent continuer à travailler tout en réduisant leur fardeau administratif. Le programme de croissance Pinnacle permet aux conseillers de monétiser leurs affaires, de déléguer des tâches opérationnelles à IPC et de se concentrer sur les relations avec la clientèle tout en recevant une rémunération garantie et des récompenses pour la croissance.

Une autre solution émergente est le modèle d’optimisation Pinnacle, où les conseillers peuvent choisir de travailler avec un groupe restreint de clients et de monétiser le reste de leurs affaires. Ce modèle offre de la flexibilité et permet aux conseillers de préserver un équilibre travail-vie personnelle tout en se concentrant sur leur clientèle privilégiée.

Augmenter la valeur de l’entreprise

Pour maximiser la valeur de leur entreprise, les conseillers doivent s’assurer que l’expérience client est uniforme, reproductible et de grande qualité. Il est essentiel d’adopter des technologies, de suivre une philosophie de placement claire et de fournir des services de planification complets. Les entreprises qui offrent un modèle pouvant être reproduit, semblable à l’approche de Starbucks' Pike Place, pourront générer des offres plus élevées.

Si vous êtes un conseiller en sécurité financière indépendant confronté aux complexités de la planification de la relève, communiquez avec l’équipe de recrutement d’IPC pour obtenir des conseils de spécialistes. Assurez-vous de préserver harmonieusement l’héritage de votre entreprise ainsi que les soins que votre clientèle mérite. Communiquez avec nous dès aujourd’hui pour commencer à planifier une transition réussie.

Qu’est-ce qui vous arrête?

Preparing for the Succession of Your Business, with John Novachis

Mon, 12 May 2025 19:39:46 GMT

Succession planning is one of the most important steps in an entrepreneurial Advisor's journey. Undertaking the task of ensuring your clients, team, and legacy are honoured is at the forefront.

When it comes to succession planning, Advisors must consider a many things - their clients, staff, family, and themselves. The anxiety of ensuring the welfare of their business as a whole can lead to sleepless nights. In this episode of Turning the Page podcast, Chris Reynolds and John Novachis, EVP Advisor Growth and Succession, IPC discuss everything from what is required for a strong exit plan to Chris's personal experience of selling his business multiple times, highlighting the recurring questions every entrepreneur faces:

How to get full value for the business?
Ensuring clients receive the same level of care.
Taking care of loyal staff.
Extending the business legacy.

The Succession Planning Landscape

There's a huge transfer of wealth and an industry shift underway - the baby boomer generation - who have built successful businesses - are looking to retire, but, there's a lack of advisors who are able to buy.

The challenge for younger Advisors: lack of required capital and high cost of entry into the wealth managements space. This creates a gap between retiring senior advisors and the lack of new entrants to fill their shoes. He estimates that $400 billion of assets managed by advisors will reach retirement age in the next three to five years, underscoring the urgency of effective succession planning.

Key Concerns in Succession Planning

The primary concerns that entrepreneurial advisors face when planning their succession:

Client Care: Ensuring that whoever takes over will provide the same level of care and maintain the strong relationships built over decades.
Staff Care: Taking care of the team members who have contributed to the business's success, including assistants, junior associates, and family members involved in the business.
Economic Fairness: Receiving a fair value for the business, with transparent valuation, reasonable payment terms, and tax-favourable conditions.
Emotional Challenges: Carrying on the legacy and finding the right person to carry on continuity of care that has taken decades to build.

Succession Planning Options

As a buyer there are multiple options available to you when it comes to succeeding your business:

Peer-to-Peer Transition: Senior advisors find a peer, often younger, to take over the business.
Junior Associate Model: Bringing in a junior associate or next-generation advisor to gradually take over.
Strategic Buyer Option: Institutions like IPC acquire the business, providing a corporate structure with dedicated relationship managers and comprehensive support.

Emerging Solutions

The Pinnacle program at IPC offers innovative solutions for Advisors who want to continue working but reduce their administrative burdens. The Pinnacle Growth Program allows advisors to monetize their business, delegate operational tasks to IPC, and focus on client relationships while receiving guaranteed compensation and rewards for growth.

Another emerging solution is the Pinnacle Optimizer Model, where advisors can choose to work with a select group of clients and monetize the rest of their business. This model provides flexibility and allows advisors to maintain work-life balance while focusing on their preferred clients.

Enhancing Business Value

To maximize the value of their business, Advisors should ensure their client experience is consistent, repeatable, and high-quality. Embracing technology, maintaining a clear investment philosophy, and providing comprehensive planning services are crucial. Businesses that offer a duplicatable model, similar to Starbucks' Pike Place approach, will attract premium prices.

If you're an independent financial advisor facing the complexities of succession planning, connect with the IPC recruiting team for expert guidance. Ensure your business's legacy continues seamlessly and your clients receive the care they deserve. Reach out today to start planning for a successful transition.

What's Stopping You?

Full episode here.

Selling Your Advisory Business: The Urgency of Uncertainty with Kevin Smith

Tue, 22 Apr 2025 19:36:46 GMT

Knowing when to sell your business

Knowing when you sell your business may be one of the most challenging decisions of your career. The signs aren’t always obvious – some people plan for years, while others face unexpected circumstances that accelerate their timeline. To make the process seem less daunting, we sought the wisdom of two advisors who sold their businesses to IPC. They share their unique succession journeys, revealing how they knew it was the right time to sell.

The Challenge of Deciding to Sell

In the summer of 2020, when the world was locked down amid the COVID-19 pandemic, Kevin Smith started experiencing a physical pain. “I felt like I was dying,” he says now. “I didn’t know what it was, but I was very ill.” Despite months of testing and navigating the medical system, doctors still couldn’t tell him what was wrong.

Health Crisis and Family Turmoil

At the same time, his eldest daughter, a young mother of four, was diagnosed with breast cancer. Suddenly, his life was thrown into turmoil. “I didn’t know if I was going to live. I didn’t know if my daughter was going to be OK or if we would have to raise her four children. Would my wife need to do it alone?"

At 56, Smith, a long-time independent advisor with IPC, wasn’t ready to retire just yet. But managing his business had become untenable. “I knew that I was in no shape to re-engineer my touch-intensive service model for the COVID era,” recalls the Kentville, N.S.-based advisor. “My wife and I knew I couldn’t take the risk and keep going. My decision to sell was because I needed to take risk out of my family situation.”

Finding the Right Buyer and Preparing for Succession

When he was eventually diagnosed with a rare tumour in his chest, Smith decided to speed up his succession. He had originally planned for his colleague and mentee – a childhood friend of his daughters’ – to purchase the business in about five years. However, she wasn’t ready to take it on prematurely.

Knowing he needed to secure a buyer quickly to maintain stability for his clients, Smith looked to IPC’s Pinnacle program, which offers advisors strategic succession solutions through its role as a potential buyer. “They were fantastic and engineered the transition, took over the practice and the team that I had mentored,” he says. “It was as close to plug-and-play as you could get, and everybody got what they wanted out of the transaction.”

The smooth transition was no accident. Despite the unforeseen speed of the sale, Smith had proactively prepared his business for succession by establishing replicable processes and building a strong team that could support his clients through the transition.

“Selling to IPC was as close to plug-and-play as you could get, and everybody got what they wanted out of the transaction.”

Life After Selling

Today, Smith and his daughter are both in better health. Having retained a 20% stake in his business, he now services two dozen families with whom he has very close relationships. He has more time to spend with his two kids and seven grandchildren and on his hobbies, like sailing and fly fishing. He’s even started a side hustle online business selling fishing flies made in Kenya.

With IPC’s Pinnacle program, Smith didn’t have to make an all-or-nothing choice. Instead, he was able to unlock value from a business he built over decades and take the time he and his family needed while keeping his hand in the work that he loves.

“Everything worked out, and the transaction was every bit in line with what I thought was fair,” he says. “This scenario wasn’t what I had planned, but I’m really proud of my team and myself. It couldn’t have worked out much better given the circumstances.”

“This scenario wasn’t what I had planned, but it couldn’t have worked out much better given the circumstances.”

When you’re ready to move forward, consider these succession solutions , all of which can help you, your team and your clients through a successful.

Vendre votre cabinet-conseil : l’urgence provoquée par l’incertitude, avec Kevin Smith

Tue, 22 Apr 2025 15:36:40 GMT

Savoir quand vendre votre entreprise

Savoir quand vendre votre entreprise peut être l’une des décisions les plus difficiles de votre carrière. Les signes ne sont pas toujours évidents : certaines personnes planifient pendant des années, tandis que d’autres font face à des circonstances inattendues qui accélèrent le processus. Pour démystifier tout ça, nous avons sollicité l’avis d’un conseiller qui a vendu son entreprise à IPC. Il nous explique ici le parcours unique qu’il a entrepris pour planifier sa relève. Il nous révèle aussi comment il a su que c’était le bon moment de vendre.

Choisir de vendre : un véritable défi

À l’été 2020, au moment où le monde était confiné en raison de la pandémie de COVID-19, Kevin Smith a commencé à ressentir des douleurs physiques. « J’avais l’impression que j’étais en train de mourir », dit-il. « Je ne savais pas ce que j’avais, mais j’étais très malade. » Malgré la multitude d’examens et de consultations qui ont duré des mois, les médecins ne parvenaient pas à poser un diagnostic.

Traverser une crise de santé et des bouleversements familiaux

Au même moment, sa fille aînée, une jeune mère de quatre enfants, a reçu un diagnostic de cancer du sein. Du jour au lendemain, la vie de Kevin Smith a basculé. « Je ne savais pas si j’allais survivre. Je ne savais pas si ma fille allait s’en sortir ou si nous allions devoir élever ses quatre enfants. Ma femme allait-elle devoir s’en charger toute seule? »

À 56 ans, M. Smith, un conseiller indépendant de longue date auprès d’IPC, n’était pas encore prêt à prendre sa retraite. Toutefois, la gestion de son entreprise était devenue intenable. « Je savais que je n’étais pas en état de repenser mon modèle de service qui était axé sur le contact humain et de l’adapter au contexte sanitaire de l’époque », se souvient M. Smith, conseiller à Kentville, en Nouvelle-Écosse. « Ma femme et moi savions que je ne pouvais pas prendre le risque de continuer. Ma décision de vendre a été motivée par un besoin urgent de réduire les risques pour ma famille. »

Trouver le bon acheteur et préparer la relève

Lorsque Kevin Smith a finalement reçu un diagnostic de tumeur rare au thorax, il a décidé d’accélérer son plan de relève. À l’origine, il avait prévu que sa collègue et mentorée, une amie d’enfance de ses filles, rachèterait l’entreprise dans environ cinq ans. Toutefois, elle n’était pas prête à le faire de façon prématurée.

Sachant qu’il devait trouver un acheteur rapidement pour conférer une stabilité à ses clients, M. Smith s’est tourné vers les responsables du programme Pinnacle d’IPC, qui offrent aux conseillers des solutions stratégiques de relève, notamment en agissant comme des acheteurs potentiels. « Ils ont été formidables : ils ont tout orchestré, en reprenant à la fois le cabinet et l’équipe que j’avais formée », raconte-t-il. « On ne pouvait pas rêver d’une intégration plus simple, et la transaction a satisfait toutes les parties. »

Cette transition en douceur n’est pas le fruit du hasard. Malgré la rapidité imprévue de la vente, M. Smith avait préparé la relève de manière proactive. Il avait établi des processus pouvant être reproduits et il avait bâti une équipe solide, capable de soutenir les clients pendant la transition.

« On ne pouvait pas rêver d’une intégration plus simple après la vente à IPC, et la transaction a satisfait toutes les parties. »

Profiter de la vie après avoir vendu son entreprise

Aujourd’hui, M. Smith et sa fille sont en meilleure santé. Ayant conservé 20 % des parts de son entreprise, il continue de servir une vingtaine de familles avec lesquelles il entretient des relations très étroites. Il consacre plus de temps à ses deux enfants, à ses sept petits-enfants et à ses passe-temps, comme la voile et la pêche à la mouche. Il a même lancé une boutique en ligne spécialisée dans la vente de mouches de pêche fabriquées au Kenya.

Dans le cadre du programme Pinnacle d’IPC, M. Smith n’avait pas à faire un choix radical. À la place, il a su tirer de la valeur de l’entreprise qu’il avait bâtie pendant des décennies, tout en prenant le temps nécessaire pour lui et sa famille, sans renoncer au travail qu’il aime.

« Tout s’est bien déroulé, et la transaction correspondait parfaitement à ma vision de ce qui était juste », affirme Kevin Smith. « Ce scénario n’était pas celui que j’avais prévu, mais je suis vraiment fier de mon équipe et de moi-même. Ça n’aurait pas pu mieux se passer dans les circonstances. »

« Ce scénario n’était pas celui que j’avais prévu, mais vu les circonstances, ça n’aurait pas pu mieux se passer. »

Insights in 5: A Volatile Start to 2025

Thu, 10 Apr 2025 17:05:41 GMT

In his Q1 2025 update, IPC’s VP of Portfolio Strategy and CIO Paul Punzo notes that the first quarter of 2025 saw significant market turbulence due to escalating U.S. trade tensions.

A key development was Donald Trump’s announcement on April 2nd, introducing “reciprocal” tariffs against many trading partners. Canada avoided new tariffs but faces 25% tariffs related to alleged drug trafficking and illegal migration. Exemptions for goods covered by NAFTA remain in place, but these announcements indicate major changes in global trade norms, impacting supply chains, costs, and investment strategies. Strategic agility, diversified portfolios, and close monitoring of trade developments will be essential.

Investor anxiety has increased due to potential economic recession and uncertain U.S. trade policies. Comprehensive diversification across global markets and currencies is key to navigating this period. Maintaining exposure to U.S. equities is important for access to sectors like technology and healthcare. The economy and markets are distinct, and how companies respond to tariffs will be crucial for investment decisions going forward.

The portfolio managers at IPC Private Wealth reviewed portfolio positioning Q1, choosing to maintain a neutral allocation between stocks and fixed income. For fixed income, the focus remains on short-term Canadian Corporate Bonds. For equities, the focus remains on U.S. stocks, while reducing Canadian and international exposure. Specific adjustments include removing U.S. and International Value Components and adding a Liquid Alternative component for diversification.

In conclusion, Paul recommends that during this time of uncertainty, investors maintain a long-term investment perspective and adhere to your financial plan. If your financial situation has changed or you have concerns about how your portfolio is currently positioned, please contact your advisor.

Watch Our Video To Learn More

Volatility: A Historical Perspective

Wed, 09 Apr 2025 14:47:28 GMT

Investors have a short memory when it comes to extreme market volatility.

Sharp, broad-market losses can feel bottomless in the moment, but we often forget about them just weeks – or years – later as markets recover.

Black Monday. The Dot Com Bubble. The U.S. Financial Crisis. Each of these events erased between 25% and 45% of the stock market’s value – yet you’d be hard-pressed to spot them just by glancing at a long-term chart. In each case, investors who chose to wait out the volatility are far better off today than they would have been had they sold in a panic.

To understand why it’s so important to maintain a long-term perspective, look at how markets recovered from some of the most volatile periods over the past 57 years.

Click on our Infographic to learn more:

English

Our Perspective: A Structural Break in Global Trade Norms

Mon, 07 Apr 2025 21:15:30 GMT

In the following video, Blair Setford notes that after a strong year for equities in 2024, the first quarter of 2025 has disappointed investors.

Tariffs have dominated headlines, causing sentiment to fall due to uncertainty. For Canada, the immediate shock may seem manageable, but broader implications include a fragmented trade regime, less policy coordination, and higher volatility in cross-border economic activity. Navigating this landscape will require strategic agility, diversified portfolios, and close monitoring of trade developments.

Investor anxiety has grown with talk of a possible recession. Comprehensive diversification will be key to navigating this uncertainty, and that means spreading investments across asset classes and global markets. Despite trade tensions, maintaining exposure to U.S. securities is crucial for diversification benefits. Keeping a long-term investment perspective and sticking to your financial plan usually leads to better results than reacting to short-term fluctuations.

Watch our video to learn more:

U.S. Delivers Larger than Expected Tariffs

Mon, 07 Apr 2025 17:01:56 GMT

U.S. President Trump’s tariff announcement has ushered in a historic escalation of U.S. trade protectionism. (1)

The effective U.S. import-weighted tariff rate has surged to 26% - its highest level in over a century - following the implementation of a reciprocal tariff regime that penalizes trading partners based on their perceived trade barriers. While Canada may have avoided the worst, a 5% effective tariff on Canadian exports still represents a meaningful shift in cross-border trade dynamics. For Canadian investors, this evolving policy backdrop brings implications for inflation, growth, and portfolio construction.

A Tariff Shock with Global Reverberations

(2) Under the new U.S. framework, all countries face a 10% baseline tariff, with significant variations above that depending on country-specific trade policies. Vietnam and China were targeted most aggressively (46% and 34%, respectively), while U.S. allies such as Canada and Mexico benefit from partial exemptions—conditional on United States-Mexico-Canada Agreement (USMCA) compliance.

These tariffs are expected to raise (3) up to $700 billion in annual U.S. customs revenue. If that revenue is recycled into consumer tax cuts, the economic drag could be modest. However, if used for deficit reduction, the U.S. may face a fiscal tightening exceeding 2% of gross domestic product (GDP)—an outcome that could stall growth and increase recession risks. We have downgraded our expectations for U.S. equities significantly considering our expectations for a weaker economic backdrop and geopolitical uncertainty in technology and trade.

Canada’s Temporary Relief, Lingering Risk

Canada was spared the full impact of the new U.S. tariffs, with compliant USMCA goods exempt. However, that protection is contingent. Sectors like automotive and agriculture still face margin pressure from compliance costs and shifting rules of origin. And while Canada may compare favorably to Asia or the European Union, its historical trade advantage has eroded as other allies (e.g., the U.K. and Brazil) receive the baseline 10% tariff with less restrictive terms. Moreover, if U.S. demand slows as a result of higher consumer prices, Canada’s export-heavy economy could feel the ripple effects. Any downturn in the U.S. could quickly spill into Canadian manufacturing and energy.

Tariffs are Not Costless

Despite political rhetoric, tariffs function as a consumption tax—paid by importers, not exporters. They raise input costs, distort supply chains, and ultimately feed into consumer inflation. We expect the U.S. Consumer Price Index (CPI) to rise above 4% this year due to tariff-driven price pressures. In Canada, inflation remains softer, but a weaker Canadian dollar—if monetary divergence between the Bank of Canada (BoC) and the U.S. Federal Reserve (Fed) persists—could import price pressures at a fragile moment for domestic demand.

A Flawed Fix for the Trade Deficit

The stated rationale for these tariffs—to reduce the U.S. trade deficit —deserves scrutiny. As economist Maurice Obstfeld of the Peterson Institute argues, America’s trade imbalance is primarily a function of domestic policies: a chronic under-saving problem driven by persistent fiscal deficits and a tax system that prioritizes consumption (4) . Tariffs may shift the composition of trade, but they will not solve the underlying imbalance.

Douglas A. Irwin, the John French Professor of Economics at Dartmouth College and a leading authority on trade policy, echoes this view. In his work, including the widely respected books (5) Free Trade Under Fire and (6) Clashing over Commerce: A History of U.S. Trade Policy, Irwin argues that the U.S. trade deficit is less a symptom of foreign unfairness and more a result of domestic fiscal imbalances and a tax system that discourages savings. The solution, he suggests, lies in restoring fiscal discipline, reforming tax incentives, and encouraging investment and savings rather than relying on tariffs that ultimately burden consumers.

Portfolio Implications: Building Resilience

In this environment of rising protectionism and geopolitical tension, diversification and risk management are paramount. We believe consideration should be given to:

High-quality, domestic-oriented Canadian equities : Companies less exposed to cross-border supply chains may benefit from reduced uncertainty and resilient margins.

U.S. exposure: While exposure to the U.S. is an essential element in Canadian portfolios, the April 2 announcement of larger-than-expected tariffs on U.S. imports has led us to believe that the economic backdrop will no longer be sufficiently conducive to a rally in equities. Secondly, the shift in the AI narrative has shaken conviction that technology will drive up the index.

Uncorrelated alternatives : Managed futures and other non-long only strategies can help mitigate volatility linked to trade and currency shocks

Conclusion

For Canada, the immediate shock may appear manageable, but the broader implications are more profound: a more fragmented trade regime, less policy coordination, and higher volatility in cross-border economic activity. Navigating this landscape will require strategic agility, diversified portfolio construction, and close monitoring of trade developments.

While Canada may have avoided the harshest blows, this is not a moment for complacency. Tariffs are not costless — and their full economic, inflationary, and geopolitical consequences will take time to materialize. This is a reminder that economic and portfolio resilience must be actively built — not assumed or incorporated after the fact — in a world where policy risk has returned to the forefront of global investing.

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

1 Tax Foundation. (2025) Trump Tariffs: The Economic Impact of the Trump Trade War. Retrieved from https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/

2 Newsweek. (2025) Trump Tariff Chart: Full List of Countries Hit with 'Reciprocal' Tariffs. Retrieved from https://www.newsweek.com/trump-reciprocal-tariff-chart-2054514

3 Wall Street Journal. (2025) Economists: Tariffs to Raise $700 Billion for U.S. and Boost Inflation. Retrieved from wsj.com/livecoverage/trump-tariffs-trade-war-stock-market-04-02-

4 Wall Street Journal. (2025) Piper Sandler Economists Forecast Tariffs Will Spur Higher Inflation, Economic Contraction. Retrieved from https://www.wsj.com/livecoverage/trump-tariffs-trade-war-stock-market-04-02-2025/card/

5 Douglas A. Irwin. (2015) Free trade under fire

6 Douglas A. Irwin. (2017) Clashing over Commerce: A History of U.S. Trade Policy

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of April 7, 2025 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Counsel mutual funds are managed by Canada Life Investment Management Ltd., a wholly owned indirect subsidiary of The Canada Life Assurance Company (“Canada Life”). Canada Life is a wholly owned subsidiary of Great West-Lifeco Inc. (TSX: GWO) and a member of the Power Corporation Group of companies. Investment Planning Counsel Inc. is a fully integrated wealth management company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations.

The Realities of Investing

Wed, 02 Apr 2025 14:11:00 GMT

Investors tend to look at the positive long-term performance numbers of a selected portfolio believing its short-term performance will mirror the outcome.

Investors make an unrealistic assumption if they think that the investments they hold will continuously appreciate in value. A wise investor understands that having negative returns at some point in their investment cycle is probable. It is important that the investors risk tolerance is determined and understood.

Reality is that the investment world is full of uncertainties. At any point in time, market events could make a rational investment approach seem irrational.

There are two pathways an investor can take; short-term and long-term. The rational approach to investing is to be patient and take the long-term investment approach rather than the patience-deprived short-term pathway.

History tells us that the short-term investor reacts to the flow of short-term news. Conversely, the long-term investor will hold their course and make rational investment decisions based upon long-term business fundamentals as negative volatility may narrow over time. Long-term investors stand a better chance of stable returns on their investments.

There will always be worries associated with financial markets such as credit crunch, change in income trust legislation, technology appreciation, political unrest, civil insurrection or terrorist attacks. These situations may cause short-term investors to panic, leading them to make rash investment decisions. A long-term investor may be able to discover opportunities in turbulent times and add to their portfolios by choosing investments that have temporarily declined in value.

Historically, market volatility is constant. Prices rise and fall and, at times, the fall is hard. Keep in mind that short-term pain is the price an investor must pay for potential long-term gain that the stock market can eventually deliver.

Portfolio Diversification is Crucial

A good portfolio is one that takes risk tolerance into account. A poor portfolio is one that favours an ad-hoc process of investing in “what’s hot” at the moment. Research by Dalbar Inc. has shown that the average institutional investor who has a diversified portfolio outperforms the average retail investor who invests on an ad-hoc, emotional basis. (1)

As a long-term investor you should not be emotionally affected by the market’s troubles of the day. You know that various sectors within the economy can and will be impacted at different times and degrees. To benefit from the market and maximize returns you must ensure that your portfolio is well diversified in areas such as asset class, geography, and investment style. If one component of your portfolio is negatively affected by volatility you can take comfort in the fact that the resulting loss may be mitigated by positive returns of another component.

Asset class diversification does not guarantee protection from negative returns but it may offer a cushion against major negative returns in volatile markets.

Focus on Long-term Objectives

Market volatility should be inconsequential to the long-term investor. Instead of focusing on the current investment value, focus on the future value of your portfolio when you will need your assets for a down payment on a home, college tuition or for retirement. If you must, or know you will, use your savings in the near-term, invest in cash or cash equivalents as this will eliminate dealing with market volatility.

Stay positive during periods of negative market volatility. Remember that during the 1987 stock market crash the Dow Jones Industrial Average fell 22% in one day. Less than two years later it had recouped all losses. After five years the Dow was up 41% from its pre-crash level and 10 years later it was up 253%.

Resist the urge to check prices every day. Opportunities to take advantage of price volatility will be constant. Sound, diversified investments managed by knowledgeable and experienced investment specialists will help you reach your investment and financial goals.

1. Dalbar Inc. Quantitative Analysis of Investor Behavior, 2003

Navigating Uncertainty Amid Trade Policy and Market Volatility

Tue, 01 Apr 2025 19:43:21 GMT

Over the past few weeks, U.S. stocks, as measured by the S&P 500, have experienced a correction—defined as a 10% fall in prices from their peak.

Unpredictable U.S. tariff policy, retaliation by trade partners and deteriorating consumer confidence have led to concerns about a U.S. recession. But is the outlook really that dire? While we acknowledge the risks, let’s take a closer look and see why the economy may be more resilient than it seems.

Revisiting Our Views at the Start of the Year

Entering 2025, we anticipated a year defined by slower global growth, shifting U.S. trade policies and continued monetary policy adjustments. Our outlook acknowledged heightened inflationary pressures, persistent geopolitical tensions and the structural issues facing major economies, including China and the Eurozone. Despite these challenges, we projected global gross domestic product (GDP) growth of approximately 3%, a level sufficient to support equity markets and risk assets ( Navigating the global economic landscape in 2025 ) .

In the U.S., higher-than-expected inflation and slower GDP growth were expected to define the economic landscape, although strong household and business balance sheets were seen as key buffers against a deeper slowdown. Meanwhile, Canada was forecast to experience modest growth benefits from early rate cuts, though trade uncertainty and slowing immigration trends posed challenges that could cap growth around 1.5% by 2026. Emerging markets were expected to see gradual slowdowns, with India remaining a relative bright spot ( Navigating the global economic landscape in 2025 ) .

Fast forward to March: much of that outlook remains intact, albeit with increased risks. The tariff-driven economic slowdown and weaker business sentiment have led to downward GDP revisions. However, the latest activity data suggests a more resilient economy than initially anticipated. February retail sales showed stronger-than-expected growth, with control group retail sales rising by 1.0% month-over-month, significantly better than prior estimates of an 0.8% decline that was suggested by the Chicago Federal Reserve CARTS data .1 Additionally, industrial production and housing stats showed signs of recovery, prompting a revision of our Q1 GDP estimates from -1.0% to 0.3%. While trade remains a drag on growth, we expect that net trade headwinds will reverse in Q2, supporting economic momentum.

Trade uncertainty and its market implications

The most significant development in Q1 has been the escalation in trade tensions. The U.S. administration has introduced 25% tariffs on steel and aluminum from Canada, prompting swift retaliation from trade partners. Historically, tariff uncertainty delays business investment and weakens consumer confidence, both of which are materializing now. The Bank of Canada’s March policy update warned of “a sharp drop in consumer confidence and a slowdown in business spending as companies postpone or cancel investments.”2

The impact on equity markets has been pronounced. The S&P 500’s correction has been led by high-valuation technology stocks, which have fallen 15 to 20%, while cyclical sectors have underperformed defensive sectors. Despite the sell-off, we maintain our view that U.S. equities will recover once macroeconomic fears abate. Historical precedent suggests that “growth scares” driven by trade fears often reverse once underlying economic data stabilizes.

Market Implications of Market Corrections and Recession Trends

The historical relationship between market corrections and recessions suggests that equity drawdowns often anticipate economic downturns, but not all stock market corrections lead to full-blown recessions. The recent correction in the S&P 500 aligns with historical market corrections that have occurred amid rising inflation and trade policy uncertainty. Historical market corrections that coincide with economic slowdowns typically see equity losses of 25-30% before stabilization. However, during stagflationary periods, equity drawdowns have been more prolonged, with slower recoveries. Stagflation – a combination of slow economic growth, persistent inflation, and elevated unemployment – typically results in muted earnings growth and restrained market performance, making defensive positioning crucial.

In addition, the nature of market corrections varies depending on the broader economic backdrop. Corrections triggered by financial instability – such as the 2008 Global Financial Crisis – tend to result in deeper and more sustained equity losses, whereas those associated with inflationary or trade-driven slowdowns often recover more quickly once macroeconomic uncertainty subsides. The current correction shares characteristics with past episodes where inflationary pressures and restrictive trade policies dampened sentiment, leading to weakness before eventual stabilization.

Moreover, sectoral performance during market corrections varies significantly. Defensive sectors, including consumer staples, healthcare and utilities, have historically outperformed broader indices during stagflationary periods, while growth-oriented technology stocks experience heightened volatility. However, we do not expect this stagflationary period to persist long term. The combination of Federal Reserve rate adjustments, easing trade tensions and improved business investment could help shift the economy back toward a more balanced growth environment.

With the ongoing market uncertainty, we have emphasized sector diversification across our portfolios to mitigate downside risk while maintaining long-term exposure to cyclical recovery opportunities.

Despite the correction, we maintain our long-term constructive stance on equities, particularly as economic fundamentals remain stronger than initial pessimistic forecasts suggested. While heightened volatility is expected, history suggests that market corrections tied to trade-driven slowdowns tend to recover more quickly than those driven by financial crises or structural downturns.

Portfolio Positioning and Investment Strategy

While trade tensions and recession fears have dominated Q1, we continue to believe that 2025 will be a year of slower but positive growth , with opportunities emerging as policy uncertainty clears. Investors should remain patient, disciplined and focused on long-term objectives.

From an asset allocation perspective, we continue to emphasize diversification across asset classes to manage risk and capture potential opportunities. Our positioning remains constructive on U.S. equities, particularly in sectors with strong earnings visibility and pricing power. However, we maintain a cautious stance on Canadian and European equities, given weaker economic fundamentals and ongoing policy uncertainty.

We also advocate for increased exposure to private credit and liquid alternatives, which can offer attractive yield opportunities and downside protection in periods of heightened volatility. Additionally, multi-factor and diversified equity strategies remain an important component of portfolio construction, helping investors navigate shifting market dynamics with a balanced approach to risk-adjusted returns.

While volatility is expected to persist, disciplined portfolio positioning focused on quality assets, defensive allocations, and alternative strategies should allow investors to navigate market uncertainty while remaining well-positioned for long-term growth.

Sincerely,

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

Chicago Fed Advance Retail Trade Summary: Current Data - Federal Reserve Bank of Chicago.
Bank of Canada reduces policy rate by 25 basis points to 2 3/4% - Bank of Canada

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of undefined . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise. 

Succession planning: Why Advisors can’t afford to wait

Tue, 01 Apr 2025 19:19:42 GMT

Financial Advisors Must Plan Their Exit Strategy

Financial advisors may have a leg up in terms of growing their wealth, but when it comes to selling their businesses, they’re just like every other entrepreneur: they rarely have an exit strategy. Procrastination can come at a hefty cost, however. This lack of planning can ultimately lead them to either shut down the business they’ve worked so hard to build or sell it at the last minute for less than what they could have received.

Common Challenges in Succession Planning

While it may be ironic that advisors who counsel clients on their financial futures neglect their own succession plans, they face the same challenges as other business owners. The Canadian Federation for Independent Business surveyed entrepreneurs of all stripes and found that 54% fail to succession plan because they can’t find the right buyer. Nearly half said they struggle to measure the value of their business, while 39% felt the company was too reliant on them for day-to-day operations to sell.

54% of Canadian entrepreneurs fail to succession plan because they can’t find the right buyer.

Add worrying about who would properly care for their clients, the emotional weight of transitioning out of a profession they love and a general lack of flexibility when it comes to succession options, and it’s no surprise that planning can be a challenge.

The Need for Planning Ahead

Canadian advisors, though, are reaching an average age of 51. If you find yourself among the more than half of advisors who don’t have a documented succession plan, now’s the time to start considering what your exit strategy could or should look like. Here’s why you need to plan ahead.

As difficult as it may be to think about selling, failing to plan can have consequences in a number of areas:

Retirement Goals

Selling a business can take time – up to two years of planning, strategizing, conversing with potential buyers and more. You’re likely counting on at least some of the proceeds from the sale to help fund your retirement, which means you don’t want to rush this process. The more time you have, the more you can work on increasing the value of your business, so you get the number you need to realize your post-work dreams.

Having a plan gives you time to interview potential successors and determine if that person is the best advisor for your clients.

Continuity of Client Care

Creating deep relationships with your clients is one of the best things about building a successful business. You’ll no doubt want to make sure they’re well taken care of after you leave. Not planning ahead, then, leaves no guarantees that the person who takes over – if anyone ultimately does – will be the right person to work with your clients. A proper exit plan includes thoughts on your ideal buyer and the steps you need to take to find them. Having a plan also gives you time to interview potential successors and determine if that person is the best advisor for your clients.

Team Disruption

Your staff are the backbone of your business, and without a succession plan, you risk significant disruption to your operations. Unanticipated changes can lead to employee uncertainty, which could impact administrative processes and degrade the quality of care your clients receive. Proper planning will help you know when to bring your staff into the succession conversation.

By having open conversations, understanding priorities and helping employees plan their next steps, you can maintain continuity as you move toward selling. Plus, a knowledgeable, well-functioning staff will be seen as an asset to a potential buyer.

Business Continuity

Markets never sleep, which means your business can’t afford to take time off. But life happens. Not planning ahead for a sudden illness or a family emergency could impact service and negatively affect your business’s sale price. Creating an exit plan and a business continuity plan will help you avoid business interruptions and prevent you from eroding value if you have to suddenly step away.

Finding Flexibility

There are many ways to exit a business, especially an advisory business. You can sell outright, retain partial ownership and become a salaried employee, or sell to a strategic buyer who can help you slowly transition out of the business. By waiting until the last minute, those other paths become much harder to negotiate, leaving you potentially feeling unsatisfied with the sale. A rushed decision could also impact what you’d get for your business. Embarking on this process early gives you the time to find a route that works best for you.

The ideal time to start your succession plan is 5 to 10 years before you need to sell.

When to Start Selling

For advisors in their 50s or 60s, now’s the time to develop that exit plan. You don’t want a health scare or another event to result in an unplanned sale. Ideally, you’d create a succession plan five to 10 years before needing to sell – that’s about enough time to weigh your options, talk to clients and create more value in your business if needed.

If you’re in your 30s and 40s, it’s not too early to start thinking ahead. You’ll want to give yourself the time to build a business that can run itself and to figure out your own financial goals so that you can do what you need to do to ensure you’re getting the price you want.

Conclusion

By developing a succession plan, you’re giving yourself the option to exit your business on your own terms. Start the process by understanding your priorities and having conversations with potential buyers to explore your options. When you’re ready to move forward, consider these succession solutions, all of which can help you, your team and your clients through a successful sale.

Faites rayonner la véritable valeur de votre cabinet-conseil

Thu, 13 Mar 2025 20:48:13 GMT

Comment déterminer la valeur de votre bloc d’affaires?

Il est peut-être facile pour vous d’évaluer les entreprises ou les fonds dans lesquels vous investissez, mais il est probablement moins évident d’estimer la valeur réelle de votre cabinet-conseil. Si vous songez à vendre votre cabinet, il est essentiel d’avoir une idée claire de sa valeur. Vous pourrez savoir si elle permet de financer votre retraite, mais aussi si vous devez prendre des mesures aujourd’hui pour obtenir un meilleur prix.

Comment déterminer la valeur de votre entreprise? Nous allons vous expliquer comment faire.

Examinez vos revenus récurrents

Chaque acheteur potentiel évalue la valeur d’un cabinet-conseil selon ses propres critères, en se concentrant sur différents aspects. Pour estimer la valeur de votre cabinet, vous pouvez commencer par analyser vos revenus récurrents.

Selon John Novachis, vice-président exécutif, Croissance et Développement de l’entreprise chez Investment Planning Counsel, les cabinets-conseils se vendent généralement entre 2 et 3,5 fois la somme de leurs revenus récurrents. Toutefois, votre position dans cette fourchette dépend de plusieurs facteurs, notamment du taux de retrait des actifs dans les portefeuilles et de la taille moyenne des comptes. Un acheteur potentiel examine également les dépenses d’exploitation fixes, comme les espaces de bureaux et la rémunération du personnel.

Entre 2 et 3,5 fois la somme des revenus récurrents

C’est le prix auquel se vendent généralement les cabinets-conseils

Cela dit, M. Novachis souligne qu’il est difficile de déterminer soi-même la valeur de son entreprise, en raison des nombreuses variables qui influent sur le prix de vente. « Fixer la valeur de votre cabinet de conseils financiers est à la fois un art et une science », explique-t-il. « La science, ce sont les variables quantifiables. L’art, c’est la manière dont l’entreprise est gérée. »

Ayez une vision claire de votre destination avant d’entreprendre votre parcours

Même si vous parvenez à déterminer la valeur précise de votre entreprise, il est possible qu’elle ne vous incite pas à vendre. Il est donc important de réfléchir sérieusement aux fonds dont vous aurez besoin à la retraite, que ce soit pour acheter une maison au bord de la mer à Maui ou pour passer plus de temps avec vos petits-enfants. Après tout, planifier des rêves de retraite, c’est exactement ce que vous faites avec vos clients.

Le montant souhaité doit être suffisant pour réaliser vos projets d’avenir. Par exemple, si votre entreprise vaut 2 millions de dollars aujourd’hui, mais que vous espérez en tirer 3 millions de dollars, il faudra réfléchir aux stratégies à mettre en place pour combler cet écart. Cela pourrait passer par plusieurs solutions : acquérir de nouveaux clients, réduire les coûts ou améliorer vos pratiques de gestion.

Saisissez l’importance de la qualité et de l’efficience

La valeur de votre entreprise n’est pas qu’une question de chiffres. Les acheteurs recherchent également la qualité. « Beaucoup pensent qu’il suffit d’atteindre un certain niveau de revenus pour obtenir le prix souhaité, mais cette époque est révolue », souligne John Novachis. « Les acheteurs ont plus de choix, et ils n’hésiteront pas à vous offrir moins d’argent si votre cabinet n’est pas bien géré. »

Si un acheteur a beaucoup de travail à faire pour redresser votre bloc d’affaires, votre cabinet n’aura pas autant de valeur qu’une entreprise de même taille qui est mieux gérée. M. Novachis estime qu’une philosophie de placement bien définie, une expérience client durablement positive et des processus efficaces sont tous des éléments qui peuvent contribuer à augmenter la valeur de votre cabinet.

Évaluez la transférabilité de votre entreprise

Une bonne façon de déterminer si vous pouvez obtenir le prix souhaité pour la vente de votre cabinet consiste à imaginer ce qui se passerait si vous partiez deux semaines en vacances, sans votre téléphone ou votre ordinateur. Si tout risquait de s’effondrer en votre absence, dites-vous que c’est un signal d’alerte pour les acheteurs potentiels.

Un cabinet facilement transférable – qui peut fonctionner sans son fondateur – est beaucoup plus attrayant, peu importe la perspective de croissance des revenus. Selon John Novachis, les acheteurs accordent une grande valeur à des éléments comme le professionnalisme, l’uniformité des processus, l’expérience client et les compétences du personnel de soutien. « C’est un secteur volatil et sensible aux fluctuations des marchés. La taille et l’efficacité sont donc particulièrement importantes », dit-il.

« C’est un secteur volatil et sensible aux fluctuations des marchés. La taille et l’efficacité sont donc particulièrement importantes. »
- John Novachis

Concentrez-vous sur le présent

Contrairement aux acheteurs d’entreprises traditionnelles, les acheteurs de cabinets-conseils ne s’attendent pas nécessairement à ce que vous leur présentiez de grands plans de croissance. Dans un contexte classique de fusion-acquisition, ce type de projection peut avoir de la valeur. Mais dans le monde des cabinets-conseils, les acheteurs savent déjà comment stimuler la croissance. « Les acheteurs se disent que les conseillers n’ont pas besoin de connaître l’orientation future de l’entreprise, car c’est eux qui la dirigeront et qui savent ce qu’ils veulent en faire », explique M. Novachis.

Analyser votre liste de clients

Les acheteurs souhaitent tout de même disposer d’une clientèle solide qu’ils pourront ensuite élargir. Beaucoup analyseront l’âge moyen de vos clients pour évaluer les possibilités d’approfondir les relations et d’offrir plus de services (p. ex. planification de la retraite, vente d’assurance et transferts de patrimoine intergénérationnels). La valeur d’une entreprise dépend aussi grandement de la satisfaction et de la fidélisation de la clientèle. Après tout, aucun acheteur ne veut perdre des clients aussitôt la vente conclue.

Réfléchissez à ce qui compte le plus

Lorsqu’il est question de la vente d’une entreprise, l’argent n’est pas le seul élément à prendre en compte. Par exemple, certains cabinets pourraient vous offrir plus si vous versez les actifs des clients dans des fonds exclusifs. Cela pourrait aller à l’encontre des intérêts de vos clients. « La plupart des conseillers veulent faire les choses correctement pour leurs clients et leur équipe. Il souhaite que tout le monde en ressorte gagnant », souligne John Novachis. En fin de compte, vos convictions personnelles pourraient jouer un rôle déterminant dans le montant que vous souhaitez – et pouvez – obtenir pour votre entreprise.

Préparez-vous à une vente réussie

Chaque entreprise est unique. C’est pourquoi évaluer la valeur de votre cabinet-conseil nécessite une analyse approfondie de ce qui le rend particulièrement attrayant aux yeux d’un acheteur potentiel. La valeur finale de votre entreprise dépend de plusieurs facteurs, comme les revenus récurrents, l’efficience opérationnelle, les données démographiques des clients et vos convictions personnelles. La bonne nouvelle, c’est que vous pouvez prendre des mesures concrètes dès aujourd’hui pour accroître cette valeur jusqu’au moment où vous déciderez de vendre. La simplification des processus, la fidélisation des clients et la mise en place de systèmes pour assurer la transférabilité de vos activités peuvent contribuer à améliorer la valeur de votre entreprise dans l’avenir.

Si vous commencez à réfléchir à votre plan de relève et souhaitez en savoir plus sur la façon de maximiser le potentiel de votre entreprise, communiquez avec nous. Vous pourrez discuter de façon confidentielle, sans prendre d’engagement, avec l’un de nos experts de premier plan dans l’industrie.

Unlocking the True Value of Your Advisor Business

Thu, 13 Mar 2025 20:06:00 GMT

How can you determine the value of your book?

As good as you may be at crunching valuation numbers for the companies or funds you invest in, determining how much your own advisor business may be worth often doesn’t come as easily. If you’re considering selling your practice, though, you’ll want to have some idea of its value – in part to know whether you’ll fetch enough to fund your own retirement, but also to see what steps you may need to take today to generate a higher price.

How can you determine your company's value? We explain.

Review your Recurring Revenues

While every buyer will value a prospective business somewhat differently, putting their own emphasis on various parts of the business, you can start by looking at recurring revenue to come up with an initial idea of a price.

According to John Novachis, Executive Vice President of Corporate Growth and Development at the Investment Planning Counsel, at a high level, advisory businesses often sell between 2 and 3.5 times that figure. Where you may fall in that range, however, depends on several factors, such as the draw rate of assets coming out of a portfolio and average account size. A potential buyer will also scrutinize fixed operational expenses, such as office space and what you’re paying staff.

2x to 3.5 recurring revenue:

The general selling price for advisor businesses

Saying that, Novachis points out that it’s hard to come up with a single figure on your own because of all the variables that can influence your selling price. "Determining the value of your financial advice business is a combination of art and science," he explains. “The science is the quantifiable variables, and the art is how well the business is run.”

Start with the end in mind

Even if you could nail down an exact figure, it may not be enough to sell. That’s why it’s important to think carefully about how much you might need in retirement, whether that involves buying a beach house in Maui or spending more time with your grandkids. It’s no different than determining your clients’ post-working dreams.

The number you land on has to support your future plans. If your business is worth $2 million today, but you want $3 million from the buyer, you should consider how to close that gap. That might mean increasing client acquisition, reducing costs or improving practice management.

Importance of Quality and Efficiency

The value of your business goes beyond the hard numbers – buyers are also looking for quality. “A lot of people think that if they just get to a certain revenue level, somebody is going to give them what they want, but those days are gone,” Novachis notes. “There’s more choice available for buyers, and they’ll discount you if you’re not running a good practice.”

If a buyer has to do a lot of work to clean up your book, your practice isn’t going to be as valuable as a similar-sized operation that’s run more smoothly. A defined investment philosophy, a positive and repeatable customer experience and an efficient process can all work to increase the valuation, he says.

Determine your Transferability

One way to think about whether you could get what you want from a sale is to consider what would happen if you spent two weeks away on a vacation without access to your phone or computer. If everything would fall apart without you, that’s a red flag for potential buyers.

An easily transferable practice – one that can run without the founder – is far more appealing, no matter how promising your revenue growth prospects might be. Buyers, says Novachis, value infrastructure like a professional office, consistent processes and experiences for your clients, and well-trained support staff. "This is a volatile, market-sensitive business, and that's why scale and efficient are very important," he explains.

"This is a volatile, market-sensitive business, and that's why scale and efficiency are very important." - John Novachis

Focus on today

Unlike in a traditional business, the buyers in this sector aren’t necessarily looking for you to come up with some grand growth plans. While that does have value in a typical M&A setting, with advisor firms, buyers, for the most part, already know what it takes to grow a practice. “I don’t need to know what the advisor thinks the business is going to do in the future because I’m going to run it, and I know what I can do,” says Novachis.

Evaluate your Client List

Still, buyers do want to see healthy client list that they can then grow. Many will evaluate the average age of your clients to see if there’s potential to deepen relationships and expand services, such as retirement planning, insurance sales and inter-generational wealth transfers. Client satisfaction and retention are also important to increasing valuations – no one wants your clients to leave right after the sale.

Consider What Matters Most

When it comes time to sell, money may not be everything. For instance, some firms might offer you more in exchange for putting client assets into proprietary funds. That may not be in your clients’ best interests. "Most advisors want to do right by clients and staff and have a win for them, too." Novachis says. Ultimately, your personal values may play a critical role in determining how much you get - and want - for your business .

Prepare for a Successful Sale

Since no two businesses are alike, valuing your advisory practice requires an analysis of what makes your business uniquely attractive to a potential acquirer. Considerations like recurring revenue, operational efficiency, client demographics and your personal values all play a role in determining the final number. The good news is that there are tangible steps you can take today that will enhance your valuation when it’s time to sell. Streamlining processes, cultivating client loyalty and putting systems in place to ensure transferability can help improve your valuation in the future.

If you're thinking about succession and want to learn more about maximizing the potential of your business, reach out to us for a no-obligation, confidential conversation with one of our industry-leading experts .

In Conversation With: Staying Focused Amid Today's Uncertainties

Mon, 10 Mar 2025 13:42:49 GMT

You may have noticed recent headlines focusing on trade tensions between Canada and the United States.

This news has created uncertainty for many Canadians, raising concerns about jobs, economic stability, and personal savings. As tariffs continue to make headlines, you may be wondering how this could impact your retirement plans and long-term investments.

Paul Punzo, Chief Investment Officer, IPC Private Wealth and Blair Setford, VP, Product Management, Investment Planning Counsel, share their views on tariffs and recent trade tensions in the following video and summary:

Understanding the Impact on Your Investments

While tariffs can present challenges for certain industries, it’s worth noting that sectors most affected—such as manufacturing—actually make up a small portion of the Canadian stock market. More broadly, trade uncertainty can contribute to market fluctuations, which in turn may temporarily slow the growth of investment accounts like your RRSP, TFSA, and pension.

During these periods of volatility, it will be important to remember that emotions can often influence investment decisions, leading to actions that may not align with your long-term financial goals. Trying to time the market in response to short-term geopolitical risks can result in costly mistakes to avoid, such as reducing exposure to certain asset classes at precisely the wrong moment - this is where professional portfolio management plays an important role. Your advisor is there is to assist you in making decisions that are aligned to your long-term strategy and to help ensure the best possible outcome.

The Importance of Diversification

Market movements often reflect current investor sentiment rather than economic fundamentals, and history shows that markets tend to look beyond temporary disruptions. The most effective ways to navigate today’s uncertainties is to maintain a well-diversified portfolio. This includes exposure to U.S. equities, which provide access to sectors that are underrepresented in Canada, such as Technology and Healthcare. These industries continue to experience strong growth and can continue to offer important investment opportunities over the long term.

Additionally, currency fluctuations can work in your favour. If the Canadian dollar weakens against the U.S. dollar, returns from U.S. investments can be amplified, helping to offset some of the effects of market volatility.

Staying the Course

The good news is that periods of market turbulence often present opportunities. Lower stock prices can allow long-term investors to purchase quality assets at attractive valuations. Professional investment managers actively seek out these opportunities to position portfolios for future growth.

The key to long-term financial success is patience. Staying invested and allowing your assets to compound over time will be critical to building and preserving wealth. While trade disputes and market fluctuations may create short-term noise, history has shown that a disciplined approach to investing remains the best strategy.

If you have any questions or concerns about how your portfolio is currently positioned, please speak with your advisor.

THIS VIDEO MAY CONTAIN FORWARD-LOOKING INFORMATION WHICH REFLECT OUR OR THIRD-PARTY CURRENT EXPECTATIONS OR FORECASTS OF FUTURE EVENTS. FORWARD-LOOKING INFORMATION IS INHERENTLY SUBJECT TO, AMONG OTHER THINGS, RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED HEREIN. THESE RISKS, UNCERTAINTIES AND ASSUMPTIONS INCLUDE, WITHOUT LIMITATION, GENERAL ECONOMIC, POLITICAL AND MARKET FACTORS, INTEREST AND FOREIGN EXCHANGE RATES, THE VOLATILITY OF EQUITY AND CAPITAL MARKETS, BUSINESS COMPETITION, TECHNOLOGICAL CHANGE, CHANGES IN GOVERNMENT REGULATIONS, CHANGES IN TAX LAWS, UNEXPECTED JUDICIAL OR REGULATORY PROCEEDINGS AND CATASTROPHIC EVENTS. PLEASE CONSIDER THESE AND OTHER FACTORS CAREFULLY AND NOT PLACE UNDUE RELIANCE ON FORWARD-LOOKING INFORMATION. THE FORWARD-LOOKING INFORMATION CONTAINED HEREIN IS CURRENT ONLY AS OF JANUARY 22, 2025. THERE SHOULD BE NO EXPECTATION THAT SUCH INFORMATION WILL IN ALL CIRCUMSTANCES BE UPDATED, SUPPLEMENTED OR REVISED WHETHER AS A RESULT OF NEW INFORMATION, CHANGING CIRCUMSTANCES, FUTURE EVENTS OR OTHERWISE.

THE CONTENT OF THIS VIDEO (INCLUDING FACTS, VIEWS, OPINIONS, RECOMMENDATIONS, DESCRIPTIONS OF OR REFERENCES TO, PRODUCTS OR SECURITIES) IS NOT TO BE USED OR CONSTRUED AS INVESTMENT ADVICE, AS AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, OR AN ENDORSEMENT, RECOMMENDATION OR SPONSORSHIP OF ANY ENTITY OR SECURITY CITED. ALTHOUGH WE ENDEAVOUR TO ENSURE ITS ACCURACY AND COMPLETENESS, WE ASSUME NO RESPONSIBILITY FOR ANY RELIANCE UPON IT

COMMISSIONS, TRAILING COMMISSIONS, MANAGEMENT FEES AND EXPENSES ALL MAY BE ASSOCIATED WITH MUTUAL FUND INVESTMENTS. PLEASE READ THE SIMPLIFIED PROSPECTUS BEFORE INVESTING. MUTUAL FUNDS ARE NOT GUARANTEED, THEIR VALUES CHANGE FREQUENTLY AND PAST PERFORMANCE MAY NOT BE REPEATED.

TRADEMARKS OWNED BY INVESTMENT PLANNING COUNSEL INC. AND LICENSED TO ITS SUBSIDIARY CORPORATIONS. INVESTMENT PLANNING COUNSEL IS A FULLY INTEGRATED WEALTH MANAGEMENT COMPANY. MUTUAL FUNDS AVAILABLE THROUGH IPC INVESTMENT CORPORATION AND IPC SECURITIES CORPORATION. SECURITIES AVAILABLE THROUGH IPC SECURITIES CORPORATION. MEMBER - CANADIAN INVESTOR PROTECTION FUND. INSURANCE PRODUCTS AVAILABLE THROUGH IPC ESTATE SERVICES INC.

IPC PRIVATE WEALTH IS A DIVISION OF IPC SECURITIES CORPORATION. IPC SECURITIES CORPORATION IS A MEMBER OF THE CANADIAN INVESTOR PROTECTION FUND.

Diversifying During Uncertain Times

Fri, 07 Mar 2025 13:30:54 GMT

The recent imposition of U.S. tariffs on Canada has fuelled a surge in Canadian nationalism. In recent weeks, investors have increasingly asked, "How much of my portfolio is in U.S. equities?"

Historically, this question reflected concerns about whether their exposure was sufficient to capture the superior performance of U.S. markets. Today, however, the question is rooted in an emotional reaction to the U.S. administration’s policies and the growing wave of Canadian nationalism. While these concerns are valid, investment decisions require a clear, objective approach. Unlike choosing to buy Canadian produce from a grocery store, the answer for investment portfolios is: diversification remains essential.

The case for global diversification

Although Canadian investors’ temptation to reduce or eliminate U.S. equity exposure in response to political and trade tensions is understandable, it might not be strategically prudent. While we have confidence in the strength and resilience of Canadian equities, the reality is that the U.S. market provides diversification benefits that can’t be replicated within Canada’s equity landscape.

The Canadian equity market is heavily concentrated in a few sectors – financials, energy, industrials and materials – accounting for approximately 75%(1) of the S&P/TSX Composite Index. In contrast, the U.S. market offers a much broader exposure, particularly in technology and healthcare, two of the most dynamic and fastest-growing sectors globally. The U.S. is home to industry leaders such as Microsoft, Apple, Nvidia and Amazon in technology, as well as Johnson & Johnson, UnitedHealth and Pfizer in healthcare. These sectors provide structural growth opportunities that Canadian investors can’t access through domestic markets alone.

Technology, a sector in which Canada has had little exposure, has been a key driver of U.S. stock market outperformance. The same applies to healthcare, which benefits from aging demographics, innovation in biotechnology and advancements in pharmaceuticals. Without exposure to these sectors, Canadian portfolios risk being overly dependent on commodity price fluctuations and financial sector performance, both of which can be cyclical and vulnerable to external shocks.

"... diversification into U.S. equities acts as a hedge against currency risk. The U.S. dollar is the world’s reserve currency and often appreciates during periods of economic uncertainty."

Additionally, diversification into U.S. equities acts as a hedge against currency risk. The U.S. dollar is the world’s reserve currency and often appreciates during periods of economic uncertainty. For Canadian investors, maintaining exposure to U.S. assets provides not only sectoral diversification but also acts as a potential stabilizer in times of market volatility.

Canadian investors have an inherent home bias, with an estimated 82% of their total assets – including real estate, pensions, investment funds – tied to Canada. Real estate alone represents approximately 40.9% (2) of total household assets, while financial assets (including pensions, investment accounts and private businesses) make up another 41%.(3) The vast majority of these assets are invested domestically. Given this already high domestic exposure, reducing U.S. equity allocations would further increase concentration risk and reduce access to global growth opportunities.

While concerns over trade policy and geopolitical uncertainty are understandable, history shows that markets tend to look beyond short-term disruptions. Investors who attempt to time geopolitical risks often make sub-optimal decisions, reducing exposure at precisely the wrong moment. Instead, maintaining a long-term, globally diversified approach ensures access to the best-performing sectors and companies, regardless of political and economic uncertainties.

Investment strategy amid trade tensions

Recent developments, including the shift in the U.S. administration’s economic policy towards Canada, has added another layer of complexity to Canada-U.S. economic relations. The Bank of Canada has already acknowledged that trade uncertainty is weighing on business confidence and investment intentions. (4) While some sectors, such as steel and aluminum may face direct impacts from tariffs, we believe that broader economic growth will likely remain resilient.

At the same time, when comparing economic growth and productivity trends, the U.S. stands out as the most resilient and best-positioned economy for long-term investors. We believe that the country is expected to maintain a gross domestic product (GDP) growth rate of approximately 2.5% annually, outpacing both Canada and the Eurozone, which we forecast to grow at more modest rates of 1.7% and 1.2%, respectively.

Additionally, the U.S. has a clear advantage in productivity growth, driven by its leadership in technology, artificial intelligence (AI) and automation. We project that U.S. productivity growth will remain at an annualized rate of 1.8%, compared to just 1.0% in Canada and 0.8% in Europe. This productivity edge is further reinforced by substantial investment in research and development, an entrepreneurial culture and a regulatory environment that encourages innovation.

The AI-driven productivity boom is expected to bolster economic growth in developed markets, particularly in the U.S., which remains in the strongest position to capitalize on these advancements. The strong fundamentals of the U.S. economy, combined with its leadership in key industries, make it a critical allocation bucket for Canadian investors, despite political noise and trade uncertainties.

The long-term outlook

While political uncertainty and trade tensions may create near-term volatility, global economic megatrends are expected to continue to shape markets over the next decade. AI-driven productivity gains, shifting trade alliances and demographic changes will influence long-term investment returns. Canada’s economy will remain closely linked to the U.S., but diversifying beyond national borders remains the most prudent approach for Canadian investors.

Conclusion

Canadian nationalism is understandable in the current climate. When it comes to investment decisions, however, diversification remains a sound strategy. History has shown that concentrated bets on any single country – no matter how dominant it is at a given time – can lead to extended periods of underperformance. By maintaining a globally-diversified portfolio, investors can mitigate risks, capture opportunities across different markets and help ensure long-term financial stability. Any shift in bilateral trade policies may cause short-term turbulence, but they’re unlikely to derail the broader economic megatrends shaping the future. The U.S. will likely remain at the forefront of AI-driven innovation, while Canada’s economic resilience will continue to be supported by its strong trade relationships. In an unpredictable world, maintaining a balanced, diversified investment approach might be the best way to safeguard and grow wealth over time.

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

Sources:

S&P/TSX Composite Index | S&P Dow Jones Indices .
The Daily — National balance sheet and financial flow accounts, third quarter 2024 .
The Daily — National balance sheet and financial flow accounts, third quarter 2024 . & INVESTOR ECONOMICS HOUSEHOLD BALANCE SHEET REPORT 2023
Monetary Policy Report—January 2025 - Bank of Canada .

Disclaimers:

The views expressed in this commentary are those of Canada Life Investment Management as at the date of publication and are subject to change without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Prospective investors should review the offering documents relating to any investment carefully before making an investment decision and should ask their advisor for advice based on their specific circumstances. The content of this material (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it. 

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of February 18, 2025 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Trump – Reliably Unreliable

Tue, 18 Feb 2025 20:21:00 GMT

Trusting his word is like forecasting the weather with a magic eight ball – you’ll get an answer, but don’t expect it to be the same tomorrow.

The past week underscored the noise and volatility surrounding U.S. trade policy, particularly under the Trump administration, and its far-reaching implications for markets and economic alliances. While the latest tariff decisions appear to have been negotiated to a 30-day pause at the last minute for Canada and Mexico, the imposition of higher tariffs on China signals a broader strategic shift in U.S. policy.

Meanwhile, the U.S. labour market remains resilient, contrasting sharply with the deteriorating economic conditions in Europe. These dynamics create both risks and opportunities for investors navigating an uncertain global economic landscape.

Navigating U.S. trade policy: Deals or strategic posturing?

A key takeaway from the latest developments in U.S. trade policy is the administration’s willingness to negotiate – provided counterparties offer political wins. Tariff threats against Canada, Mexico and Colombia were all reversed in last-minute deals, suggesting that trade friction with allied nations remains more about leverage than about a fundamental shift in economic relationships. However, the follow-through on tariffs against China indicates a more entrenched stance, driven by long-term geopolitical competition rather than short-term negotiating tactics.

Despite Donald Trump cutting deals with Mexico and Canada, we’re not backtracking from our revised view that the U.S. Federal Reserve (Fed) will stay on the sidelines for the next six months. If U.S. tariffs end up close to our assumptions, we think the boost to inflation will prevent cuts later in 2025. Our expectation is that interest rates settle at 4.75% in the U.S. It has also bolstered our belief in a stronger dollar and renewed U.S. exceptionalism in equities.

The Bank of Canada’s decision to cut its policy rate by 25 basis points (bp) on Jan. 29 was no surprise, but the outlook for future meetings has become increasingly unclear. While markets are pricing in a 40% chance of a hold at the Bank’s next meeting in March, we still expect rates to be cut twice more in the coming months, down to a terminal rate of 2.50%. A 25% tariff on Canada would knock around 3% off gross domestic product (GDP) over the next year, but also prompt a sharp depreciation in the loonie, raising the cost of imports significantly. This would constrain the ability of the Bank to cut interest rates to support the economy, especially if a pick-up in capital outflows posed further downside for the loonie.

If Canada manages to avoid a 25% tariff, we believe it’ll still be caught up in a 10% U.S. universal tariff in the second quarter. In this case, we would expect a similar interest rate path but far less fiscal stimulus, given the smaller potential impact on GDP.

A key takeaway from the latest developments in U.S. trade policy is the administration’s willingness to negotiate – provided counterparties offer political wins.

Market complacency and the risk of a re-escalation

A lingering risk is the assumption that trade-related threats will always be diluted before they materialize. This past week, investors appeared a bit sceptical that this was the start of a trade war. The peak-to-trough fall of nearly 2% in the S&P 500 wasn’t dramatic and far from uncommon by past standards. It was much less deep at the start of the trade war in 2018.

Trump has a habit of using economic threats to reach unrelated objectives ( e.g., with Colombia recently: Colombia agrees to take deported migrants after tariff showdown with Trump | CBC News), so market scepticism makes sense to me. I still expect the U.S. to impose tariffs on Mexico and Canada, but also a universal 10% tariff. Investors should remain attuned to key deadlines – March 5, when the 30-day tariff reprieve for Canada and Mexico expires, and April 1, when a broader review of U.S. trade relations is expected. These points could serve as catalysts for renewed volatility, particularly if the White House signals dissatisfaction with ongoing negotiations.

Before Trump’s inauguration, we had assumed the Federal Open Market Committee (FOMC) would deliver two more 25bp cuts to its policy rate by the middle of 2025. However, we no longer expect any more cuts from the U.S. Federal Reserve. This change has prompted us to ratchet up our year-end forecast of 4.75% for the 10-year Treasury yield. The influence of near-term expectations for Fed policy on long-term U.S. government bond yields remains strong, reinforcing our updated outlook.

The labour market: U.S. resilience versus European struggles

Amid trade policy turbulence, the U.S. labour market remains a source of economic strength. January payrolls, though somewhat softer at 143,000 new jobs, were revised downward less than anticipated and wage growth continued at a solid pace. Unemployment declined to 4%, reinforcing the view that while the labour market is cooling slightly, it remains fundamentally strong. (1)

By contrast, European economic data tells a different story. German industrial production fell by more than 2% in December (2), bringing output back to levels seen at the height of the 2020 pandemic. The Eurozone’s economic weakness is becoming increasingly entrenched, with the U.K.’s monetary policy committee divided on whether rate cuts should be larger. The fundamental challenge for European policymakers is to assess how much of this slowdown is cyclical versus structural. Given the persistence of high services inflation, monetary policy alone may not be sufficient to stimulate growth, leaving Europe vulnerable to prolonged stagnation.

The global economic fracturing: U.S.-China rivalry and the battle for influence

Beyond immediate trade disputes, recent developments have reinforced the broader trend of global economic fragmentation. The imposition of tariffs on China – but not on long-standing U.S. allies – illustrates the bifurcation of global trade into U.S.- and China-led economic blocs. While Washington still holds a relative advantage due to its extensive network of allied economies, an aggressive U.S. trade policy risks alienating neutral players, particularly in Southeast Asia, who seek to balance relations between the two superpowers.

Trump remains predictably unpredictable. His eleventh-hour decision to delay the 25% tariffs on Canada and Mexico underscores his deal-making nature but doesn’t necessarily mean his broader tariff threats are bluffs. We continue to assume a 10% universal tariff is coming in the second quarter, alongside an increase in effective tariffs on Chinese imports. There’s also a rising risk that additional tariffs will be applied to European Union imports. While the latest delays provide some breathing room, a rolling tariff threat could persist throughout the year, keeping markets on edge.

Investment implications: Positioning for a volatile trade and growth environment

Markets may be in a temporary holding pattern, but risks remain skewed toward further volatility. Investors should closely monitor upcoming trade deadlines as well as labour market dynamics, which will likely be crucial for Fed policy decisions. The contrast between U.S. resilience and European weakness suggests divergent monetary policy paths ahead, potentially widening the gap in equity and bond market performance between the two regions.

If history is any guide, Trump’s tariffs could reinforce U.S. exceptionalism in the stock market. In 2018, mid- and large-cap U.S. equities significantly outperformed their global peers after the initial round of tariffs, a trend that could repeat if trade policies follow a similar trajectory. While enthusiasm for artificial intelligence remains a strong tailwind, investors should remain mindful of potential retaliatory measures, particularly from China that could undermine market sentiment.

Ultimately, while the past week’s events reaffirmed that trade threats can often be negotiated down, the broader theme of economic fragmentation remains in place. The relentless cycle of tariff threats and policy shifts continues to inject noise into the markets, underscoring the importance of disciplined portfolio management, particularly in an environment where U.S. trade policy remains reliably unreliable.
Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer
Canada Life Investment Management

(1) Bureau of Labor Statistics (BLS) website at www.bls.gov > Employment Situation for January 2025

(2) Destatis (Germany’s federal statistical office): https://www.destatis.de/EN/Home/_node.html

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of February 18, 2025 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

In Conversation With: On Tariffs Between the U.S. and Canada

Wed, 05 Feb 2025 22:36:00 GMT

Although the proposed Canada-U.S. tariffs have been delayed for 30 days, we continue to monitor potential economic and market impacts on both countries.

The U.S. has threatened to impose a 25% tariff on Canadian imports, while Canada has announced plans to retaliate with tariffs on up to $155 billion worth of American goods. As expected, markets reacted negatively, fearing the economic consequences. The 30-day postponement follows negotiations that included agreements on enhanced border protections and a crackdown on fentanyl trafficking, among other issues.

Projected Economic Impact

Even with a weakening Canadian dollar, a 25% tariff on Canadian exports could reduce GDP by 2.5% to 3.0%. (5) However, given Canada’s current interest rate trends and public finances, the severity of any recession may prove limited. The Bank of Canada modelled a scenario where mutual 25% tariffs would cause a 2.5% GDP decline in year one and an additional 1.5% drop in year two, raising concerns about a potential recession this year.

The Importance of Canada-U.S. Trade

Canada is the second-largest trading partner of the U.S., exporting $594 billion in goods to the U.S. in 2023. (3) Conversely, Canada is also the largest importer of American goods and services, spending $350 billion annually (1). Justifying tariffs based on border security concerns is questionable, as less than 1% of fentanyl entering the U.S. comes from Canada (3) – especially when considering the economic partnership between the two nations supports 1.4 million American jobs and 2.3 million Canadian jobs (2).

Industry-Specific Impact of U.S. Tariffs on Canadian Exports

As illustrated below, certain industries will be hit harder than others, especially those with high U.S. export dependency. Given the share of U.S. exports, it is clear that the energy sector and automobile sectors will have the largest impact:

Impact By Industry

Key Sectoral Impacts

Energy

The U.S. relies heavily on Canadian crude oil, which makes up one-third of Canada’s total exports to the U.S. While tariffs could initially cause price volatility, North America’s highly integrated energy markets limit alternative sourcing options.

Automotive

Canada’s auto industry depends on seamless cross-border supply chains. Tariffs would increase production costs, reduce demand, and hurt competitiveness in both countries.

Wider Economic Consequences

The broader economic impact depends on availability of substitutes and how easily businesses and consumers can find non-tariffed replacements. If alternative suppliers aren’t available, tariffs will likely drive higher inflation. The longer tariffs remain in place, the greater the potential disruption. To mitigate economic harm, the Canadian government is introducing a remission process to provide exceptional relief from tariffs where necessary. (4)

Stock Market Considerations

It is crucial to distinguish the Canadian economy from the Canadian stock market:

Many large Canadian companies are multinational and do not rely solely on domestic revenues.
Over 50% of S&P/TSX revenues come from outside Canada, with over a quarter generated in the U.S.

Financial and technology sectors (which make up 33% and 10% of the S&P/TSX index, respectively) should be less affected, as tariffs primarily target goods rather than services.

Services includes Communication Services, Financials, Health Care, Information Technology, and select industries in the Consumer Discretionary, Consumer Staples, and Industrial sectors.

Source - RBC Wealth Management FactSet data as of 12/31/24

Given a lower 10% tariff on energy, U.S. demand for Canadian oil should remain relatively stable, helped by a weaker Canadian dollar, producer price cuts, and U.S. refinery cost absorption.

Investment Strategy Amid Tariff Volatility

At IPC Private Wealth, our portfolios are globally diversified to manage risks, including those posed by tariffs. Our macro-economic analysis informs our asset allocation and positioning, ensuring we remain adaptable.

At the individual stock level, our sub-advisors focus on opportunities that arise when tariffs create market distortions. While tariffs may cause economic pain, some sectors and companies will benefit from these shifts. Historically, equity markets have recovered from major external shocks, including the 2008 financial crisis, the COVID-19 pandemic, and even world wars. Short-term volatility is expected, but it’s critical to avoid emotional decision-making. A well-diversified portfolio—including multiple asset classes and investment managers—remains the best defense against market instability.

You can hear more about Paul's take on tariffs between the U.S. and Canada in our 4-minute video.

Sources:

1. TD Economics: Setting the Record Straight on Canada-U.S. Trade

2. Chamber of commerce “The Cost of Canada-US Trade Disruption on Full Display with New Trade Tracker”

3. Toronto Star: These industries would be hit hardest by Trump’s 25 per cent tariffs

4. Canada.ca: Canada announces $155 tariff package in response to unjustified U.S. tariffs

5. Capital Economics “Trump hits Canada, China and Mexico with tariffs”

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of September 25, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

The content of this video (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it.

U.S. tariffs on Canada, Mexico and China: A renewed trade war?

Tue, 04 Feb 2025 22:02:00 GMT

The proposed tariffs announced by the U.S. signals a significant shift in global trade dynamics, with 25% tariffs on Canada and Mexico to be imposed beginning in March and an additional 10% on China.

While officially justified as a measure to curb fentanyl trafficking, in our view, since U.S. seizures of the drug on the Canadian border amounted to a trivial 43 pounds in the whole of last year (1), we believe this is just a pretext for Trump to employ the International Emergency Economic Powers Act (IEEPA) for the first time to levy tariffs. These tariffs appear to be part of a broader economic strategy. Imports from the European Union (EU) will likely be hit within the next month or two. Also, a universal tariff is expected in April.

Since exports to the U.S. account for around 20% of Canada and Mexico’s gross domestic product (GDP), if the proposed tariffs are implemented, they could push both the Canadian and Mexican economies into recession later this year. The resulting surge in U.S. inflation from these tariffs and other future measures is going to come even faster and may be larger than we initially incorporated into our macro views. The key questions now are how affected countries may respond and what this means for North American and global markets.

Macroeconomic implications: inflation, growth, and policy response

U.S. economy: Higher inflation, tighter monetary policy

In our view, if implemented, the most immediate consequence of these tariffs will be higher inflationary pressures in the U.S., as importers pass on increased costs to consumers. Historically, tariffs have proven to be a tax on domestic buyers rather than foreign producers, and this round would be expected to push inflation in the U.S. back above 3% by the second half of the year.

This complicates the Federal Reserve’s (Fed) outlook. While we believe the Fed is unlikely to raise interest rates in response, since tariffs create a one-off price shock rather than persistent inflation, this move effectively narrows the already slim window for rate cuts in 2025. A scenario where inflation stays elevated while growth slows could put the Fed in a difficult position, limiting its flexibility to support the U.S. economy.

Canada and Mexico: Recession risks rise

For Canada and Mexico, the impact could be far more severe. Their economies are highly integrated with the U.S., and the imposition of such significant tariffs would disrupt supply chains that have functioned seamlessly for decades. Canada has already signalled its intent to retaliate with tariffs on up to $155 billion worth of U.S. imports, escalating trade tensions further.

Economic forecasts now suggest that both Canada and Mexico could face back-to-back quarters of negative growth, effectively pushing them into recession. The energy sector in particular is a critical area to watch. While some Canadian energy exports may receive exemptions, the uncertainty surrounding trade policy could weigh heavily on investment decisions in the sector.

Market reaction and investor considerations

Currency and equity market volatility

In response to heightened trade uncertainty, the U.S. dollar has grown stronger and our expectation is it will continue to strengthen, driven by demand for safe-haven assets. A stronger dollar could weigh on emerging markets and U.S. multinationals, particularly those with significant exposure to Canada, Mexico and China.

Equity markets are also likely to experience heightened volatility. Sectors with deep exposure to North American trade, such as manufacturing, industrials, and consumer goods, will face margin pressures from increased input costs. Meanwhile, companies with domestic supply chains may be viewed as relative beneficiaries, though broad-based market sentiment is likely to turn more risk averse.

Fixed income and credit spreads

The bond market reaction will be equally important. If the outlook for U.S. growth deteriorates, U.S. Treasury yields could trend lower as investors seek safety. However, if inflation concerns dominate, the yield curve could steepen, reflecting expectations that the Fed will be constrained in its ability to cut rates. Credit spreads may widen, particularly for corporate bonds in industries exposed to trade disruptions.

Global trade war risks: Lessons from history

The parallels to the 1930s Smoot-Hawley tariffs are hard to ignore, but historical context is key. While trade protectionism contributed to the economic collapse of that era, it was not the primary cause. The Great Depression’s demand shock played a much larger role. However, the risk today lies in the response. If tariffs are ultimately implemented and major economies retaliate in ways that escalate tensions further, we could see a chain reaction that slows global trade growth significantly.

While China's initial tariff hit was lower than what may be imposed on Canada and Mexico (10% versus 25%), the broader expectation is that U.S.-China trade tensions will continue to escalate, potentially reaching a 60% tariff level on all Chinese imports. The geopolitical dimension adds another layer of complexity. This trade war is not just about economics but about broader strategic competition between the U.S. and China.

Investment strategy: Positioning for uncertainty

Given the macroeconomic and market implications, a disciplined approach to portfolio construction is critical.

Diversification remains key : Exposure to uncorrelated assets, such as private credit and alternative strategies, can help hedge against market volatility.

Focus on high-quality assets : Companies with strong balance sheets and pricing power will be better positioned to weather cost pressures from tariffs.

Selective fixed income exposure : While U.S. Treasury bonds may serve as a safe haven, credit spreads could widen, making credit selection crucial.

Opportunistic equity positioning : U.S. companies with strong domestic revenue streams may be relative beneficiaries, while multinational firms exposed to North American supply chains may face headwinds.

Final thoughts

If he maintains this approach, it risks undermining global confidence in U.S. leadership and diplomacy. And while it is unlikely that Western countries like Canada or Denmark would switch sides and align with the Communist Party of China leadership in Beijing, some countries in the Global South may be inclined to lean more toward China after seeing how the U.S. treats its closest allies.

Over the short and medium-term, investors should prepare for increased volatility, balancing risk management with strategic positioning to navigate a more uncertain trade environment.

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer
Canada Life Investment Management

Source: [1] U.S. Customs and Border Protection. (2025). Drug Seizure Statistics. Retrieved from https://www.cbp.gov/newsroom/stats/drug-seizure-statistics

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of August 6, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

U.S. tariffs on Canada, Mexico and China: A renewed trade war?

Tue, 04 Feb 2025 13:24:37 GMT

The proposed tariffs announced by the U.S. signals a significant shift in global trade dynamics.

The proposed tariffs announced by the U.S. signals a significant shift in global trade dynamics, with 25% tariffs on Canada and Mexico to be imposed beginning in March and an additional 10% on China. While officially justified as a measure to curb fentanyl trafficking, in our view, since U.S. seizures of the drug on the Canadian border amounted to a trivial 43 pounds in the whole of last year(1), we believe this is just a pretext for Trump to employ the International Emergency Economic Powers Act (IEEPA) for the first time to levy tariffs. These tariffs appear to be part of a broader economic strategy. Imports from the European Union (EU) will likely be hit within the next month or two. Also, a universal tariff is expected in April.

Macroeconomic implications: inflation, growth, and policy response

U.S. economy: Higher inflation, tighter monetary policy

Canada and Mexico: Recession risks rise

Market reaction and investor considerations

Currency and equity market volatility

Fixed income and credit spreads

Global trade war risks: Lessons from history

Investment strategy: Positioning for uncertainty

Given the macroeconomic and market implications, a disciplined approach to portfolio construction is critical.

Diversification remains key : Exposure to uncorrelated assets, such as private credit and alternative strategies, can help hedge against market volatility.
Focus on high-quality assets : Companies with strong balance sheets and pricing power will be better positioned to weather cost pressures from tariffs.
Selective fixed income exposure : While U.S. Treasury bonds may serve as a safe haven, credit spreads could widen, making credit selection crucial.
Opportunistic equity positioning : U.S. companies with strong domestic revenue streams may be relative beneficiaries, while multinational firms exposed to North American supply chains may face headwinds.

Final thoughts

Although tariffs on Canada and Mexico were paused for the next 30 days, the coming weeks will be pivotal. If tariffs are imposed in March and retaliation is measured, the economic damage may be contained. But if this escalates into a full-scale trade war, the implications for global growth and financial markets could be severe. All else equal, we believe tariffs are bad for U.S. equities, but in general worse for equities elsewhere. Longer term, Trump's latest tariff actions against Canada and Mexico, and his recent threats against the European Union and Taiwan, show that he is willing to damage those alliances over minor economic disputes. If he maintains this approach, it risks undermining global confidence in U.S. leadership and diplomacy. And while it is unlikely that Western countries like Canada or Denmark would switch sides and align with the Communist Party of China leadership in Beijing, some countries in the Global South may be inclined to lean more toward China after seeing how the U.S. treats its closest allies.

Over the short and medium-term, investors should prepare for increased volatility, balancing risk management with strategic positioning to navigate a more uncertain trade environment.

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

Source: [1] U.S. Customs and Border Protection. (2025). Drug Seizure Statistics. Retrieved from https://www.cbp.gov/newsroom/stats/drug-seizure-statistics.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of February 18, 2025 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Trump, tariffs and the 51st state – Impacts and risks for Canadians

Mon, 03 Feb 2025 17:12:00 GMT

On U.S. President Donald Trump's first day in office, he threatened to impose 25% tariffs on goods from Canada and Mexico by Feb. 1.

The re-emergence of tariffs as a cornerstone of U.S. trade policy underlines the significance of global economic interdependence. For Canadians, the implications of U.S. tariffs are particularly pronounced, given the depth of our economic ties. According to Government of Canada, in 2023, the U.S. accounted for 72.3% of Canada's total trade and 77.2% of Canadian goods exports. (1) This extraordinary level of integration makes any shifts in U.S. trade policy an immediate concern for Canadian businesses, consumers and investors.

Tariff mechanisms and Canadian exposure

Tariffs are essentially taxes that a country imposes on imported goods, implemented either as a fixed dollar amount or a percentage of the good’s value. While aimed at protecting domestic industries or reducing trade deficits, tariffs can often lead to complex, unintended economic consequences. For Canada, the stakes are high given our reliance on the U.S. market as an export destination for everything from crude oil to automotive parts.

The potential scenarios for U.S. tariffs vary in intensity – from a universal 10% import tariff to targeted measures like a 25% tariff exclusively on Canadian goods. Each scenario would create different economic ripple effects:

Universal tariff: A 10% tariff applied globally would raise costs for U.S. importers, potentially reducing demand for Canadian goods. However, given the Canadian dollar’s recent depreciation against the U.S. dollar, the competitive disadvantage might be partially offset.
 Targeted Canadian tariff: A 25% tariff on Canadian goods alone would pose a far more severe challenge. The inability to redirect such a significant portion of exports could reduce Canada’s gross domestic product (GDP) by as much as 3%, pushing Canada into recession.

Economic impact on Canada

Tariffs disrupt supply chains, erode competitiveness and inflate costs. For Canada, the sectors most exposed to U.S. tariffs include:

Energy : The U.S. is heavily reliant on Canadian crude oil, which constitutes one-third of Canadian exports to the U.S. Tariffs could initially create price volatility. However, the highly integrated nature of North American energy markets limits substitution options. Also, with breakeven oil prices for new wells in key oil-producing regions in the U.S. being between $60 to $70 per barrel (pb), oil prices wouldn’t have to fall that far from current levels (approximately $75pb for West Texas Intermediate oil) before it would become uneconomic to develop some of these higher-cost new wells. And it would be a big blow to Trump’s obvious aspirations to exploit Alaska’s even higher-cost oil resources.

Automotive : Canada’s automotive exports depend on seamless cross-border supply chains. Tariffs would increase production costs and reduce demand, harming the sector’s competitiveness in both countries.

Agriculture : Retaliatory tariffs could dampen demand for Canadian agricultural exports, especially in commodities like dairy, where existing trade tensions are well-documented.

Broader impacts on consumers and businesses

The inflationary effects of tariffs extend beyond exporters. Canadian businesses importing U.S. goods would face higher costs due to Canadian tariffs on U.S. goods and the depreciation of the Canadian dollar, potentially passing these costs on to consumers. This could further strain household budgets already stretched by inflation. Businesses reliant on U.S. inputs may need to reassess supply chain strategies, potentially accelerating the trend toward diversifying trade relationships.

Additionally, retaliatory measures by Canada could exacerbate these challenges. In a prior case during Trump’s first presidential term, Canada targeted politically sensitive U.S. industries in response to tariffs, such as Florida orange juice and Kentucky bourbon, creating economic headwinds on both sides of the border.

Likely scenario and implications

Based on current rhetoric and past policy actions, the most likely scenario would be the U.S. imposing a 10% universal tariff, including on Canadian goods. While this measure is less severe than a targeted 25% tariff, it’s not without consequences. We estimate that a 10% tariff would cause Canadian goods exports to the U.S. to stagnate, shaving 1% off our GDP due to reduced demand and secondary effects on investment and consumption.

Fortunately, several mitigating factors would likely prevent a recession under this scenario. The loonie’s 6% depreciation against the U.S. dollar has already improved competitiveness, partially offsetting the tariff’s impact. Additionally, U.S. demand for Canada’s largest export – energy products – is relatively inelastic, providing stability in this critical sector. However, we predict GDP growth would remain subdued, given limited scope for immediate substitution of Canadian goods by U.S. producers operating near full capacity.

A more extreme scenario – a 25% tariff targeting only Canada – would have far-reaching implications, likely reducing GDP by 3% and triggering a recession. Such a measure would lead to a sharper depreciation of the loonie, raising the cost of imports and significantly weighing on investment and consumption. While this outcome is less probable, it underscores the importance of continued vigilance and proactive policy measures.

Historical and political context

The "America first" trade policy has been a recurring theme in U.S. politics, with tariffs used as both a revenue tool and a means to negotiate foreign policy objectives. As it stands, the outcome means that Canada and the U.S. will not be trading friendship bracelets anytime soon. In the context of Canada, recent threats have tied tariff imposition to issues such as border security, immigration and defense spending. For instance, during prior tariff negotiations, Canada’s dairy sector and energy exports became focal points for U.S. demands.

The broader political landscape also matters. U.S. policies that increase economic nationalism often create ripple effects globally, compelling trade partners like Canada to adjust domestic policies and trade strategies. Moreover, the uncertainty around tariff permanence makes long-term planning for businesses and governments increasingly challenging.

Investment considerations

For investors, U.S. tariffs can introduce both risks and opportunities. The near-term volatility in equity markets could weigh on sectors heavily exposed to U.S. trade. However, tariffs can also create opportunities in less-exposed sectors or alternative asset classes:

Commodities : Inflationary pressures from tariffs make commodities an attractive hedge.

Diversified portfolios : A greater allocation to international equities or multi-asset strategies can mitigate regional trade risks.

Currency : With the loonie likely to depreciate further under significant tariff scenarios, U.S. dollar exposure may protect returns on U.S.-denominated investments.

Outlook and long-term considerations

Navigating the economic uncertainty created by the threat of U.S. tariffs requires a thoughtful and balanced approach. While risks persist, we believe investors can find opportunities to protect and grow portfolios through diversification and strategic positioning. Key themes shaping our investment outlook include:

Strength in U.S. equities : While we anticipate volatility, U.S. equities, particularly in artificial intelligence-driven and technology sectors, should continue to outperform in 2025. Elevated valuations in these sectors highlight the importance of selective exposure and active management.

Global diversification : Non-U.S. equities and alternative investments present compelling value for investors willing to look beyond immediate headwinds. Regions like India, Taiwan and South Korea are well-positioned to benefit from shifting trade dynamics and technological advances.

Fixed income opportunities : With interest rates expected to moderate, high-quality fixed income securities could offer stability and income in an uncertain environment.

We also see value in non-traditional strategies such as private assets and alternatives, which can mitigate tail risks and enhance portfolio resilience. However, these require careful selection and long-term commitment to realize their potential benefits.

Conclusion

While U.S. tariffs represent a clear and present challenge for Canada and investors, they also highlight the resilience of diversified investment strategies. By focusing on long-term goals and adapting to evolving market conditions, investors can navigate uncertainty with confidence. Selling all your investments and moving entirely to cash might feel like a safe strategy during times of uncertainty, but it often comes at a significant cost. Cash provides security, but it also exposes investors to the risk of inflation, eroding purchasing power over time, especially in a low-interest-rate environment. Additionally, timing the market – knowing when to exit and when to reinvest – is notoriously difficult, even for seasoned investors. By sitting on the sidelines, investors risk missing out on market rebounds, which often generate the largest gains over short periods. A diversified, long-term investment approach is typically more effective in navigating volatility while capturing opportunities for growth.

The global economic landscape in 2025 is shaped by both risks and opportunities. Tariffs, while disruptive, underscore the importance of strategic planning and disciplined portfolio management. As we move forward, our priority remains guiding investors to make informed decisions that balance risk with reward, leveraging opportunities in equities, fixed income and alternative strategies. With a proactive approach, Canadian investors can weather tariff-induced volatility and position for a brighter future.

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer
Canada Life Investment Management

Source : [1] Government of Canada. (2024) State of Trade 2024: Supply chains. Retrieved from https://www.international.gc.ca/transparency-transparence/state-trade-commerce-international/2024.aspx?

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of August 6, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Navigating the Global Economic Landscape in 2025

Fri, 17 Jan 2025 22:05:00 GMT

As we embark on a new year, it’s common practice to make predictions about the economic and investment landscape.

The exercise of forecasting the economic and investment landscape comes with both challenges and opportunities. I'm reminded of a quote often attributed to British statistician George E. P. Box, “All models are wrong, but some are useful.” This serves as a valuable reminder that while forecasts are inherently imperfect, they can still offer meaningful insights to guide decision-making in an uncertain world. With this in mind, we’ve identified key themes likely to shape the global economy and markets in 2025, providing a framework to navigate both the risks and opportunities that lie ahead.

Challenges facing the global economy

We anticipate that the global economy in 2025 will face numerous challenges, including shifting U.S. trade policies, structural issues in China and slow growth in the eurozone. Despite these obstacles, we expect global gross domestic product (“GDP”) to grow by approximately 3%. This is a modest pace compared to historical standards but enough to support “risky” assets, such as non-government non-investment grade bonds, equities or commodities.

In our view, in the U.S., higher inflation and interest rates than what market participants previously expected, along with slower GDP growth, will characterize the year. However, strong household and business balance sheets should help cushion the impact. In China, fiscal and monetary support could spur short-term growth, but structural constraints such as elevated debt levels and supply/demand imbalances will likely reemerge. Meanwhile, Canada may see early gains from lower interest rates, but slowing immigration and U.S. tariffs could cap growth at around 1.5% by 2026. In our view, emerging markets will generally experience gradual slowdowns, with India continuing as a standout performer.

In our view, in the U.S., higher inflation and interest rates than what market participants previously expected, along with slower GDP growth, will characterize the year.

We expect interest rates to fall further in 2025, but central banks will likely approach monetary easing cautiously. In the U.S., inflation driven by tariffs may peak at 3% before moderating in 2026, prompting the U.S. Federal Reserve Board (“Fed”) to adopt a measured stance, with rates likely ending the year between 3.50% and 3.75%. While we predict China and Australia to tread carefully, the European Central Bank may implement more aggressive cuts due to persistently weak growth, likely weakening the euro.

The Bank of Japan stands out as a potential exception, which may raise rates amidst unique domestic conditions.

While geopolitical events will dominate headlines, their direct economic consequences may remain limited. The return of Donald Trump to the U.S. presidency could shape global dynamics, from trade relations to conflict risks. Tensions between the U.S. and China will likely deepen, but the economic fallout will likely play out over years rather than months. Of note, a potential conflict over Taiwan remains a low-probability, but high-impact risk.

We also believe concerns over a global trade war may be overblown. While tariffs and protectionist measures from the U.S. will likely disrupt trade flows, global trade volumes are unlikely to collapse. Adjustments in exchange rates and selective retaliation from other nations may limit the broader impact. We expect U.S. imports to shrink, but global trade could still post modest gains if the world economy remains resilient.

High debt levels and widening budget deficits will likely constrain fiscal policy across many advanced economies. Countries like France, Italy and the U.S. face increasing scrutiny from bond markets, which could force governments to prioritize fiscal discipline over stimulus spending. While emerging markets in Asia appear better positioned, vulnerabilities in economies like Brazil remain a concern. These fiscal pressures are likely to temper expectations for bold policy moves in 2025.

Navigating the AI boom

U.S. equities are poised to outperform in 2025, driven by the continued expansion of the artificial intelligence (“AI”) bubble. Investment bubbles are often viewed negatively, but they can have significant benefits, such as accelerating innovation and infrastructure development. Historical examples include the railroad boom of the 19th century and the internet bubble of the late 1990s. They illustrate how speculative enthusiasm can channel vast amounts of capital into transformative technologies. However, these periods of exuberance are not without their downsides. While society often reaps long-term rewards, many investors suffer substantial losses when bubbles inevitably burst, as overinflated valuations collapse and speculative ventures fail. This the importance of careful portfolio management during periods of speculative fervour.

U.S. equities are poised to outperform in 2025, driven by the continued expansion of the artificial intelligence (“AI”) bubble.

While valuations remain elevated, historical metrics suggest room for stocks to run further. However, non-U.S. equities may underperform, particularly in Europe and Canada, due to weaker economic conditions. Commodity markets are likely to face headwinds from slowing global demand, while corporate bonds may struggle to deliver attractive returns, given narrow yield spreads.

Potential for a brighter 2025?

Despite notable risks, 2025 could surprise to the upside. A stronger-than-expected recovery in global productivity, driven by technological advancements and structural reforms, could push GDP growth closer to 4%. Alleviating inflation pressures in major economies and sustained fiscal and monetary support could further bolster economic momentum. While this optimistic scenario requires several factors to align perfectly, it serves as a reminder of the potential for resilience and recovery in the global economy.

Wishing you and your loved ones a happy, healthy, and prosperous 2025 and for the economic stars align in 2025!

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer
Canada Life Investment Management

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of August 6, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Changes In Leadership

Thu, 16 Jan 2025 18:52:00 GMT

In his Q4 commentary, IPC Private Wealth Portfolio Manager Simon Bowers notes that the stock markets in 2024 experienced a remarkable year, with Canadian and U.S. equities reaching all-time highs.

In Canada, the TSX surged as investors sought higher yields following Bank of Canada rate cuts, while U.S. markets were propelled by the “Magnificent Seven” tech giants, driven by their dominance in AI and strong cash reserves. Inflation pressures eased significantly, with U.S. CPI at 2.7% and Canada’s at 1.9%, signalling potential for modestly lower rates, though not returning to near-zero levels.

Looking ahead, Simon expects equity performance to remain strong, supported by earnings growth and improving balance sheets, though replicating 2024’s gains seem unlikely. He notes that political changes add uncertainty, as Justin Trudeau’s resignation initiates a leadership transition and eventual election, creating potential market volatility.

In the U.S., Donald Trump’s return to the presidency raises questions, as his leadership is expected to mirror his previous term, characterized by policy unpredictability, debt increases, tax cuts, and tariff threats. Simon feels that tariffs, which are inflationary and often misunderstood, could disrupt global trade, though their actual implementation may differ from publicized intentions.

Globally, political and economic uncertainty persists, but long-term market trends suggest resilience. Simon believes that advisors can play a crucial role in navigating these turbulent times by helping investors assess their portfolios, manage risk, and stay focused on long-term goals.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of September 25, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Elections Have Consequences

Wed, 15 Jan 2025 17:38:00 GMT

In his Q4 2024 update, Blair Setford highlights a strong year for equity investors, with records set across the globe.

Key developments, including Donald Trump’s U.S. presidential win and Republican congressional control, are expected to have global effects that will last well into the future.

In Canada, Blair notes that the TSX saw its best performance since 2021, gaining over 21%, but weaker economic growth led the Bank of Canada to cut rates to 3.25%. This divergence from U.S. rates may weaken the Canadian dollar, and Canada faces uncertainty over the near term in addressing U.S. policy challenges.

The outlook for U.S. markets remains optimistic despite high valuations, though potential tariffs and domestic policy changes could disrupt global economies. Globally, concerns about Ukraine and Middle East tensions persist.

Looking forward, Blair encourages investors to maintain a long-term strategy during these uncertain times and recommends consulting an advisor with any questions on how best to position portfolios for 2025.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of September 25, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Is It Time to Transition Out of High-Interest Savings Accounts?

Thu, 07 Nov 2024 13:42:00 GMT

Canada is now firmly in its rate-cutting era. The Bank of Canada has slashed rates four consecutive times, bringing its overnight interest rate to 3.75% from 5% in June. That has big implications for your high-interest savings account (HISAs).

Until recently, putting money into HISAs and other cash-like investments has made a lot of sense. As rates skyrocketed and economic uncertainty increased, savers moved billions out of traditional investments and into HISA funds and other cash-like instruments, such as money market funds and guaranteed investment certificates (GICs), because they could keep their money safe from market fluctuations and earn around, if not more than, five percent in interest.

But now that inflation has come down and interest rates have been cut, holding assets inside of a HISA fund may not be as appealing. With the BoC expected to cut rates even further over the coming months, now may be the right time to consider other investment options.

“HISAs are great for parking money but are not long-term assets,” says Corrado Tiralongo, Chief Investment Officer at Canada Life Investment Management Ltd., manager of the Counsel Portfolios, “After taxes and inflation, they aren’t going to keep up.”

Falling HISA Rates

HISA funds earn interest higher than traditional savings accounts, providing investors with steady interest income. Prior to 2022, these funds paid next to nothing because rates were so low. As rates increased, so too did the popularity of HISA funds.

But the fortunes of HISA funds rise and fall alongside interest rates – when rates drop, the interest you earn on these accounts declines, which is exactly what has happened over the last few months. “Rates have come down,” says Tiralongo. “You should start thinking about these things now if you haven’t already because we expect them to fall further from here.”

HISA funds aren’t meant to provide investment growth or help people meet their long-term needs, whether that’s saving for retirement, buying a house or achieving another financial goal. That’s what diversified portfolios do. These vehicles, such as mutual funds, which hold stocks that can grow your money and bonds that can help lower your risk, may provide the opportunity for returns that have the potential to exceed what you would get in a HISA.

“If the money isn’t targeted for a specific purpose in the near few years, it should be invested for the long term,” says Tiralongo.

“If the money isn’t targeted for a specific purpose in the near few years, it should be invested for the long term”

Capturing Market Returns

Here’s another reason why you might consider moving at least some of your money back into diversified assets: when rates do fall, other securities tend to improve, he explains.

For instance, bond prices increase when rates fall. Stocks often climb, too, because returns on higher rate-paying options, such as a HISA, money market fund or even bonds, become less attractive compared to what you could potentially receive from stocks.

Since it’s impossible to time the market – you can’t know for sure how much rates might fall further or when stocks or bond prices might climb higher – there’s no time like the present to start thinking about moving money into potentially better-returning securities.

“Unless you get lucky timing these things, going from cash to being fully invested is a crapshoot,” says Tiralongo. “People should start to think, if they’re saving for a long-term asset, they should consider putting that money into longer-term investments which have the potential to return more than safer assets, like a HISA, over time.”

“ Unless you get lucky timing these things, going from cash to being fully invested is a crapshoot”

Plan Your Strategy

Moving funds into a long-term portfolio from your HISA, however, doesn’t mean you have to transfer all your assets at once. Tiralongo suggests investors employ a dollar-cost averaging strategy , which means automatically moving smaller amounts from your HISA into a fund over a set period, such as once a month.

“By doing it systematically you take the emotion out of investing,” he explains, acknowledging that putting a large chunk of money at risk in the markets at one time can be stressful. “It helps people sleep better at night.”

Whether you decide to shift your money all at once or in stages, you’ll want to talk to your advisor before making any significant changes. They can help you determine how best to move your money and what to put it into – such as a balanced mutual fund that holds an almost equal amount of both stocks and bonds or a fund that holds more of one or the other.

Another important role advisors play is helping you avoid making emotional decisions that could impact your portfolio performance today and in the future. That might include panic selling when markets will invariably fall or jumping into a security that doesn’t suit your long-term needs.

“Your advisor will help you make good investment decisions based on where you’re at in life and where you want to get to,” he explains. “Whether it's around moving money out of your HISA or something else, your advisor can help you make a plan - and stick with it.”

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of August 6, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

2024 Presidential Election Predictions & Odds

Wed, 30 Oct 2024 17:42:00 GMT

With only a few days to the U.S. election, we’re taking a look at the current landscape and what might happen next.

The perceived probability of a Trump win has increased over recent weeks. We believe there is still ample scope for a sizeable repricing across markets once the election outcome becomes clear. A Republican “sweep” would probably lead to higher U.S. bond yields, a steeper yield curve, a stronger dollar and a short-term boost to the U.S. stock market.

These developments appear to have started to influence financial markets, which until recently had not reacted much to news around the election campaign. Since mid-September, U.S. bond yields have risen sharply (mostly at the long end of the curve), the dollar strengthened, and the stock market rallied.

While we think these shifts can largely be explained by the recent positive U.S. economic data and more hawkish guidance from FOMC members (since it appears that market participants are still unsure about the outcome, even if it looks like they now assign a higher probability to a Trump win and a Republican sweep), we believe there is ample scope for a sizeable move in the days after the election.

The immediate response to a Trump win would probably be higher U.S. bond yields, a stronger dollar and a rise in the U.S. equity market (outperformance of U.S. equities in comparison with those in the rest of the world). Whereas, a Harris win probably results in somewhat lower bond yields, a weaker dollar, and a slightly softer equity market. An unclear or contested outcome could result in a period of risk-off moves (lower yields, stronger dollar and weaker equity markets) until that uncertainty is resolved.

Once the dust has settled, the key question becomes how much of the winner’s policy program will be implemented and when? We think many of Trump’s policy ideas would end up being watered down and/or delayed. It’s unclear whether his tariff threats are intended to elicit concession from trade partners, or whether he intends to follow through. Whatever the case, he could use executive orders to introduce tariffs soon after assuming office. In contrast, fiscal policy requires legislation and would likely take longer.

Even if watered down somewhat, Trump’s policies could, on net, lead to weaker growth, higher inflation and somewhat tighter policy by the Federal Reserve (Fed) relative to the status quo policy mix. If Trump were to win, we would probably revise our forecast upward for the benchmark 10-year U.S. bond yield to 4.5%, and perhaps even 5% next year, and for the dollar by 5-10%. The medium-term impact of a Trump win on the equity market is ambiguous, in our view, but our base case would remain that the AI-driven euphoria in U.S. equities would likely continue over the next year or so.

Harris represents continuity with the Biden administration and would probably be constrained by a Republican senate. Even with a slim congressional majority, her administration would struggle to pass major policy changes. In the event of a Harris win, we would expect the 10-year U.S. bond yield anchored around 4% over the next year or so, a somewhat weaker dollar as the Fed continues to ease monetary policy, and a continued AI-driven rally in the stock market outweighing any policy-related headwinds.

Election odds can be viewed here .

What happens once the dust settles?

The initial market reaction to the election outcome would probably run its course over a few weeks.

We think many of Trump’s policy ideas would end up being watered down and/or delayed – which is essentially what happened in 2016-2020.

As noted, we believe the medium-term impact of a Trump win on the equity market is ambiguous. The clearest positive for equities among his policies is the presumed cut to the corporate tax rate. The other components of his policy proposals are probably a net negative for the U.S. equity market. Trump’s proposals, in our view, are more clearly negative for equities in the rest of the world, which wouldn’t benefit from a corporate tax cut. It would likely risk being hurt by higher tariffs and the risk of wider trade wars. Nonetheless, we believe the ongoing momentum around AI stocks would probably continue under a Trump presidency, driving U.S. equity markets higher over the next year.

A Harris presidency would probably look broadly similar to Biden’s four-year term. We expect her to continue his trade and immigration policies, as well as the “friendshoring” of critical supply chains. With a Republican congress, she wouldn’t be able to make much change on the fiscal front. Even if Democrats won both the Senate and the House, their majorities would likely be slim ones, and the current expectation is only limited changes to taxes and spending.

Conclusion

Taking a step back, we believe the outcome of the election will make a significant difference to the outlook for U.S. economic policy in several key areas, given the major differences between the two candidates’ views. In our view, Harris represents more of the same as the past four years. Trump represents a major shift on trade and immigration policy, as well as a different set of priorities on fiscal policy.

That said, the key challenges for the U.S. economy and markets will, for the most part, likely be the same under either Trump or Harris presidency. There are some areas where their approaches may not differ all that much in substance. Neither candidate (nor Congress) appears willing to reduce the massive fiscal deficit, meaning the risk of a, “bond vigilante,” moment in the next few years will remain high.

Both candidates will probably take a tough stance on China – a rare area of bipartisan agreement – even though it may be through somewhat different approaches. Both appear uncomfortable with the dominant position of the “big tech” platforms and may intensify regulatory and anti-trust scrutiny of their business models, which is a key risk to the ongoing surge in their share prices.

On balance, we are still maintaining our overweight to U.S. equities over the short term (~12 months) and will monitor events closely.

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management Limited

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of August 6, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Broad Bull Market Continues

Wed, 16 Oct 2024 13:54:00 GMT

In his Q3 Update, Portfolio Manager Simon Bowers discusses recent developments in the financial markets and the issues that should remain top of mind for investors.

Simon notes that in the third quarter, the ongoing bull market in both stocks and bonds continued, despite economic uncertainties. The two most significant developments during the quarter were political and economic in nature. Politically, Joe Biden’s decision not to seek re-election led to Kamala Harris becoming the Democratic candidate, energizing the election race. However, the outcome remains uncertain, and there are concerns about extremist rhetoric, particularly within a faction of the Republican base. The potential for civil unrest, especially if Donald Trump loses, remains a risk, though markets prefer clarity and would welcome a decisive result from either party.

On the economic front, the U.S. Federal Reserve cut interest rates for the first time in four years, signalling further reductions, while the Bank of Canada continued its rate-cutting policy. Some Canadian economists have raised concerns about a fragile labour market and called for more substantial cuts, potentially bringing rates down to 2.5%.

Beyond these headline events, economic nationalism and the rise of artificial intelligence (AI) stocks remain concerns. AI stocks have shown signs of a bubble, while economic nationalism is a trend that seems to be spreading across the globe.

In conclusion, Simon notes that while risks remain, markets have always faced challenges. Investors are reminded that timing the market is difficult, and staying invested long-term often brings more opportunity than attempting to avoid short-term risks.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of September 25, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

A Promising Economic Outlook Despite Some Risks

Wed, 09 Oct 2024 15:50:00 GMT

IPC Portfolio Services Vice President Blair Setford provides his take on what drove the markets during Q3 2024 and the risks that investors face over the short term in this three-minute video.

In his commentary, Blair notes that the third quarter saw significant economic and market developments influenced by central banks cutting interest rates, shifting concerns from inflation to growth, and ongoing geopolitical issues.

In Canada, the Bank of Canada was the first among the G7 central banks to cut interest rates, with inflation now near the 2.0% target. Three rate cuts have already been made, with more expected. However, economic activity remains sluggish, though a soft landing and moderate growth by 2025 are anticipated.

In the U.S., the Federal Reserve lowered interest rates by 0.5% in September, signalling a policy shift to support a weakening labour market. Historically, U.S. stocks have responded positively to rate cuts, with gains in four out of six previous cycles since 1989. Despite risks, Fed Chair Jerome Powell remains optimistic about the economy, which should support continued market growth.

The U.S. presidential election, with its potential for polarizing outcomes, could also impact markets. Additionally, geopolitical conflicts, especially in the Middle East and Eastern Europe, pose risks to global supply chains, energy affordability, and market stability, though these are considered short-term concerns.

Blair urges investors to remain focused on their long-term strategies despite the uncertainties, as sticking to a well-planned investment approach remains the best way to achieve financial goals.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of September 25, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Three Big Questions about the Post-Pandemic Economic Outlook

Wed, 02 Oct 2024 16:01:00 GMT

Recently, I was fortunate to spend 10 days in the interior of British Columbia, far from civilization and in the company of the mountains, grizzly bears and mountain goats.

The experience allowed me to unburden my mind from the ever-increasing number of distractions and demands that we all experience in daily life. This time enabled me to reflect on the complexities shaping today's markets, allowing me to focus on three pressing questions that shape our global economic outlook. The first question is: how we should think about the post-pandemic recovery. Understanding how we got here is important to understanding where the road might lead us in the future. The second question is why some developed economies like Europe are lagging behind the U.S. and last but not least, what are the risks to our global economic outlook?

How Should We Think about the Post-Pandemic Economy?

This is a big question and one that will be the subject of countless PhD theses to come. On the demand side, outsized government fiscal support (government spending) during the pandemic and in its immediate aftermath played a key role in sustaining consumer spending. This fiscal expansion manifested itself in several ways, including the “excess savings” that were accumulated by households, and which have helped support spending over the past three years. With that said, while the pandemic served as a timely reminder of the power of fiscal policy in sustaining demand, it’s possible to have too much of a good thing. The fiscal situation in most advanced economies is now unbalanced as budget deficits are too large and interest rates are too high. Advanced economies would be best served by rebalancing in favour of tighter fiscal policy and looser monetary policy (lower interest rates).

These observations are widely accepted among economists who have models that are oriented around analyzing shifts in demand. And, while there are clearly political challenges to overcome, most would agree that a recalibration between fiscal and monetary policy would be beneficial, not least in putting public finances on a more sustainable footing over the long run.

Yet the key to analyzing the post-pandemic economy lies in understanding developments on the supply side. In simple terms, the pandemic caused two things to happen: The first was that the dislocation caused by rolling lockdowns in advanced economies caused the supply of goods and services to decrease. At the same time, monetary and fiscal expansion – the lowering of interest rates and the increase in government spending to stimulate the economy during the pandemic – caused the demand for goods and services to increase. This moved economies to a new equilibrium where small changes in demand created large moves in prices rather than supply. This helps to explain the rise in inflation during 2021-22.

However, as the dislocation caused by the pandemic has faded, the supply of goods and services has normalized. In the U.S. and in Canada, this has been helped by a surge in immigration, which has increased the supply of labour. This has shifted the Canadian and U.S. economies to a new equilibrium, where the supply of labour is higher, and inflation is lower.

This is, of course, a simplified model of the economy, but it does help us to think through the various shocks and shifts that economies have experienced over the past five years. It also leads us to an important conclusion: the potential for a supply-side recovery raises the possibility that inflation can be conquered without crushing demand and tipping economies into recession. This supply-side recovery is crucial as it opens a path to the coveted “soft landing”, where inflation can be controlled without pushing the economy into a recession.

Supply-side recovery could lead to lower inflation without a recession, offering the potential for a soft landing.

Why Has Europe's Recovery Lagged the U.S.?

Despite global recovery momentum, Europe has struggled to match the U.S.’s pace of growth. The underperformance of Europe relative to the U.S. is clear in the data. Whereas the U.S. economy is now nearly 10% larger than it was pre-pandemic, euro-zone GDP is only 3.9% larger. This discrepancy raises important questions. One explanation we often hear is that the prevalence of long-term fixed-rate mortgages has shielded U.S. households from the effects of higher interest rates to a greater extent than in Europe. However, this narrative doesn’t square with the data. Debt servicing costs for households have risen further in the U.S. than they have in the eurozone.

Instead, the underperformance of Europe is more likely due to a combination of different factors. For a start, fiscal support in Europe was generally smaller than was the case in the U.S. At the same time, while the U.S. saving rate has now fallen back to pre-pandemic levels, in Europe it has risen. In addition, the energy shock that followed Russia’s invasion of Ukraine led to a huge deterioration in Europe’s terms of trade that manifested itself in a hit to real household incomes. Since the U.S. is now a net energy exporter and does not import natural gas from Russia, it was not subject to the same shock. Crucially, the energy shock accelerated structural decline in sectors like German manufacturing, which had already been facing long-term challenges due to competition and an aging workforce.

Some of these pressures will ease over time. The surge in the household savings rate in Europe remains puzzling and may not be sustained. But structural headwinds will persist, particularly those facing German industry. Accordingly, we expect that the euro-zone economy will continue to experience extremely low rates of growth, and our expectations remain below that of the consensus. Moreover, the structural nature of this weakness will limit the ability of the European Central Bank to reinvigorate growth by cutting interest rates. Nonetheless, we continue to expect a relatively gradual pace of policy easing in Europe, with euro-zone interest rates lowered by 25bps each quarter to around 2.5% by the end of next year.

The European economy will continue to experience extremely low rates of growth, and our expectations remain below that of the consensus

What are the Key Risks to the Outlook?

Risk #1: U.S. Hard Landing - Potential Recession if Consumer Spending Weakens

The biggest threat is a hard landing or recession in the U.S. However, while there are some signs of stress among lower-income households, our view remains that a soft landing is still the most likely scenario. Likewise, the U.S. election presents an obvious risk to the outlook, especially around trade, immigration, and fiscal policies, which could have significant negative implications for economic growth and inflation.

Risk #2: China Structural Issues - Faltering Growth, but no Global Systemic Collapse

One cannot ignore the concerns about China in the global economic outlook. However, while China’s economy is clearly struggling, its problems are mainly structural in nature. China’s recent pivot towards fiscal and monetary stimulus should support growth in the near term. But the economy continues to be propped up by investment, still elevated levels of construction, and the willingness of trading partners to allow China’s producers to expand their market share. While unsustainable in the long run, we do not foresee a collapse that would severely impact the global economy.

Risk #3: Election Uncertainties - Impact of U.S. and Canadian Elections on Trade and Policy

On the home front, with the inflation battle all but won, weak GDP growth will force the Bank of Canada into more aggressive action, with a couple of 50bp interest rate cuts possible to end this year. We expect the Bank to adopt a more measured pace of loosening in 2025 until the policy rate reaches 2.25%. Looser monetary policy should support a recovery in GDP growth to 2.0% in 2025 and 3.0% in 2026, although elections in the U.S. this year and likely next year in Canada, as well as uncertainty about immigration policy, are risks to the outlook. These forthcoming elections present considerable uncertainty for businesses, particularly regarding international trade policy and domestic environmental regulations. It is still unclear whether potential U.S. policies to impose a universal import tariff would include Canada and Mexico, while the scheduled renegotiation of the terms of the United States of America, Mexico, and Canada Free Trade Agreement (USMCA) in 2026 is another potential flashpoint. With goods exports to the U.S. worth 20% of GDP, either tariffs or a breakup of the USMCA could be hugely disruptive.

Looking back over the past two decades there have been two types of shocks that have caused major economic disruption. The first has been non-economic in nature. The Covid-19 pandemic created huge dislocations on the supply side of the global economy, collapsing output and leading to a subsequent surge in inflation, while Russia’s invasion of Ukraine caused a sharp rise in energy prices, particularly in Europe. These types of shock are by nature almost impossible to anticipate in advance. The Middle East is a constant source of risk but is only likely to cause significant consequences for the global economy if it leads to direct disruption to global oil supplies. Likewise, the risk of a confrontation between China and Taiwan continues to linger in the background but, while potentially catastrophic, could take many forms. Understanding the nature of these risks is more important than anticipating them in the first place.

On the macro-financial front, commercial real estate markets seem to be stabilizing. We were always sceptical that they had the potential to cause systemic problems for the global financial system. It is a reasonable assumption that there are risks lurking in pockets of private credit markets and shadow banks, but these are difficult to assess. We continue to anticipate the bubble in artificial intelligence (AI) and related stocks will inflate further, but when it pops the underlying technology won’t disappear.

Risk #4: Ballooning Budget Deficits - Bond Markets Could React Sharply

Perhaps the biggest risk lies in shaky public finances across advanced economies. Budget deficits have ballooned, and public debt burdens are high and rising. The ultra-low-interest rate environment that helped to sustain fiscal positions in the pre-pandemic era has ended. The key lesson from the Truss debacle in the U.K. – a sell-off in the U.K. government bond markets triggered by the loose fiscal spending - highlights what’s at stake: the tone and approach of policymakers are critically important. In addition to the forthcoming election in the U.S., national elections are due next year in Germany. Meanwhile, France’s new government may struggle to pass a budget that delivers the fiscal tightening needed to put its public debt on a sustainable path.

If any of this gives rise to a sense of governments’ lack of discipline on deficits – or, in the case of Germany’s election, produces a result that threatens the integrity of the eurozone – then the situation in global bond markets could react sharply if governments’ fiscal discipline falters. Sometimes the biggest risks are hiding in plain sight.

Key Takeaways

While the global economic landscape presents challenges, it also holds potential opportunities. The post-pandemic recovery is underway, with supply-side improvements fostering optimism for a soft landing, particularly in North America. However, Europe’s structural headwinds and political risks, along with uncertainties surrounding U.S. and Canadian elections, pose risks of volatility that long-term investors should carefully consider without losing sight of growth opportunities. Key to navigating the road ahead will be the careful balancing of fiscal and monetary policies, as well as remaining vigilant to potential shocks—whether from geopolitical tensions, public debt concerns, or unexpected market disruptions. Agility and focus on long-term fundamentals will be crucial for navigating these uncertainties and seizing growth opportunities. Our portfolio management team remains vigilant, dedicated to safeguarding your investments and capitalizing emerging opportunities.

Our current positioning reflects the foregoing views and the balance of risks and opportunities. We believe that market participants continue to underestimate the degree and pace of rate cuts by the Bank of Canada and hence we remain overweight core Canadian fixed income. In addition, the artificial intelligence bubble we believe has additional room to run and the U.S. markets will continue to benefit from this positive market sentiment, as such, we are overweight large cap U.S. equities. We are underweight Canadian equities and neutral on international equities. The former as we believe that slowing global economic growth and investor sentiment will cause Canadian equities to lag and the latter because we believe that there is a significant dislocation in the pricing between U.S. and non-U.S. companies.

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer
Canada Life Investment Management

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of August 6, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Current Investment Positioning and Outlook for 2025

Wed, 25 Sep 2024 15:49:00 GMT

We recently sat down with three of our top-ranked investment specialists to discuss how their portfolios are currently positioned and their outlook for the year ahead.

With inflation on the wane and interest rates falling across many of the major economies, their outlook is positive. And while ongoing volatility is to be expected due to a number of risks including errors in economic policy and ongoing geopolitical instability, our investment specialists remain optimistic about the opportunities in the markets over the near term.

You can find out what our experts are thinking in this five-minute video:

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of September 25, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

It’s Time in the Market that Matters Most

Wed, 21 Aug 2024 15:03:00 GMT

Over the past few years, a combination of rising interest rates, increasing inflation and a global pandemic gave investors plenty of reasons to pause on putting their money into the markets.

Instead, many parked their savings into the relative safety of a high-interest savings account (HISA). While that may have helped calm nerves and provide a decent return, especially as rates increased, ultimately, those who stayed invested in the markets through the tumultuous times are reaping the rewards.

“In 2020, we had a global pandemic that made many people get out of the market because they thought a major correction was coming,” says David Ragan, a Director and Portfolio Manager at Mawer Investment Management. “Instead, we saw high single-digit returns.”

In 2023, he continues, “interest rates had just been hiked all around the world and there was fear of an economic slowdown or even a recession. However, equity returns in 2023 were up double digits. You just don’t know what’s going to happen.”

While keeping your money in a HISA may feel like a safe way to generate a return, as interest rates decline and yields on these accounts and funds drop, these solutions will become less attractive to investors. Not only that, but you’ll continue to miss out on any potential market gains.

“Given how hard it is to know when to get back into the market, the likelihood of you missing some big upswings is high.”

Ten Days Make a Difference

Research has shown that not investing in the market can have a significant long-term impact on your portfolio. An analysis by Counsel Portfolio Services found that if you invested $10,000 in the S&P/TSX Composite Total Return Index over a 10-year period, from December 2013 through December 2023, you’d accumulate $20,842 for a 7.62% rate of return. If you were in and out of the market – maybe moving into cash during volatile periods – and missed out on the 10 best days, your investment would grow to $12,739 for a 2.45% return.

Why such a significant difference? It’s because some of the market’s 10 best days over that period fell within two weeks of its worst. Given how hard it is to know when to get back into the market, the likelihood of you missing some big upswings is high.

“There’s a handful of very positive days that make up a large portion of your return,” Ragan notes. “One of the biggest mistakes you can make as an investor is having an emotional reaction — which is often going to cash — at the worst time. You just don’t know what the month or the year is going to give you.”

“...equities, save for some ups and downs, are doing just fine. The S&P 500, for example, is up around 15% since the start of the year.”

More Bang for Your Buck

With the Bank of Canada recently cutting interest rates for the second time this year — and hinting more reductions could be on the way — HISAs are becoming less desirable. Although some of these accounts are still yielding over 4%, it’s all relative to how equities are doing. And equities, save for some ups and downs, are doing just fine. The S&P 500, for example, is up around 15% since the start of the year.

“Cash has underperformed equities this year and last,” Ragan says. “If it’s a down year for the market, that’s when cash outperforms because it’s the lowest-risk asset. But cash rarely outperforms equities and for that to happen, you have to be right on the timing.”

The last time cash outperformed the market was in 2022, when it returned 2% compared to the 18% drop in stocks. Since 1928, cash has outperformed stocks just 31% of the time, with the majority of that outperformance happening over a one-year period.

Setting the Stage for a Return to the Market

When you’re ready to move your money back into the market, Ragan says there are two ways to do it. The first is putting a lump sum of cash in the market at all at once, “but that can be scary — particularly you if you pick the wrong moment to do it,” he says. “It’s the right thing to do in the long-term, but in the short-term, it can be emotionally hard.”

The other option is to use dollar-cost averaging. It’s an investing approach where you move a smaller amount of money every month from your HISA into a diversified portfolio until all of those funds have been transferred. “That can help minimize regret,” he explains.

While the markets may feel uncertain at the moment, with that uncertainty comes opportunity, Ragan says. “It’s never a bad time to start making a plan or to think about staging cash-in. No one knows what’s going to happen but if your two decision points are being out of the market for the next five years or being in it now, you should be in it now.”

Mastering Your Emotions

The key to making a move in a way that won’t be emotionally draining is to take a long-term strategic view of your portfolio and be honest with yourself about what you’re feeling. Acknowledging your emotions and understanding that they aren’t necessarily backed up by facts can be the key to moving forward.

Also, trust that equities will remain a better option than cash. “That’s all we can bank on,” Ragan says. “You know when you invest over the long term — at least based on historical numbers — you’re going to win.”

How To: Level-Up Your Wealth Management Business

Wed, 07 Aug 2024 14:30:00 GMT

Tangible tips & tricks from Turning the Page Podcast

No matter where you are on your entrepreneurial journey, there’s always something to learn, and who better to look to than our fellow professionals. The last six months have been full of insightful conversation with industry experts - everything from creating incredible client experiences, to the latest in wealth-tech and how to establish your brand and presence. #Turningthepage Podcast always strives to bring you the best minds in the business to share their knowledge.

Before we dive into key lessons from the last six months - we want to hear your stories. Did you recently implement a new process in your business or read an interesting case study that you want to unpack? Let's connect.

Level-up through: Creating a Great Client Experience

EP53: Building a Family Office-Type Business for High Net Worth Investors with Dean Trudea u

How do you stand out when trying to serve, connect with, and build your business for the high-net worth market? Learn from Dean Trudeau, founder of OPES Family Advisory in Ottawa, who is on a mission to build something unique in Canada.

Those in the high-net worth space have specialized needs and considerations that involve more than just looking for someone to manage their money. In a short period of time, Dean has created a truly unique offering for his clients, gathering a team of professionals to build a unique client experience, and giving his clients a family office-type experience that they’ve been looking for.

Learn more about Dean and his unique model on Spotify or Apple Podcasts .

Learn how to create moments of delight with Nat on Spotify or Apple Podcasts

EP56: Creating Moments of Delight for Your Clients with Nat Korol

There are countless tools available to help entrepreneurs market their services to current and potential clients. But what really makes you stand out?

For Hyphen co-founder Nat Korol, co-founder of a Toronto-based B2B creative marketing firm, Hyphen, it’s the little things that can make a big difference. We chatted about how you can create moments of delight for your clients, and how ultimately this can lead to a growing business via increased client retention and referrals! It can even be as small as having a welcome sign in your office that you customize for each client as they arrive.

Level-up through: Technology Tools that Simplify Your Business

Listen to this great conversation on A.I. and the financial industry on Spotify or Apple Podcasts

EP55: How A.I. is Reshaping the Wealth Management Industry with Conquest Planning's Brad Joudrie

Everywhere you turn, people are talking about A.I. (artificial intelligence). New A.I. tools are being developed daily, in every single industry to address consumer needs - including ours! For those of us in the wealth management industry, is it something we should worry about or something we can harness and use?
A.I industry expert, Brad Joudrie, the Chief Revenue Officer of Conquest Planning, joined me and answered questions as a major contributor to the wealth management industry. Plus, Conquest Planning has become a major tool in our industry. Brad shares some insight into how financial advisors are using these tools to enhance the portfolios of their clients across the country.

EP59: How Technology is Changing Estate Planning with wealth.com’s Danny Lohrfink

Another industry impacted by the changing effects of A.I. is estate planning. Estate planning is an important part of a client’s journey, but it can also become a document that is left in a drawer and never touched.

I had the pleasure of connecting with Danny Lohrfink, Co-Founder and Chief Product Officer of wealth.com, the wealth management industry’s leading estate planning platform. Danny and I dug into the intersection of estate planning and technology - it’s evolution, and how tech has helped create ease and accessibility within the estate planning process.

Learn more about using technology in estate planning on Spotify or Apple Podcasts

Level-up through: Distinguishing Yourself from the Crowd

EP58: How Positioning Can Help You Stand Out in the Crowd with David Finley

There are thousands of financial advisors and financial institutions vying to earn the business of millions of Canadians. While many people do similar work, it’s important to know how to make yourself stand out in such a crowded space.

David Finley, the Founding Partner and Chief Strategist of Wealth Brand Partners, joined me to tell you how to position yourself in this crazy and crowded marketplace, so that prospective clients know exactly why they should hire you. Wealth Brand Partners is the expert in positioning strategy, helping top wealth advisors further differentiate and maximize relationships with their most valued clients and prospects today.

Hear what David has to say on positioning your business on Spotify or Apple Podcasts

Did you have a favourite episode? Something that resonated with you?

I’d love to hear about you and your business right now. How about we have a virtual coffee and chat about it? Let’s schedule a call . I’d love to help guide you and get set to make the second half of the year great!

I also invite you to subscribe to the Podcast so you get alerts to the latest episodes as they are released. And if you can, please share episodes of the Podcast that you’ve enjoyed with someone you think will benefit from it.

Cheers,

Chris

Recession Fears, Market Sell-off – Key Questions for What Comes Next

Tue, 06 Aug 2024 14:11:00 GMT

So much for the summer lull. Stock markets are in turmoil and bond yields have fallen significantly as fears about a U.S. recession have taken hold.

For all the challenges in gauging where economies and markets are heading amidst significant spikes in volatility such as we are seeing, it’s clear that there are three pressing questions for investors:

1. Is the U.S. heading for recession?

While economists use two successive quarters of falling GDP as short-hand for recession, true recessions start when “reflexivity” in the jobs market kicks in: weaker demand leads to less hiring and more firing, which feeds back into weaker demand, creating a vicious cycle that is only broken with government policy support. This is why labour market data is critical to assessing recession risks, and why there has been such an extreme reaction to the July’s U.S. Employment Report released on Friday.

It wasn’t just that payrolls missed consensus expectations – rising by 114,000 vs 175,000 expected – it was that the unemployment rate rose to a three-year high of 4.3%, triggering the Sahm Rule: an indicator which signals the start of a recession when the three-month moving average of the national unemployment rate rises by 0.50 percentage points or more relative to the minimum of the three-month averages from the previous 12 months. The July reading was 0.53%.

“The rise in the unemployment rate has so far been driven by an expansion in the labour force rather than a fall in employment…”

But, some perspective is needed. The rise in the unemployment rate has so far been driven by an expansion in the labour force rather than a fall in employment (the same can be said in Canada, where unemployment has increased, not by layoffs of existing workers, but by new entrants into the labour force). This marks a difference from previous cycles. Other data points paint a picture of a labour market that is cooling, but not collapsing. Data also released last week showed that, while job openings in the U.S. held steady at close to a three-year low in June, there has been no increase in layoffs. Furthermore, the modest decline in average weekly hours worked seen in July’s Employment Report does not scream “recession”.

Piecing all of this together, the probability of a ‘Goldilocks’ outcome – in which GDP growth remains above 1.5% q/q annualised and core PCE inflation drops to 2.5% or below – is likely slightly lower. Likewise, the risk of a recession/hard landing has increased. In reviewing the macro economic data and scenario analyses, the risk of a recession/hard landing has increased, but there is probably something like a one-in-four chance of this happening. Big questions that flow from here are whether the dislocation in financial markets seen over the past week feeds off itself and creates a vicious cycle that feeds back into the real economy and how the Federal Reserve responds. Which brings us to our second question.

2. How will the Fed respond?

The Fed’s response will be determined by two factors: the extent to which downside risks to the real economy materialize, and whether the sharp sell-off in financial markets causes something to break. This would then create a feedback loop into the real economy through tighter credit conditions.

“As I noted earlier, while the respective probabilities of a hard and soft landing in the U.S. are converging, our analysis still suggests that the latter is the most likely outcome.”

We have argued in our earlier commentaries that the Fed should have started cutting rates in the second quarter, and I’ve noted before that, by waiting for core inflation to return to target, central banks more generally risk keeping policy too tight for too long (since inflation is a lagging indicator). July’s Employment Report suggests that these risks may be starting to crystallize. With that said, while the report was bad it wasn’t that bad. As I noted earlier, while the respective probabilities of a hard and soft landing in the U.S. are converging, our analysis still suggests that the latter is the most likely outcome.

Given all this, our sense is that the Fed will now cut by 25bps at each of its three remaining meetings this year. It would take one of two developments to trigger a larger 50bps cut. The first is a market dislocation that deepens and starts to threaten systemically important institutions and/or broader financial stability. The extent to which this will happen is inherently unknowable. But it’s worth keeping in mind that a rapid appreciation of the yen, and the subsequent unwinding of carry trades, have played a role in previous periods of acute market stress, including the collapse of the hedge fund LTCM in 1998.

The second is if markets continue to price in a 50bps cut in September (and beyond) and policymakers judge that not delivering it would do more harm than good for financial markets. The fact that the inflation genie appears to now be back in the bottle means the Fed has more leeway in this regard. This is not true of all central banks, and that brings us to our third question.

3. How will other central banks respond?

Many central banks are still trying to calibrate policy in an uncomfortable environment of weak growth and stubbornly high inflation. This is particularly true of the European Central Bank (“ECB”), where euro-zone GDP increased by a solid if unspectacular 0.3% q/q, however, inflation data released over the past week showed that inflation edged up from 2.5% y/y in June to 2.6% in July, and services inflation continued to hover around 4%. The latter is of particular concern since it more closely reflects domestically driven price pressures. This has given ammunition to a vocal set of hawks on the ECB’s Governing Council.

As things stand, our sense is that doubts over the outlook for the U.S. economy, combined with a softening in euro-zone business surveys in recent months, will mean that policymakers opt to lower interest rates by another 25bps to 3.5% at its September meeting. The same is likely to be true for other countries; where previously a decision may have been finely balanced, now central banks will err on the side of looser policy.

Putting it all together

Despite the sell-off in equities and other “risky” assets, valuations are still far from pointing to an economic cataclysm. We believe that a weaker economy will prompt the Fed to ease policy and expect it to cut rates at each meeting from September until next July. But, although this is becoming a clear risk to our forecasts, we doubt a recession is on the cards and expect growth to reaccelerate after a soft patch during the second half of this year. So, we don’t expect risk sentiment to deteriorate much further. The upshot is that we doubt the economy will stand much in the way of the AI-fuelled bubble picking up steam again soon.

“Market sentiment will drive volatility and prices wildly over the short term, but ultimately the fundamentals will overcome those base emotions.”

I would like to remind investors that fear, and greed are the behavioural drivers in financial markets. Market sentiment will drive volatility and prices wildly over the short term, but ultimately the fundamentals will overcome those base emotions. It is important for investors to not be overwhelmed by the market sentiment and react in ways that are contrary to their best interests. Make sure that you have a financial plan and that your investments are invested according to the that plan.

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of August 6, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Data Will Drive Economic Policy Forward

Wed, 17 Jul 2024 20:13:00 GMT

In his Q2 Update, Portfolio Manager Simon Bowers discusses recent developments in the financial markets and the issues that remain top of mind as we head into the second half of 2024.

Simon notes that the Bank of Canada recently reduced its interest rate from 5% to 4.75%, indicating confidence that inflation is under control and that economic conditions are robust enough to ease restrictive policies. He feels this move signals potential further rate cuts but expects the Bank will be careful not to diverge too much from the U.S. Federal Reserve to avoid depreciating the Canadian dollar, which could spur uncontrollable inflation. He also notes that the U.S. Federal Reserve, which also raised rates in 2022, is expected to cut rates twice this year, although opinions on this vary.

Portfolio Positioning

In terms of portfolio positioning, Simon feels that investment strategies that emphasize diversification and regular portfolio rebalancing are critical in today’s markets, especially given the recent U.S. market outperformance driven by AI. He strongly suggests that investors should take caution against chasing hot sectors, recalling the Nortel experience from past market events.

Canadian Tax Policy

Simon notes that a significant policy change in Canada recently involved increasing the capital gains inclusion rate, which is primarily affecting corporations and the entrepreneurial class rather than the ultra-rich as intended.
Simon believes that the proposed tax changes, though not yet law, highlight the importance of proactive financial management. The IPC Private Wealth program helps investors achieve their financial goals through constant oversight, strategic rebalancing, and tax planning to improve after-tax outcomes for IPC Private Wealth clients. This proactive approach is crucial in navigating changes in legislation and economic conditions, ensuring better investment decisions and increased confidence for advisors.

For more information about how IPC Private Wealth can help you achieve your objectives, please give us a call.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of July 10, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Keep Your Eyes on the Earnings Ball

Wed, 10 Jul 2024 21:25:00 GMT

In his Q2 update, Rana Chauhan discusses how investors are often overwhelmed by distractions that influence their decisions and suggests that they focus on corporate earnings instead.

As Rana points out, negative headlines and warnings about market crashes or overvaluations are common topics of discussion with market experts, but these concerns are typically distractions. For example, the 2023 U.S. bank failures, like Silicon Valley Bank and Signature Bank, were predicted to threaten the financial system but didn't have lasting impacts. Furthermore, historical evidence shows that markets frequently defy expert predictions. In 2014 and 2015, despite warnings of an overvalued market, the S&P 500 delivered positive returns of 13.7% and 1.4%, respectively. Similar patterns were observed in 2016 and 2019. More recently, the S&P 500 gained approximately 30% in 2020 despite economic uncertainties and trade tensions. Even in 2023, concerns about a recession did not materialize, and the markets continued their upward trend.

"...these are distractions from what truly matters: corporate earnings."

Current market fears, such as geopolitical tensions in Ukraine and Gaza and concerns about the upcoming U.S. election, are typical. However, these are distractions from what truly matters: corporate earnings. Corporate earnings are the lifeblood of any company and have a direct impact on stock prices. As earnings rise, so do markets, as evidenced by the S&P 500 Index closely tracking corporate earnings over time. Presently, corporate earnings are showing strength despite these distractions.

Therefore, rather than getting swayed by expert opinions, Rana suggests that investors focus on corporate earnings. As Warren Buffet said, “We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” By tuning out the noise and sticking to a financial plan, investors can achieve long-term financial goals.

See the video below to learn more.

If you have concerns about your portfolio or financial plan, please consult your Advisor.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of July 10, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

How To Dollar-Cost Average Out of a HISA into a Diversified Portfolio

Wed, 10 Jul 2024 19:29:00 GMT

Popular risk-mitigating strategy ‘helps people sleep better at night’

After two years of stashing cash in the relatively safe confines of a high-interest savings account (HISA), moving your money back into the market can seem like an emotional undertaking.

Canadians, nervous about the economy’s direction in 2022, moved assets into these accounts to avoid any potential ups and downs. Many still worry about recessions and market volatility, even though inflation and rates are moderating. “High-interest savings accounts offered investors a safe harbour,” says Lee Bowes, portfolio manager with IPC Private Wealth. “Some clients didn’t want to deal with that stress.” However, with interest rates being cut and the interest paid out from HISAs declining, he explains that now may be the ideal time to put at least some of those savings back into the market.

"...this strategy will allow you to buy more shares when prices are low, which could help increase the value of your portfolio as market prices increase."

Slowly but Surely

If you are one of the many investors who want to take a more cautious approach to investing in equities again, consider dollar-cost averaging (DCA). It’s a popular financial strategy where, instead of moving everything into a market-based portfolio at once, you divide your investment dollars into smaller amounts and then invest them automatically and at regular intervals over a longer period. It’s typically used to move money from a savings or chequing account into an investment account, but it can also be used to move money from a HISA into a diversified portfolio. Say you have $60,000 in your HISA. With dollar-cost averaging, you might move $10,000 into a balanced fund of stocks and bonds monthly for six months. Even if markets fall the day after you invest, you’re only putting part of your money at risk. At the same time, this strategy will allow you to buy more shares when prices are low, which could help increase the value of your portfolio as market prices increase. “Dollar-cost averaging is what we consider the head-on-the-pillow approach,” Bowes says. “It helps people sleep better at night.”

“ It’s not really about returns, it’s about removing emotion from the process,”

Sticking to the Schedule

Some research does suggest that investing all your HISA money into equities at once might be more profitable over time, but there’s a reason Bowes recommends DCA to certain clients.

“It’s not really about returns, it’s about removing emotion from the process,” he says. “We’re not going to try to time the market because we’re probably going to get it wrong. Instead, we’re going to build a diversified portfolio by investing in stages.” At the same time, the automatic movement of money ensures that you are investing instead of keeping that money in your HISA because you either forgot to move it or got nervous about investing one month.

The process typically involves setting the timeline for when each instalment (or tranche) will be invested, says Bowes. You’ll want to choose that schedule with your advisor. Whatever you do should align with risk tolerance levels and your ability to reach your financial plans. You also don’t need to divide up your payments evenly. Bowes has recommended investing a larger portion of funds, say 60%, at one time and then transferring 20% in months two and three. That way, you get some benefits of investing a large amount at once – as long as the market climbs from there – and some of the benefits of DCA. Whatever you do, it’s important to stick to your investment schedule no matter what the market does. “I tell my clients, ‘Listen, if the markets fall before we allocate a tranche, that’s great, you’re going to be better off. But if the markets go up dramatically, we’re not going to change our minds. Once you’ve made the decision, you have to stick with it.” “Once you nail down the details,” he adds, “you basically calendarize it and then follow the investment schedule unemotionally. Your advisor should keep you updated as each tranche is used until you’re fully invested.”

Keeping Your Bases Covered

Bowes recommends liquidating portions of your HISA over time so that your money works for you in the markets rather than sitting in an account that could ultimately pay less as rates fall. However, there may still be reasons to keep some money in a HISA – maybe you want to take a vacation or buy a new car in a year and don’t want to put that money at risk. Otherwise, you’ll need to be in the market to meet your long-term goals. “It’s better to be invested,” he says. “If your time horizons are long enough, you’ll be fine. If your time horizons are very short, then dollar-cost averaging may be an even better choice, but you’ll still want to at least put some of your money into a portfolio.”

For more information on how you can enact a dollar-cost averaging strategy, please h ttps: .

Bank of Canada Cut Interest Rates in June with More Expected

Mon, 24 Jun 2024 20:02:00 GMT

The Bank of Canada (BOC) and the European Central Bank (ECB) cut interest rates in early June as predicted in our Q1 commentary

Our expectation that this will be the first of many, and the dovish tone of the accompanying communications, suggests that another rate cut in July may be in the cards. For now, our forecast is that there will be three more 25 bp cuts this year, implying that the BOC will pause at one of its meetings, but if anything, the odds seem to favour cuts at every meeting.

The decision to cut the policy rate by 25 bps seemed to follow the weaker-than-expected first-quarter GDP data. The BOC statement shrugged off the solid 3.0% annualized rise in consumption and simply noted that overall gross domestic product (GDP) growth was slower than expected, consistent with the idea that excess capacity continues to accrue.

The most striking thing about the statement is what it did not say, which was any reference to taking a cautious or gradual approach to policy loosening, instead simply noting that "risks to the inflation outlook remain." In his opening statement at the accompanying press conference, Governor Tiff Macklem notes that "it is reasonable to expect further cuts to our policy interest rate,” even if the Bank is "taking our interest rate decisions one meeting at a time.”

“ May’s surprisingly large jump in euro-zone services inflation may have been due to the most unlikely of culprits: Taylor Swift.”

On the Euro front, we received some good news on inflation. May’s surprisingly large jump in euro-zone services inflation may have been due to the most unlikely of culprits: Taylor Swift. So, to some extent, the ECB can “shake it off” (apologies – I couldn’t help myself), but yes, you read that correctly. Inflation rose quite sharply in May, particularly in Spain and Portugal where Ms. Swift performed on her Eras Tour. Note that we saw a similar effect last year in Sweden at the time of a Beyoncé concert.

There has been some speculation that the European soccer championship (being held in Germany during June and July) and the Summer Olympics in Paris might push services inflation up further. However, looking beyond these temporary blips, we think that the ECB will continue with a gradual pace of interest rate cuts.

"In response to the soft May CPI, PPI and import price data, the markets share our view that the Fed will most likely cut twice this year – in both September and December."

Shifting focus to the U.S., the Federal Reserve’s (the Fed) updated projections indicated that a slim majority of officials favour fewer than two interest rate cuts this year. In response to the soft May CPI, PPI and import price data, the markets share our view that the Fed will most likely cut twice this year – in both September and December. Although there is a lot of focus and hoopla on the timing of rate cuts, we think what is more important for markets is how deep those cuts ultimately are, rather than the exact timing of rate cuts. In other words, we suspect investors should focus on the depth of cuts relative to what’s priced in, as opposed to their start date. As we noted in previous commentaries, our expectations are that central banks in most developed markets will cut more than what is currently priced in by the end of 2025.

Roaring Kitty Returns and Spurs Renewed Concerns of a Bubble

Investors might remember Keith Gill, better known as “Roaring Kitty”, the social influencer who inspired the 2021 meme stock frenzy in companies such as GameStop and AMC. Well, after a years-long absence, he is back, inspiring the latest buying mania in GameStop. Even if interest in meme stocks rebounds following the renewed surge in GameStop’s share price, some of the tell-tale signs that a bubble in the broader stock market may be entering its final stages, such as excessive leverage, are absent. This suggests to us that the current one remains a long way off from bursting.

A few years ago, we weighed the evidence for a bubble in the stock market during the meme stock craze. As a reminder, that episode featured an army of bored retail investors, influenced by social media conversations, ploughing money that they had received from government stimulus cheques during the pandemic into heavily shorted equities such as GameStop and AMC.

At that time, we noted that bubbles in stock markets were typically accompanied by high and rising leverage, whereas the meme stock mania was mainly about channelling money from stimulus cheques. High and rising leverage was a feature of the 1929 Great Crash, the bursting of the dot com bubble and the Global Financial Crisis (GFC). Leverage levels in 2021 weren’t excessive, at least relative to the size of the broad stock market, hence, we weren’t convinced then that the market was in a bubble that would soon burst.

"...the bubble that appears to be inflating now amid the hype around Artificial Intelligence doesn’t appear to us to be clearly being inflated by leverage."

Today, the amount of leverage (margin debt), doesn’t seem to be a concerning feature. It hasn’t risen in recent years by as much as the stock market and declined relative to the capitalization of equity markets. While there may be increased leverage taking place today that is hard to spot (for example option trading among retail investors or within hedge funds), the bubble that appears to be inflating now amid the hype around Artificial Intelligence doesn’t appear to us to be clearly being inflated by leverage.

Excessive risk-taking at banks can be another sign of a systemic bubble in the stock market that is entering its final stages. However, leverage at U.S. banks has declined since the GFC, something that probably helped contain last year’s mini-banking crisis (remember Silicon Valley Bank, First Republic Bank, etc.).

For a more amusing and fuller account of bubbles and what to look for, I would recommend subscribing to Acadian’s Owenomics blog, where senior portfolio manager and researcher Owen Lamont shares his views on market events and investor behaviour through an academic and practitioner lens: Owenomics: Observations on Behavioral Finance & Markets

Economic Outperformance does not Equal Market Outperformance

One feature of markets and investor behaviour is that investors tend to latch onto historical narratives, believing that past trends will continue indefinitely into the future. In my career, this was evident through the 90’s when Canadian equities greatly underperformed U.S. equities due to the dot-com bubble. After the bubble burst, Canadian equities were in vogue again for nearly a decade.

Canada’s outperformance during that time was due to a variety of factors, including acceleration from Chinese growth which caused commodity and agricultural prices to rise, coupled with increased debt by Canadian households which lifted our banks and last but not least, America’s troubles during that time – 9/11, two recessions and government deadlocks. But as they say, all good things do come to an end.

"In my conversations with investors, I see the same mistakes happening today: with the belief that U.S. equities can do no wrong."

In my conversations with investors, I see the same mistakes happening today: with the belief that U.S. equities can do no wrong. A persistent feature of the post-pandemic age has been the relative strength of the U.S. economy and equities market. But past performance is no guarantee of future results. Will the U.S. continue to dominate the world economy, and its markets to outperform global benchmarks? Yes and no.

Over the past two years, U.S. GDP has grown by 4.8%, compared to just 0.90% in the euro-zone, 1.63% in Canada and 0.41% growth in the UK. The return on U.S. equities in that time has been 1.6 times higher than the return on the MSCI ex-US World Equity Index. This is about more than just a temporary period of economic outperformance.

The American economy, which has been the world’s largest since the 1870s, has been doing better than its developed market peers for decades, with real GDP growth averaging 2.25% a year since 1990 compared with 1.7% in the UK, 1.4% in France and 0.7% in Japan. In that time, major emerging markets such as China and India have grown faster, but this has been so-called “catch-up” growth from what are still relatively low levels of income. Measured at current exchange rates, China’s GDP per capita is still only 30% that of the U.S., while India’s is just 10%.

American economic dominance extends beyond more than just the pace at which its GDP has been increasing. The U.S. dominates the rest of the world in economic, financial, and technological terms. Yes, it faces challenges in some areas. China’s economy is now close in size to that of the U.S., while Singapore and Switzerland rival the U.S. on measures of innovation and technological leadership. But the U.S. is the only economy that ranks in the world’s top five on measures of GDP, financial market depth and technological innovation.

America’s strength is partly a function of its relatively large population, the world’s third largest. But real global dominance requires high levels of productivity alongside a sizeable population. As the Nobel Prize- winning economist Paul Krugman famously said, “Productivity isn’t everything, but in the long run it's almost everything”. America has been consistently more productive than its economic rivals for a long time. A variety of factors work in favour of the Americans on this front, including deep capital markets, an ability to attract skilled migrants, high research and development spending and an entrepreneurial culture.

Stock market buoyancy, the other feature of American outperformance since the pandemic, may prove less resilient. Earnings per share and valuations have risen sharply on the back of a strong economy, while equities have also been lifted by optimism around artificial intelligence (AI) – particularly large tech firms.

"We suspect this optimism will continue to propel the U.S. market over the next 18 months, but enthusiasm around AI has all the hallmarks of an inflating bubble."

We suspect this optimism will continue to propel the U.S. market over the next 18 months, but enthusiasm around AI has all the hallmarks of an inflating bubble. Once it bursts, as it inevitably will, the U.S. stock market will be destined for a period of significant underperformance relative to its peers. This raises the question of whether a bursting equities bubble in itself threatens America’s global economic position. It didn’t in 1929, nor in 2001. The drivers of U.S. dominance are too fundamental to be challenged by the occasional bout of irrational exuberance.

What Do Market Conditions Mean for Your Portfolios?

We are maintaining our overweight position in equities that we enacted early in the second quarter. We continue to favour U.S. large-cap equities over International and Canadian. Having said this, we still foresee GDP growth slowing in developed economies. Our positioning is based primarily on our expectation that the emerging bubble centred around artificial intelligence stocks has a lot further to run. Central banks easing policy would certainly help at the margin as many past bubbles are associated with relatively loose monetary policy. Despite our overweight positioning in U.S. large-cap equities, we see long-term opportunities in areas of financial markets where investors are in distress and/or sentiment is exceedingly poor.

Commercial real estate comes to mind. Although a lot of bad news now appears to be priced into commercial real estate investment trusts (REITs), the sector still faces significant challenges. This suggests to us that a material improvement in its fortunes is not likely soon. Having said that, relative valuation is looking increasingly attractive.

At the end of May, the spread between the dividend yield of the index and the earnings yield of the S&P 500 had risen to its highest level since the dot-com bubble. Such a comparison is useful in our view since REITs are required to distribute at least 90% of their income. That may bode well for its relative performance in the long run at least. For now, we remain underweight, but I expect that sometime in the next 18 months we will look to increase our position size.

Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of April 2, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Moving Money Out of a High-interest Savings Account

Thu, 13 Jun 2024 14:00:00 GMT

HISAs are a good short-term solution when interest rates are high. In light of the recent rate cuts, there may be better opportunities for long-term investors.

High-interest savings accounts (HISAs) have been all the rage over the past few years as nervous investors looked for safe places to park their cash. With fears of a recession slowly receding and interest rates expected to continue falling, now might be a good time to upgrade your ambitions. “A high-interest savings account isn’t a long-term asset,” says Chris Reynolds, co-founder and executive chair of Investment Planning Counsel (IPC). “Interest is fully taxable, and it generally doesn’t beat inflation. At some point, long-term investors should reallocate that money into something more growth oriented.”

But how should investors move their money back into the market, especially with continued concerns around market volatility, inflation and general economic uncertainty? Reynolds, a former advisor who has been in the financial business long enough to see several market cycles, has a few ideas.

" At some point, long-term investors should reallocate that money into something more growth oriented.”

Think About Timing

What you transfer your HISA money into – a more conservative or aggressive mutual fund, for instance – is highly dependent on when you’ll need to access the money you’re saving. So, the first place to start is to consider the time frame. “If you’re in your 40s and this is for your retirement, short-term fluctuations in the market should mean nothing to you,” Reynolds says.

In most cases, investment decisions are driven by whether your horizon is longer or shorter than a decade. If you have a longer runway, you could consider owning funds that hold companies that will grow significantly over the next 10 years. “Think about where you want to have your money and which companies will continue to provide valuable services over that time,” he notes.

If you need your money within five to 10 years, you could play it safer by investing in a balanced mutual fund that holds a mix of growth-oriented stocks and conservative investments, such as higher-yielding bonds or government-backed fixed income. “You’ll want to have a little less volatility and greater diversification,” says Reynolds.

As you get closer to when you need the cash, a basket of Canadian government bonds could be the way to go. These are some of the safest investments around and may provide higher yields than a HISA. At the same time, when rates start to decline, bond prices rise, so those who do own bonds today, could get some capital appreciation, too.

At the same time, when rates start to decline, bond prices rise, so those who do own bonds today, could get some capital appreciation, too.

Update Your Appetite for Risk

A lot of people moved their investments into HISAs because of the economic and geopolitical uncertainty that’s marked the last couple of years. As inflation moderates and recession worries lessen, now’s a good time to think about how much risk you’re comfortable taking on.

It’s important to remember that markets move up and down, but they’ve always risen over time. Still, “risk tolerance is a factor because it prevents people from doing things that are foolish,” Reynolds explains. But, he adds, “What’s also foolish is seeing a 20% drop in an investment and taking your money out. That’s a good way to lose a big chunk of your money.”

If you think you can stomach another short-term market drop, then you’re likely fine to invest in more aggressive investments. If the prospect of seeing your portfolio decrease makes you feel sick to your stomach, then more conservative investments may be a better way to go. Risk tolerance is difficult for people to assess, so talk through this with an advisor.

Choose Your Investments Wisely

As you populate your portfolio, you should consider holding funds that own companies with good fundamentals that you’d want to hold in whatever economic or investment environment we may be in, says Reynolds.

Also, try to find opportunities that align with your personal investing philosophy while resisting the urge to follow the crowd. “A trend might be your friend for a while, but trends can stop so suddenly that you might not even know what happened,” Reynolds notes. “I’m of the Warren Buffett state of mind: look for great companies with a strong moat [meaning a high bar for competitors to enter the same business] and good growth potential and invest in them long term.”

" ...look for great companies with a strong moat [meaning a high bar for competitors to enter the same business] and good growth potential and invest in them long term.”

Consider Moving Money Over Time

While now may be the right moment to consider moving your money back into the market, you don’t need to transfer it all at once. If you do need some cash in, say, a year from now, you could keep those dollars in a HISA and continue to earn what should still be decent interest even if rates do start falling.

Even if you’re planning to tap into your portfolio years from now, you could still slowly invest those dollars, little by little, through dollar-cost averaging (DCA). This strategy lets you take a set amount of money – say $1,000 every month – and move it from your HISA into the mutual fund of your choosing.

Not only might that help you feel a little better about moving your money into stocks and bonds again, but it also helps to avoid timing the market. The last thing you want to do is try and choose a moment when you think stock prices will rise only for them to fall. “If you try to time the market, you’re probably going to be wrong,” he says. “Just add it in continually over a set period of time.”

Talk It Out

Changing investing habits isn’t easy – even if you’ve only started using a HISA in the last two years – so don’t be shy about asking for help. Your advisor can help you determine your risk tolerance levels, work with you to set short- and long-term goals and ultimately decide the best place to put your money.

“The conversation should be, ‘My time horizon to utilize this money is this, but my tolerance to volatility is only within these parameters,’” says Reynolds. “Based on those two factors, your advisor can help design the type of portfolio you should be building.”

Adding Value Through Active Management

Tue, 16 Apr 2024 18:27:00 GMT

The third week of February marked a crucial period for IPC Private Wealth clients, featuring up to four major portfolio events.

These events included: rebalancing to address portfolio drift, aligning portfolios with strategic views, raising funds for client liquidity and cash flow needs, and adjusting investment mandates to align with new risk profiles.

As Lee notes, recent portfolio drift - especially towards growth-style and U.S. equities over recent quarters, necessitated adjustments to client portfolios to maintain alignment with investment objectives and risk profiles. Subsequently, portfolios were updated to correspond with our Portfolio Management Team’s strategic views, with a slightly overweight position in fixed income due to the asset classes outlook for the year ahead.

Detailed adjustments include decreased international equity exposure, and increased U.S. equity allocation to reflect recent enthusiasm around the introduction of viable AI applications to the marketplace. Additionally, shifts in real estate and small-cap allocations were made to align positions with recent market trends. These adjustments also provided the opportunity to fulfill client liquidity requirements for the remainder of 2024, while facilitating the realignment of investment mandates to correspond with any changes in client investment risk profiles.

...global geopolitical and geoeconomic uncertainties are expected, with a record-breaking year for elections and ongoing economic volatility due to concerns about interest rates and conflicts across the globe.

Looking ahead to the rest of the year, global geopolitical and geoeconomic uncertainties are expected, with a record-breaking year for elections and ongoing economic volatility due to concerns about interest rates and conflicts across the globe. To take advantage of volatility, the IPC Private Wealth Team will continue to look for opportunities to employ tax overlay management, currency hedging, and dollar-cost averaging strategies to help ensure the best possible outcome for our clients.

In conclusion, Lee notes that clients should remain assured that the IPC Private Wealth Team in collaboration with the Advisor will continue to actively manage portfolios to ensure they remain aligned with their return objectives, time horizons and appetite for risk.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of April 10, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Keeping Your Investing FOMO and FUD in Check

Wed, 10 Apr 2024 19:38:00 GMT

In his Q1 2024 update, Rana notes that the financial markets have kicked off 2024 on a strong note, with the S&P 500 climbing approximately 13% (CDN) in the first quarter, marking the most robust start since 2019.

FOMO and FUD

This surge brings us to his main topic of discussion: the psychological phenomena’s of FOMO (Fear of Missing Out) and FUD (Fear, Uncertainty, and Doubt). Rana is concerned that investors witnessing short-term market gains may feel the urge to aggressively adjust their portfolios or, conversely, cling to ultra-safe investments due to the volatility experienced since COVID-19, potentially stalling the growth needed to meet financial objectives.

“...emotional reactions to market fluctuations—whether chasing returns or shunning risk—are not sound investment strategies.”

As Rana says, emotional reactions to market fluctuations—whether chasing returns or shunning risk—are not sound investment strategies. A well-considered long-term financial plan takes a holistic view of the markets, considering long-term performance, personal time horizons, and risk tolerance. The strategy is the actionable component of this plan, and deviations from it may increase the risk of not meeting financial goals. That’s why consulting an Advisor before making changes is crucial for informed decision-making.

“...the advent of practical AI applications promises to spur a new cycle of technological innovation, enhancing productivity worldwide.”

Outlook

For Rana, looking ahead to the rest of 2024 presents a mix of concerns and optimism. Worries include interest rates, inflation, ongoing conflicts in Ukraine and the Middle East, China’s economic state, and a potentially divisive U.S. election. On the brighter side, many companies are reporting strong earnings, supply chain issues are being resolved, and the advent of practical AI applications promises to spur a new cycle of technological innovation, enhancing productivity worldwide. History has shown that, in the face of such challenges and opportunities, progress is possible and likely assured.

Rana concludes that when navigating 2024’s financial landscape, it will be important to adhere to your established financial plan. The uncertainties ahead, both positive and negative, underscore the importance of sticking to the plan you committed to with the help of your Advisor.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of April 10, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

How to: Create a Service-Oriented Business

Tue, 09 Apr 2024 19:55:00 GMT

Exploring the Essence of Service

As Financial Advisors, we're the guardians of financial well-being.

We recognize that our role extends far beyond transactions; it embodies a commitment to understanding, empowering, and ultimately enriching the lives of those whom we serve.

Service is not just something we offer, it’s a lighthouse that guides us in our business, our clients, and in our lives . Delivering exceptional service - and experience - takes centre stage, leading to positive outcomes for both the Advisor and us.

In the last few years, I’ve had some thoughtful and interesting conversations on my podcast, Turning the Page, with industry experts and individuals who embody ‘service’, in their individual, unique ways. Below Continue reading to explore my recent conversations for insights on enhancing ‘service’ in business.

I’d love to learn how you plan to do so, as well! Let’s jump on a call and have a virtual coffee to discuss.

Service via Personal Alignment and Authenticity

Episode 47: Turn Strategy into Action with Keita Demming

Service is not just something you embody for your clients, it’s something you embody for yourself. Having a clear strategy for your business and life enables you to better serve your clients. It begins with serving yourself as well as finding and living in your authenticity. I enjoyed my chat with Keita Demming, an author, trusted Advisor and Thought Leader in design, strategy, and innovation. His book, Strategy to Action, shares a practical methodology that’ll help turn your biggest ideas into real offerings. These principles can be used in both your personal and professional life - to better serve yourself, and in turn your clients.

Listen to the full episode here or on Spotify , or Amazon Music

Listen to the full episode here or on Spotify or Amazon Music

Serving via Compliance

Episode 48: Learning About the Office of the Investor with CIRO’s Karen McGuinnes s

One of the most fruitful conversations I had was with Karen McGuiness, leader of the Office of the Investor. She’s part of the new SRO, the Canadian Investment Regulatory Board. Karen discusses the importance of compliance, and how being in tune with this quick-evolving environment is the ultimate act of service for your client - helping to protect and keep them on track. Karen shares some valuable tips on how to keep you and your clients in the clear. My favourite piece of advice? Document, document, document!

Planning Your Future Business via Service:

Episode 49: There’s More than One Way to Prepare for the Succession of Your Business with John Novachi s

Being prepared to step away from your business is an act of service to both your clients and your team. Making sure your succession is set up so that everyone involved can continue to receive great service is extremely important. I appreciate my chat with John Novachis, Executive Vice President of Corporate Growth and Development at IPC. He provides service by dedicating himself to the success of IPC and our team of independent Financial Advisors. He shares the many ways he has worked with Advisors to set up succession plans that serve not only themselves but everyone else involved .

Listen to the full episode here or on Spotify or Amazon Music

Listen to the full episode here or on Spotify , or Amazon Music

Service via Putting People First

Episode 50: Building Resilience through Adversity with Peace by Chocolate Founder Tareq Hadha d

It’s tough to find someone who embodies service more than Tareq Hadad, founder of Peace by Chocolate. From serving in a medical relief operation in Lebanon, to helping build his family business in Damascus and finally serving his new community in Antigonish, Nova Scotia, Tareq is no stranger to service. Tareq shares his passion for peace and entrepreneurship, and helped his family relaunch the family business and recreate the chocolates they once exported across the Middle East. Their story has turned into an international inspiring phenomenon. Tareq teaches us to not only focus on your return on investment, but your return on people.

Serving Through Creating a Great Client Experience

Episode 52: What I Learned from Five Star Hotels and and How to Offer Five Star Service in Your Business

Over the holiday break, I went on an epic 17-city tour across Southeast Asia! Travel is one of my passions and I love studying how five star hotels and restaurants work and interact with clients. They are built around offering the best service possible. In this episode, I share with you three things I learned from five star businesses that leave a memorable impression, and how you can start implementing these into your business today!

Listen to the full episode here or on Amazon Music and Spotify

What does service mean to you?
How does service manifest in your business?
What do you do to serve your clients?

I’d love to have a virtual coffee with you and talk about it.

Be sure to subscribe to the podcast on Amazon Music , Apple , Spotify or wherever you listen to your podcasts so you don’t miss the latest episodes of Turning the Page!

Chris

Are We There Yet? And Other Musings From the Road of Investing

Tue, 02 Apr 2024 14:04:00 GMT

Anyone who has taken a road trip with children, or as a child themselves, can distinctly remember the constant question, "Are we there yet?"

It's a refrain that echoes through the annals of family travel. A humorous yet exasperating reminder of the timeless rituals of the road. Beyond just a simple inquiry about arrival time, this question encapsulates the essence of the journey itself – the anticipation, the impatience, and the longing for the destination intertwined with the joy of the voyage.

In our case, “Are we there yet?” has been the long voyage to relief from high-interest rates. The voyage has been not so enjoyable, fraught with uncertainty and volatility, especially for fixed-income and balanced portfolio investors. Reminds me of family road trips from Toronto to Florida as a child….sorry Mom and Dad! But I digress, I believe we have arrived and let me explain why.

Central Banks Gaining Confidence

March’s flurry of central bank meetings points to growing confidence among policymakers in most major economies that inflation is on track back to their 2.0% target. That supports our view that long-term government bond yields will fall back a bit further this year and will probably lend further fuel to the stock market (not that it is needed! – more on that later). No less than six of the G10 central banks have delivered policy decisions at the time of this writing, and the pattern among them has been unmistakable. All six took at least a somewhat dovish slant in their communications, even the Bank of Japan’s nominally hawkish decision to end both its negative policy rate and Yield Curve Control came packaged with plenty of caution and crucially fell well short of expectations of a more substantial shift.

Lastly, in contrast to his approach earlier in the tightening cycle, Federal Reserve (“Fed”) Chair Jerome Powell downplayed the recent hotter-than-expected U.S. inflation data, suggesting it was more likely to prove a “bump in the road” than a major cause for concern, and that Fed officials “haven’t really changed the overall story” of inflation heading back towards 2%. It was also notable in his opening remarks, that Powell included new guidance that, in addition to further evidence that inflation is coming down, “an unexpected weakening in the labour market could also warrant a policy response.”

Although Powell also stated that the Fed doesn’t yet see any signs of trouble – officials are still forecasting the unemployment rate to peak at only 4.1% next year – this served as a reminder that the Fed has a dual mandate. After the employment side of that mandate was demoted during the inflation surge of 2021-22, the Fed is now acknowledging that the risks to its employment and inflation objectives have become more balanced again.

Inflationary Pressures are Easing

The latest data from major advanced economies show that unemployment rates are rising and pay pressures are easing. While wage growth is still too high for comfort in most cases, we suspect that further signs of a slowdown will support the case for rate cuts by the end of Q2 in the U.S., euro-zone, U.K., and Canada, with Australia following in Q3. Japan is the exception where pay data justifies a rate hike. Recent comments from policymakers have made us feel more confident about this. We forecast rates to reach 3.25% in the U.S., 3.0% in Canada and the U.K. and 2.25% in the euro zone by the end of next year.

On the face of it, the Fed will be able to act first. U.S. wage growth is already coming down and productivity growth has risen such that unit labour cost growth is easily consistent with its inflation target. Labour market data are relatively timely in the U.S. and by its June meeting, the Fed will have earnings data for March, April and May which should support the case from key inflation indicators for a first rate cut. But much obviously depends on whether core inflation itself falls further.

We suspect that the European Central Bank, Bank of Canada, and Bank of England will also cut interest rates in June. However the incoming labour market data present more of a risk to this view. In the absence of a rise in productivity growth akin to that underway in the U.S., wage growth will need to fall further to become consistent with these banks’ 2% inflation targets. We expect data relating to the first quarter released in May and early June will reveal that a downward trend is well underway, but any upside surprise could lead to a delay in rate cuts.
Ultimately, as noted by the Bank of Canada, central banks want to “balance the risks of waiting too long to lower rates, thus making economic conditions weaker than necessary, against lowering rates prematurely and potentially squandering the progress made toward price stability.”*

On Artificial Intelligence, Market Bubbles and Does it Matter?

Concurrently, equity investors have been on a road trip of their own (albeit a much more fun one), one that kicked off in March 2023, when ChatGPT 4.0 was released. The bubble in the S&P 500 that is forming now resembles the internet bubble that formed in the second half of the 1990s in many aspects, not least how it is an attempt to capture the future benefits of transformative technology. Nonetheless, valuations remain far short of what was reached then, suggesting that the current AI bubble has plenty more room to inflate.

Let me explain: At the time of this writing the price/forward 12-month (FTM) earnings (EPS) ratio of the index is a bit above 20. That compares to a peak of nearly 25 shortly before the dot com bubble burst. Admittedly, the current rally is ‘super-concentrated’ in a way that it wasn’t 25 years ago – a phenomenon that has arguably been accentuated by a huge shift from active to passive investing in the past decade.

Even so, the combined valuation of the three sectors in which the ‘Magnificent 7’ (Microsoft, Apple, Amazon, Nvidia, Meta (aka Facebook), Alphabet and Tesla) operate remains less stretched now than it was then. And that of the rest of the market is also lower, which points to the possibility of the rally broadening out.

The Role of Passive Investing

Lastly, unlike most bubbles, this one hasn’t been accompanied, at least so far, by obvious signs of high and rising leverage. On the other hand, the share of funds invested in ‘passive’ products is now much higher than in prior bubbles. Our view is that the shift to passive investing seen so far can’t have played a very big role in causing a bubble in the overall stock market. After all, whether money is invested in active or passive funds shouldn’t - in principle - have a bearing on how much overall finds its way into equities. However, investing in passive funds weakens the price discovery mechanism in the stock market. In other words, it reduces the relative weight of money that is able and willing to bet against potentially distorted valuations of certain stocks or sectors. In that way, it can reinforce the status quo.

According to data gathered by Morningstar, the share of U.S.-listed equity mutual funds and ETFs that are passive funds has nearly doubled over the past decade or so, to more than just over 50% at the end of 2023. Given trends over the last few years, we have seen estimates that the passive share could hit over 70% in the next decade.

It’s impossible to know how quickly a bubble will inflate, how big it will get before it bursts, what will cause it to burst and when it will burst. Having said that, Owen Lamont, Ph.D. Senior Vice President, Portfolio Manager, Research at Acadian Asset Management, writes an amusing anecdote on how to spot the end of the bubble in his piece “ Scenes-from-a-bubble .” Although fictional, Mr. Lamont’s scenarios resonate with me, having lived through a few market bubbles myself. Nonetheless, our expectations for the S&P 500 are rooted in the idea that a bubble in the index will continue to inflate against the backdrop of a modest rise in earnings.

What does this mean for your portfolios?

Developments on the inflation front over the last quarter have lessened our concerns of a hard landing. As a result, we expect to move to an overweight position in equities early in the second quarter. We continue to favour U.S. large-cap equities over International and Canada. Having said this, we still foresee GDP growth slowing in developed economies. Our positioning is based primarily on our expectation that the emerging bubble centered around artificial intelligence stocks has a lot further to run. Central banks easing policy would certainly help at the margin as many past bubbles are associated with relatively loose monetary policy. Sincerely,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

*Governing Council, Bank of Canada March 6th Deliberations: Summary of Governing Counsil Deliberations: Fixed announcement date of March 6, 2024 - Bank of Canada.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of April 2, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Building Communities; Driving Growth

Thu, 01 Feb 2024 19:08:00 GMT

The year ahead is a blank canvas. What do you want to create as your masterpiece this year?

As you think of your business plans for the year ahead, I wanted to share highlights from some recent episodes of my podcast, Turning the Page , to help spark some ideas. I thoroughly enjoyed these conversations and I hope you find something in them that will inspire you too. If so, drop me a note and let’s get on a call to talk about them.

Episode 42 - The Importance of Philanthropy and Community Giving with Steve Fox

Listen here or on Apple , YouTube , or Spotify

“With great power comes great responsibility”
- Uncle Ben Parker

As Spiderman's Uncle Ben said, "with great power comes great responsibility.” In this episode, my guest, Steve Fox and I get into what this sentiment truly means for all of us as business owners and members of a community. Steve is a Wealth Advisor with IPC in Windsor, Ontario. Not only is Steve a successful business owner with 30 years under his belt, but he also puts philanthropy at the forefront of both his business and life.

Steve shares what influenced and inspired him to do this and how he’s made it a core part of his life. He talks about his philanthropic efforts in Honduras, and why it’s a cause that Steve and his family organize and participate in each year. Personally, I have been fortunate enough to have joined Steve on several of these trips to Honduras. I talk about how I was challenged by one of our fellow Advisors to be part of this and what these community trips to Honduras have meant to me. In short, I can truly say that my ‘on the ground’ experiences with the communities in Honduras has had a profound impact on my life.

We’re very lucky here in Canada. As financial advisors, we get to help our clients live their best lives while building successful businesses of our own, all of which gives us such a great, blessed life. As we grow our business, it’s important for us to give back to our community – be it locally or abroad.

Episode 45: Growing Your Business by Growing Your Community with Renée Rebelo

Listen here or on Apple , YouTube , or Spotify

All great businesses create a community. They create a sense of belonging to something bigger. This is abundantly true in the wealth management business. Great advisors create a community with their clients, share ideas and give them a sense of belonging.

My conversation with Renée Rebelo on this topic was fascinating.

Renee is a Wealth Advisor with IPC in Grimsby, Ontario. Her story of how she got into the advice business and how she built it from the ground up is truly inspiring. Even more captivating, however, is how Renee thrived and grew her business during periods of crisis - by building and nurturing trust within her community. For example, during the pandemic, when the world went into lockdown, to motivate herself first, Renée committed to running ‘live’ sessions on Facebook every day for 30 days. She started by sharing a simple “30-Day Financial Declutter Challenge” to her few Facebook followers. This small act led to a strong growth of followers on her Facebook community to speaking spots on TV and radio, which in turn led to attracting new clients, and eventually receiving a book deal!

In this episode, Renee shares how she’s built her community around mixing her two passions: travel and financial planning, the growth she experienced, and what a sense of belonging can mean to your clients (and yourself).

Episode 43 - How to Talk About Grief in Business and Life with Dina Bell-Laroche

Listen here or on Apple , YouTube , Spotify

In this conversation with grief expert, Dina Bell-Laroche, we cover a topic that is difficult for all of us - death and survivor guilt.

When we start a business, there’s so much we must learn. Everything from creating a long-term vision to the day-to-day running of a business, to how we interact with clients. But we’re not taught how to handle the human or emotional side of engaging with our clients. In fact, how we handle emotional, difficult conversations with a client is a significant difference-maker in nurturing deep client relationships and building a better business.

Death or some other tragedy can throw out any plan we have and change our lives or the lives of our clients drastically. As financial advisors, we must be prepared to help our clients navigate grief at some point in their life/financial journey. Having the language to normalize the grief experience and being able to listen to our clients can go a very long way in helping us handle the human side of advice to our clients. Dina who also authored “ Grief Unleashed: Moving from the Hole in Our Hearts to Whole-Hearted, ” shares some approaches that we can take to help our clients navigate grief.

As you execute on your goals for 2024, I invite you to think about how you want to shape and grow your business, your client network and community. I’d love to hear about your plans and everything you want to accomplish in 2024 over a virtual coffee!

Let’s choose to make 2024 the best year ever by taking bold, inspired action.

Cheers,
Chris

Central Banks, Fixed Income, and the Year Ahead

Wed, 24 Jan 2024 20:32:00 GMT

In our "Insights in 5" 2023 year-end update, IPC Private Wealth Portfolio Manager Simon Bowers looks back on the year and discusses what to look out for in the days ahead.

Simon notes that as the prospects for a BIG R recession fade and inflation moderates, the biggest question for investors in 2024 is what’s next for high-interest rates? While they were needed to curb inflation, the next step is for rates to move lower. The question now becomes at what pace.

The probable case is that rates begin to moderate in the first half of 2024, with central banks recognizing that higher rates slow growth. Simon feels that rate reductions will be done in a measured way, with central banks following the U.S. Federal Reserve closely.

For more on Simon's outlook and his take on the fixed income and equity markets in 2024, please enjoy following three-minute video:

If you have concerns about your current investment plan, please give us a call.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of January 24, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Market Monitor: Our Investment Specialists Outlook for 2024

Wed, 24 Jan 2024 18:39:00 GMT

We recently sat down with nine of our top-ranked investment specialists at IPC Portfolio Services' Toronto Due Diligence conference in Toronto to discuss what they’re excited about and how they have positioned their portfolios for 2024.

With inflation subsiding and interest rates now stabilized and potentially falling over the near term, the table has been set for a positive investment environment for 2024. And while ongoing volatility is to be expected, our investment specialists are taking advantage of overlooked investment opportunities.

Find out what our experts are thinking in these short videos:

North American Equity and Fixed Income Outlook 2024

U.S. Equities Outlook 2024

Global Equities Outlook 2024

If you have concerns about your current investment plan, please give us a call.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of January 24, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Faith: The Key to Investing During Uncertain Times

Wed, 10 Jan 2024 15:15:00 GMT

Counsel’s Chief Investment Strategist Rana Chauhan provides his summary of 2023 and notes that 2024 will likely be a contentious election year in the U.S. as a political circus unfolds south of our border.

In 2023, the markets experienced a mixed start, with positive news from Artificial Intelligence and falling inflation.

However, negative news about bank failures, stubborn inflation, the Ukraine war, and a new conflict in the Middle East intervened which led to some tough months for investors. Despite these challenges, the S&P 500 managed to provide a healthy 24% return for the year.

As an investor, however, Rana believes it will be crucial to maintain faith in the future by focusing on what matters most and tuning out the negative noise.

2024 Outlook

Rana expects that 2024 will likely be a contentious and unpredictable election year in the U.S., with political parties and the press likely sowing confusion and uncertainty among investors. This uncertainty will likely create a sense of fear in the markets, which can be the primary cause of market volatility and investors questioning their investments. As an investor, however, Rana believes it will be crucial to maintain faith in the future by focusing on what matters most and tuning out the negative noise. Investors will need to focus on companies creating products and services that we use daily and embrace the promise of Artificial Intelligence that marks a new innovation cycle, similar to how the internet led to the creation of new companies during the 2000s.

Maintaining faith in the future, the companies we invest in, the management teams that lead new developments, and the financial advisors who create financial plans for investors will be essential to successfully navigate the changing political landscape and the market volatility that is likely to emerge in the year ahead.

To manage through this tough period in the markets, Rana suggests the best course of action is sticking to the financial plan and to discuss any concerns you have with your Financial Advisor.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of January 10, 2024 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Key Investment Themes and Risks for 2024

Mon, 18 Dec 2023 21:46:00 GMT

It seems like it was only yesterday when I wrote my last “What to expect next year” piece. Like birthdays, these events come around sooner each year.

As I sit down to reflect on the past year’s uncertainties, how we navigated them, and opportunities for us to improve upon, I am astounded by the number of events and the degree of uncertainty that unfolded in 2023: the Artificial Intelligence (“AI”) revolution, bank failures, war in the middle east, etc. But before we delve into our 2024 outlook, it is always helpful to understand where we were at the beginning of the year and our expectations at that time for 2023.

We began the year with the following three questions in mind: Will the world's major economies fall into recession? Will inflation recede? How far will central banks have to raise interest rates?

Three Questions

On the question of recessions, we expected demand to weaken as the full effects of the substantial monetary tightening that occurred over 2022 had yet to be felt. We expected a substantial hit to interest rate-sensitive sectors (notably housing). In the case of the U.S. and Canada at least, we anticipated a relatively mild recession. In Europe, we expected a deeper recession.

But, even here, the contraction in GDP would be much smaller than the Global Financial Crisis (2007-2009) and Pandemic (2020) recessions. In addition, we expected that the economic recovery would commence over the second half of 2023.

“We have seen GDP growth across developed countries slow and in some cases such as Canada, become negative in some quarters.”

So how did we fare in Canada? Of the four recession types that we identified in our previous commentaries, we expected a growth recession where GDP growth slowed sharply for several quarters. GDP would not fall, but remain below trend for several quarters, causing unemployment to rise.

We have seen GDP growth across developed countries slow and in some cases such as Canada, become negative in some quarters. We have also seen unemployment rise, albeit later than what we anticipated and to a smaller degree, reminding us that monetary policy works on long and variable lags.

On the topic of interest rates, we had anticipated that that the conditions would be in place for the Bank of Canada and the Fed to begin cutting interest rates, at a gradual pace, by the final quarter of the year. As 2023 went on, we saw that advanced economies were showing resilience in the face of higher rates. Unemployment remained low and financial activity remained high, likely due to pent-up savings and consumer demand from the pandemic.

As a result, our expectations for rate cuts from central banks moved out to mid-2024 and we adjusted our portfolios accordingly. We were correct in our estimation that rates would peak early in 2023, as central banks would hold and let the effects of higher rates work through the economic system.

“ We believe that market participants have abandoned the “higher for longer narrative” and are now starting to come around to our expectation of a late Q1/Q2 rate cut.”

We believe that market participants have abandoned the “higher for longer narrative” and are now starting to come around to our expectation of a late Q1/Q2 rate cut. Our expectation is the U.S. Fed and the Bank of Canada will be among the first central banks to cut interest rates, but in truth, we wouldn’t put much weight on the timing of rate cuts – the key point is that most central banks are likely to be lowering interest rates by around the second quarter of next year.

While recessions have not yet taken hold to the extent that we had anticipated, this seems to reflect temporary factors including households running down their savings and producers working off backlogs now that shortages have abated. With accumulated savings having been largely exhausted in the U.S. and Canada, most supply-side distortions have now unwound and interest rate hikes clearly weighing on credit growth and raising debt servicing costs, it seems very likely that a sharper slowdown is to come in advanced economies. Accordingly, and with few exceptions, we think that the rate hiking cycle is already over and see cuts coming next year.

However, the unusual nature of this cycle and uncertainties surrounding the transmission of monetary policy mean that the biggest risks relate to central banks. On the upside, previous interest rate hikes might fail to take a significant toll as many borrowers sit out the effects of the tightening cycle. But on the downside, policymakers might keep interest rates too high for too long and finally spark a labour market downturn.

“…we think equities, especially in the U.S., will rally strongly over the subsequent couple of years as economies recover, interest rates fall and enthusiasm about AI continues to grow.”

In short, our expectations for 2024 are generally below consensus on GDP growth in most major regions and we anticipate interest rate cuts in most economies. We think sluggish global growth will cause corporate earnings to disappoint and appetite for risk will worsen, meaning risky assets will struggle over the next few months. However, we think equities, especially in the U.S., will rally strongly over the subsequent couple of years as economies recover, interest rates fall and enthusiasm about AI continues to grow.

As always, there are risks in both directions. Here, we set out what we see as the biggest threats and opportunities for the year ahead.

Opportunities in the Year Ahead

Starting on the optimistic side, we think the biggest upside risk to our forecasts is that previous interest rate hikes never take a major toll, and inflation returns to target, nonetheless. Like most others, we have been surprised by the resilience of the world’s major economies this year against a backdrop of aggressive monetary policy tightening. Our view is that this partly reflects the longer maturity of debt, and we think that some of the pain has yet to come, but perhaps not. It is possible that many firms and households will sit out the policy tightening cycle altogether as by the time they need to refinance, market interest rates will be falling. This would raise concerns about the impotence of monetary policy and its power to deal with the next crisis. But in the meantime, it would mean stronger growth in advanced economies and no recessions.

The next upside risk is that falling inflation provides a significant boost to consumer spending. Easing pandemic-related disruptions or decreases in oil prices might prompt a sharper decline in inflation than we have assumed. If wage growth remains healthy at the same time, real incomes would rise sharply. This possibility is stronger in the euro zone than in the U.S., where wage growth is already slowing. Note, too, that euro-zone households still have significant excess savings, which they might eventually decide to spend. Admittedly, the positive effects of lower oil prices for consumers would be partly offset by the adverse impact on producers at the global level. However, we would anticipate a net positive impact given the higher propensity to save.

A third potential source of optimism is that AI might start to boost productivity, and it’s possible that the boost will start to come through sooner than we expect. After all, the adoption lags before countries implement new technologies after they are invented have shortened over time and there is an outside chance that the recent strength in U.S. productivity already reflects some of this.

“…it is quite feasible that central banks will be slow to acknowledge weakness in their economies as they focus on stamping out any lingering inflation threat…”

Risks to the Downside

Unfortunately, though, we still think that the balance of risk is skewed to the downside. Chief among these is the possibility that central banks will not cut interest rates in 2024 as we anticipate.

This could happen either because core inflation is sticky around current rates or because monetary policymakers choose to err on the side of caution. In the aftermath of such a severe inflation shock and given their current rhetoric, it is quite feasible that central banks will be slow to acknowledge weakness in their economies as they focus on stamping out any lingering inflation threat, however remote.

If interest rates are kept at current levels and banks maintain a hawkish tone, bond yields are more likely to rise than fall as we anticipate. The ongoing tightness of financial conditions could prompt a rise in loan defaults and insolvencies, plus the sharp rise in unemployment that has so far been absent in this cycle, although we may have seen the first crack come in the Canadian labour force.

“Corporations might struggle to refinance once their long-term loans come due and a round of insolvencies would impair financial institutions’ assets.”

A second downside risk is that something breaks in the financial system. By and large, financial institutions seem to have adjusted to higher interest rates, and stress tests imply that major banks are well-positioned. If policy rates have peaked, we could be out of the woods. However, it is still possible that the lagged effects of previous hikes could cause a crisis. Corporations might struggle to refinance once their long-term loans come due and a round of insolvencies would impair financial institutions’ assets.

These risks are perhaps greatest for commercial real estate companies and the investment funds that are exposed to them. Alternatively, we could yet see renewed declines in house prices once households come to remortgage at higher rates with knock-on effects for the financial sector.

“…global fracturing might intensify. Relations between the U.S. and China blocs could deteriorate further, perhaps due to tensions surrounding the election in Taiwan or in the run-up to the U.S. election.”

Third, there is a threat to public debt sustainability. If government borrowing remains elevated, market concerns about the fiscal position could grow. If serious stresses do start to appear in government bond markets, countries may be forced into an abrupt fiscal consolidation causing prolonged economic weakness. Or alternatively, they might resort to financial repression with adverse implications for inflation.

Fourth, global fracturing might intensify. Relations between the U.S. and China blocs could deteriorate further, perhaps due to tensions surrounding the election in Taiwan or in the run-up to the U.S. election. This could result in tariffs, sanctions, and limits on capital and technology flows, suggesting China’s growth would suffer in 2024 and beyond. The immediate economic impact on large developed markets should be small, though financial markets could react badly and some Western firms may lose Chinese market share. There is a much smaller risk of a far worse outcome involving conflict.

Finally, China might suffer a renewed downturn. We have assumed that the Chinese economy is past the worst and that a policy-induced cyclical recovery will continue. However it is notable that there has still been no major correction in construction activity despite the property crisis. This might yet materialize if structural factors weighing on demand take their toll faster than we have assumed. In that event, policymakers may struggle to provide an offsetting boost to demand since the fiscal deficit and public investment spending are already elevated. Besides China, trading partners in Asia and commodity producers would suffer.

Final Words

In practice, the impact of any of the shocks would depend on its precise nature. In most cases, it is possible to think of more extreme versions of the scenarios above which are less likely to happen but would have far greater effects if they did. And crucially, the risks are not independent of each other. The realization of one may mean that the probability of others increases, such as higher rates prompting fiscal concerns and financial strains. It is under these circumstances that the economic repercussions would be greatest.

“ …our sense is that 2024 will have been a year of low economic growth in advanced economies followed by falling interest rates (nearly) everywhere, but particularly in the U.S. and Canada.”

The one thing we can be reasonably sure about is that the economic backdrop is likely to look and feel very different in a year's time. Move the clock forward 12 months and our sense is that 2024 will have been a year of low economic growth in advanced economies followed by falling interest rates (nearly) everywhere, but particularly in the U.S. and Canada. The prospect of a moderate recovery commencing in the second half and the Bank of Canada and Federal Reserve cutting rates by the end of Q2 are the key themes that will shape 2024. We are more dovish than most market participants regarding the amount of rate cuts that the developed market central banks will deliver next year.

Our sense is that risky asset valuations reflect an overly optimistic view the global economy will hold up well in the face of higher interest rates. So, if, as we expect, the economy falters instead, sentiment sours and valuations may take a tumble. Nonetheless, we think they will begin to rise again once growth worries ease and enthusiasm around AI returns. We have positioned ourselves to expect a faltering of expectations, which will benefit our fixed income positioning. If the macro backdrop does not worsen from our base case, we will use that opportunity to take on greater risky asset exposure, especially in the U.S. where enthusiasm over AI will push prices higher.

Happy holidays.
Wishing you and your loved ones a happy, healthy, and prosperous 2024.

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of December 18, 2023 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Sandwich Generation: Are You Taking Care of Yourself?

Wed, 22 Nov 2023 21:28:00 GMT

It’s a significant life change when you’re helping a parent daily while you also care for your children at home. Welcome to the sandwich generation.

The term Sandwich Generation was coined almost 40 years ago by social worker Dorothy Miller to refer to women performing this double duty. And today, according to the most recent research [1] , women still form the majority of family caregivers in Canada.

When you’re a caregiver to two generations, you’ve got to be at your best to meet everyone’s needs.

The middle of the sandwich can begin in a healthy place, only to have feelings of satisfaction eventually turn to frustration. It’s not unusual to find yourself harried and stressed when you’re being pulled in two different directions. You can deal with caregiver stress by adopting these four self-care and caregiving best practices and ultimately improve your well-being.

1. Monitor your well-being

Keeping an eye on your own emotional, physical and mental well-being is important. Stress may express itself through your emotional state – feeling overwhelmed, excessively worried, angry, irritable, anxious or depressed. You might lose interest in pastimes you usually enjoy. Or begin having conflicts with your spouse or children.

Monitoring these symptoms is especially important for women. Research [2] shows that women and men have different triggers that cause stress. And sandwich generation caregiving involves several triggers specific to women, including dealing with children, family health and time constraints, and meeting others’ expectations.

It’s important not to write off these problems as normal consequences of sandwich generation caregiving. Ignored, your symptoms could worsen; but treated, you can get back to a healthy place.

2. Make time for self-care

When you experience these signs of stress – or, better yet, before stress arises – you need to practice self-care. Many caregivers who take the time to care for their children and parents forget to make time for themselves. How can I do pilates if I could be visiting mom?

Self-care is all about looking after your physical and emotional health. You might exercise at the gym, take pleasant strolls or eat healthier. Or perhaps you’ll meditate, do yoga or take spin classes. Maybe you’ll talk things out with a friend, relative or therapist. Whatever works for you.

It’s important to understand that caring for yourself is not selfish. Everyone’s entitled to live their life with as little stress as possible. And the stronger you become, the better able you are to provide care for your loved ones.

3. Share the responsibilities

In Canada, women who provide care spend more hours per week helping family members than men who provide care. Although gender roles are blurring, many women still identify as the primary caregiver.

One way you can manage this responsibility is by asking for help and sharing the responsibility with family, such as a spouse or sibling. By asking for help and sharing caregiving needs, you not only can achieve greater balance in your life, but you gradually start to shape the positive conversation on equality and gender roles.

Another avenue that may be worthwhile is seeking external support. Many caregiving hours can be managed by arranging housekeeping services, meal delivery or private home healthcare, or talk to your employer about a flexible work schedule.

There’s no one size fits all solution. Determine what support you need and from whom and strive to make it happen.

4. Seek financial guidance

A sandwich generation caregiver can also face a variety of financial planning matters, from learning about power of attorney and caregiver tax credits, to covering healthcare expenses and determining if leaving the workforce affects your retirement date.

A financial advisor can provide guidance and advice for many aspects in this phase of your life. They can help you navigate the changes, identify pitfalls you don’t see, and recommend solutions that open new opportunities for you or make the financial side of caregiving a lot easier for you.

Give us a call and get the conversation started.

[1] Statistics Canada, General Social Survey on caregiving and care receiving, 2012.

[2] Statistics Canada, Stress, health and the benefit of social support, 2004.

The Sudden Wealth Paradox | How to Manage a Windfall

Wed, 15 Nov 2023 20:54:00 GMT

Suddenly receiving wealth comes with complications.

In the following article, Sam Febbraro, EVP, Portfolio Services, shares how you can manage sudden wealth responsibly and face the different challenges that come with it.

Sudden wealth sounds like a nice problem to have, but it can come with some complications. Most of us are comfortable with becoming wealthy gradually. Over the years, we build up equity in our homes, our earnings increase, and we can afford nicer things, like a better car or a more exotic vacation. But, when a sudden windfall happens – from the sale of a business, the sale of a house or farm, an inheritance, or even lottery winnings – the results can be unexpected.

A sudden change in your wealth status can be exciting and liberating, but at the same time, you may feel confused, overwhelmed, isolated, guilty, or sad. After all, your identity is wrapped up in your home, your job or business, your friends, where you shop, what you drive, or where you vacation.
Suddenly, all the parameters that you built your life around, and all the ways you define yourself, are up in the air. You’ve had the rug pulled out from under you and replaced with a magic carpet. What now?

It’s a nice problem to have, you would think. But the truth is, sudden wealth can play havoc with your emotions, your relationships, and your life – if you let it. So, how can you responsibly manage sudden wealth and face the challenges that come with it? Here’s how:

Change the way you think about money

Most people tend to live at or above their means, so money is a commodity to be consumed. But when you have substantially more than what you need, it is wise to rethink your relationship with money.

Think of money as a resource. Treat it like a forest. Would you cut all the trees down and sell them all? Or would you use some for firewood, sell some, and replant, thinking of the future? To ensure that your resource will last, it’s important to steward it by planning and managing it responsibly.
Imagine how the windfall could make not only your life better, but improve the lives of your children and your children’s children. As Warren Buffet once said, “Someone is sitting in the shade today because someone planted a tree a long time ago.”

Do not make any big decisions or life changes right away

The fact is, we make poor decisions when we’re emotional. And whether your sudden wealth is the result of the sale of a business or the death of a loved one, you’re going to be emotional. You may experience euphoria, relief, guilt, anger, or regret. You may even find yourself feeling a loss of identity or sense of purpose. The thing to remember through this is to ‘keep calm and carry on.’

Invest your money prudently. Park it in a safe short-term investment, and give those feelings time to process. There’s no rush. More importantly, seek the counsel of a good financial advisor who will sit down with you to understand your concerns – whether it involves your family, business, or personal aspirations.

Keep a low profile with your new-found wealth

If possible, try not to tell many people about your windfall, since it will likely attract the wrong kind of attention.

In the book ‘The Millionaire Next Door,’ we learn that many millionaires lead quiet lives and drive the same car for ten years. By keeping a low profile, they avoid attracting unwanted attention from wealth – fraudsters pushing bad investment ideas, lawsuits, unwanted advice, predatory ‘friends,’ and relatives. Avoid making sudden changes to your lifestyle to protect your privacy.

Learn about money

Learn all you can about wealth. Even if you plan on delegating a lot of the responsibility, you need to become knowledgeable so that you can make informed decisions. Educate your family and children on the value of wealth and work together on decisions that affect everyone. After all, as Benjamin Franklin once put it, “An investment in knowledge pays the best interest.”

Put together a team

The more money you have, the more complex your financial situation becomes, and the more there is at stake. So it’s important to assemble a team of experts who will guide and support you. You will need accounting and tax advice, investment management, estate and trust strategies, as well as insurance. A financial advisor can act as the quarterback for all of these relationships, ensuring an integrated strategy and timely execution of your plan.

Know your tax liability

How much you get and how much you get to keep is not the same unless it’s the sale of your principal residence, life insurance proceeds, or lottery winnings. The sale of a cottage attracts capital gains tax on the appreciation of the property going back to your original purchase price. Inheritance will trigger estate taxes and fees, and a severance package or a performance bonus will be taxed at your highest income tax rate. It is important to understand how much money you are going to end up having after tax. Seek counsel on how you can legally reduce or defer the taxes payable on your windfall.

Devise a solid financial plan

To succeed in achieving your most important goals, you need a solid financial plan. First, consider your needs and desires carefully. Reflect on what and who are most important to you.

Together with your financial advisor, look at your options and make decisions. Will you retire or buy a vacation home? Will you give money to charity and set up trust funds for your children? How much income do you need and how much do you want? Through financial planning tools and assumptions of interest rates and rates of return, your advisor can project what strategies you will need to follow to successfully meet your goals, even those that are 10 or 20 years down the road.

Invest responsibly

The bulk of your money should be invested in a variety of investment vehicles that are professionally managed. Your financial advisor will help you choose from the different investment solutions to find the one that is suitable for you. It could be wrap programs that provide a combination of pooled investments in one easy package tailored to your needs, or a unified managed account (UMA) that holds a variety of investment vehicles, from individual securities, mutual funds, stocks, and bonds to exchange-traded funds.

Diversification is perhaps the most important concept. If you invest in a wide variety of securities, countries, and sectors, the underperformance of a single investment will not hurt the value of your entire portfolio.

Recognize that you can’t have it all – there is always a trade-off between risk and return. The safer the investment, the less return it generates. The riskier the investment, the higher its return potential. Your ideal portfolio will balance your tolerance for risk with your need for return to achieve your goals. To provide safety, part of your portfolio should be invested in a conservative asset class such as bonds. To provide growth potential, a portion of it should be invested in a higher risk asset class such as stocks. To maintain your ideal weightings, regular asset class rebalancing is key.

Advance planning is the key to controlling outcomes

Sudden wealth sometimes comes instantly, but it isn’t always unexpected. If you are retiring and planning to sell your business, or if you are planning to downsize from an expensive house, you can do some advance planning. An inheritance plan can be designed to reduce taxes, family conflict, and even litigation (no one wants to see their inheritance eaten up by legal fees). Consider strategies for disbursing assets in the most advantageous way before selling your business or piece of real estate.

Sudden wealth looks easy, and it can be if approached in the right way. With a prudent approach to stewarding your new-found money and a solid financial plan that reflects your priorities and goals, you’ll be able to enjoy your wealth and build a lasting legacy for your loved ones.

Maximizing the Succession Value of Your Book

Fri, 10 Nov 2023 20:07:00 GMT

Assessing and Maximizing the Value of Your Book of Business

You want a fair price for the business you’ve built. Advisors have many reasons to sell their book of business. You may want to sell part of your book to free up capacity for growth or sell your entire business as you prepare to retire.

Whatever your succession objectives, the bottom line is you want a fair price for the business you’ve built.

In this article, I will teach you how to assess the value of your book and how to maximize the value of your business so you can get a fair price for your book.

Understanding the Importance of Business Valuation

How to assess the value of your book

“ What’s my book of business worth? ” Whether spoken or unspoken, this question comes up a lot when I speak to financial advisors. So, let’s dig into it.

What’s most crucial in valuing a book is the quality of the clients and assets in the business. That’s because what’s ultimately being bought and sold – the real asset – is the client list. This is essentially the ‘goodwill’ value of your business.

"...the real asset - is the client list. This is essentially the 'goodwill' value of your business."

Valuing your book of business often starts with assessing your overall income. While the makeup of clients may differ from one Advisor to another, it likely consists of some combination of trailers and fees earned for service, commissions, and/or referral fees. For simplicity, let’s refer to these as your recurring revenues.

It’s important to consider the quantitative and qualitative factors that influence the quality and sustainability of your recurring revenues. While the following lists are not exhaustive, they highlight some key factors to consider.

Quantitative Factors in Book Valuation

Qualitative Factors in Book Valuation

Do you have a systematic and well-documented client experience process?
Do you have a strong, knowledgeable team with defined roles and responsibilities?
Do you have a professional office setup for both virtual and in-person client meetings?
Do you use technology solutions to efficiently execute your business processes?
Do you create and maintain up-to-date financial plans for your clients?
Do you have a defined client interaction and engagement strategy for each client segment?
Do you have clearly documented meeting notes and records for all client conversations?
Do you have a good compliance audit rating history?

Applying the Book Valuation Multiplier

When coming up with a price for your book, apply a multiple to the recurring revenue that you earn. In the financial services industry, the business multiplier typically ranges anywhere between 2x to 3.5x. Deciding where within this range the multiple should be is both an art and a science – guided by the quantitative and qualitative factors above.

An attractive book with high quantitative and qualitative scores would likely be priced closer to the 3.5x multiple while a book with low scores would receive a multiple closer to 2x. However, we also need to account for market conditions and other related factors, such as the quality and consistency of business processes and client engagement strategies, before arriving at the final fair value. When you add this to the mix, you realize that assessing the value of your book is not straightforward and there can be more than one right answer.

Strategies to Enhance Business Value

It’s good to know the value you can potentially get for your book. It’s even better to know that you’ve maximized that value when you sell your business.

To do this, a good starting point is to look for opportunities to boost quantitative and qualitative scores we talked about above.

Opportunities for Significant Value Increase

From a quantitative perspective, this can include:

Sell the lower value clients in your book, so you have more time to nurture high value clients (i.e. those with higher investable assets)
Build up the fee-based component of your business
Streamline or reduce the overall number of portfolios that you manage within your book

From a qualitative perspective, ensure that you have:

Systemized business processes
A knowledgeable team
Adopt technology solutions that enhance your operational efficiency

What steps you take to boost the potential value of your business will depend on numerous factors – not least, your ideal succession timeline. The more runway you have, the more steps you can take to significantly enhance the final value you can extract from your business .

"..look for opportunities to boost quantitative and qualitative scores"

In some cases, taking bigger steps can lead to greater increases in the value of your book. For example, depending on your current situation, changing dealers may be an opportunity to streamline your portfolio offering , define your client segmentation strategy more effectively, elevate your client experience , attract higher net worth clients, adopt a better tech stack or more robust compliance support . The right changes can, in turn, boost the enterprise value.

Another opportunity may be to shift your business from non-discretionary to discretionary . While transforming your business in this way requires time and planning, becoming a portfolio manager can significantly boost your operational efficiency, overall profitability, and ultimately, the value you can extract when you sell your business. We have helped Advisors achieve this type of transformation with IPC One, our award-winning discretionary wealth management platform, so we have seen just how impactful it can be .

Make the Most of Your Succession Opportunity

No matter how near or far you are from succession, maximizing the value of your book is important to ensure you get a fair price for the business you’ve spent years building. This starts with understanding both how to assess the value of your book and how you can take active steps to boost this value.

For guidance on how to maximize the value of your book and achieve optimal succession outcomes, feel free to reach out to our experienced team or connect with me on LinkedIn .

Turning Investment Volatility into Tax Savings

Wed, 08 Nov 2023 20:54:00 GMT

For most investors and portfolio managers, tax-loss selling – or tax-loss harvesting – is typically near the top of the list of year-end tax strategies. You sell a non-registered investment that’s worth less than its original cost, and you apply the resulting capital loss against capital gains. The net result is a lower tax bill.

You don’t need to wait until the end of the year to take advantage of this tax strategy. At IPC Private Wealth , for example, our Portfolio Management Team practices tax-loss harvesting year-round on behalf of our investors. Investments are monitored regularly, and if a tax-loss harvesting opportunity that’s beneficial to the investor is identified, the team will take advantage of it. Harvesting capital losses year-round provides investors with the opportunity to use them to offset capital gain either in the current year, a future year, or from the three previous tax years.

Repurchasing a Promising Investment

Sometimes an investment is an ideal candidate for tax-loss harvesting but remains a holding our investment specialist continues to believe in. For example, a security may have lost value because the sector it belongs to is experiencing a downturn, which is expected to be temporary. This calls for a hands-on monitoring approach to benefit the investor through tax loss harvesting. In instances like this, we will sell the investment to realize the capital loss, but after a statutory period of time (30 days), we will repurchase it.

In order to maintain the underlying characteristics of your portfolio during the ‘harvesting’ period, we will typically hold a sector ETF that is representative of the security that we have sold. On occasion, if the investment specialist’s view of that original holding changes within the 30-day ‘harvesting’ period, and they recommend disposal of that original security in favour of another security with greater potential upside, we will simply re-purchase the new recommendation.

Overlay Tax Management

The tax you pay on your non-registered investments can significantly impact the value of your portfolio over time. Minimize the tax you pay with an overlay tax management strategy.

Capital Gain

An investment is sold at its target price, higher than its purchase price. Tax is payable on 50% of that gain.

Capital Loss

An investment is sold at a price lower than its purchase price.

Overlay Tax Management - Portfolio Management Team

Active portfolio monitoring

Strategically identify securities best to sell and when

Use proceeds from sale of security to buy similar security (e.g. ETF)

Maintain sector exposure within the portfolio

Capital losses can be used to offset capital gains, which reduces net capital gains tax.

Losses can also be carried back three previous years or forward indefinitely.

Benefits of Regular Overlay Tax Management

Reduce your Costs

The tax you save helps to effectively reduce your investment costs.

Grow your Portfolio

The tax you save compounds, which means extra dollars towards your long-term goals.

The above should not be construed as legal or tax advice, as each clients' situation is different. Please consult your own legal and tax advisor. The charts and illustrations used in this publication are hypothetical and intended for illustrative purposes only; they do not indicate actual performance of any investment or security and are not intended to reflect future values or returns on investments in a particular investment or security.

IPC Private Wealth is a division of IPC Securities Corporation. IPC Securities Corporation is a member of he Canadian Investor Protection Fund.

How You Come Out Ahead

Any tax-loss transactions we conduct throughout the year benefit you when you file your tax return. You apply any capital losses against capital gains from the same tax year, paying less tax overall. You can magnify these tax savings by investing the money you save back into your portfolio, where they’ll become investment assets that compound over time.

It is possible for an individual investor or financial professional to practice year-round tax-loss harvesting. But you need the expertise to know when to sell and the time to actively monitor a portfolio for opportunities.

To find out about year-round tax-loss harvesting, give us a call .

Who Will Win? – It’s Anybody’s Guess!

Wed, 01 Nov 2023 14:21:00 GMT

When it comes to investing, it’s always a good idea to diversify.

Diversification is the technique of allocating portfolio resources or capital to a mix of investments. The goal of diversification is to reduce the volatility of an investment portfolio by offsetting losses in one asset class with gains in another. “Do not put all your eggs in one basket” is a common expression that captures this idea since having your “eggs” in multiple baskets mitigates risk; if one basket breaks, it won’t break all the eggs.

Beyond simply dividing your assets between stocks and bonds, comprehensive diversification means investing across multiple assets classes, geographic locations, industries, currencies, and markets. That’s because the various asset classes will tend to experience gains or losses at different times within an economic cycle. And since it is impossible to know with certainty at what point an economy is within a market cycle, incorporating comprehensive diversification into a portfolio is the best way to capture market-based returns without taking on undue risk.

Predicting which asset class will perform in any given year is difficult. The best performing asset class in one year may be the worst-performing one in the next. For instance, who would have guessed that investors who pulled their money out of Canadian Bonds in 2000 would have missed the stellar returns the following year?

While diversification can help an investor manage risk and reduce the volatility, you can never eliminate market risk completely, no matter how diversified your portfolio is. Market risks affect nearly every type of security, so it is also important to diversify among the different asset classes. The goal of diversification is to find a sweet spot between risk and return and let your time in the markets do the rest.

Have questions? Talk to us about your investment strategy today.

How to Become the Trusted Voice in a Noisy, Busy World

Thu, 26 Oct 2023 18:37:00 GMT

Generating Trust with your Digital Marketing

Introducing Marcus Sheridan

Marcus Sheridan is the go-to voice to learn how to generate trust faster with potential clients and become the go-to expert in your marketplace. Digital marketing is still a mystery to some advisors. This episode gives you the insight into becoming that go-to expert.

Marcus, AKA The Pool Guy (there’s a great story behind that nickname), did one our of IPC conferences years ago. I became an instant fan. So much so, I made everyone in the company read his book! That’s how much I believe in his message, so this podcast is really going to help you uplevel your message in the digital marketing space.

“If you look for it, you can always make your audience a hero.” - Marcus Sheridan

Marcus Sheridan is a highly sought-after international keynote speaker known for his unique ability to excite, engage, and motivate audiences. Forbes named Marcus “One of 20 Speakers You Don’t Want to Miss.” He has been dubbed a “Web Marketing Guru” by the New York Times and featured in Inc., The Globe and Mail, Forbes, and many more. As an owner of IMPACT, Marcus has established one of the most successful digital sales and marketing agencies in the country. Within his speaking company, Marcus Sheridan International, Inc., he gives over 70 global keynotes annually where he inspires audiences in the areas of sales, marketing, leadership, and communication. Mashable rated his book, They Ask, You Answer, the “#1 Marketing Book”, and Forbes listed it as one of “11 Marketing Books Every CMO Should Read”.

This article is adapted from the Turning the Page podcast.

Find the episode on Spotify , or Apple Podcasts .

Marcus' Entrepreneurial Journey

Marcus started his entrepreneurial journey with a pool company he started back in 200. He started it out of the back of a pick up truck with some buddies. Their business grew overtime until the 2008 financial crash. Many swimming pool companies went out of business and Marcus was afraid his business would suffer the same fate. He had to figure out how to save their business.

To make it happen, Marcus leaned into the internet. He studied how consumers were using it and how consumers learned to trust a company through their website. He learned one thing: If he obsessed over his customer’s questions, fears and concerns AND was willing to address them on his website, he might be able to save his business. From this, the “they ask, you answer” strategy he’s famous for was born and his company’s website became the most trafficked pool website in the world.

The Importance of Trust in Business

The landscape might have changed a lot since 2008, but one thing is still true: There’s one emotion that binds every business together. It’s the emotion that allows consumers to give you money in exchange for goods or services. That emotion is TRUST. Whether you’re a solopreneur, a multi-billion dollar corporation or somewhere in-between. That’s the battle we’re in. You’re in a battle for trust of potential customers.

“If you can build the model of your company or brand around trust, you’re going to be built to last. It doesn’t matter what happens with AI. It doesn’t matter what happens with the next platform. You’re going to be okay.” - Marcus Sheridan

Often we’re focused on the logistics and platforms and how they’re changing. But no matter how any of that changes, it still all comes down to trust. If you can build the model of your company or brand around trust, you’re going to be built to last.

Marcus shares the recipe on how to build trust with potential clients online. If you follow the three things he shares in this episode, you’ll be built to stand out from the majority of your competition.

The "They Ask, You Answer" Strategy

Marcus treats his “they ask, you answer” theory as an obsession. It’s an obsession with the questions, the worries, the fears, the issues and concerns a potential buyer or customer would have and the willingness to address those through text, video on your website and integrate that into your sales process.

Most companies don’t embrace it and ignore the questions potential customers want answered. Oftentimes, companies might come up with excuses like “There’s regulations we have to follow.” If you want to become the trusted voice in your field, you can still address the question, but you can’t always answer it how you want. Those who do well online don’t have a glass half empty mindset, they have a glass half full mindset when it comes to subject matter. They find a way and aggressively talk about what customers want to know.

Marcus’s goal is every potential client has heard his voice, seen his face and have a feeling that they know him before they ever meet in person. Imagine having that kind of connection with potential clients before you even meet them, or even being able to build a better relationship with current clients.

Building a Trustworthy Brand Online

Think about the types of questions potential clients ask you when you start to build a relationship with them. How can you use digital marketing as a tool to build trust with potential clients before you even meet them? Harnessing this mindset can give you an advantage above others in your field while also helping you to build lifelong client relationships.

I’d love to talk to you more about what you’re doing to be the trusted voice in personal finance in your world! What are you doing to build trust with potential and current clients? I’d love to chat with you more about it over a virtual coffee and how you can accomplish big things in your business in 2023!

Set up a virtual coffee with me here .

If you loved this episode, I’d appreciate it if you would follow Turning the Page on Apple , Spotify or whatever podcast app you use! If you found the information helpful, be sure to share it with another financial advisor who could use these words of wisdom!

Let’s talk soon!

Chris

Three Managers and Their Approach to Buying Companies

Tue, 03 Oct 2023 14:18:00 GMT

We sat down with three of our top-ranked investment specialists

Discover what drives their security selection process and how they intend to manage their investment mandates. Here’s a brief overview of what we learned:

EdgePoint Wealth Management

Geoff MacDonald and his team take a highly differentiated approach to selecting securities by ensuring the companies he invests in are under-owned and have more upside potential than the largest index names that tend to be overpriced.

Brown Advisory

Karina Funk gets excited by uncovering the best companies that already have a strong foundation and can be resilient in the face of economic adversity. Whether it’s higher interest rates, pandemics, or a war in Europe, Karina and her team look for companies who are structurally stronger than their peers, and who can continue to provide consistent cash flow that can be reinvested into their business or passed on to shareholders.

Mawer Investment Management

Jim Hall looks for businesses that are well-positioned to compound wealth over the long term. He is currently encouraged that the higher cost of capital is causing companies to allocate their resources more effectively. While the process of adjusting to the higher cost of capital can be difficult over the short term, he believes it will provide long-term investors with the opportunity to participate in wealth creation at a reasonable price.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of October 3, 2023 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Market Volatility - Five Ways to Stay Calm

Wed, 27 Sep 2023 19:31:00 GMT

What's the best way to endure market volatility?

Economic optimism or pessimism, global health risks and trade wars are just some of the many factors that can introduce volatility in your portfolio.

To thrive as an investor, it’s important to keep your emotions in check.

But let’s face it, staying disciplined can be easier said than done, especially as global markets react to the global outbreak of the COVID-19 virus. Here are some effective ways that can help you manage how you feel about your investments during times of market volatility.

1. Tune out the noise

Don’t get caught up in the news of the day. The news about a global health crisis is making many investors jittery about the Chinese economy and the impact it is having on the broader global economy, especially if it results in prolonged disruptions to supply chains and lower consumer confidence. However, history shows that the effects of global distress after similar global health challenges, like SARS and the Avian Flu, are often short-lived and exist only on paper – unless you allow your emotions to influence your investment decisions. No one has a crystal ball to know when the market is going to move up or down, so remind yourself that while salacious headlines may grab your attention, they don’t offer sound investment guidance and shouldn’t be the reason for making sudden changes to your portfolio.

2. Be diversified

Adhering to a diversified investment plan can help lower volatility in your portfolio and minimize the impact of market declines. Different types of investments, such as stocks and bonds, and even various geographic markets, can perform in opposite ways; when one is up, another can be down. Once you determine a target asset allocation that makes sense for you, ensure you periodically rebalance your portfolio to maintain that mix and stay aligned to your risk tolerance and overall circumstances.

3. Think long-term

Short-term losses can be unnerving, but markets generally reward the patient investor. Markets tend to recover over time and can keep growing to set new highs. Remaining invested, particularly through the current volatility, is one of the best ways to ensure you reach your long-term goals. As such, day-to-day fluctuations in your portfolio become much less relevant when your investment horizon is years, if not decades, long.

4. Have a coach

Volatility in domestic and global markets can be hard to reckon with, especially when you have to deal with it alone. Financial Advisors help allay their clients’ fears amid the negative news flow and provide a “reality check” when volatility spikes. They also help their clients develop a financial plan they can trust, giving them confidence that they can look past the short-term blips that stem from global apprehension. Partnering with an Advisor includes being equipped with a financial plan that reflects your situation and outlines how you’ll reach your goals.

5. See the glass as half-full

As much as investors may dread short-term volatility, it can provide opportunities for those who want to buy assets when they’re underpriced. In other words, you can even capitalize on the ups and downs of the market. A pre-authorized contribution plan can allow you to manage, and take advantage of, short-term volatility through dollar-cost averaging – investing a fixed amount at regular intervals to help smooth out the rises and falls of changing prices. It’s also a way to put your savings on autopilot so that you don’t have to remember to do it.

Your Advisor can help

While short-term market volatility may not be enough to change how you invest, recent events in your life – planned or unexpected – can be. After any key life events, such as a marriage, income change or inheritance, it’s a good time to re-evaluate your investment objectives.

Speak to an Advisor today to review your investment plan, discuss any questions or concerns you may have, and see if you’re on course to your financial goals regardless of what’s going on in the market.

Peace of Mind with Answers to Retirement’s “Three Big Questions”

Thu, 31 Aug 2023 15:40:00 GMT

Retirement success hinges on finding answers to “three big questions,” says IPC financial advisor Doug Hopkins of Milton, Ontario. They are:

When can I retire?
Will I outlive my money?
How much can I spend in retirement?

For many Canadians, the global COVID-19 pandemic added urgency to these questions. Doug says that he’s prepared about 80 retirement plans for clients since the start of the pandemic – a sign of just how much the pandemic has changed people’s views on retirement.

Here’s how Doug helped his client, Pauline Dunning, find the answers to her Big Questions.

Pauline’s question: Can she “pull the trigger” and retire early?

Pauline, 56, had always expected to retire at about age 65. She enjoyed her work as a physician in a hospital and always thought of medicine as providing the flexibility to work beyond the traditional retirement age of 65.

The COVID-19 pandemic, however, changed all of that. Virtually overnight, Pauline’s job became much more demanding and stressful. Suddenly, the idea of retirement moved from the back burner to the front, as Pauline wondered whether retiring earlier than age 65 might be possible, providing a solution to her stressful situation. So, she got in touch with Doug to consider her options and opportunities.

The Plan: Evaluate Retirement Income Projections and Re-evaluate Investment Strategies

Based on her new goal to retire earlier than she had originally thought, Doug prepared a retirement income plan for Pauline. Pauline’s income in retirement will come from her hospital pension, Canada Pension Plan and Old Age Security, and her managed investment portfolio. Her financial plan accounts for all these income sources and considers when Pauline should start receiving her work pension, Canada Pension, and Old Age Security benefits.

Running retirement planning scenarios for Pauline with an earlier retirement date provided a surprising result: she could afford to retire four years ahead of plan – at 60 – without part-time work or risking running out of money. This answers Pauline’s Big Questions. Thrilled, Pauline opts for this plan.

Based on Pauline’s needs, Doug allocates most of her investments to longer-term growth, including her Tax-Free Savings Account. This allows her to have a portion of her portfolio continue to grow and earn higher potential returns over the longer term.

In the next four years, Doug and Pauline will monitor her spending carefully to make sure her plan projections are accurate. Then, once she starts retirement, they will meet each year to determine if she needs to make any changes and to ensure she’s withdrawing from her investment portfolio as tax-efficiently as possible.

Process & Personalization in Retirement Income Planning Matters

In Doug’s experience, while the process of creating a retirement plan may be similar for everyone, the plans themselves must always be personalized. “Your retirement plan is based on your goals, dreams, hobbies, and answers to questions about what you want your retirement to look like – you can’t generalize from one person to the next,” he says.

He follows a tried-and-true process, starting with a discovery phase. This means working through questions like whether his clients want to continue living in their current home or if they plan to move. How will they spend their time? Will their expenses increase, fall, or stay about the same? With this information nailed down, Doug and his clients can prepare an estimate of their desired cash flow in retirement.

Then, Doug and his clients take a careful inventory of all their assets and expected sources of retirement income, from property to pensions and government benefits such as the Canada Pension Plan and Old Age Security.

The final step is to bring together a client’s retirement cash flow needs and assets to develop a retirement income plan. Doug prepares two projections: one that shows his client what retirement might look like if they spend as planned, and another that establishes the maximum amount they could sustainably spend each year until age 100. In some cases, these two approaches don’t differ very much, but in others, they show how a client might be able to spend more than they expected.

Pauline’s insight: “With new information about my retirement schedule, I feel as if a load has been lifted from me. I don’t have to keep working until age 65 and can retire early on my own terms. Working with Doug has shown me how retirement has an emotional side as well as a financial side, and it’s important to take care of both.”

Doug’s Perspective: “The key to working with a planner is the advice you get on an ongoing basis. It’s important to understand all the ins and outs before you take action. That’s where a planner can help – you only retire once, and I’ve walked hundreds of clients through these questions.”

Why it Pays to Diversify Your Retirement Income Plan

Wed, 23 Aug 2023 18:17:00 GMT

There was a time when creating a retirement income plan was easy – simply invest in government bonds and sit back to collect the income.

Today, and for the foreseeable future, investors will need to maximize their retirement income potential by diversifying their savings into other investments. Planning a strategy to obtain higher yields, tax advantages, and long-term growth is the key to funding your future obligations.
To help you better understand how different asset classes work together to generate income in modern, well-diversified income portfolios, we’ve highlighted some of the key attributes of each class below:

Modern income portfolio checklist :

Equities
Dividend-paying equities
Real estate investment trusts (REITs)
Corporate bonds
High yield bonds
Global bonds
Bond ladder

How equities contribute to your retirement income plan:

In today’s environment, equities provide growth opportunities to a well-diversified income portfolio.
Growth is required to protect the portfolio from inflation and help expand the value of the portfolio to help ensure the money will last.
Additionally, capital gains from equity investments are taxed at a lower rate than interest income.

Key benefits of equities:

Capital gains potential
Tax-efficiency
Diversification

How dividend-paying equities contribute to your retirement income plan:

The role of dividend-paying equities is to provide growth and a tax-advantaged income stream.

Dividends paid by Canadian corporations receive preferential tax treatment and can provide higher after-tax yields than bonds.

Growth in the underlying company may also lead to higher dividend payments over time to help offset inflation and to help ensure the money is there when you need it.

Key benefits of dividend-paying equities:

Potential for higher yields than bonds
Capital gains potential
Tax-efficiency
Diversification

How real estate investment trusts (REITs) contribute to your retirement income plan:

The role of REITs is to provide diversification and higher after-tax yields in a well-structured income portfolio. Due to their unique structure, REITs pay out a significant portion of a company’s profits as tax-efficient dividends, capital gains, and return of capital.
REITs are also subject to different market forces, and therefore may provide additional stability to a portfolio containing equities and bonds.

Key benefits of REITs:

Higher yields
Capital gains potential
Tax efficiency
Diversification

How corporate bonds contribute to your retirement income plan:

The role of corporate bonds within an income portfolio is to provide stability through diversification and access to higher yields than government bonds.

While investment-grade corporate bonds tend to behave similarly to government bonds, they do provide additional diversification through exposure to different companies and industries. Like government bonds, there is also potential for capital gains when interest rates fall.

Key benefits of corporate bonds:

Higher yields
Capital gains potential
Diversification

How high-yield bonds contribute to your retirement income plan:

Like their investment-grade corporate bond cousins, the role of high-yield bonds is to capture the higher yields available from loaning money to corporations.

High-yield bonds differ from corporate bonds since they tend to be issued by companies with less stable balance sheets. While there is a higher risk of default, a well-diversified portfolio of high-yield bonds may prove to be less volatile than equities while providing the benefits of diversification through exposure to different sectors of the economy.

Key benefits of high yield bonds:

Higher yields
Capital gains potential
Diversification

How global bonds contribute to your retirement income plan:

Global bonds, much like corporate bonds, provide the benefits of diversification and access to higher yields.

Bonds issued by developing countries often pay higher yields than government bonds issued by developed market economies. They also provide additional diversification since you gain exposure to different currencies, geographic regions, and sectors that may behave differently at other times within an economic cycle.

Key benefits of global bonds:

Higher yields
Capital gains potential
Diversification

How adding a bond ladder contributes to your retirement income plan:

Bond ladders play a unique role within a well-diversified income portfolio. They are designed to help maximize income while mitigating the negative effects of rising interest rates.

With rates at or near historic lows, future rate increases appear inevitable. When rates rise, the market value of many income-producing securities will fall. Because bond ladders consist of a selection of bonds with staggered maturities, the proceeds from a maturing bond can be reinvested at higher interest rates. Bonds may also be held to maturity if desired, protecting capital value.

Key benefits of a bond ladder:

Protection from rising interest rates
Diversification

We can help you meet the income challenge

If today’s low yields challenge your retirement plans, we are here to help.

Ensuring your portfolio includes exposure to these alternative income-producing asset classes can be critical to the success of a retirement income plan when entering the decumulation phase of your financial life. Talk to your Advisor and discover for yourself the benefits of investing in optimally diversified portfolios designed for a low-yield world.

Why Advisors Who Create Transformative Client Experiences Get Better Outcomes

Tue, 22 Aug 2023 22:59:00 GMT

Creating Memorable Client Experiences for Financial Advisors

The Concept of Work as Theater

You deliver services, but you stage experiences.

How do you differentiate yourself as a financial advisor when so much of what we do is focused on the products itself? How do you stand out in an industry where your peers can offer the same products as you?

Our podcast guest has the answer: create an amazing client experience.

Dennis Moseley-Williams is a certified Experience Economy Specialist - and only one of two in the financial services field. A sought-after keynote speaker, and author of “Serious Shift: How Experience Staging Can Save Your Practice,” Dennis and Chris discuss why selling investments and advice is not enough to guarantee success as a financial advisor in today’s growing experience economy.

“All work is theater. Every business is a stage. The services, the products, doesn’t matter what business you’re in. They’re just props. What you want to do is be an event. Something they look forward to.” - Dennis Moseley-Williams

This article is adapted from the Turning the Page podcast.

Listen to the full episode on Spotify and Apple Podcasts .

The Importance of Creating Experiences your Clients will Remember

The key, he argues, lies in staging experiences when you interact with clients. “Experience is about capturing your attention and holding it and creating time well spent,” Dennis said. “Service is about speeding things up and making them efficient. Experience is about slowing things down, making them personal and memorable and making a desire to linger.”

Staging Experiences vs. Delivering Services

This is all part of the emerging experience economy. He’s on a mission to change the viewpoint of financial advisors and all entrepreneurs on how they should focus on the client first and foremost. You do that with the services you offer, but he believes the experience they have with you and your team is just as important and should be a vital part of your business planning.

When was the last time you had an amazing experience from a business that left such a great impression you had to tell all of your family and friends? How do you create THAT type of experience for your clients?

Throughout the podcast, Dennis shares standout examples in and outside the financial services industry and explains how you too can stage memorable experiences that can lead to better business outcomes.

The Emerging Experience Economy

Creating an amazing client experience is also vital to implement into your business as so much of the advice industry embraces the ease that comes with modern technology. Dennis argues that, while technology is important and great at helping us improve our overall productivity and efficiency, advisor should also take time to slow it down - to create an experience every time they interact with their clients... “Close to 60% of investors prefer zoom meetings. That means close of 60% of investors don’t think there’s a reason to go in to see you, you’re not worth the drive. So let’s turn that around. You should be a can’t miss event.”

Be more than “this could have easily just been an email."

Listen in to learn:

The difference between client experience and client service and what this distinction means for your business.
Why you should begin every interaction with a desired ‘emotional outcome’. - what is it you want your clients to feel with every interaction
What would you do differently if you were to charge admission
How technology is influencing the client experience

Chris challenges advisors to think about how they are creating exceptional client experiences by asking themselves what they would do differently if they were charging admission

Be sure to subscribe to Turning the Page on Apple , Spotify or whatever podcast app you use! If you found the information helpful, be sure to share it with another financial advisor who could use these words of wisdom!

Would you like to have a chat with Chris? Have a question for him? Would you like to pick his brain? Set up a virtual coffee to chat here .

Administrative and Operational Excellence for Advisors with Lorraine Nolan

Thu, 17 Aug 2023 20:28:00 GMT

Unlocking Operational Excellence to Transform Your Business

"Doing the same thing year after year and expecting the growth and results isn't realistic. Instead, bringing in new ideas, unique ways of thinking and processes that better optimize your business can help."

Front Stage vs. Backstage in Business Operations

Early in my career, I did a program called Disney University, which looked at how Disney runs their companies and parks. They teach you about the front end vs. backstage. The front end is the fun part, what customers and clients see. But then there’s backstage, and that’s what makes everything happen!

We often talk about the front stage, but not backstage. Administrative and Operational Excellence is so vital to the running of a great business. Everyone focuses on the fun side of the business – the relationship with clients, marketing, communications, but what about the hard stuff? Administration, paperwork, scheduling, efficiency and technology all keep the business moving when people aren’t noticing.

This article was adapted from the Turning the Page podcast.

Listen to the full episode on Spotify and Apple Music .

Our guest today to talk about that is Lorraine Nolan, who helps businesses streamline their administration with the whole team. With 35 years of experience in the Financial Services industry, Lorraine has held many different roles. She’s worked in back office administration, worked closely with clients, and managed a team of employees. She has developed extensive experience and knowledge relating to growing and managing the operations of Advisor offices including acquisitions and Advisor transitions to retirement.

Her process driven approach has been instrumental in creating and building efficiencies and profitability for Advisor run businesses. Lorraine is able to utilize her experience to provide Advisors and their Teams with the strategies they need to drive results.

Learn more about Lorraine, her business and her passions at https://mavenalliance.ca

What do YOU do to make sure the backstage of your business is running smoothly? I’d love to chat with YOU about it and learn more about you and your business! Why not set up a virtual coffee with me so we can chat about how you can accomplish big things in your business!

Set up a virtual coffee with me here .

If you loved this episode, we’d appreciate it if you would follow Turning the Page on Apple, Spotify or whatever podcast app you use! If you found the information helpful, be sure to share it with another financial advisor who could use these words of wisdom!

Cash Management Options During Times of Volatility

Wed, 16 Aug 2023 13:25:00 GMT

With growing uncertainty on inflation’s future, many investors are seeking ways to preserve and grow their cash reserves.

One option to consider is “parking” cash in a safe, short-term, low-risk investment until you are ready to move it back into higher risk investments.
There are several savings options to consider for short-term investing. The key is to understand what each has to offer, and how they align with your financial objectives. Here is a quick overview of some of the more common saving solutions, their pros and cons and what you should know.

1. Guaranteed Investment Certificates (GICs)*

A Guaranteed Investment Certificate is a deposit investment sold by Canadian banks, trust companies and credit unions.

Pros:

GICs offer guaranteed returns, which means investors can be confident about the money they will receive at the end of the term.
They are considered low-risk investments, making them a suitable option for risk-averse investors who want to park their money until the market becomes more stable.
Can be held in registered accounts such as Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs) to take advantage of tax benefits.
Eligible for protection by the Canadian Deposit Insurance Corporation (CDIC) up to $100,000.

Cons:

Typically offer lower returns compared to other investment options, such as stocks and mutual funds.
Regular GICs have a fixed term, which means you cannot access your money until the term ends, without incurring a penalty. This can be disadvantageous if funds are required early due to unexpected expenses or emergencies, or if there is a better investment opportunity.

2. Money Market Funds

A money market fund is a mutual fund that invests in highly liquid, short-term, high-quality debt securities such as government bonds or commercial paper.

Pros:

Money market funds are considered low-risk investments.
They also offer increased liquidity compared to GICs, as investors can withdraw their money at any time without penalty.
While not guaranteed, unitholders of mutual funds do have protection under the Canadian Investor Protection Fund.**

Cons:

Money market funds are not guaranteed, unlike GICs.
Interest earned can be affected by changes in prevailing interest rates.

3. High Interest Savings Funds

A high interest savings fund is a low-risk fund which offers a higher rate of interest than a traditional chequing or savings account. It is classified as a traditional mutual fund with the main difference being that it invests in cash deposits at one or more financial institution(s), and not in traditional stocks or bonds.

Pros:

High interest savings funds are considered low-risk investments as they invest in cash deposits at one or more financial institutions or through high-interest securities and are not subject to bond or equity market volatility.
They may offer higher interest rates compared to money market funds and savings accounts, making them a suitable option for those looking for a higher return on their cash balances.
They offer increased liquidity and easy access to your money with no term commitments.
Interest is accrued daily, and distributions are made to unitholders monthly which can be taken in cash or reinvested into additional units of the fund, which increases the value of your holdings.
They can be held in registered accounts such as Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs) to take advantage of tax benefits.
While not guaranteed, unitholders of high interest savings funds do have protection under the Canadian Investor Protection Fund.**

Cons:

The returns can be affected by changes in prevailing interest rates.
Will have fees unlike GICs or bank accounts.

4. High Interest Exchange-Traded Funds (ETFs)

Another place to consider stashing cash would be in a high interest exchange-traded fund (ETF). A high interest ETF could be thought of as a traditional savings account which trades on a stock market.

Pros:

High interest ETFs invest in high-interest accounts from multiple financial institutions and may provide a higher return compared to other cash alternatives such as GICs and money market funds.
The monthly distributions paid out can be taken in cash or reinvested into additional units of the ETF, which can increase the value of your holdings.
They can be easily bought and sold on a stock exchange, which makes them convenient for those who want to access their money quickly.

Cons:

High interest ETFs are subject to bid-ask spread risk, which means that their value can fluctuate based on market conditions which may not fully reflect the value of the underlying holdings.
Will have fees compared to other cash alternatives such as GICs or bank accounts.

There are various cash management options to consider during times of equity and bond market volatility. It is important to carefully consider your risk tolerance before deciding which is the best choice. Your Advisor can discuss the best strategy to meet your cash preservation needs, as well as a systematic way to return to the markets when you are ready. One example would be utilizing a dollar cost averaging strategy which allows investors to return to higher risk investments in a measured manner. To learn more about the right cash management strategy for you, give us a call.

*Unlike mutual funds, the returns and principal of GICs are guaranteed.
**The Canadian Investor Protection Fund provides protection within prescribed limits to eligible clients of member firms in the event of an insolvency by the member firm. See www.cipf.ca for more information.

Secure Your Retirement Income with a Waterfall Investment Strategy

Wed, 09 Aug 2023 16:00:00 GMT

Are you on your way to building a retirement nest egg?

Do you want an investment strategy that provides a lifetime of reliable retirement income while maintaining the potential for growth to protect against inflation? You should consider adding a waterfall investment strategy to your financial plan. A waterfall investment strategy enables you to automatically shift your asset allocation over time to match your risk tolerance and changing financial circumstances, while always allowing the flexibility to adjust the plan if necessary.

This will enable you to:

Shift from an accumulation to a decumulation strategy gradually, allowing your money to continue working for you while protecting your income stream when you need it.
Control your exposure to market risk by systematically transferring your capital into investments with reduced equity exposure as your investment time-horizon shortens over time.
Allocate your investment capital between diversified portfolios representing a strategic mix of risk and return profiles.
Protect 1-3 years’ worth of income within a conservative, short-term income-producing investment to fund monthly cash flow requirements in retirement.

How a Waterfall Investment Strategy Works

Long-Term Investment Solution

Your long-term investment solution typically provides 100% equity exposure to maximize your return potential. On a set basis, a predetermined amount is sold and then transferred to the medium-term investment solution with reduced risk exposure. A suitable long-term investment solution is the IPC Focus Equity Portfolio, which aims to achieve the highest potential for long-term growth. The Portfolio focuses on large-cap stocks and is overseen by specialized investment managers with proven track records in selecting growing companies.

Medium-Term Investment Solution

The medium-term solution typically consists of a balanced investment portfolio that provides you with a consistent income stream with growth potential, reduced volatility, and more predictable returns. Two examples are IPC Visio Balanced Income Pool and IPC Global Income & Growth Portfolio . Both investment solutions pay a fixed monthly distribution that can be automatically invested in the short-term investment.

Short-Term Investment Solution

The short-term investment solution typically consists of a conservative, low-risk investment that provides regular distributions that to help meet monthly cash flow requirements. One example is the IPC High-Interest Savings Fund . The Fund protects capital from the impacts of market volatility since it has no correlation to equity or bond markets and is comprised of 100% cash & cash equivalents.

Waterfall Investment Strategy in Action

John, age 35, wants to establish an investment strategy with the goal of providing income for life when he retires at age 65. He earns an excellent income, and due to his long-term time horizon, is willing to take on some risks to grow his wealth. John agrees to his Advisor’s recommendation to implement a waterfall strategy by allocating 30% of his capital to the long-term investment solution and the remaining 70% to the medium-term investment solution.

At age 55 and with retirement just on the horizon, John agrees to his Advisor’s recommendation to reduce the amount of risk he is taking. Accordingly, the allocation of his strategy is changed to 20% long-term investment solution and 70% medium-term investment solution. This is accomplished gradually and systematically with a predetermined amount being moved from IPC Focus Equity Portfolio to IPC Visio Balanced Income Pool on a monthly basis. With the remaining 10%, John’s Advisor begins to move capital from the medium-term investment solution to the short-term investment solution to start building a basket of savings he will use to generate an income stream during retirement .

At age 65, John retires. To help reduce the overall risk in his investments while he begins to withdraw regular income payments, the allocation of his waterfall investment strategy has changed to 10% long-term investment solution, 60% medium-term investment solution, and 30% short-term investment solution, reflecting how John’s investment allocation has changed over time. This will help ensure John has up to three years’ worth of income payments secured within a low-risk investment. The remaining 70% remains invested in a combination of income and growth-oriented securities to continue growing his capital to help offset inflation.

By adopting a waterfall investment strategy early in his financial plan, John has managed to grow his savings by allocating a larger share to equities while he was young, and gradually building a secure pool of capital that can be used for retirement income after age 65. His investments will continue to grow to help offset inflation since 70% remain exposed to investments with growth potential. And finally, John will feel secure knowing he has approximately three years of income payments saved in a secure investment that pays monthly income for funding his day-today expenses in retirement.

The Flexibility to Adapt to Your Changing Needs

Wealth Accumulation

Implementing a waterfall investment strategy using a tactical combination of short-, mid-and long-term solutions, can help you capitalize on market appreciation while offsetting the effects of short-term market volatility to ensure your funds are both growing and protected for your retirement.

Retirement Income

As you approach retirement age, you’ll need to secure enough income to meet your immediate and short-term (1-3 years) expenses. Securing your savings in a low-risk, income-producing investment provides you with a sense of security knowing your short-term income requirements are protected from market volatility.

Speak to your Financial Advisor today to learn how implementing a waterfall investment strategy can help you achieve your long-term investment goals.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of March 2, 2023 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

The Importance of Succession Planning: Insights from George Hartman

Thu, 27 Jul 2023 17:28:00 GMT

Understanding Succession Planning for Financial Advisors

The two most important events in an entrepreneur’s life are when you start your business and then when you successfully pass your business and your legacy on through a well thought out succession plan. Yet as critical as succession plans are, it astounds me that over 70% of advisors don’t have a written succession plan, never mind a well thought out one. I even think that number is low!

In this episode of the pod, we’re going to tackle succession planning and what it means to a financial advisor. Joining me to talk about it is the man who literally wrote the book on succession planning in the wealth management business, George Hartman!

Catch the full episode on Spotify , and Podbean

George has had an over 40 year career in financial services as an advisor, manager, executive, educator, coach and author. He’s an insightful industry observer and prolific writer, having published three best-selling books for financial advisors and currently working on his fourth. For more than 10 years, George has written the monthly column The Coach’s Forum for the trade journal Investment Executive and is a regular guest on Building Your Business television broadcast on IE:TV.

As one of the financial services industry’s best-known advisor strategists, practice management mentors and practice valuation experts, he presently coaches a number of top-producing advisors in Canada and the US and consults with several financial services firms on their business strategy and succession plans.

"So, start with the end in mind and have a vision for your business. Ask yourself, 'What do I want my business to look and feel like down the road, what do I want to leave behind?' Consider what the future would look like."

He literally wrote the book on succession planning. George is also the author of “ EXIT is NOT a Four Letter Word. ” The book will change the financial fortunes of advisors who implement a refreshing new exit process. Delivered in an entertaining and informative style, this book provides advisors with the rationale and routine to prepare for the eventual transition of their business to the most qualified successor for the greatest value and assure their legacy.

What are YOUR plans for succession planning? What struggles do you have with it? I’d love to chat with YOU and learn more about you and your business. Why not set up a virtual coffee with me so we can chat about how you can accomplish big things in your business!

If you loved this episode, we’d appreciate it if you would follow Turning the Page on Apple , Spotify or whatever podcast app you use! If you found the information helpful, be sure to share it with another financial advisor who could use these words of wisdom!

Have you started a succession plan? I'd love to connect with you and learn more about what you have in place, set up a virtual coffee and chat!

Think. Do. Say. Building Long-Term Trust in a Busy World with Ron Tite

Wed, 28 Jun 2023 15:41:00 GMT

Building Long-Term Trust in a Busy World

It’s a busy world. People used to vote with their wallet. Now they vote with their time.

People today are inundated with non-stop content. They don’t know where to look or who to trust. So how do you win their time and their confidence? My guest today has come up with a powerful approach to cut through the noise with just three words: Think. Do. Say.

This article was adapted from the Turning the Page Podcast.

Listen to the full episode on Spotify, or Apple Podcasts .

"How does someone separate themselves from the crowd? Through building trust on a continual basis over time - aligning what you think, what you do, and what you say."

Joining me today is Ron Tite! Ron is a best-selling author, speaker, producer, and entrepreneur who blurs the lines between art and commerce. He has been an award-winning advertising writer and creative director for some of the world’s most respected brands including Air France, Evian, Fidelity, Hershey, Johnson & Johnson, Kraft, Intel, Microsoft, Volvo and many others.

He’s the founder of Church+State, host and executive producer of the hit podcast, “The Coup”, and publisher of This is That Travel Guide to Canada – a best-selling and award-winning satirical book. He has written for television. Penned a children’s book. Wrote, produced and performed a hit play. Created a branded art gallery. And was executive producer & host of the award-winning comedy show, Monkey Toast.

Ron’s first book, Everyone’s An Artist – Or At Least They Should Be was published in 2016. His most recent book, Think Do Say: How to Seize Attention and Build Trust in a Busy Busy World, hit store shelves in 2019.

The Think. Do. Say. Approach

In this episode, Ron will share with you:

People are constantly being inundated with content every single moment of every single day. How do you stand out from the noise?
How authenticity in the content you create can build long term trust with clients and consumers.
Ron uses his “think, do, say” theory to show how one of the oldest manufacturing brands in the world recently went through a reinvention that sets them up for generations to come.
Helpful tips on how business owners can learn to be creative in their own business and how you can use everyday tasks to kickstart that part of your brain.
Why business owners should cut the jargon.

Pick up Ron’s book on Amazon .

How do you get creative in your business? I’d love to chat with YOU and learn more about you and your business. Why not set up a virtual coffee with me so we can chat about how you can accomplish big things in your business!

Set up a virtual coffee with me here .

Breaking the Curse of the High Achiever with Dan Mason

Wed, 21 Jun 2023 16:10:00 GMT

Understanding High Achiever Burnout and How to Overcome It

A lot of the coaching work I do with clients is informed by attachment theory. We have to look at what your relationship to success is like. Are you driven by anxiety, the desire to be liked, to feel good enough? Or, are you driven by avoidance when it comes to work? There are a lot of people who didn't get their needs met in their early years of life. This is what we review so that we can assess what to do.

I've been in business for more than 30 years. Every once in a while, I’ll meet someone who is hugely successful, yet very unhappy. It always puzzled me. There are so many people that have climbed the top of the success ladder, yet feel like they’re just on a treadmill. They're just so focused on business wins that they’ve found themselves so disconnected from their life outside of the office. They might not even know why they're even doing the business they're in anymore. Before they know it, burnout kicks in.

The Role of Attachment Theory in Coaching

I’ve definitely had moments in my life where I’ve been through that (and you may have too).

It’s been important to me to dig further into this, and the ‘curse of the high achiever’. Learning more about why we do what we do, and how to navigate it can be empowering. Hopefully, once you work through this yourself, this can be something you can even teach your clients when it comes to their investments and their lives.

This article is adapted from the Turning the Page with Chris Reynolds podcast.

Catch the full episode on Spotify , Apple Podcasts , and PodBean .

The Disconnect Between Success and Happiness

If you feel this way, my chat with Dan Mason will help you kick-start your journey back to yourself with some practical tools to achieve practical happiness.

Dan Mason is an international career and life happiness coach, television personality, keynote speaker, and host of Apple’s #1 debut podcast, Life Amplified. He teaches unfulfilled high achievers how to trade the corporate grind for a life with more happiness, meaning, wealth, and fun. Through his coaching and television appearances, he’s taught over 20 million people globally how to thrive in their purpose.

Dan took his own journey and turned it into skills that he uses to help his clients. He spent 20 years as a media executive and on-air talent, overseeing very successful radio brands and major markets across the United States. He had a pretty sweet life, hosting album release parties with names like Taylor Swift and Maroon 5. It all looked great online! He invested so much energy into cultivating that image of success. Eventually, the wins were less fulfilling and, like many high achievers, he just tried to push through and achieve something bigger. At age 38, he was on blood pressure medication and battling shingles.

After taking a deep assessment of his life, he realized success and happiness are not mutually exclusive, which placed him on the path to personal growth and figuring out who he was, not just what he did for a living.

Now he’s using this knowledge and experience to help thousands of people around the world through his one-on-one coaching, podcast and media appearances.

Practical Tools for Achieving Happiness

Whether you’re a new advisor that wants to make sure you’re set up to live a balanced life or you’re a seasoned veteran who feels burnt out and wanting some help to get back on track, this episode has something for you.

Dan talks about:

How you can break the curse of the high achiever and feel fulfilled in all parts of your life.
Understanding the why behind our desire and motivation to achieve even ‘more’.
How to understand your relationship with success and how it motivates you every day.
The science behind your ability to innovate and change as you move through your career.
How to stay relevant as you progress through your entrepreneurial career and transition through the phases of your intelligence curve.

Knowing when you’re ready to transition to a different part of your career and why it’s a great thing for you and your team.

If you’re feeling this way, you’ll want to tune in to this episode. Or consider sharing this with someone whom you know will benefit from it.

What’s your purpose or why? What’re you doing to build a deeper connection with potential and existing clients? I’d love to have a conversation about what motivates you and in turn, help you build more engagement with your clients. Let’s connect over a virtual coffee!

Set up a virtual coffee with me here .

If you loved this episode, I’d appreciate it if you would follow Turning the Page on Apple, Spotify or whatever podcast app you use! If you found the information helpful, be sure to share it with another financial advisor who could use these words of wisdom!

Let’s talk soon!

Chris

Sustainable Investing with Sonia LeRoy

Thu, 11 May 2023 15:27:00 GMT

Clients are looking to not only grow their portfolios but also help shape the world by contributing to positive change. The key to making both of these happen is sustainable investing.

This article is adapted from the Turning the Page Podcast with Chris Reynolds.

Listen to the full episode on on Spotify or Apple Podcasts .

I recently had a great conversation on the ‘why’ of sustainable investing, with one of IPC’s very own, Sonia LeRoy, Senior Wealth Advisor. Sonia has a very unique approach to the Canadian investment landscape - placing a strong emphasis on responsible investing within business and works to educate and better support her clients with this philosophy. In our chat, we discuss how sustainable investing can be a powerful way to build stronger relationships with your clients as well as the key role it plays in portfolio growth.

Sonia provides solutions to investors - affluent Canadians, to help them meet their complex and challenging financial objectives. With over 30 years of investment and advanced financial experience, Sonia and her team provide innovative financial solutions. Knowing that each family’s situation and objectives are unique, she looks to provide tailored advice to fit each client, whether that be; customized tax minimization, investment optimization, or succession planning strategies. Sonia holds both a Certified Financial Planner (CFP®) and Registered Financial Planner (RFP) and is a long-time member of the Financial Planning Standards Council of Canada and the Responsible Investment Association (RIA). As an RIA member, she places emphasis on and incorporates socially responsible investing strategies into LeRoy Wealth Management Group. Sonia has won the WP Advisor of the Year Award for Responsible Investments twice, most recently in 2022.

What is Sustainable Investing

Sustainable investing, or often referred to as ‘ESG’ (environmental, social and governance investing) is a way for clients to influence their investments to behave as better corporate citizens. It allows client’s core values and views of the world to be integrated into their investment choices. Clients can use the power of their portfolio to influence the direction they want to see the world go in.

Sustainable investing is widely misunderstood because it can mean so many different things to so many different people. Think of the different levels of ESG on a spectrum. From being an excellent non-financial tool to asset risk to screening out unethical companies or problematic industries.

Sonia also calls it ‘responsible investing’. Her goal is to help investors figure out what’s important to them and then deliver a solution that aligns their money with their version of responsible invest ing.

Sustainable Investing Creates More Intimate Client Conversations

Sustainable investing starts with in-depth client conversations. The type of questions you ask can lead to a much more personal and intimate conversation:

“Do you consider yourself to be a responsible consumer?”
“Have you thought about what it means to be a responsible investor?”
“If you could integrate your personal values into your investment strategy, would that be interesting to you?”

Your clients might not have been asked questions like this before, and they will appreciate it!+

“You can use the power of your money to influence the direction of these issues. When people realize that, they get excited!” - Sonia LeRoy

These client conversations dive straight into a discussion about people’s core, fundamental values. What is important about their money or the world to them? What are their hopes and dreams for the kids? (It could be their kids, the environment, social justice, so many topics.) They can use the power of their money to influence the direction of the issues that are important to them. Whether it’s the environment, social fairness, fair trade or global social justice to name a few. This can get a client excited!

Any of Sonia’s new clients come from referrals from other clients that are all responsible investing clients. When you have these conversations with your clients, it leads to other people with common philosophies. They’re already coming to her ready with thoughts of wanting to align their money with their values.

Sustainable Investing is the Way of the Future

According to the Responsible Investment Association Trends Report for 2022, they estimate that there’s $3 trillion assets under management in Canada that are invested with some form of ESG or sustainable and responsible investing criteria.

Sonia believes responsible investing is the way of the future. It’s been around for awhile, but it’s easier to do it now, more effectively, without a trade off, no need to give up rate of return or take on extra risk. In fact, Sonia believes it can actually improve the risk/reward trade off for investors.

“I think it can actually improve the risk-reward trade off for investors. Evidence is growing that companies who perform on an ESG basis actually experience fewer risk events and can even be more likely to be profitable over time.”

Money is power and with power comes responsibility. If you want to connect with your clients on a deeper level, you should be including ESG or responsible investing into your conversations. Clients are looking for more alternatives or unique strategies like this with their portfolio today. To be able to support your clients, help them find ways to connect their money and values is a rewarding task. In addition, including ESG into the conversation will help you to deepen your relationships and better understand your clients. Sonia feels so privileged to be involved in those conversations, and they’re easier to have than you think - especially with the right questions and resources.

I’d love to talk to you more about sustainable investing! Are you having these conversations with your clients? Why not have a virtual coffee with me? I’d love to chat with you more about it and how you can accomplish big things in your business in 2023!

Set up a virtual coffee with me here .

If you loved this episode, I’d appreciate it if you would follow Turning the Page on Apple, Spotify, or whatever podcast app you use! If you found the information helpful, be sure to share it with another financial advisor who could use these words of wisdom!

Let’s talk soon!

Chris

Advanced Tax Strategies Give Barry and Barb Control of Their Retirement Income

Wed, 10 May 2023 15:40:00 GMT

The transition from work to retirement is also a transition for your investment portfolio. Instead of contributing to savings every month, retirement means starting to withdraw from savings – and that means paying close attention to how much is left after income taxes are paid.

That was the big concern Barry and Barb Gilden brought to their IPC financial advisor, Julia Easey , in Simcoe, Ontario.

Barry & Barb’s question: How could they minimize the tax they’d pay on their retirement income ? With her guidance, a clear investment strategy and the effective tax management of their portfolios, Julia helped the couple keep their tax bill in check and maintain their standard of living.

The Goal: Reduce the Impact of Taxes on Portfolio Withdrawals

When Julia, a Certified Financial Planner, first started advising Barry and Barb, the couple were in their mid-50s and still working. Barry was an Engineer at a major utility company while Barb worked in the hospitality industry.

Barry had a defined-benefit pension plan, and both Barb and he had contributed to their Registered Retirement Savings Plans (RRSPs) over the years. They also had savings in Tax-Free Savings Accounts and some non-registered investments.

When the couple thought about retirement, they were worried that Barry’s defined-benefit pension income plus their RRSP withdrawals might result in a large tax bill – perhaps higher than in their working years.

The Plan: Minimize Tax; Maximize Income

After evaluating their personal financial situation and understanding their objectives, Julia recommended a combination of strategies to help ensure Barry and Barb could keep more of their income and meet their financial goals in retirement.

Julia put in place a retirement income plan that:

allowed Barry to retire at 58,
manages the couple’s tax payable on withdrawals, and
ensures their portfolio will continue to grow and meet their financial legacy goals.

The Plan in Action: Income Splitting, Avoiding Clawbacks; Positioning for Tax-free Investment Growth

First, Julia let Barry know that the income from his defined-benefit pension plan qualified for pension income splitting with Barb.

Pension income splitting means that Barry can allocate, for tax purposes, up to half of the income from his defined-benefit pension to be taxed on Barb’s tax return. This single strategy meant that the couple’s tax situation was already more beneficial than during their working years when Barry’s salary was taxed only on his income tax return.

Then, in each year of their retirement, Julia will work with the couple to withdraw funds from their RRSPs to meet their spending needs and slowly reduce the amounts in their registered accounts. Using this strategy meant that none of their Old Age Security benefits were clawed back when they hit age 65 and qualified for OAS.

By implementing a combination of personalized strategies, Barry and barb were able to lower their overall tax bill in retirement.

Next, when Barb’s RRSP was fully withdrawn, Julia converted Barry’s RRSP to a Registered Retirement Income Fund (RRIF). This change meant that Barry’s RRIF was now eligible for income splitting with Barb, just as his defined-benefit pension income had been earlier, reducing the tax payable on withdrawals.

Meanwhile, Julia invested their Tax-Free Savings Accounts and non-registered accounts into highly tax-efficient investment portfolios so those accounts can continue to grow with minimal tax consequences. These accounts are intended to meet Barry and Barb’s financial legacy goals, including making financial gifts to their children and grandchildren.

Finally, Julia established a transparent investment fee arrangement for the couple, allowing them to deduct the investment fees from their non-registered portfolio. This arrangement also increases the tax efficiency of their portfolio.

These strategies combined to produce a tax-efficient retirement income plan for Barb and Barry – allowing them to decrease their overall tax bill in retirement, compared to during their working years.

Today, at ages 71 and 69, Barry and Barb can look back at over ten years of tax-efficient retirement income strategies, secure in the knowledge that they’ve minimized the tax they’ve paid in retirement while meeting all of their other financial goals.

Barry & Barb’s insight: “Julia’s planning helped us understand the benefits of addressing our retirement tax liabilities. It’s an area we had not considered before working with her. Overall, we believe this has saved us and our future estate tens of thousands of dollars.”

Julia’s perspective: “As a planner, my job is to listen very well to what my client’s priorities are and help them steer their plans and maximize all opportunities available to them. That means I will challenge a client’s ideas, like the concern that paying more tax in retirement is inevitable or unavoidable, or that what your neighbour has done with their portfolio in retirement is right for you, too. The strategy we come up with is for you and based on your needs and goals.”

Talk to us about your retirement plan and put your concerns to rest .

How to Maximize Your Spending Power in Retirement

Mon, 01 May 2023 18:05:00 GMT

When you’re in retirement planning mode, retirement can seem more like an abstract idea than a reality. But the retirement stage of life can be just as dynamic as the years that precede it.

Retirement has also changed over the years. For example, fewer people have traditional defined-benefit pension plans these days, meaning they need to develop their own strategies to ensure income lasts through the retirement years.

Abbotsford, B.C.-based IPC financial advisor, Dean Lewis says a retirement income plan that considers all aspects of your personal situation, expected income streams, and government benefits, as well as how to efficiently drawdown on your overall portfolio, is critical to help you maximize the spending power of your savings.

Dean explains how his approach helped his client, Sarah Jennings, secure her retirement income and meet her goal to retire early and address one of her main concerns – higher healthcare costs.

The Goal: Retire Early and Meet Healthcare Costs

Sarah, 60, wondered whether she could choose to retire before 65. She’d never benefited from an employer-sponsored pension plan, and questioned whether her savings – about $350,000 spread across a Tax-Free Savings Account, a Registered Retirement Savings Plan, and a non-registered investment account – would be enough to meet her needs.

A retirement income plan that considers all aspects of your personal situation, expected income streams, and government benefits, as well as how to efficiently drawdown, is critical to help you maximize the spending power.

Sarah is single with health concerns and wants to make sure she can enjoy her retirement. That means balancing working long enough to build up her savings and retiring early enough to enjoy the things she’s looking forward to in retirement, such as travel, playing more golf

The Plan: Target Spending to Your Retirement Lifestyle

“In my experience,” says Dean, “people are the busiest and most active between ages 60 and 75. I design retirement income plans to make sure they have enough funds to make this first phase of their retirement meaningful and enjoyable.”

One of the most efficient ways to make sure my clients get the most for their retirement savings is to control their future costs, says Dean.

That often means drawing from taxable savings, such as Registered Retirement Savings Plans, first, and leaving non-taxable savings, such as a Tax-Free Savings Account, to be drawn down later in retirement.

Dean explains that in British Columbia, where Sarah lives, she is eligible for the Fair PharmaCare program, which helps eligible B.C. residents with the cost of some prescription drugs and medical supplies. This benefit can help address Sarah’s concerns over the rising cost of healthcare as she ages.

By drawing down Sarah’s taxable savings first, and leaving her non-taxable savings for later in retirement, Sarah’s taxable income will fall over time. And because PharmaCare premiums are based on taxable income, this means Sarah’s PharmaCare bill could drop from its current rate of $1,100 per year to just $300 per year, based on today’s rates.

Taking the Canada Pension Plan benefit early is another strategy to keep taxable income lower in retirement. Taking CPP earlier means a smaller CPP benefit, which in turn means that a retiree might qualify for the Guaranteed Income Supplement, a non-taxable benefit added to the Old Age Security benefit for lower-income seniors.

The Plan in Action: Efficient Drawdown, Government Benefits and Long-Term Growth Allocation

Based on Sarah’s assets and expected income, plus the tactics for maximizing after-tax income, Dean shows Sarah that she can retire at 60 – five years ahead of plan – while maintaining her standard of living in retirement.

In Sarah’s case, drawing down taxable savings from her RRSP earlier in retirement means her TFSA can be invested for long-term growth. Sarah’s TFSA can grow until it is needed, providing the potential to increase her income in retirement.

Once Sarah’s taxable savings from her RRSP are depleted, she will qualify for lower PharmaCare premiums and the Guaranteed Income Supplement along with her Old Age Security benefit.

Dean advises Sarah to start taking her Canada Pension Plan benefit as soon as she retires. Having a lower Canada Pension Plan benefit when she is 65, once eligibility for the Guaranteed Income Supplement begins, will boost the amount of Guaranteed Income Supplement she can receive, giving her more income to spend every month.

Sarah’s Insight : “Dean showed me how all the different parts of my retirement income could fit together to meet my needs. I’ve been his client for more than ten years now, and I trust his advice completely. Before I started working with Dean, I thought that retirement was probably many years away for me. His know-how made my early retirement goal work!”

Dean’s Perspective: “The same amount of savings can produce very different income streams in retirement for different people. If you understand the rules that can impact future income, taking tax into account, a client like Sarah can be set up to enjoy the retirement they want earlier than expected. I call this a ‘tax-smart lifestyle,’ and it’s what I aim to deliver for all of my clients.”

If you're looking to start your retirement income plan, let's talk.

Incorporate Your True Age in Your Retirement Income Plan

Wed, 26 Apr 2023 15:57:00 GMT

For more than a century, the idea of retirement has been linked to a “retirement age.”

Many people consider 65 to be the retirement age in Canada – the point at which you qualify for full Canada Pension Plan or Quebec Pension Plan benefits, for example, and when you can start your Old Age Security benefit.

Increasingly, however, retirement planning is beginning to recognize that people really have two different ages: a chronological age, or the number of years you’ve been alive; and a biological age, which takes into account how old your body seems, based on many different factors such as genetics and how your chromosomes have changed over time.

This idea has already received a lot of attention in fields like biology, gerontology, actuarial science and from retirement income planning specialists including Dr. Moshe Milevsky – finance professor, thought leader, and author of more than a dozen retirement income planning books.

At IPC, our Advisors take the time to learn more from experts like Dr. Milevsky about concepts that can help enhance your retirement planning, such as the difference between biological and chronological age. Here are some big-picture insights into how a few select IPC Advisors are incorporating the difference between biological and chronological age into their retirement income planning with clients.

Insight #1: Your biological age can differ from your chronological age by up to 20 years

While chronological age is simply a measure of how many years you’ve been alive, our biological age can be impacted by as many as 60 or 70 additional considerations. These range from the length of our telomeres (the protective caps on the ends of the strands of DNA called chromosomes), to health and lifestyle aspects such as our blood pressure and activity level, and even to the amount of wealth we’ve saved for retirement.

When all of these factors are taken into account, a person’s biological age might differ from their chronological age by as much as two decades. That could mean someone planning to retire at a chronological age of 65 might only have a biological age of 55 – or even less.

Insight #2: Your retirement income plan should incorporate your biological, not just your chronological age

Someone whose biological age is younger than their chronological age should plan for more years of retirement than if their biological and chronological ages were similar. That’s because they’re really younger, on a biological basis, than their birth certificate suggests.

How Flexible Advice Can Make a Difference

Renee Rebelo, Wealth Advisor with Life Coach Financial has long been integrating the concept of “biological age” into the retirement income plans she creates for her clients. She starts by asking her clients how they picture their “first day” of retirement: “What does a ‘day in the life of retired you’ look like?” Then, if a client describes being active and busy, she knows their biological age may be younger than their chronological age.

In contrast, a client who describes health concerns and a less-active lifestyle may have a biological age that’s close to or even older than their chronological age, and she knows to adjust their plan to incorporate what they’ve told her about their health. When she’s collected information about the client’s vision for their retirement, Renee says the next step is “all about matching the client’s lifestyle and health status with their finances to create a sustainable retirement income plan.”

Renee says that incorporating this kind of biological-versus-chronological-age thinking into retirement income plans is most important in the years before retirement, when the gap may be the largest. As we age, she explains, our biological and chronological ages can get “caught up,” meaning they’re closer than before retirement. “By asking these questions early, before the decision about retirement is made, we can develop a plan that is synchronized to your personal needs, goals, and concerns – and the concept of biological age can be woven directly into your plan.”

Keep in mind, says Renee, that retirement income planning is a dynamic process that you can continue to adjust for as long as you’re alive. “If your health status changes, we can — and should — revisit your plan to make any necessary revisions,” she notes. For Renee, creating a flexible plan that can be monitored and fine-turned throughout a client’s retirement, not just at the outset, is how professional financial advisors can add the most value.

Renee’s Perspective:

“Designing retirement income plans that are personalized and based on insights such as the difference between biological and chronological ages is crucial if I am to bring more certainty to the financial planning process for my clients. By incorporating a client’s biological age and ensuring the plan is flexible enough to account for any sudden changes in health, my clients can enjoy their retirement knowing the bases are covered if they need to face the unexpected. A secure, stress-free retirement is what I aim to deliver to all my clients.”

Get Confident About Your Retirement Income Plan

What does this mean for you as someone planning their retirement? Understanding the difference between biological and chronological age can help underscore the importance of a having a formalized retirement income plan created just for you. We believe investors should have the confidence that their retirement strategy and investments can continue to grow while withstanding market volatility, and that they can generate sustainable income throughout retirement, even if their circumstances, including their health status, change.

If you have concerns about your retirement income plan and making your money last, let's talk.

Behavioural Finance Insights with Dr. Daniel Crosby

Tue, 25 Apr 2023 19:27:00 GMT

Exploring the Role of Behavioural Finance in Financial Advice

Dr. Daniel Crosby is helping people see Advisors as the decisional guides and life coaches that they truly are. In this week’s podcast episode he shares his insights, why he’s an advocate for the advisor, and the role of behavioural finance.

“Behavioural finance should be a mirror onto our own behaviour and not a window onto other people's behaviour.” - Daniel Crosby

Dr. Daniel Crosby is a psychologist and behavioural finance expert who helps organizations understand the intersection of mind and markets. Dr. Crosby has penned three books. The first two; Personal Benchmark: Integrating Behavioural Finance and Investment Management (2015) and The Laws of Wealth (2017) were on the New York Times bestseller list, and named the best investment book of 2017 by the Axiom Business Book Awards. His latest work, The Behavioural Investor , was Axiom's best investment book of 2019 and is a comprehensive look at the neurology, physiology and psychology of sound financial decision-making.

Dr. Crosby found his niche from a conversation with his dad. He was into his doctoral program - burnt-out - but loving both human behaviour and psychology. His father (a financial advisor) shared how there was a ton of psychology behind the work that he was doing. And thus, this single conversation led to where he is today. With all his research and study, he found a tangible, practical way to serve other financial advisors, like his dad.

So, what insights about our business can we learn from behavioural finance?

This article is inspired by the Turning the Page Podcast with Chris Reynolds.

Listen to the full episode on Apple Podcasts , or Spotify .

The Commandments of Behavioural Finance

In his book, “The Laws of Wealth,” Dr. Crosby outlines the 10 Commandments of Behavioural Finance. In our conversation, he shares his top two and why it's important for progressive advisors to put these commandments into practical terms with their clients.

First up: “you can control what matters most”. You have power, even though you’re likely conditioned to think otherwise. There’s always some external excuse in the news that someone can use to justify their financial decisions, whether it’s COVID, politics or some societal movements. But in fact, quite the opposite is true when we look at the best determinants of whether or not people reach their financial goals. It's simple, uncomplicated things that are in your power. Questions like:

Are you saving enough?
Are you staying invested?
Are you taking the appropriate risk?
Are you being long term?

It's not what Biden does or Trudeau does or the Fed does. It's what you do.

Second: In his book, Dr. Crosby says that people need a financial advisor - but maybe not for the reasons you think. It’s not just about someone helping you achieve mind-blowing investment returns.

Most people think that when they’re hiring an advisor, they’re hiring someone who is helping them with grandiose monetary returns. That's just not the case. Financial advisors - as savvy as they are - don't have perfect knowledge about stock picking and the future trajectory of the market. But research shows that across a handful of different studies, people who work with advisors not only make way more money, they’re globally happier. People who use an advisor have better marriages and communication. Even the divorce rate is lower!

A big reason for the outperformance of people who work with an advisor over the medium to long term is just simply that advisors help keep clients from making catastrophic screw ups. People that don’t make these major mistakes can double or triple their wealth on average.

The literature is unequivocal that there are a number of reasons to work with an advisor, both both financial and personal, but that it's not for the reason that you think.

Irrational Behaviour in the Marketplace

It’s been a crazy four years in the marketplace. Crypto, wild valuations in the market and NFTs just to name a few! Why do people jump on board some of these crazy trends?

It’s because of fear. Thanks to COVID-19 and the uncertainty that came with it, there has been an influx of existential angst. There were parts of the country where people didn’t leave their homes for months. In a way, our lives had been completely de-risked. We know that people are risk averse sort of in aggregate, but humans want a little excitement. Many people took that angst and risk and found an outlet for it in meme stocks, in crypto in the crazy valuations we saw.

According to Dr. Crosby, behavioural finance should be a mirror into our own behaviour and not a window onto others. It’s easy to see the madness and judge what people did. But we’re all susceptible to these things. He digs into the four primary types of investor biases in his book, “The Behavioural Investor,” It’s some great insight into the mind and why people do what they do with their money.

The Importance of Being Weird

Dr. Crosby believes that it’s important to be contrarian in a principled way, not only in your personal life, but in the markets as well. It’s something he passionately talks about in his famous TED talk.

We’re taught that the way to be happy is to do what others are doing and follow the trends that everyone else does. We've been sold this shallow bill of goods about looking a certain way, having the right bag, the right car, the right bank account etc. and now, people are learning that it’s actually not what it's cracked up to be

In life and in markets, we need to pick our North Star. We need to know what we're about, and we need to pursue that with vigour.

Warren Buffett is a prime example of this in the markets. “Be greedy when others are fearful and fearful when others are greedy.” Be principled in how you work it. You have a method of thinking about markets and you're staying true to th at.

Be sure to check out Dr. Crosby’s podcast, Standard Deviations on Spotify or Apple Podcasts .

I’d love to talk to you more about how you communicate with your clients! What are you doing to make sure they feel seen and heard? Why not have a virtual coffee with me? I’d love to chat with you more about it and how you can accomplish big things in your business in 2023!

Want to grab a Coffee with me? Discuss something you heard on our podcast, talk about your goals to accomplish in your business, and life in the new year, set up a virtual coffee here .

Also, be sure to subscribe to Turning the Page on Apple , Spotify or whatever podcast app you use! If you found the information helpful, be sure to share it with another financial advisor who could use these words of wisdom!

The Importance of Communication in a Client/Advisor Relationship with Kevin Mulhern

Fri, 31 Mar 2023 18:05:00 GMT

The fundamental foundation of any good relationship is communication - bet you’ve heard that before.

One of the cornerstones of every successful Advisor that I've ever met has been around the art of communication.

They learn how to keep their clients informed, understand what their clients want to hear, and make the effort to continuously develop that relationship.

Available on Spotify and Apple Podcasts

Joining me to talk about all things communication is Kevin Mulhern, the CEO and Co-Founder of AdvisorStream, a platform used by most of the top advisors in Canada, the US and the UK. Kevin built AdvisorStream to help advisors and financial firms better communicate and connect with both existing and prospective clients through leveraging digital communications. They took the tools available to many bigger firms and made it easy and affordable for any advisor to utilize.

Kevin and I discuss the importance of communication with your clients, as well as his entrepreneurial journey and the advice he wants to share with advisors as they grow their own business.

“Communication is that central and that critical is really a cornerstone of retention and really a cornerstone of building a business for an advisor.” - Kevin Mulhern

Content is king but only if you have the right content

You might want to have weekly communications with a client, but taking the time to sit, write and create something that resonates is not easy and takes time! As an advisor, you don’t always have the time to do that. That’s why it’s important to use outside sources to help not only with the writing of the content itself but the delivery and systems behind it. Knowing where to place your effort and expertise is important!

There are brilliant content creators out there that know how to deliver a message that resonates AND yields a high ROI. Harnessing their power so you can spend your time doing what you do best is the way to succeed.

Content is the center of all marketing activities, no matter how you’re delivering that content - whether it’s via social media, a website, or email drip campaign - at the heart of that marketing initiative is content. Hire the best, so you can be at your best.

Your Clients Want to Hear from You Often More than You Think

According to Kevin, the average investor today gets 26 touch points a year. And every single group of investors, regardless of age or gender or even wealth level, all of them want more communications.

We know that communication can make or break a relationship - not only professional ones. There are numerous studies that illustrate the positive impact of regular communications, so if you could set-up an automated system to reach out to your clients, show you're on top of their plan, and deliver up to date news that might affect their finances, you’ll make your job so much easier.

Salesforce did a great study to learn why investors leave their advisors. Lack of consistent communication was the second most cited reason that an investor will leave their advisor. It was actually ranked higher than perceived bad advice. That is something that is easily taken care of with the right technology tools.

It’s also not just about retention, but it’s about growth as well. A recent study by Vanguard showed that clients who feel engaged and have relevant information communicated to them consistently will refer you five times more than someone who's just not engaged. Consistent, credible, relevant content and communications is beneficial for both strong business growth and retention.

What You Can Learn from Kevin’s Entrepreneurial Journey

Kevin built AdvisorStream because he found a real opportunity (with automation) to change the lives of advisors, help create efficiency for them, and free up time.

Kevin has found that advisors spend on average 54 hours a week working and about 16 hours of that could be automated. What can you automate that can free up your time and money?

Inside his own business, Kevin has been doing the same thing - automating what he can to free up his and other’s time to do the things they are best suited to do. It’s important to automate the things that can be automated as long as they can be done properly, reduce overhead and reduce the number of people you need in the early days of a business. That way you have a much better chance of trying to survive. Every new business has a runway of time of money that will run out sooner or later. It’s important to find tools that can help you make that runway longer to get your business off the ground and get it healthy.

Want to grab a Coffee with me? Discuss something you heard on our podcast, talk about your goals to accomplish in your business, and life in the new year, set up a virtual coffee here .

How to Prepare Financially for an Unexpected Illness

Wed, 15 Mar 2023 20:10:00 GMT

When I was planning for my financial future, I didn’t understand the value of seeking out professional financial advice.

In truth, when I finally did engage a financial advisor, I rebuffed their recommendation and advice – in this instance, when he recommended critical illness insurance as part of a comprehensive wealth management plan for me. In hindsight, I wish I hadn’t.

My parents didn’t teach me financial literacy

As someone from humble beginnings, my parents didn’t have much money. I never learned to save, let alone make long-term plans for things like retirement. Although there is not one specific conversation that I recall that influenced how I eventually handled my own money, I do remember what I felt about money. It felt intimidating.

Money is the great determiner of all our comfort and security. It determines whether we can purchase a home, vacation in exotic places, or whether you can meet the basic necessities of life.

I was well into my twenties before I understood what a financial advisor did or how having one could benefit me. But it was not until I was in my thirties that I realized I needed the help of an advisor to manage money and safeguard my future.

Finding the right financial advisor

My first experience with a financial advisor was underwhelming.

Back in 2012, I was a recently single mom, and my first advisor encouraged me to make a big decision on my own - a move that did not feel right for me. It made me feel like he did not understand my long-term goals.

By 2014, I came to realize that one day I’d need to look for a new advisor – one who was willing to assist me as a young, ambitious woman beginning to accumulate wealth.

Flash forward to 2017, my daughter and I had found the loves of our lives, my husband and his daughter. We had just purchased our first home and we were excited to bring our families together. It was around this time when we finally found our advisor, who has since become our trusted family advisor.

My advisor and I sat down for our first meeting which allowed us to determine our financial goals, risk tolerance, and so on. It felt good to know that we were taking all the right steps to prepare for our family’s future.

We discussed my financial worries and concerns, our educational goals for the girls, when we would like to retire, when we would start renovations on our new (to us) home. It was very comprehensive, and he raised many questions I’d never thought of before. I could see the future. I could see our kids going to university and us lounging by the pool in tropical countries. It was picture perfect.

“I declined. ‘Thanks for your analysis. I will keep this in mind, but honestly, I do not plan on going anywhere anytime soon.”

Making the wrong financial choice

Amid my euphoric look forward, my advisor asked, ‘How about life insurance? Do you have a plan?’

I abruptly returned to the present and said, ‘I have coverage through work.’

He followed with, ‘Group Life Insurance through your job is a good start, but is it enough? If anything were to happen to you, do you know how much your family would need?’

I said, ‘No’.

He took a moment to illustrate the potential financial impact of illness, or worse, my death. It was shocking to see the breakdown. I had never thought about how my husband or kids would be impacted if I were gone. But in that moment, I felt confident that the basic insurance plan offered by my employer would be sufficient. After all, I was in my mid-thirties and healthy.

I declined. ‘Thanks for your analysis. I will keep this in mind, but honestly, I do not plan on going anywhere anytime soon’.

The impact of a critical illness on a financial plan

That conversation happened only four weeks before I was diagnosed with a rare and aggressive form of leukemia and was told that I may not survive the first ten days of treatment. Heading into the fight of my life, that conversation with my financial advisor came back. This was exactly what he had warned me about, and I had chosen the easy path forward.

The financial stress was as overwhelming as the diagnosis itself. The idea that those few words uttered only weeks before could determine my family’s quality of life was devastating.

“I was diagnosed with a rare and aggressive form of leukemia.”

Against grim odds, I did survive those early days. In fact, nearly five years later, I am in remission and healthy. I am grateful that I was given a second chance at financially protecting my family.

In this 5-minute video, hear Michelle and Doug as they discuss her experience, their relationship and the value that personalized financial advice played in providing her with a sense of hope and financial security when faced with one of life’s most significant challenges.

Building a financial plan when you’re a cancer survivor

Planning for my financial future will entail a very different conversation when I qualify again for critical health care coverage than my first.

As a cancer survivor now considered high-risk, I will likely have the opportunity to purchase life insurance again, but for the remainder of my days the cost will be at a significant premium -hard-earned money that could have been used towards something else for my family.

“There is not much I regret in this life, as I believe our poor decisions are an opportunity to learn and grow, but my decision to decline my advisor’s advice is one I struggle with to this day.”

Take advantage of great financial advice

There is not much I regret in this life, as I believe our poor decisions are an opportunity to learn and grow, but my decision to decline my advisor’s advice is one I struggle with to this day. I had to learn the hard way that if we do not invest in our health before we get ill, we will be forced to invest more after our health inevitably declines – in my case, quite unexpectedly.

Although I am in remission, experience has taught me that anything can happen. Luckily, I have an advisor like Doug Hopkins who is helping to make sure we are protected just in case.

My hope for every Canadian is that you too have a financial advisor like Doug who is skilled and caring enough to protect your future by considering that life does not always go as planned and that each of you make the decision to protect the ones you love most.

Invest Smarter with a Dollar Cost Averaging Strategy

Thu, 09 Mar 2023 14:31:00 GMT

Time in the Market is More Important than Timing the Market

Investing can be an emotional process, especially if you try to time the market. The “what ifs” can be overwhelming, leading to missed opportunities in the market. A strategy that can help you overcome this challenge is dollar cost averaging. You can invest a fixed amount of money at predetermined intervals over an extended period. A dollar cost averaging strategy allows you to automatically buy more units when the price is low and fewer units when the price is high.

To illustrate the benefits of dollar cost averaging, consider the example of two investors, Sally and John.

Return on Monthly Investment: +4.79%

Return on Lump Sum Investment: -10.00%

Sally

Monthly Investment: $10,000

Monthly Investment Average Unity Cost: $8.59

John

Lump Sum Investment: $60,000

Lump Sum Average Unit Cost: $10.00

Sally, a concerned investor, has $60,000 to invest into a mutual fund. Her advisor suggests spreading out her investment over 6 months to equal amounts of $10,000. Throughout those 6 months, the unit price is up some months and down in others. The chart above shows how Sally uses dollar cost averaging to benefit from the market's volatility over this period and grow her investments.

Now assume John invests in the same mutual fund but is less cautious and places $60,000 as a lump sum investment in January. He makes no other additional investments or withdrawals from his mutual fund for the next five months and, therefore, does not take advantage of the declines in the price. The chart shows how John would have fared over this same period.

Sally’s return on her monthly investment using a dollar cost averaging strategy is a gain of $2,875, or 4.79% and at the end of the period she owns 6,986 units, whereas John’s return on his lump sum investment is a loss of $6,000, or 10% and he owns 6,000 units.

Here are three reasons why dollar cost averaging matters:

Consistency

Your overall returns will reflect the general trend in the investment’s performance, rather than the specific price from one day.

Reduced Risk

Instead of having to invest a large lump sum at once, you can periodically invest smaller amounts over a longer period.

Long-Term Mindset

It enables you to stick to a long-term investment mindset, rather than focusing solely on daily price changes.

A dollar cost averaging strategy lets investors make investments at regular intervals, regardless of the price, to average out the cost of their purchases over time.

Investing in Uncertain Times: The Case for Dollar Cost Averaging

We are experiencing a very different market than the previous 10 years. Higher interest rates, which are intended to combat inflation, are weighing on companies and consumers. Dollar cost averaging allows you to invest regularly without worrying about what’s happening in the market. It also provides the following benefits:

Having an automatic plan in place increases the opportunity for you to buy at good times, as it is difficult to predict when those entry points will be.
A disciplined approach to entering the market can reduce risk by not putting all your eggs in the basket at the same time.

The Results of Consistency

Implementing a dollar cost averaging plan will help you avoid emotional reactions to market swings by automatically investing your money regardless of day-to-day changing conditions. It also reduces volatility by averaging out your investment costs over time. Overall, having a dollar cost averaging plan in place reinforces the importance of maintaining a long-term mindset when investing.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of March 2, 2023 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Bond Ladder Strategy | Handling Interest Rate Uncertainty

Wed, 01 Mar 2023 17:01:00 GMT

For investors, capital preservation and a steady income stream are key benefits of having an allocation to fixed-income investments.

How can you reduce risk amid uncertainty about interest rate trends?

With a Bond Ladder strategy.

Benefits of a Bond Ladder

A Bond Ladder is a structured portfolio of bonds that mature at different times in the future.

Capital Preservation – Offsets uncertainty from changing interest rates with a diversified portfolio of bonds maturing over the short, medium, and long term.
Potential for higher yields – Benefits from rising interest rates by seizing opportunities to reinvest when interest rates rise

How a Bond Ladder Strategy Works

Janet has a balanced portfolio with approximately 40% allocated to fixed income
Interest rates are currently rising

Janet’s advisor recommends a portfolio that uses a core Laddered Bond strategy complemented by an allocation to High Yield and Emerging Markets Fixed Income securities. The core Bond Ladder portion is invested in a concentrated set of bonds with five different maturity dates.

When Bond A matures after one year, the proceeds can be reinvested into a new longer-term bond with a higher rate of interest.

This process can be repeated as Bonds B, C, D and E mature, creating a "laddered" portfolio of bonds spread across a range of maturity dates.

Bond E

$10,000

Maturity: 10 Yrs

2.00%

Bond C

$10,000

Maturity: 3 Yrs

1.00%

Bond A

$10,000

Maturity: 1 Yr

0.50 %

Bond D

$10,000

Maturity: 5 Yrs

1.50%

Bond B

$10,000

Maturity: 2 Yrs

0.75%

J anet's portfolio faces reduced risk thanks to staggered maturity dates and is positioned to take advantage of rising rates.

Interested in a sophisticated portfolio that can benefit from a Laddered Bond strategy? Ask us about IPC Private Wealth Visio Pools .

Visio Pools provide access to concentrated portfolios of the best investment ideas from top-ranked asset managers carefully selected for their specific areas of expertise. The result is portfolios that are lower cost, easier to monitor and understand, and optimized to achieve your financial objectives.

The Four Disciplines of Execution with Chris McChesney

Tue, 28 Feb 2023 19:14:00 GMT

The most important part of strategy is execution. And, you can learn strategy in every business school, but, hardly anyone learns execution.

Execution often feels very particular to a situation, it doesn’t lend itself to best practices that can be shared from one environment to another. There is a distinction between practices and principles. It’s quite important to know the difference. Best practices are okay, but principles are gold.

Talking about execution in today’s podcast is Chris McChesney from 4DX. Chris got involved with Stephen Covey 30 years ago and for the last 20 of those years - with the team at Franklin Covey - he’s been working on finding solutions to the problem of execution. From that came the best-selling book, “The 4 Disciplines of Execution: Achieving Your Wildly Important Goals,” which was created to help entrepreneurs with their problem of execution. The book has literally changed Chris Reynolds’s life and his views on goal setting and tactics. One of his favorite quotes from the book is: “Strategy is easy – implementation is hard.”

“In the moment, a human being will choose urgent over important. Which means you’ve got to have a system around this, and that’s where these commitments come in. I’m going to make a commitment so that lead measures will happen.”

- Chris McChesney

Chris McChesney shares with us The 4 Disciplines of Execution and how embracing this mindset can help you achieve your goals not only in business but in life here: https://www.franklincovey.com/the-4-disciplines/

The Principle of Focus - Focus on the Wildly Important

Life and business throw many things at us that need to be done on a daily basis to keep the machine running. But it’s just as important to create a distinction between things in business and life that needs to be maintained from a single strategic priority.

How do you maintain that ‘focus’ and turn it into success?

By zeroing in on the ‘Wildly Important Goals’, or WIGS. Create a distinction in your brain between all the things that have to be maintained, and sustained and the single strategic priority that connects them.

Chris said “If you ask what is wildly important, my brain goes all the way to the top. It goes to the bottom line, growth, and these macro objectives. And that’s not what we’re talking about. If those macro objectives; like total sales or profitability - if those represent the title of a book, your wildly important goal is the chapter within the book, that’s going to make all the difference.”

As an example. Everyone wants profitability! But what is preventing that from happening? Maybe it’s smaller clients that eat up resources or spending enough time with bigger clients, a better experience. That’s where you have to get to. These goals have no value if they don’t hit the working level.

The Principle of Leverage - Act on the Lead Measures

Once you have what you need to accomplish identified, you can turn your focus to the lead measures. It’s similar to the Pareto principle, or 80/20 rule - act on the lead measures for that targeted, focused objective. It’s tough to move a rock, but it’s easy to pull a lever that can help to make that rock move.

It’s also important to understand the difference between lead and lag measures. Lag measures are what accountants are for - how much money you made. Lead measures are the harder part - what were the tactics that led to those results?

When you know this, you can turn your Wildly Important Goal into a winnable game.

Let’s say you want new accounts and clients. You know first appointments have a predictive ratio around new accounts, but you’re struggling. You know first appointments convert at around a 3:1 ratio. Sometimes, you have to go with a slightly smaller rock. Instead of choosing new accounts, what if you made the WIG first appointments? That’s a winnable game that matters. Do new first appointments matter? Yes! But it changes your thinking. But you can add a lever on that rock. Double down on referral leads for first appointments. That’s a winnable game and has a predictive outcome.

The Principle of Engagement - Keep a Compelling Scoreboard

Being able to see if you’re winning or losing at your winnable game can help you to stay on track. James Clear, the author of the best selling book “Atomic Habits” said “We don’t rise to the level of our goals. We fall to the level of our systems.”

Get off the emotional push you have for a goal and come back to systems. It comes down to the systems we have. Of the 12 million receptors going into our brain for input, 11 million of them are visual. We’re more visual than we realize. If you can’t see it, it’s gone. It’s competing with everything else going in your life. Can I see the lead measure? The outcome? In real-time?

The Principle of Accountability - Create a Cadence of Accountability

It comes down to force against leverage. We’re going to pull on that lever every week to make this winnable game happen. How? Keep a cadence of accountability. Know what actions to commit to every single week. What are the commitments I’m going to make in addition to all the stuff I have to do to get traction on that wildly important goal?

These disciplines are about bringing people in rather than pushing an agenda. It’s a great opportunity to build accountability with not only yourself but your team. Look at the scoreboard and ask “Based on your scoreboard what do you have to do this week…”

You’re committing to something that will ensure the lead measure. Let’s say your lead measure is to run six miles a week. You look at the forecast and see it’s going to rain a few days this week. What is your commitment to still make it happen? Will you go to the gym? Use the treadmill inside? This is the type of commitment that makes a Wildly Important Goal come to life.

It’s committing to an action that you can do that will have the biggest impact on keeping this a winnable game. The best leaders hold you accountable because they want the best from you.

 What is YOUR wildly important goal? Why not have a virtual coffee with Chris Reynolds and talk about it? Chris is a HUGE fan of the four disciplines and implements the strategi es with his team and company every day. He’d love to chat with you more about it and how you can use it to accomplish big things in your business in 2023 .

Want to grab a Coffee with me? Discuss something you heard on our podcast, talk about your goals to accomplish in your business, and life in the new year, set up a virtual coffee here .

The Case for the 60/40 Portfolio

Tue, 14 Feb 2023 15:52:00 GMT

In Roger Gibson’s practical guide to strategic asset allocation of investment portfolios, he references the ancient Jewish Talmud records dating as far back as 1200 BC, which said,

“Let every man divide his money into three parts, and invest a third in land, a third in business and a third let him keep by him in reserve.”

In modern parlance, Gibson equates land with REITs (or real estate), business with US stocks (equities), and reserve as US bonds (fixed income). This simple asset allocation scheme would have passed the test of time, with all three assets generally providing long-term positive returns while giving investors the much sought-after benefit of diversification.

In the current day, we have fallen into a simplified doctrine of the 60-40 portfolio, 60% stocks and 40% bonds. This norm, which in prior decades was tested as the optimal portfolio for the average investor, has generally stood the test of time, ubiquitously now being called the ‘balanced portfolio.'

Since the 2000s, the balanced portfolio has worked well. Stocks and bonds have been in an extended bull market and during periods when stock prices have retreated, the bond portfolio has provided safety and the much-needed diversification that investors seek.

Could it be that the holy grail of diversification had been achieved, with perfect diversification benefits with, until very recently, negative correlation between US stocks and bonds, during a secular bull market for both stocks and bonds?

Alas, 2022 has tested that belief, with both stocks and bonds unexpectedly dropping, and pushing correlations into positive territory - the dreaded one-two punch of negative returns and zero diversification benefits. Even before this year, critics of the 60-40 portfolio were questioning the low interest environment’s effects on the income-side of the portfolio, and whether it would provide enough diversification against risk assets.

So, is the solution to forget about bonds, as they provide no downside protection during an inflationary environment? And, if one has a long-enough timeframe, don’t they underperform stocks anyways?

I would argue no, that there are still two key benefits to mixing bonds into your portfolio that go beyond correlation alone. The first is that bonds, even in the current environment, will lower the volatility (annualized standard deviation) of your portfolio.

The second reason is for protection. Even with bonds having historically negative performance this year, they still have provided more stability than stocks in terms of their drawdown performance. Having a 60-40 portfolio may not have fully protected your portfolio from overall negative performance this year, but it has certainly cushioned the blow.

In conclusion, the reason you fundamentally want to own bonds is the same reason they will inevitably find their way into a balanced portfolio. If you had an infinite investment horizon and no need to consider periodic withdrawals, then you could, in theory, only need to care about the appreciation side of your portfolio. We know that most investors are not in that position, and so there is still a strong case to be made to balance your portfolio accordingly – for both lower volatility and protection.

Preparing for Impact in 2023 with Ryan Estis

Thu, 12 Jan 2023 19:31:00 GMT

Crisis creates opportunity.

Sales and leadership expert, Ryan Estis and Chris discuss how entrepreneurs can use moments like these to create greater impact for their business, clients, and teams.

We all know that 2022 was a difficult year for business owners and now, they’re preparing for another challenging year in 2023. Challenges, however, create opportunities and the decisions you make in difficult moments like these will define your future. I sat down with Ryan - who left his corporate job in 2009, right as The Great Recession was kicking off,- to talk all about leadership, opportunities and dealing with crisis. He shares that while it was a difficult time to start an entrepreneurial journey, “ it was the best professional decision I ever made.”

So how do you make 2023 your best year ever?

Available on Apple , and Spotify

“The decisions you make and the action you take on the way down really puts you in a position to accelerate momentum on the other side.” - Ryan Estis

Who Is Ryan Estis?

It's safe to say that he understands the challenges business leaders and top performers face, because he’s been in their shoes. Ryan spent 15 years helping companies connect with employees and customers as an ad agency executive, building a client roster of category leading brands. Nine years ago, he decided to put that experience into practice and launch his own research and learning organization. As a result, he was afforded an inside look at what the world’s best companies do differently and he shares that insight by helping clients initiate change, improve performance and deliver growth. Ryan has been recognized as one of “the best keynote speakers ever heard” by Meetings & Conventions magazine.

In our conversation, I asked Ryan, “what do you see as the biggest challenge for entrepreneurs in 2023?” Read his top answers below:

The Way We Work Has Changed - It's Time to Adapt

The post pandemic world of work has permanently altered the way we work. We’re in a once in a lifetime opportunity to reimagine and rethink our relationship with work. This also means as leaders we have to act and think differently. As entrepreneurs and leaders, we need to evolve leadership capabilities and competencies and engage our teams differently.

Find the Opportunity Crisis

This is a defining moment in history for business owners. Those who find the courage to grow, invest ahead of the curve and make thoughtful decisions will emerge stronger. At times like these, it’s even more important to be significantly more strategic and disciplined to be able to grow through the crisis.

Leaders have to have a vision of where they are taking their business to recruit others to follow. Having a visionary, purpose-driven business is the best way to inspire emotional commitment and investment from your team. Without it, it will be hard to grow your business.

Be Purpose and Values Driven

Impact and purpose matters now more than ever because people are drawn to it. Impact is about outcomes. The impact you have on the world starts with your team and extends out to your clients and personal life. It’s that powerful! The way you live and run your business should leave things better than you found them. Put people first and performance and profitability will follow.

Enhance the Client Experience

What your clients think about you is your brand and your client experience. “Your brand is no longer what you say it is, it’s what everyone says it is. Your clients are the stewards of that experience”, says Ryan.

Ryan thinks there’s an opportunity in the advice and financial service business to create depth and breath in that client experience because clients are expecting more. “Our experience as consumers is shaping our experience of everything.” In a post-covid world, clients expect more and you have to deliver on that.

“Businesses stop growing when the leader in them stops growing. The best investment you can make is an investment in you. When you get better, no one can take from you.” - Ryan Estis

Stay in the Learning Lane

Ryan believes leadership and growth is an inside-out phenomenon. Things are changing so fast in the world, so you need to stay in the learning lane. Keep learning and investing in yourself to be ahead of the game in the coming year.

Look out for Ryan’s new book, Prepare for Impact, coming out later in 2023!

Want to grab a Coffee with me? Discuss something you heard on our podcast, talk about your goals to accomplish in your business, and life in the new year, set up a virtual coffee here .

The Human Dimension of Financial Advice

Thu, 05 Jan 2023 18:36:00 GMT

While some Canadians choose to go it alone, an overwhelming majority believe that financial advisors have a positive impact on their lives, their families, and their futures.

During times of heightened market volatility, investors are looking to financial experts for guidance to help them make the right decisions or get answers to tough questions. In our study, we found that 93% of Canadians indicated they want to work with someone who knows their personal situation.

If you’re ready for financial advice with a human touch, we’ve created an e-book highlighting the tangible benefits of financial advice and how investors can benefit from the meaningful relationships they develop with their advisors.

Are you ready to get the right advice for you and your family?

Managing Interest Rate Risk in a Rising Rate Environment

Thu, 01 Dec 2022 14:01:00 GMT

When interest rates go up, most people are worried about the impact on their mortgage.

At IPC, we’re also concerned about what happens to bond prices. Why is that? That’s because the part of your portfolio which is held in bonds is at risk due to price decreases when interest rates rise.

How Interest Rates Affect Bond Prices

When new bonds are issued, they typically have an interest rate set at or close to the current market interest rate at that time. As market interest rates change, an existing bond’s interest rate – which is fixed – becomes more or less attractive to investors, who are then willing to pay more or less for the bond itself. This is known as interest rate risk.

Interest Rates and Bond Prices have an inverse relationship: when one goes up, the other goes down.

How Can We Add Value?

Our Portfolio Management Team works to protect you from interest rate risk by blending together diversified fixed income strategies into one cohesive mandate.

Managing credit risk

Canadian long-term government and corporate bonds provide stable pay-outs. When rates rise, they are susceptible to decreasing prices.

Diversification

Global corporate and government bonds, as well as emerging market bonds, may provide higher pay-outs than Canadian bonds and are not impacted by Canadian rate hikes.

Managing long term risk

Short-term bonds are impacted less than long-term bonds by interest rate increases.

Enhanced yield

High yielding North American corporate bonds provide higher than the typical bond pay-out rates and are affected less by interest rate increases.

Together these varied sources lessen interest rate risk in your portfolio and provide a reliable, sustainable income stream. Interest rate protection is just one of many highly specialized services our Portfolio Management Team provides to help support your financial plan.

Contact your Advisor to learn more.

Why Financial Advisors Must Embrace Technology to Grow with Mike Waller

Thu, 24 Nov 2022 19:39:00 GMT

Embracing technology can bring on better results for your clients and build an even stronger relationship with them, while saving you and your business time and money.

The amount of technology available for financial advisors is staggering. It feels like there’s a new tool created to help you and your clients every single day. While it might be overwhelming, Chris’s guest, IPC Advisor, Mike Waller, is a prime example of how you can use technology as a catalyst for growth in financial advisory businesses.

Available on Apple , Spotify and Amazon

How Embracing Technology can Enhance Your Business

A few years ago, Mike decided to address the challenges in front of him. He wanted to do the most good for his clients while being able to move fast enough to tweak portfolios and communicate it with his clients. He moved his business onto ‘IPC One’ - a technology-enabled wealth management platform that has allowed him to increase his operational efficiency and client service standards, lower costs for his business and his clients, and increase the number of clients he can serve effectively.

Mike saw the need to have a scalable model that allows revenue to grow faster than expenses. He found that with IPC One.The platform gave him the ability to simplify his process, increase his operational efficiency, improve profitability and to solve his client’s investment needs efficiently. This opened up his capacity to scale his business and attract more of the right clients .

Mike shares how IPC One has been a great tool for him to work with the right type of clients he’s looking to grow with. “So I have my portfolio models but I can customize it for each client based on their needs. And that is key. The high net worth client wants something built for them. They don’t want just another mutual fund. They want to feel like ‘Hey, you listened to me. You created something custom for me.’”

Embracing Technology Improves Productivity

Not only is he able to see wins with his clients, technology is allowing him to simplify his book. IPC One and other technology tools lets him communicate plans with clients easier. He’s able to send videos to clients to show them he hasn’t forgotten about them and show them what they’re doing, which leads to very few calls from clients that are nervous, most just want to talk..

Technology also allows Mike to improve his productivity to help him scale his business. Thanks to the tools he’s implemented, Mike is able to spend his time on the high value tasks that grow his business. (and that's not paperwork!)

In this episode, Mike and Chris discuss:

Why he became a Portfolio Manager-Advisor and transitioned to IPC One
How technology has allowed him to increase productivity and deliver greater value to clients
How the platform allows him to do what he loves most
The results and impact of this transition on his business and his clients
If you found the information helpful, be sure to share it with another financial advisor who could use these words of wisdom!

Would you like to have a chat with Chris? Have a question for him? Would you like to pick his brain? Set up a virtual coffee to chat here !

Why Comprehensive Diversification is Best for an Inflationary Environment

Thu, 17 Nov 2022 15:00:00 GMT

Inflation in Canada, the U.S., and around the world has been increasing at its fastest rate in over 40 years.

Even the most recent numbers show the U.S. Consumer Price Index (CPI) at 8.2%, and 6.9% in Canada, down only slightly from their previous highs. In the European Union, prices are rising faster than at any time since the euro currency was introduced. Even Japan, where prices have been perennially depressed, has experienced the green shoots of inflation. Among major economies, only China has a lower inflation rate today than in early 2020.

With the covid-induced supply chain shortages and consumer demand coming back stronger than ever, the demand/supply imbalance has created significant inflationary pressures. During the work-from-home era, millions of Canadians shifted their spending from restaurants and movie theaters to the purchase of “goods.” Buying all those goods drove up prices as suppliers struggled to keep pace with demand. Over the past few months, although goods prices have been slowly coming down, the stickier part of inflation i.e., Owners Equivalent Rent, wages, etc. has started to pick up raising the concern that the only way to bring down inflation is through a recession.

With inflation rates higher than in any period since the 1980s, investors and retirees are worried about how to protect their portfolios. Although global tensions in Ukraine have exacerbated an already difficult period for consumers, we still believe that many of these price pressures should prove temporary, albeit with a lengthened timeline that will extend beyond 2022. The IPC Portfolio Management team has been analyzing price moves carefully and positioning our portfolios to provide better outcomes.

Have traditional inflation hedges been effective?

There is ongoing debate as to the efficacy of certain asset classes in different inflation environments. Below are four of the more popular ones:

TIPS - U.S. Treasury Inflation-Protected Securities (TIPS) historically are viewed by investors to protect against higher inflation. Although they have outperformed the U.S. Treasury Bond Index, the performance has disappointed relative to the inflation rate surprises.

Gold - had been underperforming broader asset classes coming into 2022, even though inflation numbers were coming in higher than expected. More recently, however, investors have flocked to gold and prices have started to climb. This has largely been due to the volatility created by the Russian invasion of Ukraine, which has investors going into the safety of gold rather than being driven by inflation worries.

Energy - has often been described as an inflation hedge due to its short shelf life and its correlation to economic growth. Our main contention with energy as an asset class (and specifically oil and gas, which by market cap make up the largest part of the energy market), is their price volatility that will often be tied to demand-supply imbalances and the longer-term transition to greener alternative energy. In the past six months, we’ve seen oil and gasoline prices surge due to the demand-supply imbalance created by the war in Ukraine, particularly in light of sanctions on Russia. While prices have more recently moderated, what remains is structural underinvestment in refineries as well as oil drilling and exploration.

Cryptocurrencies – Bitcoin, and other cryptocurrencies, have been described as “digital gold.” While there are some aspects of crypto that might mimic gold’s characteristics, namely its fixed supply and the need to (digitally) mine the asset, current price action has shown that it has been a poor “risk off” hedge. It has not held its value when inflation has gone up and has proven to be highly correlated to the equity markets.

Below are the returns for the various inflation hedges since May 12, 2021, when U.S. inflation first spiked, to Sep 30, 2022.

Source: Morningstar Direct , 9/30/2022

As we can see from the chart, apart from oil, traditional inflation hedges have not kept up with inflation. Oil has outperformed with a return of 45%, while Gold, TIPS, and Bitcoin have returned -9.1%, -9.5%, and -65.9%, respectively, badly underperforming the 8.2% inflation number as of September this year.

The takeaway from this analysis is the importance of diversifying across the various hedges for inflation. In this example, oil has proven to be the protector. Next time, it may be another asset class that comes to the rescue, illustrating why diversification is key.

What we are doing across our portfolios

At IPC, the Portfolio Management team is constantly thinking about how we can protect our clients’ money across the various business cycles.

Accordingly, we’ve been busy incorporating several investment strategies across our portfolios to help cope with high inflation.

Rotation towards the “defensive” or value-oriented section of the market as these sectors tend to do well in a rising rate environment.

Investing in quality dividend-paying companies that are mature and tend to have pricing power where they can pass on some of the inflation expense to the consumer. Dividend-paying stocks tend to benefit from an inflationary environment since they tend to have capital discipline and don’t want to get penalized for missing a dividend payment.

Diversifying geographically since various regions have vastly different sector weightings, meaning they will behave differently in an inflationary or rising rate environment. In the chart below, we compare Canada, U.S., and International (EAFE) market sector weightings:

Source: Morningstar Direct 9/30/2022

For example, Canada has higher weighting in Financials, Energy, Materials, and Industrials while the U.S. market is skewed towards Technology, Health Care and Consumer Discretionary. The international market is relatively more even in terms of its sector diversification but is still tilted towards cyclical stocks like Financials, Materials and Industrials. As mentioned previously, an allocation towards more defensive or cyclical sectors tends to benefit investors during an inflationary period.

In our portfolios we have done the following recently:

Reduced our overweight to equities and slightly increased the weight towards fixed income
Within fixed income, we reduced our overweight to high yield and global bonds and reallocated these positions towards Canadian Core Fixed Income.
Within our equity allocation, we are maintaining an equal weight between our growth and value-oriented managers while complementing them with multifactor strategies. We have also reduced our allocation to Global Real Estate and Global Small Cap.
Geographically, we have increased our U.S. equities exposure, and reduced our exposure to international equities, reallocating towards Canadian equities.
Maintaining a largely unhedged position against U.S. dollar exposure in the portfolios and underlying funds as the USD has strengthened considerably against most currencies. Being unhedged during periods of USD strength/Canadian dollar weakness boosts the performance of USD-denominated securities.

In Conclusion

We find that the best hedge against inflation is to be diversified since there is no one magic bullet we can turn to with complete confidence. Rather than going all in on a specific strategy, we believe that providing exposure to multiple strategies will help ensure our clients can participate when the markets return to a more stable phase marked by a return to growth.

Why Now’s the Time to Become a Retirement Income Specialist

Thu, 29 Sep 2022 16:36:00 GMT

You can grow your business by shifting your focus to a growing market segment in Canada – the retirement income market.

Many long-tenured advisors began their careers by serving clients who started in the wealth accumulation phase of their lives. As the country’s demography continues to age, these very same clients will likely be starting to move towards their decumulation years. Some may already be drawing down on their portfolios to fund their retirement lifestyles.

Are you positioned well to continue to serve clients in this next phase of their lives? Advisors who do, will be able to open new opportunities to grow their business and draw clients away from the competition.

Listen in, as I share a few more reasons why this is the time to position yourself in the retirement income planning space and how you can begin to do s o.

If you would like to find out how we can help you position yourself well in the retirement income space, let’s connect.

Winning Opportunities in a Market Downturn with Dan Nolan

Thu, 15 Sep 2022 17:34:00 GMT

Your clients are worried about their finances.

Turn on the news. Look at social media. When it comes to the financial news, so much of what you see is doom and gloom. So many people are concerned about their livelihood and their future.

In this episode of Turning the Page podcast, Chris talks to Wealth Advisor, Dan Nolan about getting to the root of a client's fears and helping them manage through volatile markets. They discuss the types of conversations an Advisor should be having with clients and how, if done right, an Advisor can lock in client relationships for life.

Listen on Spotify and Apple Podcasts .

Building Trust with Tough Conversations

In a bull market, everyone is an investment expert. It is when markets are down that your clients need you to step up, more than ever, as a financial advisor. Guiding and reassuring your clients through a downturn is when you show your worth. Demonstrating the value of your advice and preparing them for the next upswing builds trust, enhances your relationship and sets up your business for the future.

Navigating market downturns requires challenging client conversations. So how do you handle these tough conversations, and how do you help your clients through potentially difficult times? In this episode of Turning the Page, Chris has a candid conversation with someone who has been through downturn markets before: Dan Nolan.

Dan has been a professional financial advisor in Ottawa since 1992 and helped his clients through tough market cycles more than once. He’s here to share his experience and show you how you can use this opportunity to build real trust with your clients.

Dan holds the certified financial planners designation, the certified investment managers designation and is a fellow of the Canadian Securities Institute. In his free time, Dan enjoys golf, playing hockey and spending time with his wife and three children. Dan is also kept busy by attending numerous charity events throughout the year and volunteering as a head coach for his son’s minor hockey team.

“This is a tremendous opportunity. When markets are going well, it’s an easy business. When markets are down, this is when we need to step up as financial advisors…show our worth, build trust, and set our businesses up for the future.” - Dan Nolan

Connecting with Clients in a Bear Market

In this episode, Chris and Dan discuss:

Why your clients are worried right now and how financial markets can take a toll on their financial and emotional well-being. It’s not the overall markets they’re worried about. It’s their own situation. How can financial advisors help their clients understand this relationship and not fear the downturns?
Why it’s important to always refer to a client’s financial plan and remind them of their ultimate goal.
How to handle objections from clients such as “But it’s different this time…”
How you can turn this moment into a real opportunity to build relationships and to set up your business for the long term.
The type of conversations you should be having with clients to help them find the opportunities around them, no matter what type of market we’re in.
The importance of building a personal relationship with your clients.
Advice Dan has received over the years that he would pass onto younger advisors.
How the more value you create for others, the more value you create for your business.
Dan’s most memorable client and why. Spoiler alert: it wasn’t about the money.

You can learn more about Dan and his team at https://investmentplanningcounsel.ca/deep-river

Be sure to subscribe to Turning the Page on Apple , Spotify or whatever podcast app you use!

If you found the information helpful, be sure to share it with another financial advisor who could use these words of wisdom!

Would you like to have a chat with Chris? Have a question for him? Would you like to pick his brain? Set up a virtual coffee to chat here!

Appointing an Executor: Who Will You Choose?

Tue, 26 Jul 2022 14:38:00 GMT

When appointing an executor for your estate, the person who first comes to mind won’t necessarily become your final choice.

That’s because you must consider several factors when making this important decision.

On the personal side, typical choices for an executor could be a spouse, child, sibling or close friend. On the professional side, common choices include an individual’s lawyer or accountant, or a corporate executor, such as a trust company.

Any two (or more) of these choices can be named as co-executors.

Spouse as an executor

Naming a spouse is a common practice and can be a prudent choice when the estate is uncomplicated and virtually all estate assets are distributed to the spouse. But if the estate involves complexities, such as business ownership, the spouse could face a stressful period managing the estate. Troubles could also develop if the spouse and children are major beneficiaries and disagreements arise over estate settlement – the executor could bear the brunt of the conflict.

Also, if you appoint an executor who’s close to your age, whether it be a spouse or anyone else in your life, it’s wise to plan on an alternate executor in case your first choice predeceases you.

Naming a child

Another common choice is naming an adult child. It’s an easy decision if you’re certain the child is capable of administering your estate, and you have only one child. If you have two or more children, this choice deserves careful consideration. You can name co-executors to treat your children equally and have duties shared, but this arrangement comes with hitches. Any disagreements among co-executors may cause delays and test their relationship. Also, meeting together and co-signing documents at the lawyer’s and accountant’s office and bank may be difficult if they live in different cities. Appointing only one of the children can streamline estate settlement, but the potential problem still exists of other siblings disagreeing with the executor’s decisions.

If you feel certain this route won’t cause discord among siblings, naming one or more children as executor can be ideal. But keep in mind, there are too many instances of arguments over estate decisions causing friction between siblings, even to the point of estrangement.

Someone close to you

You may want to appoint a friend, sibling or other relative because the person is someone you’re close with. But there are other factors to consider. Is the person capable? Your executor should be highly organized, diligent and able to relate with your lawyer and accountant. Does the individual live nearby? Many duties require in-person meetings, and travel would present a hardship.

Does she or he have the time?

An executor’s duties can include making life insurance claims, uncovering and paying bills and debts, taking care of investment accounts, valuing and selling the house and other assets, obtaining probate, overseeing personal and estate tax returns, keeping beneficiaries informed and distributing estate assets. And there are many other time-consuming duties that can stretch for many months, a year, even two years or more.

When to consider a corporate executor

You may want to choose a corporate executor when you face a problem choosing a friend or family member. Perhaps, you don’t have an individual who’s capable or interested. Or you feel that you’d be placing a burden on someone close to you. Maybe you’re worried that naming your spouse or a child will potentially cause discord among family members.

If the estate is complex, a corporate executor may be necessary. Examples of complexity include owning a business, owning foreign property or income property, or having one or more trusts. One way to strike a balance is by appointing a corporate executor to completely administer your estate, or make a corporate executor and a friend or family member co-executors that work together to carry out your final wishes.

It’s important to set time aside to evaluate the right person for your needs and circumstance when choosing an executor.

And if you do have second thoughts about your first choice, we advise speaking to someone neutral like a financial advisor, who can provide insight into the different nuances that come with such an important decision.

We know for many people the executor decision can be challenging, so if you want to discuss your options, speak to us .

Helping Clients Weather The Storm

Thu, 21 Jul 2022 17:22:00 GMT

What steps are you taking to help your clients during these volatile times?

Tune in as Blair Setford, VP of Product Management, sits down with Counsel’s VP of Portfolio Strategy, Paul Punzo, to discuss how the team is responding to recent market volatility, their outlook for 2022, and how client portfolios are being positioned for the markets ahead.

Highlights include:

Not expecting a recession, but if one occurs, it may be mild
Expect equities to lose more ground as the “risk-free” rate continues to rise
Value should continue to hold up better than growth
Returned to our neutral weightings on equities and fixed income
Regional equity weightings have been nudged back closer to neutral
Expect defensive sectors like consumer staples to do better than cyclicals like consumer discretionary or financials – increased weighting to multi-factor strategies to get those exposures

When Should I Maximize the Value of My Business?

Thu, 09 Jun 2022 16:46:00 GMT

Understanding Business Valuations in the Financial Advisory Industry

There is a lot of talk in the industry about business valuations. Looking at advisor demographics and assets under administration (AUA), there seems to be approximately $250B-$350B of AUA connected to advisors who will reach retirement age in the next three to five years.

There’s also the fact that there’s not enough new advisors coming into the industry, and those that are able to acquire new books, don’t necessarily have the capitalization or resources.

Market Volatility and Business Valuations

Market Volatility With the recent volatility in the markets, I am often asked, ‘is now the right time to maximize the value of my business?’ Our methodology for valuing businesses adjusts for market volatility and any impacts it may have on overall revenue.

“It provides the protection advisors need in today’s world.” We achieve this in the form of a “hedge” in our valuation equation and normalization of revenues based on a representation of financial markets versus the current one. Read my previous post on determining what’s a fair price for your business.

Six Steps to Successful Succession Planning

The decision to monetize, exit or stagger the transition of your business involves many factors. Having worked with hundreds of advisors, I’ve narrowed it down to 6 steps to success:

Prepare financially
Prepare emotionally
Determine an exit date
Select the best exit plan
Choose your succession option
Implement your plan

Trying to time the market is something we deter clients against, similarly, this also applies to advisors and their succession plan. The right timing should be based on a well-thought-out plan (like you do for your clients) and should be no different for you as a business owner.

Succession on Your Terms

If you’re looking for choice and the ability to grow or succeed your business on your terms, our Pinnacle Advisor Program might be for you. It’s open to all advisors, regardless of whether you’re with IPC or not. This program provides advisors with an ability to monetize and de-risk the value of their business today, with the option to either sell and exit the business completely or continue to run the business (in whatever capacity you choose) and be rewarded for new asset growth.

If you would like to have a one-on-one private conversation on how IPC can help you formulate your 6-step plan, feel free to contact me today.

Before You Sell - Consider This In Your Succession Plan

Thu, 12 May 2022 14:20:00 GMT

Over the years, I’ve had the opportunity to work with hundreds of advisors. Everything from business planning, growth strategies and succession planning – I’ve done it.

In my line of work, there has been one single principle that has stayed true. The ‘win’ must benefit clients, staff and the advisor. If one or more is compromised, it all falls apart.

“If one or more is compromised, it all falls apart.”

As the competition in the industry continues to heat up, I’ve noticed some emerging trends that are catching the attention of advisors as they consider their business growth and succession plan. There have been a few start-up firms in the industry that are looking to acquire and onboard advisor practices on to their closed-end investment management platforms. These firms are acquiring advisor practices at a significant valuation with attractive future monetization agreements that are clearly piquing interest.

As an advisor, should you beware?

Read the Fine Print

Let’s consider some things. These organizations are quite small in nature and can lack long-term financial stability. Most times, they are seeking a quick consolidation only to spin off the business to a larger wealth management organization.

In addition, these firms require the selling advisor to give up or down grade their current licenses and perform limited duties. What’s worse, they even require the clients of the selling advisor to transition their good quality investments (held for years) into new investments that haven’t proven performance. Structures like this challenge the many years of trust and integrity built between an advisor and their clients.

Additionally, the ultimate business valuation received by the selling advisor is directly linked to the transition of client assets into new investment solutions. If you read the fine print closely there are many conditions that need to be achieved to attain the stated business valuation such as tax treatments, market and redemption risks, advice fee pricing, etc.

Looking for Choice?

If you’re looking for choice and the ability to grow or succeed your business on your terms, the IPC Pinnacle Program might be for you. It’s open to all advisors, regardless of whether you’re with IPC or not. This program provides advisors with an ability to monetize and de-risk the value of their business today, with the option to either sell and exit the business completely or continue to run the business (in whatever capacity they choose) and be rewarded for new asset growth.

The IPC Pinnacle Program understands the importance of the relationships you’ve built, the portfolios you’ve managed day-in and day-out for your clients and the work you’ve put in to grow your business. It’s an opportunity for advisors to gain continuity and consistency when it comes to client trust and relationships and keeping existing investments, plus we partner with you to choose a successor advisor. It’s also a great option for advisors who want to gradually exit and stay on, so that continuity, established processes and the client experience are learned and transitioned.

If the IPC Pinnacle Program sounds like something you want to learn more about, let’s schedule a private one-on-one conversation and discuss how we can help with your succession plan. Feel free to contact me today.

Is Your Business Open or Closed for Success?

Wed, 06 Apr 2022 13:46:00 GMT

Nadir Chandra’s story was typical of most business owners who have made the tough decision to leave their companies. At age 54, he was confident in finding a meaningful second act and was ready to leave his 25-employee commercial sign-making business. Nadir was thinking of selling to one or two of his key employees and when I met him his first question was: “Is this the right choice for me and my business?”

Life After Your Business

Many financial advisors find themselves in the same predicament. You can envision your life beyond ownership, but you don’t have a clear picture of how to transition your business to the successor you choose, for the money you want and on your timeline. So, what do you and the Nadir Chandras of the world do?

“Often, they believe there are systems in place that will take care of everything when they decide they are ready.”

Here is what I told Nadir:

First, understand that leaving your company is a process. Realizing that life after leaving your business can be as fulfilling as your life as a successful entrepreneur is simply the first step. The next step is to figure out a way to approach your transition in a methodical, logical, and rational manner. Most financial advisors do not put enough thought and planning into their future succession plans. Often, they believe there are systems in place that will take care of everything when they decide they are ready. Maybe, they believe they’ll figure it out when they get there.

If that describes your situation, you are not alone. Most advisors for that matter, don’t know there is a succession planning and implementation process that is methodical, rational, and can be tailored to your unique goals.

Reaching your destination

Setting goals and objectives, while also understanding the value of your business, are the first steps towards planning your future. Based upon what you want and what you have, you can then examine and choose a proper path for you: be it a sale to a third party, a transfer to children, a sale to a co-owner, or retaining ownership of your business until the very end. As part of this process, you also must consider what would happen to the business and to your family in the event your death or disability precedes your “best outcome” plan.

Simply knowing the process and proceeding down the path to part with your business, however, is insufficient. If you can’t describe how you’re going to get there, is it likely you’ll reach your destination?

To promote success, here are some questions to ask yourself:

What are my plans after I transfer the business?
How much money do I need from my business to live comfortably?
Who do I trust to continue running my business successfully?
Do my children want any involvement in the business after I leave?

These may seem like straightforward questions that you may have thought of, but you may be surprised how often the answers to these questions may change. Communicate frequently with your family, partners, top management, and colleagues, to be sure everyone’s goals and expectations are in line. Your plan can change dramatically if your goals and objectives begin to shift.

If you’re unsure where to start or want to know your options, I have experience helping advisors and business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, I’d be happy to sit down and talk with you. Feel free to send me an email at your convenience.

Bill Black is an Exit Planner who helps financial advisors and business owners create and execute their business transition or exit planning strategy. In his spare time, he enjoys golfing, playing with his grandkids and exploring wine country.

Succession Planning Strategies for Wealth Management Advisors

Wed, 16 Mar 2022 21:11:00 GMT

The wealth management business has two big issues. First up, 50% of the assets under administration managed by independent advisors are held by advisors over the age of 60. The second issue is that there are a limited number of young advisors coming into the business. In a space with approximately $800 billion in assets under administration, this is a $400 billion dollar problem.

“In a space with approximately $800 billion in assets under administration, this is a $400 billion dollar problem.”

If you have less than a 10-year time horizon in this business, it is time to ask some questions and make some serious decisions. If it were me, I would be asking questions like:

1. How is my business valued, and how can I maximize that value?

For many of us, our businesses make up one of the largest portions of our net worth. The value of a business is always directly proportional to how transferable it is to another person. Simply put, if your business is easy to transfer, it is worth more. If that is the case, my focus would be on simplifying my offering, setting up repeatable processes for dealing with clients and incorporating the use of technology.

2. Who can take over my business?

When I sold my business, my biggest concern was how my clients would be treated in the future. After all, most of my clients were like friends. I cared about them and their future well-being. That was something I took seriously as finding the right person is difficult. You need someone who is qualified, client-focused, young, wants to be an entrepreneur, and can afford to pay you. People like this are not easy to find. Many people look to their children to take over the business. However, this is not always an easy task. Adult children still need to be qualified, trained, and have the right mindset to become a business owner.

3. What is my time period in transition?

Many advisors want to slow down but don’t really want to stop. They like dealing with clients and helping them solve problems. They would like to ease out of the day-to-day things like managing their staff, marketing, etc. and just focus on their clients. How would you do this in a systematic manner?

These are important questions and it’s critical to explore all your options.

Have you mapped out your own succession plan?

If you’re interested in putting a succession plan in place and want to do it at your own pace, I recommend reading our playbook where you’ll find some solid strategies to start.

If you already have a lot on your plate and want some no-obligation guidance, I’m available and happy to help. Reach out to me to learn about our entire succession planning process, regardless of whether you’re buying or selling a business.

Cheers,

Chris

Focus on Volatility

Tue, 01 Mar 2022 17:09:00 GMT

Should you abandon your investment plan in these volatile times?

Investing will always involve some level of risk. No one ever knows when the market will turn. History reveals that equity markets usually recover strongly two years after a major crisis.

During a period of volatility it is all too easy to allow your emotions to dictate your investment decisions. To enjoy the potential for future gain, you may have to endure the pain of short-term volatility, and remain rational through periods of turmoil.

Your investment plan has been created with your long-term financial goals in mind. So, before you make any irrational decisions, consider the following:

Your recommended portfolio was compatible with your long-term investment objectives and time horizon when created. Has your long-term objective changed?
Will switching to a short-term investment strategy impact your long-term financial goals?
Has your tolerance for risk and expectation for reward changed? How will diving into a ‘hot market favourite’ impact your long-term investment strategy?
Will changing your investment portfolio result in the narrowing of your asset class diversification, thereby lowering your long-term return potential? Will it change your tolerance level? Will a change improve your asset class diversification and improve your potential for return relative to risk?
Will your asset class diversification strategy and globally diversified portfolio benefit your long-term investment objective?

Table 1: Despite short-term turmoil, markets historically tend to move higher over time

Performance of Down Jones Industrial Average through 12 Major Postwar Crises(1)

Given that timing the market is always difficult, investors generally stand to lose more if they exit the market and stay out while waiting for the turn. In fact, missing the rising tide may cause more damage to their long-term investment plan.

Table 2: It’s best to stay invested

Source: Counsel Portfolio Services, Morningstar Direct. January 2022. (Based on the S&P/TSX Composite Total Return Index)

Discuss your investment strategy with an IPC Advisor today.

Chart 1 represents performance of the Dow Jones Industrial Average through major post-war crises. The Dow Jones Industrial Average (DJIA) is generally accepted as a measure of U.S. stock market performance. Returns assume reinvestment of all distributions, and, unlike fund returns, do not reflect fees or expenses. It is not possible to invest directly in the DJIA. The original chart can be found in Contrarian Investment Strategies: The Next Generation, 1998, by David Dreman.

The Next Big Thing: Trends Shaping the Future of Financial Advice

Tue, 15 Feb 2022 22:14:00 GMT

Key Trends Shaping the Future of Financial Advice

I have not written in a while, and I think now is a great time to start up again! In my new role as Executive Chair of IPC, I am able to focus on things that I am passionate about, and good at. So what's the thing I am most passionate about? Helping Advisors build a better business. I think about it constantly, read extensively and study other industries and trends. In addition, I spend time speaking with Advisors about their businesses and helping them take advantage of these trends.

To help Advisors elevate their businesses, the question I always ask is: what is your “next big thing”? This is not a question I invented, rather something I gleaned from my business hero, Steve Jobs. He always pushed his team to focus on the next big thing that would change the world rather than basking in their prior successes. Now while we might not want to change the world, we absolutely do want to better serve our clients and build the value of our businesses.

What are the next big things I am seeing in the industry?

1. Use of Technology

COVID-19 has fundamentally changed society and how we do business – permanently. We make all consumer decisions via Google (or your preferred browser or social media channel recommendations), we attend virtual events, interact remotely with our colleagues, peers, and fellow business professionals. We even attend masterclasses from our living rooms (I’ve personally done several and highly recommend the classes by Chris Voss and Gordon Ramsey). Advisors are reporting increased success by using technology for better client communication and engagement. The Advisor of the future, therefore, will be the one who successfully embraces the use of technology in every aspect of their business.

My advice? Add a new technology capability to your business every 90 days. If you do this, you will completely transform your business in three years.

2. Focus on Emerging Customer Problems

The best businesses are the ones that can identify emerging problems within a large consumer base and find solutions by becoming subject matter experts.

Over the next five years, the three big problems I see facing our clients are:

Inter-generational Wealth Transfer

With the largest amount of wealth in Canada set to change hands from one generation to the next, some Advisors are adding to their services to better connect and serve their clients' next generation. They are doing this by offering a “Basic” service - WealthSimple, is one such example and engaging the next generation in family planning meetings, which help the next generation prepare to inherit.

Shifting from Accumulation to Decumulation

As financial advisors generally earn most of their money from investors who are in the retirement phase of their lives, particularly those who are either three years away from retirement or three years into retirement, some Advisors are laser-focused on becoming subject matter experts in retirement income planning. They are sharing knowledge and building their brand within the space using multiple channels such as podcasts, newsletters, social media and delivering impactful presentation through virtual client events, to reach their audience. This is helping them ensure that they continue to retain the clients they've nurtured as they go through their wealth decummulation phase.

The Emerging High Net Worth Market (sudden money)

Advisors are broadening out their service offerings for clients with over $1 million in investable assets. These are the people who hold most of the wealth in Canada – those who have come into increased wealth either through the sale of a property, home or a business, inherited, or experienced a lottery windfall. Advisors need to keep these clients feeling special while delivering more comprehensive wealth management solutions to meet their evolving needs. Advisors are doing this through partnerships and by offering services such as tax and estate planning, planning for philanthropy or charitable giving, business succession planning or advice and planning for their next generation.

These are just a few of the key trends that are reshaping how Canadians seek advice and access the services of a financial advisor. As with embracing technology for all aspects of their business, advisors who evolve to meet the changing needs of their clients and the Canadian investor are the ones who will be successful going into the next five years. In my next post, I will continue the topic of “the next big trends” we are seeing in the industry. In the meantime, I would be happy to work with any Advisors who wants to take their businesses to the next level of success. I am only an email away!

Cheers,

Chris

Retirement Income Planning Doesn’t End When Retirement Starts

Sat, 08 Jan 2022 16:39:00 GMT

In your working years, the idea of retirement might seem idyllic with the stress of saving for retirement behind you. In reality, the retirement phase of life can be filled with decisions that require careful attention. For example, deciding when and how to downsize from a principal residence can weigh heavily on a retiree with a fixed-income stream.

This was what Audrey James, age 85, faced when she went to her long-time IPC Advisor, Midori Hillis , in Victoria, B.C ., with the decision to change her living arrangements.

Audrey’s Question: Can she increase her living expenses and still leave a financial legacy? With Midori’s ongoing advice and planning strategies, Audrey was able to navigate this major life transition with confidence, securing retirement income for her own future as well as her wealth-transfer plans.

The Goal: Downsize, But Meet Increased Living Costs

Widowed early, Audrey lived in a condo she’d bought many years before but discovered that managing a household on her own was starting to take its toll. Since Audrey and Midori first started working together some 20 years ago, the plan had always included the option for Audrey to sell her primary home and downsize when she was ready. Now that the time had come, it opened the door to a whole new series of decisions Audrey had to make.

Where would she move to?
What could she afford for a new living arrangement?
How would she make sure she wouldn’t run out of money?
Could she still leave a financial legacy for her estate?

The Plan: Unlock Equity, Protect from Inflation, Use a Cash Wedge

With news that Audrey was ready for a new living arrangement, Midori knew it was time for the plan they’d worked on over the years to kick into action.

Audrey’s income was modest, mostly made up of Canada Pension Plan, Old Age Security, and a small private pension.

With the switch to assisted living, her spending needs would go up significantly. Luckily, her condo had risen in value over the past 40 years, becoming her most significant asset, apart from the savings in her Registered Retirement Income Fund (RRIF).

Once Audrey settled on an assisted living facility, Midori helped her find a local realtor who was able to estimate what Audrey would get from the sale of her condo.

Using the right mix of strategies, Audrey was able to ensure short-term market fluctuations would not erode her investments.

Based on Audrey’s estimated expenses, current income streams, and the proceeds from her condo sale, Midori ran projections and put together a detailed plan to provide the income that Audrey would need every year, for the next 15 years. The plan also included an option for Audrey to downsize further along the way should her expenses increase by moving into a smaller studio space from her current one bedroom apartment.

With Midori’s guidance, the plan ensures that Audrey’s intended financial legacy will be met by securing guarantees on part of her portfolio. It also protects her from the impact of inflation by including a conservative strategy to invest in assets that are expected to grow at or above the inflation rate.

These two goals are met by using segregated funds which ensure that 100% of Audrey’s deposits go into her estate (with a 100% death benefit guarantee) regardless of stock market fluctuations. On her death, her estate will receive the current market value of her investments or her total contributions less redemptions, whichever value is higher.

This strategy provides Audrey peace of mind that short-term stock market volatility will not erode the value of her investments for her estate.

Audrey’s near-term income requirements are secured by a strategy known as a cash wedge, which sets aside the next 18-24 months of her income needs in a high-interest savings account. By securing up to two years of Audrey’s income needs, Midori and Audrey can choose the best time to take more funds from the portfolio as needed.

Next Steps: Continuous Review and Dialogue

With Midori’s planning and advice, Audrey felt sure about her next step. Though these are significant changes, the plan allows Audrey to see her cash flow expectations and the value of her potential estate each year. Should Audrey need to increase her level of care or decrease the monthly cost of her living arrangements, Midori can help her make the necessary adjustments.

Audrey and Midori will continue to meet twice a year to review and update her plan, as they’ve done for two decades now.

Audrey’s Insight : “I couldn’t have made this significant change without Midori. I am all settled into my new apartment, and I have peace of mind that I can afford the additional costs that come along with being in a place like this – which means I can enjoy my time here.”

Midori’s Perspective : “It is a balancing act to develop a plan when you face significant changes in a short time. Retirement income planning should start early. Regular dialogue with your advisor will allow you to adapt your plan to meet life’s transitions so you can live life on your terms. That’s what I aim to provide for my clients: confidence and choice."

Connect with Midori for your retirement plan, or work with an IPC Advisor in your region.

Your Retirement Income: Too Important to Leave to Chance

Fri, 19 Nov 2021 21:37:00 GMT

In a recent survey, we found that 70% of those polled were concerned about their retirement strategy.

From generating enough income to offset healthcare expenses to managing inflationary pressures and market fluctuations, Canadians have a number of concerns when looking out over the next 15 years.

To help provide Canadians with a greater sense of certainty about their retirement plans , we’re highlighting the benefits of professional financial advice. With challenges ranging from historically low -interest rates to inflation and market volatility, determining how to maximize your retirement income in the safest, most effective, and tax-efficient way possible in today’s economy requires an experienced hand and a personalized plan.

Your retirement is too important to leave to chance. With over 90% of survey respondents confirming that professional financial advice has had a positive impact on achieving their life goals, why not start your conversation with an advisor on how to maximize your retirement income with more confidence.

Learn more about the various factors that go into a comprehensive retirement plan in this infographic.

The Digital Tsunami - Estate Planning Advice for the Digital Age

Thu, 28 Oct 2021 15:36:00 GMT

Originally published - Hartung, Sharon. “The digital tsunami.” STEP Journal (Vol27 Iss4), p.41, May 2019.

The sudden death in 2018 of the CEO of one of Canada’s largest cryptocurrency exchanges made global news when it was alleged he had died without leaving anyone the ‘digital keys’ to the company’s cryptocurrency wallet.

It is estimated that some CAD$180 million of clients’ cryptocurrency reserves was lost.(1) Canadian regulators are now proposing regulation to deal with Canadian cryptocurrency exchanges,(2) but the events serve as a timely reminder to any practitioners involved in estate planning with regard to the proper management of digital assets.

This is a story of pre-planning best practice. Without a recovery password or adequate pre-planning, even the best tech professionals might never get into the CEO’s encrypted laptop – if, indeed, the keys are stored on it at all.(3) Then, to add insult to injury, as cryptocurrencies are both unregulated and managed by experts in a decentralised way, there is no central help desk that can help reset the password, and nor can the company’s stakeholders turn to the law for help.

There is a very real practical element to the technological management of digital assets. Without the necessary passwords, all the cybersecurity measures put in place during a client’s lifetime will act as barriers imposed on the executor. Practitioners might be best advised to approach pre-planning of significant digital assets by assuming that passwords will not be available for whatever reason: legal, technical or otherwise.

In 2016, the Uniform Law Conference of Canada published its model legislation, the Uniform Access to Digital Assets by Fiduciaries Act.(5) Its aim is to clarify the position of the fiduciary with respect to digital assets in Canada by codifying the ‘colour of right’ of the fiduciary to access a deceased person’s digital assets. However, progress has been slow and, at the time of writing, no Canadian province or territory has formally adopted this law in its own provincial estate legislation.

Practical Tips

By now, most readers will be familiar with the comprehensive definition of a ‘digital asset’ provided by STEP in its guide for the public (6) on the topic, which sets out that a digital asset has many of the same characteristics as physical assets and property, such as financial and sentimental value.

A client may have wishes, preferences and intentions not just for their physical assets, but for their growing inventory of digital assets too, which could include family photos, parked web domains or loyalty points. The following are four key tips that practitioners should consider when faced with planning that involves a client’s digital assets.

Learn About the Client's 'Digital Life'

Ask your client if they use email or social media, and how they share family photos. Look for digital assets of both financial and sentimental value. Encourage them to identify their top three digital assets that would have the greatest impact if they were lost or inaccessible.

Differentiating Between Digital Assets

Explore how the client is using those three key digital assets and research their associated licensing agreements or terms of service (if they exist), as well as any pre-planning options that the service provider offers. If pre-planning is not offered, ask what paperwork the fiduciary will have to provide.

Seek Appropriate Advice

A legal advisor can advise a client on how to capture wishes and preferences about those digital assets (e.g. jurisdictional laws, fiduciary access and will inserts or clauses). For complex or cross-border digital estates, practitioners are advised to seek specialist advisors such as technical, tax, cross-border or local experts as appropriate. Remember, even if the tech experts are on the fiduciary’s side, due to jurisdiction-specific fiduciary access laws, they might not be legally authorized to access digital assets, even if they hold the passwords.(7)

Discuss Tech Management Strategies with the Client

Encourage the client to consider user or technology management steps. These include documenting, testing or transferring digital assets before incapacity or death, and identifying and mitigating other risks that might prevent the fiduciary from carrying out their wishes.

Including an insert or clause to address the inclusion of digital assets in a will is a good first step, but it is not on its own sufficient estate planning for digital assets.

Conclusion

With ever-increasing numbers of people holding digital assets, a digital assets ‘tsunami’ is coming, and practitioners must be prepared. The recent events discussed at the beginning of this article may be used to encourage clients to think practically about the management of their digital estate. In addition, practitioners in Canada and elsewhere must pay close attention to jurisdiction-specific legal and tax developments.

cnn.it/2Gt34Bt
tgam.ca/2Y10oBu
bit.ly/2XWO5Gl
bit.ly/2T7THd9
bit.ly/2vyGIXG
bit.ly/2I3Dgh7 ; SIG members can also view a guide for practitioners via the SIG Member Portal at www.step.org/digital-assets-global-special-interest-group
See Kathleen Cunningham and Shelley Rhoads Perry, ‘Access All Areas?’, STEP Journal (Vol26 Iss4), pp.48–49

Why Partnering with the Right Dealer Matters

Wed, 28 Jul 2021 17:56:00 GMT

I recently sat down Chris Reynolds, Executive Chair, for an in-depth discussion on why partnering with the right dealer matters.

We explored how Advisors can remain relevant in the ever-evolving financial industry by considering three key questions:

What are the three things senior Advisors should be looking for in a dealer?
Is it easy for Advisors to change dealers?
Why should senior financial Advisors consider joining IPC?

Advisors should always be paying close attention to the kind of culture, tools and technology, and financial rewards their organization offers. If they are considering changing dealers, Chris encourages them to focus on how rewarding the change will be, instead of on how challenging it could be.

In addition, we tackle the aging advisor populations’ biggest concern – Who will take over their business? –and how IPC’s succession program makes that transition good for both the Advisor and their clients.

Listen in as Chris and I discuss how you can ensure that your dealership is best designed to benefit you, and your clients.

The Importance of Estate Planning

Mon, 14 Jun 2021 19:14:00 GMT

Estate planning is all about protecting your loved ones by planning a smooth transfer of your assets to your heirs.

It’s about giving you peace of mind knowing your heirs are protected and will receive the legacy you intended for them.

Although estate plans are customized, depending on unique personal circumstances, the main benefits of implementing an estate strategy are basically the same. Specific estate planning needs are determined by your age, relationship, family status, and, of course, your accumulated assets, even if these are minimum at present.

The point is that estate planning can help everyone achieve these common goals:

Manage your legacy.
Avoid or minimize family disagreements.
Ensure a smooth wealth transfer.

Learn more about the What, Why, Who and How of Estate Planning in this infographic.

Growth or Value Investing – What’s the Difference?

Tue, 08 Jun 2021 21:05:00 GMT

Growth and value refer to two popular investment methodologies – or styles – that investors employ when selecting stocks.

If you’ve been reading the financial press, you’ve likely read about a shift in sentiment within global equity markets. Financial commentators are noting how investors are selling growth-oriented equities in favour of value-oriented stocks since the announcement of a successful vaccine. What makes this change noteworthy is that value stocks have been out of favour for over a decade as growth equities led the way.

For those unfamiliar with the terms “growth” and “value” and how they apply to stock investing, you may be wondering what this shift means and how it might affect your investments. Growth and value refer to two popular investment methodologies – or styles – that investors employ when selecting stocks. A deeper understanding of these investment styles can give you some insight into what’s driving stock markets and what investment managers consider when selecting stocks for your portfolio.

Value vs. Growth - Two investing styles explained

Growth-Style Investing

Portfolio managers invest in stocks of fast-growing companies – where the company’s revenue and earnings potential tends to be stronger than other companies in their sector or even the rest of the market. Think Amazon, Facebook, or Google (Alphabet) and, these days, Zoom.

Value-Style Investing

Portfolio managers invest in companies trading for less than the true worth of the business. Value companies are still growing their business, and the underlying fundamentals are strong. However, they might be selling for less than their true value because the market is underpricing them for some reason. As such, investors underestimate its long-term return potential. So, value investors essentially buy into companies they consider “on sale.” Think Coca-Cola, or Macy’s.

The pros and cons of each investing style

Growth-Style Investing

Pros:

Invest in great companies that are growing fast and generating stronger than market returns
Opportunity to invest in exciting new companies, such as technology innovators or those that are rapidly driving changes in consumer behaviour
Can benefit from companies that have made a positive change in their business strategy or their leadership

Cons:

Equity prices can be volatile as risks tend to be higher
Expected price gains may not materialize if growth expectations don’t pan out or business fundamentals suddenly change

Value-Style Investing

Pros:

Invest in great companies for less than its real value
Ignores market noise – focuses on fundamental value and long-term prospects of a business
Can experience steady, consistent gains in the long run
Short-term price volatility is not a cause for concern as long as a company’s business fundamentals are strong
Often can earn dividends

Cons:

Requires long-term patience to benefit from price gains
Price gains may not meet long-term expectations
Hard to tell if a falling price trend will continue

Which is better – growth or value?

So how do you decide which investment style is best for you? Understanding how each investment style has performed over time can help. More than that, however, discovering why it can be beneficial to integrate both styles into your long-term investment strategy can not only help you stay invested it can also help smooth out your investment returns over time. Illustration 1 shows how stocks that conform to either a growth or value orientation have performed since 1987. It shows that there are extended periods when one style outperformed the other. While there can be many reasons for this, the key takeaway is that it can be challenging to predict when market sentiment will shift from growth to value and back again.

Growth and Value – A history of changing leadership

Take 2020, for example. Few could have predicted the emergence of the COVID-19 virus and how it would affect the global economy. When news spread that the virus had become a global pandemic, stocks suffered considerable losses as investors turned to protect capital. Investors quickly found their footing and began investing in stocks of companies like Zoom Video, Amazon, and Netflix that were benefitting due to changes in consumer behaviour. The result was that 2020 was a good year for select growth stocks, an outcome few could have predicted at the beginning of the year.

In late 2020, market sentiment shifted to favour stocks with a value orientation. The driving force behind this change was news on vaccine development. Forward-looking investors realized that the end of the pandemic was on the horizon and bought companies whose share prices would benefit from the re-opening of the economy when growth would be abundant. The result was that the performance of value-oriented equities surpassed growth equities in February of 2021 for the best relative showing in any month since 2001. [1]

This example illustrates just how difficult it can be to time the market. No one could have foreseen the emergence of COVID-19 virus and the economic havoc it would cause, nor could they have predicted the record-setting pace of vaccine development that followed. This inability to accurately predict changes in market sentiment is the primary reason why many professional investors recommend a style-neutral approach to equity investing.

Why choose to invest in both (the neutral approach)?

There are several reasons why we recommend a style neutral approach to equity investing:

Just as it’s impossible to time the asset class that will outperform in any given year, we believe it’s impossible to time the markets for style outperformance.
It improves the overall diversification strategy for a portfolio.
Investors who attain consistent returns tend to stay invested over time.

To illustrate the benefits of a style-neutral approach, Table 1 compares the performance of three indices: the Russell 1000 Growth, Russell 1000 Value, and a 50/50 blend of both over recent periods. If you were invested exclusively in value stocks, there would be years where you would have been deeply disappointed by your returns relative to that of a growth-oriented investor.

Source: Morningstar Direct as of April 30, 2021.

When we look at the performance of the style neutral 50/50 approach, we see how it provided a more consistent and competitive rate of return. We know from experience that investors who earn consistent rates of return tend to stay invested and benefit from market growth. Diversifying by investment style allows you to avoid the pitfalls and potential frustration of guessing which style will outperform in the future while ensuring a smoother, less volatile path to achieving your financial goals.

How to choose a Value or Growth Investing Approach

Whether you decide to take a more style-neutral approach to investing or favour a growth or value-oriented style will likely depend on your financial goals and investment philosophy.

We’re here to walk you through the strategies that best align to your needs and objectives, including your investment horizon and tolerance for market volatility.

[1] Source: Forbes. Growth Stocks Vs. Value Stocks: The Untold Reality. Robert Zucarro, April 26, 2021.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of June 8, 2021 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Protecting Your Children from Affluenza

Mon, 31 May 2021 16:13:00 GMT

How much should we support our children financially?

Imagine an affluent couple whose wealth is self-made after decades of hard work and disciplined financial planning. They have a child who’s 18. Now, the couple is giving serious thought to the handing down of wealth.

How much should we support our children financially over the next 10 years? Over the next 20 years? How large should we make the inheritance in the will? For many parents, answers to questions like these involve the issue of “affluenza.” The concern is that a child who receives great wealth with ease may also inherit a lack of drive and wander through life with a sense of entitlement.

There’s no magic solution, and certainly not one that works for every family. Not only do parents’ beliefs about how to share wealth come in all stripes, our children have varying degrees of motivation and financial responsibility. A lump sum inheritance could be given to one adult child who mismanages the money and fails to realize personal success, while another child becomes the founder of a thriving business, a philanthropist and positive contributor to society.

Here are three tiered approaches to distribute wealth sparingly, generously and gradually – all designed to avoid affluenza. As you read them, think (as objectively as possible) about which would suit your family best.

Limiting support

On the tough love end of the spectrum are affluent families who make the adult child work for almost every dollar in their bank account. No hand-outs, no affluenza. This approach requires solid communication and an understanding child – or you risk resentment. Exceptions may be made to help fund major life events like education, a wedding and the down payment on a first home.

Giving generously

You may feel confident about being generous with family wealth if you’ve taught your children to manage money responsibly. Take university years as an example. You tighten the controls on the Bank of Mom and Dad so your son or daughter learns to budget and manage finances. After each school year, you encourage them to spend summers working or interning, not taking time off. Come graduation, while many peers pay off loans, your kids have learned the value of saving and investing.

Even with this approach, if affluenza is a concern, you may not wish to be overly generous. As American investor, business magnate and philanthropist Warren Buffet famously said: “I believe in giving my kids enough so they can do anything, but not so much that they can do nothing.”

Sharing wealth gradually

If you give wealth in instalments over your lifetime, your child will have financial support to help achieve life goals without the possibility of misspending a large lump sum or losing motivation. And you can establish a testamentary trust to continue distributing assets in instalments over time, after you pass away.

Ultimately, if affluenza may be an issue, you need to find an approach that’s true to your beliefs and suits your children’s degree of financial responsibility. We can work with you to find your opportunities while living, and leaving an inheritance through or outside of your estate.

How Can You Benefit from a Concentrated Portfolio?

Mon, 17 May 2021 20:50:00 GMT

Don’t put all your eggs in one basket. It’s a common expression and a sound principle that can help mitigate risk when investing in financial markets. Yet how many baskets do you actually need?

What is a Concentrated Portfolio?

A concentrated portfolio is an investment approach that focuses on a professional portfolio manager’s short-list of their best ‘high conviction’ ideas. In other words, it involves putting your eggs in a small number of the best baskets available. This strategy aims to achieve diversification benefits while concentrating on fewer, but carefully selected, investments.

Many affluent Canadians are already taking this approach, so let’s examine how you can benefit from a concentrated portfolio.

Why is diversification important for your investments?

Diversification typically refers to the strategies investors employ to reduce the risks associated with investing in a single security.

In the case of investment in equities, investors tend to spread their capital across different companies, economic sectors, and geographical regions to mitigate the impact of a loss to the portfolio if one of the underlying companies fails to meet expectations.

If your portfolio includes securities with low correlation between how they each perform, it will tend to provide you with a smoother ride and help you remain on track towards achieving your financial goals.

Is it possible to be too diversified?

The short answer is yes. The simple act of spreading your investment across too many options and without an appropriate strategy can be inefficient and even undermine your long-term returns.

Studies have shown that additional diversification, when carried out carelessly, provides little to no benefit to the average investor past a certain point, and it may even dilute investment returns over time.

Many investors assume that adding more and more stocks to a portfolio alone can help reduce investment risk. Yet studies show that once you have an appropriate set of stocks in a given mandate, you gain little in the way of additional benefits from added diversification 1 .

There are several potential downsides to being over-diversified, including:

Overlapping objectives . Investing in portfolios containing hundreds of individual securities with the aim of diversifying can be counterproductive if their investment objectives overlap.
Higher cost . Investing in more than one mutual fund with a similar mandate can needlessly increase investment costs.
Increased complexity . Exposure to thousands of underlying securities offers little in the way of additional diversification benefits while potentially increasing complexity and diluting your investment returns.

Why concentrated diversification works

Professional portfolio managers are often specialists in a specific style of investing and use their considerable skills and research to invest in a shortlist of stocks in which they have high levels of confidence.

Investors with smaller accounts typically do not have access to this high-conviction portfolio strategy, which may have only 25–30 stocks chosen from a universe of thousands of options.

Studies prove 1 that despite investing in a small selection of stocks this way, effective portfolio diversification can still be achieved since the individual securities can be diversified by economic sector, geographic region, investment style and market capitalization – all of which are critical components of a fully diversified investment strategy.

This approach offers two key benefits:

Transparency - A concentrated approach helps to make a portfolio more understandable and less of a ‘black box’ with the investor uncertain about which companies they hold.
Simplification - A portfolio with many moving parts and complex or overlapping strategies can leave investors unsure of which investments are contributing or detracting from the overall performance.

This same approach can also be applied to fixed-income investing. Rather than investing in hundreds or even thousands of bonds, affluent investors take a more concentrated approach, investing in a shortlist of carefully selected bonds with rolling maturities. A professional manager oversees this bond ladder approach, which can help offset the negative effects of rising interest rates while protecting capital over time.

Is a concentrated portfolio right for you?

The choice of whether to invest with a broad diversification approach or a more concentrated approach is a personal one that should be based on your preferences, comfort level, and financial objectives.

If your current portfolio holds multiple investment solutions and you’re unsure how they complement each other to help achieve your financial goals, perhaps it’s time to ask for a comprehensive portfolio review. We can determine if you may benefit from a concentrated approach with increased clarity regarding the individual holdings 2 .

When investing, you never want to put all your eggs in one basket. Yet sometimes all you need is a few of the best baskets to achieve your investment goals and have a more rewarding experience doing so.

[1] Journal of Financial and Quantitative Analysis; Meir Statman,1987. Investment Analysis and Management; F. Reilly and K. Brown, 2011.
[2] If you are a seasoned investor with a larger account, be sure to discuss the advantages of taking a more concentrated approach to investing through an investment solution like IPC Private Wealth Visio Pools. Visio Pools provide access to concentrated portfolios of the best investment ideas from top-ranked asset managers carefully selected for their specific areas of expertise. The result is portfolios that are lower cost, easier to monitor and understand, and optimized to achieve your financial objectives.

Estate Planning: Protecting Your Heirs and Beneficiaries

Mon, 17 May 2021 14:07:00 GMT

Protect, build, and preserve your assets, so your loved ones will receive the legacy you intend to leave them.

Who do we make an estate plan for?

A key influence and motivating factor for many people when it comes to estate planning is the care and concern for their family and loved ones. They want to provide an enduring legacy for those they love and will leave behind. In this portion of our estate planning series, we will provide you with strategies that specifically serve to protect the people your estate plan is for, your heirs and yourself.

Finding true peace of mind

Estate planning is not often something that gets top priority on our to-do lists, but the people we are ultimately doing it for, are a top priority, which is why it is important to change this mindset. A little time invested now can prevent costly legal and financial troubles later, not to mention the more people-related issues not having a plan can create. Estate planning is really “people planning.” This article highlights the various tools available to you that will help you protect, build, and preserve your assets, so your heirs will receive the legacy you intend to leave them.

The first person to protect is you

You are your own best asset. You’re the one who built and continues to build on the assets that make up your estate, and with the careful guidance and expertise of an advisor, you can ensure it grows and endures. Therefore, the first line of defence for your estate is compensating for a potential loss of capacity, should you one day require long-term care, suffer from a serious illness, or pass on prematurely.

And then, of course, you’ve got heirs to protect. Legal issues, such as a contested will or the transfer of your business can also pose a significant risk on the value of your estate and leave your assets and heirs vulnerable.

It's never too early to plan your estate

No matter what stage of life you’re in, having a solid plan for your estate ensures your wishes are honoured and your beneficiaries receive the legacy you intend. Here are the 9 steps we recommend to get started:

Become better informed about what is involved in estate planning by reading articles like this.
Start the process as early as possible and avoid doing it under stressful circumstances or environments.
At the start of the planning process, talk with your family and heirs. Tell them your intentions and wishes to ensure they understand what you’re working to create. They may not know or understand your intentions and may even have information you may want to consider before you make your final plans.
Work with an experienced financial advisor who is qualified to assist with estate planning.
Have an up-to-date, properly drafted will and power of attorney in place.
Ask your advisor to introduce you to specialized accountants and lawyers as needed.
Involve your executors in your estate planning process.
Introduce your financial advisor to your heirs and executors so they can work together more easily when the time comes. It will also ensure it is not an emotional or stressful time the first time they meet.
Communicate your final estate plan to your family, heirs and executors so they understand your decisions and what has been put into place.
Update your plan regularly as your situation changes. Be sure to keep your heirs aware of any changes.

People-oriented protection strategies

There are some common strategies to consider including in your estate plan to protect both yourself and your heirs from influences that are not specifically financially based, such as health, the law, business, and family emotions and stress. Here are three to consider:

1: Insurance

There are several insurance products that can assist in protecting the value of your estate if you become ill or suffer an untimely passing. Here are three types of insurance to explore:

Critical illness coverage

Did you know that one of every two people living in Canada will develop cancer during their lifetime?(1)

Given the advance of modern medicine, 63 percent of Canadians diagnosed with cancer can expect to survive.(2) These stats highlight the importance of planning for an illness.(3) In addition to the physical and emotional strain of a critical illness, the financial impact can be enormous. We do not want to scare you, but rather inform you that health is a factor that may impact your estate.

Critical illness insurance(3) can provide you with a lump sum payment should a serious illness strike. You may want or need to use this money to offset lost income, fund out-of-country treatment, or pay down debts while you focus on getting well.

Long-term care insurance

Canadians are living longer than ever before, and there is a good chance you may require care in your later years. Whether it’s in-home or in a special facility, most provincial insurance plans cover only a portion of long-term care. A long-term care policy may assist in funding your care in your later years and assist in protecting your assets from being eroded by covering these healthcare costs.

Life insurance

A good life insurance4 policy is a critical element in all estate plans. The coverage can protect your family in the event of your passing, for example, by paying off the mortgage. But once your family is past school age and grown and you’re more established, your life insurance can transform from a tool to protect your family, to an asset in your estate. The instructions for how you may wish to have these funds used after you pass can change over time for these reasons. You may wish to direct them to a favourite charity or a specified individual.(4)

2: Legal Consultation & Documentation

Having properly drafted legal documents can ensure your wishes are carried out by your executors and heirs. Be sure you work with an experienced estate planning lawyer, who can navigate complicated issues such as family businesses and blended families. If you don’t already have a lawyer, your financial advisor may be able to connect you to the right one.

Powers of attorney

If you become unable to make decisions for yourself, who would you trust to make them on your behalf? There are two key powers of attorney(5) documents your lawyer can help you prepare:

A general power of attorney is a legal document that can give your attorney authority over all or some of your finances and property.
An enduring or continuing power of attorney is a legal document that lets your attorney continue acting for you if you become mentally incapable of managing your finances and property. It can also give your attorney authority over all or some of your finances and property.

It is important to note that each province and territory has its own laws relating to powers of attorney. We recommend you get legal advice to be sure that your document is valid based on the province you reside in, and to fully understand what abilities and power you have given your power of attorney. Preparing now can save you and your family the emotional stress and potential conflict of having to make decisions about your finances and care if your wishes are not known or can no longer be communicated.

Your will

A carefully drafted will(6) is a legal document which outlines how you want your estate to be divided after your passing. It sets out precise instructions which will help your estate representative deal with your estate when the time comes. You’re not legally required to prepare a will. However, if you don’t have a will, the laws in your province or territory will determine how your estate is divided. Provinces and territories set the laws for estates.

The right executor

Being an executor(7) can be a large, complex job. As you think about who you want to take on the job, consider who will ensure the instructions in your will are carried out, it’s important to remember it requires time and expertise to manage an estate properly. While some people appoint a family member, others choose to work with professionals who have both the experience and perspective to execute larger, more complex estates. A financial advisor can work with you in selecting the right executor to meet your situation and will support your executor when the time comes.

A marriage contract

If you’re planning to marry (or remarry), it’s important to understand how this can affect your estate. In some cases, for example, the validity of your previously signed wills could be impacted due to your marital status. That’s why a marriage contract(8) is a good idea if you or your spouse are bringing significant assets into the marriage.

With a contract that clearly states how you will divide your assets if the marriage breaks down, or how your assets will be handled if you pass on, your estate value is protected, and your wishes can be honoured.

3: Business Succession Plan

You’ve worked hard to build your business so if you intend to pass it on, you will need a plan(9) in place to ensure the value of the business survives the change in ownership. For this, you will need to work with a financial advisor, specialized consultants and accountants depending on your business type, how established and stable the business is, and the overall size of your business.

Your financial advisor can help you understand these strategies in more detail and suggest other ways to protect and preserve the value of your assets.

Speak to us today about how we can help you understand, select, and combine the strategies available that will work best to protect you and the people you care for.

Sources:

1. Canadian Cancer Society, Canadian Cancer Statistics, 2014

2. Canadian Cancer Society Advisory Committee on Cancer Statistics, 2014

5. What every older Canadian should know about: Powers of attorney (for financial matters and property) and joint bank accounts, Government of Canada Website, Updated Oct 2016

6. Making a will and planning your estate, Government of Canada Website, Updated June 2018

7. Ontario Estate Law: Executor Duties, Ontario Probate Website, Updated 2018

8. What is a prenup or a marriage contract?, Steps to Justice Website, Reviewed July

Additional Resources:

Wealth Transfer 101: How to talk to your heirs about their inheritance, IPC Private Wealth, 2017

The Art & Science of Estate Planning: provided by Investment Planning Counsel Inc.

Prior to implementing any strategies contained in this document, Individuals should consult with a qualified Tax Advisor,

Accountant, Legal Professional, Financial Advisor or other professional to discuss the implications specific to their situation.

Estate law, including wills, powers of attorney and probate fees, vary and are governed by each provinces and/or territories.

Please review provincial laws based on where you reside.

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of May 17, 2021 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Are Your Heirs in the Dark? | Planning Heirs Financial Future

Fri, 14 May 2021 17:47:00 GMT

A lack of communication between parents and children may be leaving inheritors in the dark about their financial future, and many benefactors risk not having their wishes carried out as planned.

In a poll* among Canadians with at least $500,000 in investible assets, we found that 58% of those surveyed have not discussed instructions for their estate with their heirs.

58% of those surveyed have not discussed instructions for their estate with their heirs

A large majority have also not taken the opportunity to introduce their heirs to their financial advisor. Those who avoid or miss this important financial planning step risk not transitioning their wealth to the next generation smoothly. They also run the risk of placing their beneficiaries at a disadvantage when they fail to help them understand the value of the money they will inherit or prepare them to manage that inheritance well past the next generation.

Blended families have unique concerns

Our survey found that families who were part of a blended, non-traditional unit, have other concerns that complicate their estate planning efforts. These concerns range anywhere from “not knowing who to appoint as a beneficiary” to “not knowing how to divide their wealth fairly”.

The choice for many is to leave the conversation for later but, too often, inertia prevents these discussions from happening before it’s too late. Not addressing plans, however, can lead to misunderstandings, unpleasant surprises, possible legal complications and, in turn, family conflict in the future. Take the time to have the conversation with your heirs and help protect the sustainability of your legacy.

Read our “ Are Your Heirs in the Dark ” to learn more.

*Survey method: A total of 400 well qualified respondents across Canada were interviewed using an online methodology during the period October 17-22, 2017. Survey conducted by Environics Research.

Why Evolve Your Financial Plan as Your Wealth Increases

Wed, 05 May 2021 15:32:00 GMT

For many people saving for retirement, their financial life often looks something like this:

a portfolio that consists of traditional investments, generally fixed income and equities;
estate planning involves drafting a will and naming an executor;
charitable giving is conducted on an ad hoc basis year to year; and
a legacy for the next generation is the value of assets that happen to remain.

However, your financial life will transform as your wealth accumulates. This transformation is typically marked by a turning point – when you’ve achieved your nest egg objectives and have a lifetime of retirement income to fund your desired lifestyle.

The need for a strategic financial plan

When your net worth reaches and exceeds a level that meets your financial needs for your expected lifetime, you will require a new strategic plan. Your objectives will evolve from wealth accumulation to wealth preservation, then to drawing income, transition your wealth and planning your legacy.

So, as you move into your retirement phase, your plan should include planning for these and other aspects of wealth management to ensure your legacy remains as intact as possible when passing it on to heirs.

When your net worth reaches and exceeds a level that meets your financial needs for your expected lifetime, you will require a new strategic plan.

How does a financial plan change as wealth increases?

Your investment portfolio may change in a way that protects your assets against market volatility. When you were building your nest egg, market dips and falling prices often represented buying opportunities. But now you may need to look at investing from a more conservative perspective – the risk of down markets changes to a primary aim to preserve capital.

While you may increase your exposure to guaranteed investments such as bonds and GICs that can protect your wealth, investments such as real estate, infrastructure, private equity and other alternative investments and strategies could be added to your portfolio to help smooth overall performance.

Your goal will be to take the necessary steps to protect capital for your own needs while ensuring there is something left for your heirs after you are gone.

A strategic financial plan also allows for personalization of your wealth management strategy as your needs will evolve differently to that of the next person’s. For example, take the situation of distributing assets to the next generation.

A business owner could plan to hand over the company to a trustworthy child who is already involved in the operations of the business. In this instance, the owner’s number one goal is minimizing tax on capital gains upon transferring the business.

In another instance, an individual may plan to leave a significant portfolio of assets to a child who lacks financial responsibility. This individual’s needs are to educate their child on wealth stewardship, on the family’s wealth philosophy, or to create a trust that grants the inheritance by installments. By tailoring your plan to your personal needs and circumstances, you’ll gain the flexibility to maximize the benefits of wealth transfer when living while ensuring your heirs are taken care of after you are gone.

Philanthropy and Charitable Giving

Philanthropy may become part of a financial plan, perhaps involving a cause meaningful to the family. This endeavour also involves customization given each person’s values, ideals and preferences. The nature of their assets too can influence the ideal method of giving. Assets typically include:

Life insurance
Securities
A bequest through your will or another vehicle

Which ever option suits your situation, you can benefit from the guidance of a professional to help maximize the impact of your bequest. Another determining factor is your personal tax situation, as donation tax breaks for different methods can be applied to annual tax returns, the estate or both.

These examples are only a few ways your financial planning needs can evolve once you’ve taken care of life’s basic financial needs. In fact, new solutions are often required for virtually every component of wealth management, including investments, tax strategies, charitable giving, insurance, retirement income, estate planning and inter-generational wealth transfer.

We can help you to find out whether your turning point is approaching or has arrived and personalize the next level of your strategic wealth management plan.

Understanding Your Investment Performance

Tue, 27 Apr 2021 21:23:00 GMT

Timing can be everything, especially in investing.

The timing and size of your deposits and withdrawals can also influence your investment outcomes. To better understand how your investment returns are calculated and how your portfolio is tracking towards your investment goals, it is important to know the different ways your returns can be measured.

It is important to know the different ways your returns can be measured

This infographic explains the differences between time-weighted and money-weighted returns , so you can be more informed about your investments.

Business Continuity Planning – What It Is and Why It’s a Must for Advisors

Tue, 30 Mar 2021 15:14:00 GMT

Your business might need to suddenly respond to an unanticipated change

While the global COVID-19 pandemic provides a striking example of how business conditions can shift dramatically, it's not the only example of why your business might need to suddenly respond to an unanticipated change.

In this video, EVP Sam Febbraro chats with John Novachis, EVP Corporate Development to review the importance of business continuity planning for financial advisors.

As John explains, a business continuity plan is a documented plan and set of practices that gets executed to ensure your business will continue to run as smoothly as possibly when an unforeseen event occurs – whether that’s a sudden death, disability or incapacitation of a business owner.

Listen along as Sam and John discuss the steps you can take to make sure your business is protected from events you don’t expect.

5 Things You Can Do To Sleep Better

Wed, 24 Mar 2021 16:19:00 GMT

Many people are juggling busy lives, from work to child care and everything in between. To get through your daily to-do list, are you sacrificing sleep? You shouldn’t.

Since childhood, we’ve been told a good night’s sleep is important. Knowing the importance of sleep and actually making time for it are two different matters. It might be tempting to trade off some sleep time in order to get more things done, or to rely on a cup (or more) of coffee to keep you going when sleep deprived.

However, as the medical community conducts more research into the science of sleep, they are finding out just how crucial it is to our mental and physical wellbeing to get enough sleep.

Not only do you need enough hours of sleep each night, but you also need sound sleep instead of a restless type of sleep.

As you continue navigating the many challenges caused by the pandemic, increased stress may be one of the factors disrupting the quality of your sleep.

Are you sleeping enough?

Before we look at some of the drawbacks of not getting enough sleep, let’s consider what “enough sleep” means. As you might expect, there’s no magic number of hours that satisfy the requirement for adequate sleep. Everyone has their own body clock and personal sleep needs, but in general it’s recommended that adults should aim for seven to nine hours per day as part of good sleep hygiene.

Adults should aim for seven to nine hours per day as part of good sleep hygiene

If roughly eight hours a night sounds unattainable to you, maybe you’ll commit to getting more sleep when you discover how a sleep deficit interferes with your health.

Common consequences of insufficient sleep

Despite best intentions, few people get the right amount of sleep every night. It’s not a concern if you miss out on a few hours of sleep from time to time, but when sleep deprivation becomes habitual, you put yourself at risk of certain ailments and conditions. According to Healthline.com, these issues include but are not limited to the following:

Memory issues: Your brain needs adequate sleep to absorb and remember new information
Lack of focus: Your ability to concentrate, solve problems and avoid accidents relies on getting enough sleep
Moodiness: A lack of sleep may make you emotional, quick-tempered, anxious or depressed
Weakened immunity: Sleep promotes a strong immune system that can help fend off viruses
Chronic conditions: High blood pressure, diabetes, obesity and heart disease are linked to insufficient sleep

This list of ailments and conditions is not meant to stress you even more, but it’s a reminder that getting the shuteye you need is not just about having your “beauty sleep.” Without enough sleep on a regular basis, you put yourself at risk of serious health issues.

Tips on how to get quality sleep

Fortunately, there are proven ways to ensure you can enjoy a better night’s sleep that will leave you feeling refreshed, energetic and ready to tackle the day’s challenges.

The U.S. Centers for Disease Control and Prevention offer five sleep hygiene tips:

To establish your circadian rhythm , which regulates your sleep-wake cycle, try going to bed at roughly the same time each night (including weekends, if possible) and wake up around the same time each morning.
Minimize the use of electronic devices as you prepare for bedtime. Many people watch TV or spend time on their phone/tablet in bed. Not only may this practice overstimulate your mind and keep you awake, but blue light emitted from electronic devices may disrupt your sleep
Keep your bedroom quiet, relaxing and as dark as possible Also maintain a comfortable bedroom temperature (cool is usually better for sleeping), as sleep is difficult when it’s too hot or cold
Avoid large meals and caffeine or alcohol before bedtime, as you’ll be taxing your body to digest and process food and drink instead of letting your body focus on sleep
Be physically active and exercise during the day, but strive to curtail your activities within a few hours before going to bed. Being active in the daytime can help you fall asleep more easily and deeply at night

Sources:

https://www.healthline.com/health/sleep-deprivation/effects-on-body

https://www.cdc.gov/sleep/about_sleep/sleep_hygiene.html

Spotlight on Personalized Advice | Financial Solutions

Wed, 10 Mar 2021 20:31:00 GMT

A majority of Canadians believe that financial advisors have a positive impact on their lives, their families, and their futures.

During these uncertain times, investors are looking to financial experts for guidance to help them make the right decisions or get answers to tough financial questions.

In our study, we found that:

93% of Canadians indicated they want to work with someone who knows their personal situation.

If you’re ready for financial advice with a human touch, our E-Book highlights the tangible benefits of personalized advice and how investors can benefit from the meaningful relationships they develop with their advisors.

Is a Portfolio Service Right for You?

Wed, 24 Feb 2021 20:40:00 GMT

We often get asked if a portfolio service is the right choice for an investor.

The answer to this question depends on your desired approach to managing your investments.

If you want to manage portfolios personally or buy and sell securities directly on a DIY platform, then Investment Planning Counsel is not for you. Similarly, if you prefer to define your own asset allocation strategy, make strategy changes or select and monitor managers, we are not a service that will work for you.

In contrast, if you choose to work with a financial advisor – an IPC Advisor in this instance – Investment Planning Counsel may be right for you.

We partner with IPC Advisors to customize investment solutions to meet the specific investment needs, wants and preferences of investors.

Your Advisor will work with you to define your strategy and determine the target return you will need to achieve your goals. They will help keep you on track to your goals and make adjustments to your investment strategy as your personal and life circumstances change.

We will help define your asset allocation strategy as well as research, select and monitor investment specialists.

We will also adjust your portfolio’s allocation as needed and implement the necessary risk management strategies.

Working with an IPC Advisor does not tie you to investing with Counsel Portfolios. Although we partner exclusively with IPC Advisors, our Advisors are free to work with any financial institution they choose. We call it independence.

Our Advisors have total discretion in their choice of partner. They can choose to work with Counsel Portfolios or not, depending on the needs of their clients. Unlike direct sales institutions, such as banks, we have no sales quotas or added compensation incentives (direct or indirect) for Advisors who work with Counsel Portfolios.

Disclaimers:

Choosing a Portfolio Manager: What Should You Consider?

Wed, 24 Feb 2021 20:36:00 GMT

Choosing the right provider for a portfolio service is one of the most important decisions you can make for your investment strategy.

Not all portfolio management service providers are created equal, and some may meet your needs more effectively than others.

Some factors to consider when choosing a portfolio service provider are their portfolio construction process, investment philosophy, investment manager selection, and investment costs. Here are a series of questions to ask a prospective provider.

The number of “Yes or No” answers you get does not suggest if one approach is better than the other. What matters is that you understand your portfolio manager’s process to know if it fits your preferences.

Portfolio Construction Process

Ask if they:

Use a systemized process to design, build and monitor portfolios and if they ensure portfolios are well-optimized at all times
Automatically rebalance portfolios at regular intervals to ensure you maintain your asset allocation strategy and your portfolio stays aligned to your objectives
Have a static asset allocation strategy (i.e. set at 60% equities and 40% bonds)
Research market trends continuously and can adjust your asset allocation structure to take advantage of new opportunities or trends in the market
Build portfolios using a range of investment strategies (e.g. equities, fixed income, alternatives, risk management, etc.)
Use a range of investment structures (e.g. ETFs, pools, separately managed accounts)
Use an 'active-only' security selection strategy
Build portfolios using index-linked strategies only
Invest using Environmental, Social and Governance (ESG) principles

Investment Philosophy

Ask if they:

Are impartial in their investment style and philosophy
Have a specific investment niche or focus to their investment style (e.g. value-biased; growth-biased; hedge funds only; real estate only, etc.)
Portfolios to specific target range of returns to help you achieve your goals (i.e. do they focus on you and your needs)
Manage returns to a peer group or category
Build diversified portfolios with multiple strategies and multiple managers within a single easy to use solution

Investment Manager Selection

Ask if they:

Have an objective and disciplined process for the selection and appointment of investment managers
Hire all their investment managers in-house
Use independent investment managers
Can terminate a manager from a portfolio if that manager no longer meets the objectives of the portfolio
Combine investment management talent effectively to ensure no over- or under-exposure to any one asset class, security, geographic market or investment style

Investment Costs

Ask if:

You will have to use multiple providers to meet your portfolio management needs
You've received a clear explanation of the cost structure for their portfolio management services
You understand the value you get for the costs of portfolio management
There are incentives, quotas or differences in compensation structures (direct or indirect) when an Advisor recommends a solution

Disclaimers:

Managing Burnout

Wed, 24 Feb 2021 18:52:00 GMT

In a typical year, most people live hectic lives, juggling family and work responsibilities.

During this pandemic, everything has become even more challenging.

Adapting to these overwhelming, ever-changing circumstances has tested our ability to live as normally as possible while trying to stay safe and healthy as well. Under these highly stressful conditions, it’s easy to get worn down if you’re not careful and not aware of how the pandemic is taking a toll on your mental and physical health.

Here are some common signs of burnout:

You’re working harder than ever but are less productive
Your sense of well-being is on the decline for no specific reason
You’re constantly exhausted and listless, or experience reduced mental sharpness
You lack motivation and generally feel unhappy or dissatisfied.

There are proven ways to help you bounce back from difficult times in order to carry on with day-to-day life. Nourishing your mind and replenishing your physical energy start with recovery. The two main components of recovery, according to The WiseMind Co.,* are internal and external.

Internal Recovery

To help you manage stress and enhance productivity at work, strive for 10 or 15 minutes of internal recovery, which is the restorative act of taking strategic breaks roughly every 90 minutes. The following three practices may help “recharge your batteries” during the workday:

Breathe. To help you relax and limit the impact of stress, take three slow, deep breaths when there’s a natural break in your day (e.g., between meetings, just before lunch or when transitioning from one task to another).
Move your body. Take a short walk (make it brisk if you’re able). Try stretching to alleviate some tension in your body. Any physical activity can help relieve stress and improve well-being.
Connect with nature. Immersing yourself in nature may calm your nervous system. Head outside for fresh air. Take note of the trees, flowers, and plants, or observe the birds in the sky and other creatures of nature.

External Recovery

This component refers to the restorative practices that you engage in outside of your workday. Try the following three practices whenever you have the opportunity:

Set boundaries. Create a clear divide between work and your personal life. If you’re working from home, changing your clothes, or switching off your computer and phone may symbolically indicate that you’re transitioning to personal time. By disconnecting from work, you can reconnect with yourself and what matters most to you.
Make time for … nothing. This might be difficult since society seems geared toward being constantly busy and accomplishing as much as possible. However, press the “pause button” occasionally and putter around with no specific goal in mind – or relax and do nothing at all.
Prioritize play. The WiseMind Co. believes the opposite of play is not work, but depression. Play boosts our mental health and well-being. It also frees our creativity and triggers the ability to innovate and solve problems. A playful attitude may keep you positive as well, so laugh more and stress less.

Everybody’s recovery strategy is different. You may focus more on one component of recovery over another. Similarly, within each component, certain actions may resonate more with you than others, or you may integrate actions of your own.

What’s most important is prioritizing recovery in your life instead of always trying to do too much, too fast.

Bonus Tips:

Be self-compassionate. You don’t need to be perfect and it’s okay to miss some of your goals. Give yourself permission to step back from all the demands on you and address your own needs.
Keep happiness in your life. Create a list of things you enjoy and the people you like. If you consciously make time for them, you’ll feel energized and more contented.
Seek professional help. A therapist can help you identify the causes of your burnout and provide direction on how you can successfully cope with life’s challenges.

* Source: The WiseMind Co., a mindfulness-based consulting & development firm.

Counsel Portfolios: What Makes Us Different

Thu, 18 Feb 2021 20:49:00 GMT

There are a variety of providers you can choose to work with to manage your investment portfolio.

What’s important is that you understand how that provider will help you target your returns and achieve your desired financial objectives.

Your options include banks, full-service or discount brokers, mutual fund companies, investment counsellors, or a portfolio service, which is what we are.

At Counsel Portfolios, we offer investment solutions with a comprehensive range of related portfolio management services to help you meet your long-term financial planning needs.

What makes us different from a bank or traditional fund company is our approach to managing your money.

We build portfolios by accessing a wide variety of investment vehicles and styles. We then hand-select independent (or “third-party”) asset managers to manage the money.

So, what makes independence in money management important?

By outsourcing money management to dedicated asset managers, we remain objective. That means we will seek out managers based on defined criteria and hold them accountable. If a manager is no longer suited to the objectives of a portfolio, or if they stray from their mandate’s goals, we will replace them.

There is a distinct advantage to this approach of independence in money management when compared to firms with internal money managers.

Many mainstream providers, such as banks or large mutual fund companies, hire asset managers on staff to provide security research and selection capabilities. In-house money managers tend to manage assets to a single category or style. Often, they focus on competing solely within their asset class category (e.g. global balanced, dividend or fixed income) and manage for returns to beat their peers in a given category.

How they do relative to their peer group very often determines their bonus or compensation structure - a factor that may bias a portfolio’s long-term returns potential. This approach is common in the industry.

Portfolio Services- What’s the difference?

A portfolio service, on the other hand, may hire any one of these suppliers if they are suited to any part of an overall portfolio strategy. This selection process is done following extensive research following stringent criteria.

As a portfolio service with independent money managers, we do not compensate money managers on the basis of comparative performance to their peers. Rather, the independent money managers on our roster earn a fixed percentage based on the total assets they manage for us and are held accountable for how they perform to meet the long-term objectives of your portfolio.

This approach allows us to stay focused on the needs of our investors and manage assets to achieve their goals.

So, when choosing who should manage your portfolio, take the time to understand your needs and objectives, including your investment horizon and tolerance for market volatility and the consistency of returns over time. This will help you make a choice that’s right for you.

Counsel Portfolios

Disclaimers:

Study Highlights Need for Legacy Planning

Wed, 17 Feb 2021 16:13:00 GMT

While COVID-19 has had an immediate financial impact on many Canadians, the uncertainty it has caused has left others eying their legacy.

In our study on how Canadians are responding to the pandemic, a key finding reveals that while many understand their importance,

65% or those polled have yet to complete their will or estate plan.

A similar number of Canadians have yet to discuss their estate plans with their heirs.

The good news is that Canadians understand the value of professional advice and are turning to their advisors for the comprehensive estate planning advice they need. If you’re thinking about your legacy, a transfer of wealth or how to start the conversation with your heirs, a Financial Advisor can now work with you virtually and can even host inter-generational planning conversations with entire families to help ensure the smooth transition of an estate.

If the pandemic has caused you to consider your legacy, an advisor can help you through the process and set your mind at ease.

You can learn more about some of the key trends uncovered in our study here .

Why is Succession Planning Important for Advisors?

Wed, 17 Feb 2021 15:44:00 GMT

As we kick off this video series for 2021, our EVP Sam Febbraro sat down with John Novachis, EVP Corporate Development to discuss why advisors must create a succession plan for their business – and why it needs to started sooner rather than later.

John goes on to discuss how succession planning is interconnected to your business continuity plan and your ability run the business in your absence. He also introduces the concepts of “Successor planning” and “Exit planning” and explains why these matter when planning for your succession and concludes by highlighting the one thing he believes advisors must consider when it comes to their succession.

Download the full transcript from this video.

Your Anxious Minds

Tue, 16 Feb 2021 22:19:00 GMT

The pandemic has had a significant and widespread impact on many Canadians, affecting financial, physical, and emotional wellbeing.

It’s easy to become anxious during these trying times, but anxiety is a destructive response to life’s difficulties.

People use the terms “worry,” “stress” and “anxiety” interchangeably, but there are distinctions. Worry comes about when your mind fixates on negative thoughts, potential dangers, or undesirable outcomes. “Worriers” tend to occupy their minds with new worries once an existing worry has been addressed. Meanwhile, stress is a negative physiological response to a particular trigger, such as delivering a speech or writing an exam. Signs of stress on the body include sweating, rapid heart rate, and laboured breathing.

Anxiety is a collective response to deep fear and uncertainty. Since it arises when facing both worry and stress, anxiety affects both the mind and body.

If episodes of anxiety are short-lived, they can motivate people to take action and stay safe. However, acute or chronic anxiety can be damaging as it interferes with how we think, function, and interact with the world.

Understand how you respond to anxiety

Fortunately, you can manage your anxious mind. Before we look at ways to handle anxiety, take a moment to gain awareness of how anxiety affects you. Reflect on past moments of anxiety and answer the following questions:

Do you become anxious easily or often?
Are there patterns as to what situations or events trigger your anxiety?
What are your specific mental, emotional and physical responses to anxiety?
How do you deal with anxiety? Do you know what usually works and what worsens your anxiety?

It’s important to know that everyone gets anxious sometimes – it’s human nature! Equally important is recognizing anxiety and managing it effectively.

Take control of anxiety

Here are three simple practices* to help you unwind your anxious mind and live your best life.

1. Stay in the present

Dwelling on fears, dangers and uncertainty may trigger anxiety. If you find yourself getting anxious, free your mind from this trap by focusing on the present. Let your senses take over and calm your nervous system with the “3x3” method: stop obsessing about the future, become aware of your surroundings, and note three things you see right now and three things you hear. Mindfulness exercises help you shift focus from the source of anxiety to your immediate surroundings, which may disrupt anxiety-inducing thoughts.

Another variation of mindfulness is the “5-4-3-2-1” technique. Quietly observe your surroundings. Identify five things you see, four things you physically feel, three things you hear, two things you smell, and one thing you can taste.

2. Deep breathing

We tend to breathe faster and more shallow when anxious, so take slower, deeper breaths to soothe your frazzled nervous system and relax your mind and body. Try these exercises to promote deliberate deep breathing:

5x5 deep belly breath : Inhale for a count of five. Exhale for a count of five. Do this for one minute or for as long as it takes to help
4-7-8 calming breath : Inhale for a count of four, hold for a count of seven and exhale slowly for a count of eight. Continue for four breath cycles before returning to your natural breathing rhythm

3. Savour the wins

Focusing on the negative is counterproductive and a sure way to develop an anxious mind. Gain a healthier perspective by celebrating the positives in your life. Get into the habit of recalling what went well during the day. This simple but powerful action will help shift your attitude from dreading the future to recognizing that life is going better than you feared. If you list the day’s positive moments as you’re going to bed each night, you may sleep more soundly and awaken more refreshed and optimistic, ready to tackle the day’s challenges.

If you’re interested in learning more about anxiety and how to cope with it, Anxiety Canada is a valuable online resource.

* Source: The WiseMind Co., a mindfulness-based consulting & development firm.

Creating a Detailed Succession Plan for Financial Advsiors

Wed, 27 Jan 2021 16:56:00 GMT

There are many articles and books that outline how to “launch or grow a business” but few that focus on “how to transition a business” to your kids, a loyal employee or an external buyer when the time comes to move on to the next phase of your life.

Demographics and retiring baby boomers will exponentially expand the need for this information. Now more than ever, successful business owners need guidance in creating a detailed and realistic succession plan.

While many financial advisors find themselves leading this process with their business owner clients, many do not have a succession plan of their own in place. There are four common questions that come to mind when embarking on this critical task. They include:

What do I need to consider when creating my succession plan?
When is the right time to put a succession plan in place?
Who would make a good candidate to take over the business?
How can I get started with this process?

Let’s explore each of these questions in more detail.

1. What do I need to consider when creating my succession plan?

To create a succession plan, independent financial advisors need to first define the type of business they’re running. More specifically, they need to determine if they’re operating a business that’s more self-sustaining, with well-defined processes and structures, or one that’s highly dependent on the individual owner for success.

The challenge most financial advisors discover when it comes to planning for succession is that they often fall into the latter category, where their practice revolves exclusively around themselves. This makes the succession process that much more difficult as there is no natural successor to take over the business. This scenario often diminishes the overall value of the business as well.

“Ultimately, your success is measured not by how well you run the business, but by how well the business runs without you.”

John H. Brown

If you’re in this particular situation and are just starting the planning process, your first step should be to decide whether you would prefer to transition your business to a partner advisor (if you have a partnership), a junior associate you’ve trained (this might be one of your children or an employee) or sell it to an external party. Once you’ve determined your preference for this critical step, you can then begin developing a more detailed and formal succession plan.

Advisors who have already been through the succession planning process will attest to the fact that there are many factors to consider, and that many of these should be implemented sooner than later. As a business owner, there are many things you should plan for when setting up your business that will facilitate an easier transition for your successor, as well as derive maximum financial value for your business. These would include:

Outsourcing non-core services to key strategic partners.
Delegating administrative functions to specific team member(s).
Systemizing your wealth management process, including your ongoing communication and investment management services so that a senior financial advisor or associate can execute it with your clients and prospects.

2. When is the right time to put a succession plan in place?

Succession planning is not something to only consider when you’re approaching retirement. Instead, it should be part of your formal business plan. This is particularly true given your obligation to ensure your clients continue to receive advice and guidance in the event of your sudden illness, disability, death or other incidents that impair your ability to manage your clients.

The rule of thumb when it comes to succession planning is that Advisors should start the formal planning process at least five to ten years prior to their preferred retirement or exit date. This timeline should give you sufficient time to plan and execute the necessary steps to exit your business in a timely, efficient and financially viable manner.

3. Who would make a good candidate to take over the business?

Choosing a successor to take over your business can be a difficult decision. Should you consider one or more of your children who have expressed an interest in joining the business? Is it best to consider an existing employee or a third party? All of these considerations come with pros and cons.

If you’re considering handing down your business to your children, then this conversation should ideally start when they’re teenagers. This will give them an opportunity to more formally explore the business as a potential career option. At this point, it’s also important for your children to think about why they’re interested in joining the business and in having a career as a financial advisor.

Your kids may want the challenge of taking over your business and becoming an entrepreneur. Others would instead prefer the option of simply being employees in the company with a regular pay cheque rather than having the burden of being the owner. It’s also possible they would want to inherit your legacy as a monetary value while pursuing their own career aspirations. As IPC Advisor, Kevin Dunphy often tells us, when thinking about your child as a successor, it’s important to ask: Are your children up for the challenge and interested in taking charge of your business? Do they have the passion and desire to drive it forward while taking care of the valued clients you’ve nurtured for years?

“Cheque or challenge… what does the next generation want?”

Kevin Dunphy, IPC Advisor

Your children should follow their own passions and dreams. If this leads to a role as a financial advisor, then great! If not, then that’s fine too. Regardless, it’s best to know their preferences and intentions well in advance.

If your kids decide to enter the industry and become a financial advisor in whatever capacity, encourage them to get their initial work experience elsewhere after completing their formal education. This will provide them with an unbiased perspective on this career path while also giving them a fresh perspective that will add value if and when they’re ready to join your business.

The dialogue with your next generation should always be open and honest. The sooner you start the conversation, the better positioned you will be to explore alternative options where necessary to determine who should succeed you in the business.

Conversely, you may find yourself considering an employee or an external third party to be the ideal successor for the business. In these cases, it’s imperative both of you share the same values and beliefs. We will elaborate on these options in future blog posts.

Whichever route you choose to take, the ideal candidate needs to have the right mindset, skill set and experience to meet, and more importantly exceed your clients’ needs and expectations.

4. How can I get started with this process?

Succession planning is about finding the right approach that will create a seamless transition to an appropriate successor while fully addressing the needs of the families and businesses you serve. Your succession plan also needs to protect and preserve the value and reputation your business has established.

Here is a short list of the tactics to consider in your succession plan:

Start now . Succession planning should start at least 5 to 10 years before you’re ready to leave the business. The sooner you start the better!
Create a plan . Ensure you document the critical steps in this process with specific timelines and owners for each one. This is a living, breathing document that can evolve and transform over time as the business matures and your circumstances change.
Identify a candidate(s) . Consider all possible candidates, including your kids. In the case of the latter, ensure there is genuine interest that’s not solely motivated by a pay cheque but instead by the challenge and passion for this role and to be an entrepreneur.
Put business systems in place now . The more the business can run without you, the more attractive it will be to a potential buyer or successor, making the transition that much easier.
Increase the business’ equity value . Business owners should always be looking for ways to continuously improve the value of their business. Be bold and don’t be afraid to take calculated risks where necessary.

You can start the succession planning process by taking an inventory of what you’ve done to date and what you still need to do. Remember that this is your legacy; your succession plan cannot be an afterthought. When in doubt, the ultimate guiding principle should always be to put the interests of your clients’ and their families first in any and all decisions that may impact their future.

Start the conversation today by reaching out to us to learn how we guide and support you in developing a succession plan that’s right for you and your business.

Financial Planning for the Unexpected (and Expected)

Tue, 12 Jan 2021 21:48:00 GMT

COVID-19 forced most of us to adapt to new realities by revisiting our daily habits and financial priorities.

For some, this meant tightening budgets or postponing big-ticket purchases. For others, the pandemic triggered the need to revisit estate plans or, at the very least, update wills.

As we step into 2021 and set new financial goals, we asked our advisors for recommendations to best prepare for both the expected and unexpected when planning their financial future. We share their top three recommendations.

#1: Align Your Plan and Strategy with Intended Outcomes

The pandemic affected people differently. While some families’ finances were only minimally impacted, others faced significant challenges. It’s no surprise, then, that since the beginning of the pandemic:

One in three investors increased their frequency of communication with their advisor.

Meanwhile 74% agreed that they’ll need to continue seeking advice to be financially successful in the future.

The varying effects of COVID-19 underscore the importance of tailored advice. For example, while the state of the markets may concern you if you’re relying on your investments for income, if you’re one who’s saving for retirement, market downturns can also provide the opportunity for growth.

One advisor shared a story of a new client who – prior to the start of the pandemic – had wanted to ensure his portfolio was set up to produce the long-term outcomes he was looking for. As it turned out, the advisor uncovered, his investments were mismatched to his age, tolerance for risk and, ultimately, not optimized to achieve his intended outcomes.

The advisor recommended changing the portfolio’s allocation to increase risk to capture the higher returns expected from investing in equities over the long-term. When the markets dropped in the early days of the pandemic, the advisor tactically took advantage of the opportunity to move the client’s funds into equities more quickly than initially planned, providing a boost to the portfolio’s performance from buying equities at lower prices.

Working with your advisor to fully articulate your objectives and understand your opportunities can help you move forward with your investment strategy more effectively.

#2: Get Real Time Advice for Critical Life Moments

The value of having a strong relationship with your advisor becomes most apparent when your life, and not the markets, changes unexpectedly. That’s why the detailed information advisors gather about you and your family when developing your comprehensive financial plan is so important.

Whether you’re planning to buy your first house or “moving up” from an existing home, saving for a child’s education, or planning for major goals like buying a second property, choosing your retirement date, or preparing your next of kin to inherit from you, an advisor can provide real-time advice to meet the financial challenges you encounter along the way.

For example, when an advisor works closely with both partners in a relationship to create a financial plan, managing one’s finances becomes far less stressful if one member of the couple becomes ill or passes away. Close communication, coupled with in-depth planning, means that when clients are faced with unexpected challenges – such as the death of a partner - they can “know with confidence” what will happen next. As one advisor explained,

“We make sure we know exactly what you want to happen when things go wrong so you don’t need to make decisions when you’re under duress and grieving.”

Including the extended family in estate planning can help to ensure the final wishes are known and executed when the time comes.

We found only 35% of people we polled were “completely prepared” when it came to estate planning. This finding suggests there’s a large gap to be closed to help Canadians prepare their next generation to inherit their wealth.

The pandemic has propelled advisors and their clients to take advantage of technology to increase their communication frequency and efficacy while also making it more convenient to facilitate estate planning conversations with family members who are separated geographically. This enhanced communication, paired with a focus on in-depth financial planning means advisors can add value for their clients by responding in a more timely and expedient manner.

#3: Get a well-crafted, yet adaptable plan to weather the storm

When people are faced with the unexpected, they need a plan of action. Having a financial plan – that you can adjust when necessary – allows you to be much more prepared for whatever life throws your way.

Since the pandemic began, 48% of Canadians polled report that the stability of income, short-term cash flow, and the health of their retirement savings have become more critical.

This suggests shorter planning cycles are now more necessary as financial conditions change frequently or to help Canadians plan for more near-term goals.

Without the benefit of financial advice, these challenges can become overwhelming, leaving many to struggle with how best to solve them on their own.

In one example, an advisor we spoke to has worked with clients in or approaching retirement, to create financial plans that will protect their income for the next 18 months to two years from market fluctuations. The result is confidence their short-term income needs will be met during the pandemic, while their longer-term needs for continued growth will be governed by a financial plan that can account for market fluctuations.

Planning starts with a conversation

A financial plan isn’t only valuable during times of global upheaval or in retirement. Instead, working with the right advisor to create a comprehensive financial plan can ensure you’re fully prepared to face financial challenges at every life stage.

No matter where you find yourself on your financial journey, an advisor can help you plan for both the expected and unexpected financial milestones in your life. Consultative planning and close dialogue with your advisor will give you’re the confidence to make informed decisions that can provide peace of mind during challenging times. Review our advisor fit framework to find the right advisor for you.

Start a conversation with an advisor to see where your opportunities lie.

6 Tips for Entrepreneurial Success

Tue, 12 Jan 2021 18:09:00 GMT

It’s been about eighteen months now since I officially left the “business”, although it’s truly only been in the last six months that I’ve truly cut my ties from all things IPC. In speaking with our CEO Chris Reynolds the other day, he asked me if I would give him my take on running a successful practice.

1) Find a Great Business Coach

In retrospect, one thing I wish I’d done much sooner was find a great business coach to work with. Specifically, I wish I’d started working with The Strategic Coach earlier than I did. Over twenty years, I became a disciple of Dan Sullivan, never missing one of his quarterly meetings. During that time, I learned how to create a great life and business while also uncovering lessons that will carry me forward in the next phase of life’s journey.

2) Business versus Financial Advisory Practice

If I had to choose again, I wouldn’t become a financial advisor. Instead, I would run a business that specializes in offering clients financial advice. Why might you ask? There’s a subtle yet important difference between the two. When you offer financial advice to your clients, you’re not simply selling them products - you’re providing advice on their lives.

As Dan Sullivan once said, “most advisors have jobs that they can’t be fired from”. When you see yourself as an entrepreneur, as someone who owns and runs their own business, your attitude is and should be quite different. As an entrepreneur, you assume greater responsibility for the outcomes in your business (either positive or negative).

3) Business Structure - The Foundation for Success

How you structure your business will determine your success, and ultimately your rewards and satisfaction. A proper business structure is essential in so many ways. Do you want to be a Sole Practitioner, have a Partnership or run a Corporation?

There is merit in each entity so it’s important to select the one that best fits your needs and objectives. Remember, the structure should be designed with a long-term perspective in mind. While it’s impossible to fully predict the future, you should plan for any eventualities that may arise over time.

4) Operating Structure -Built for Greatness

It is my belief that every successful business has three key elements in place: Great Teams, Great Clients and Great Business Relationships. Sir Richard Branson has often said that the client comes second at Virgin Air. If all your team members are treated well and given the proper tools to work with, they will become proud of their role in your business and treat clients accordingly.

It’s also very important to promote team and individual growth, which would include having a structured salary and benefit system. Meet regularly with your team and let them know you always have an open-door policy. Ultimately, you are responsible for their well-being. Remember, great businesses attract great clients.

While your prospective client is interviewing you, you should also be doing the same with them. If there isn’t a fit, don’t be afraid to tell them so. If the relationship changes over time, don’t be afraid to “terminate” the client if the fit is no longer there.

5) Build Strong Business Relationships

Your business relationships will ultimately determine how smoothly everything runs. While my relationship with IPC was always good, there were many times when we disagreed vehemently on certain issues. In retrospect, more often than not things worked out just fine for everyone involved.

In viewing your business relationships, look closely at your suppliers and other professional relationships (i. e. lawyers accountants, etc.). If you feel any of these aren’t working, don’t complain about it, simply move on by finding new businesses to partner with.

6) Build Superior Business Processes

Can you imagine what your business would have been like had you started documenting and improving your business practices from day one? It’s all about building optimal business processes and documenting these to ensure you can create repeatable business systems that will deliver outstanding client satisfaction.

I’ll close by giving you one last piece of advice. Add integrity into your life and business. Treat everyone with respect. Make this your life and business mantra. If you make a mistake, own up to it and rectify it. Don’t point out the mistakes of others while burying your own. Don’t be manipulative with your family, friends, clients or business relationships. If you have the choice of being right or happy, choose the one that truly matters.

How to Value A Financial Advisor's Book of Business

Mon, 07 Dec 2020 14:00:00 GMT

“In my simple world, the value of any business or transaction for that matter is what a seller and buyer agree is a fair price.”

When speaking with independent financial advisors, I'm often asked “what is my business worth and how can I make it MORE valuable?” There are many ways to value a business, Google, an old university/college textbook or your local public library are all great resources to learn more about this topic.

There are several reliable ways to value a business. The most common are based on Price to Earnings Ratio, Multiples to EBITDA (earnings before income tax, depreciation and amortization), Discounted Cash Flow of future earnings (using an appropriate risk-adjusted discount rate) or using market comparables.

The Valuation Conundrum

The issue with most valuation methods is that no single approach is 100% correct. Many involve making assumptions that can each impact many “sensitive" variables. In my simple world, the value of any business or transaction for that matter is what a seller and buyer agree is a fair price. To reach an agreement on a fair price, both parties need to see value in the deal.

In the wealth management business, the most u nderstood, predictable and reliable variable for an advisor is income earned through “trailer fees, fees for service, renewal commissions and referral fees.” For simplicity, lets refer to these as “recurring revenues”.

The Art versus Science Valuation Methodology

Now that we have a common view of revenue, we can apply a “multiples” approach to determine a fair price that makes sense for both parties. This is where the concept of “art and science” comes into play. Let’s first look at the science (math, in fact). In this realm, we’re interested in identifying the key factors that will impact recurring revenues, and hence, the value of the book of business. I will address five of these variables here, but you could easily apply many others when valuing a book.

Science and the Quantitative Analysis

The average age of the clients: the younger the average age, the greater the predictability of your future recurring revenues.
The average asset size of the clients: the larger the average asset size of the clients in a book, the more lucrative the client base.
The depletion rate of the book of business: this is the percentage of assets that are in a pay-out mode (i.e. RIFs/LIFs). The lower the percentage the better the stability of the book and its recurring revenues.
The extent to which the book earns “fee-based” versus “commission-based” income: a fee-based book of business has greater predictability for recurring revenue compared to the unreliability inherent with so-called “lumpy” commissions.
The average number of investments per client: this is a good measure of the quality of an advisor’s portfolio management services. Does the advisor have hundreds of product offerings on their shelf or a smaller selection that targets the specific goals-based investment objectives of their clients? A lower value indicates a very disciplined approach to managing a client’s investments.

In reviewing these five criteria, you might now decide to take a weighted average score for each variable (e.g. a variable with a low score gets X points, a medium score gets Y points and a high score gets Z points). Here’s a helpful example on how to calculate a weighted average .

Then all you have to do is add up these points. It will give you a “score” that’s aligned with your business objectives. This total will also give you what I refer to as the “top-end” of the range of valuations. The “low-end” is simply a percentage of the top-end value (like 75%).

Qualitative Analysis: The Art of it All

Before we can determine an exact price for the book of business, we need to first look at the qualitative variables that can influence the valuation. So let’s take a look at the “Art” side of this equation, or what I refer to as the qualitative components of a great business. Others refer to this as due diligence. While there are many qualitative factors to consider, here is a list of some to consider:

Does the business have a systematic and well-documented client experience process?
Does the business have a strong, knowledgeable team with defined roles and responsibilities?
The practice is run as a professional office. It’s a proper business that’s not out of the advisor’s basement or from a coffee shop. Like any lawyer or accountant, clients have scheduled appointments and are met in a professional setting.
Does the business have a proven track record of using technology solutions for its business processes and client service capabilities?
Does the business create and maintain up-to-date financial plans for its clients?
How effectively has the business documented and maintained meeting notes and records for all client meetings?
How strong is its compliance audit history?

Putting a Price to your Valuation of the Book

Now that we have a fairly robust view of both the quantitative and qualitative components needed to evaluate a book of business, you can proceed to calculate an actual price for what this book would be worth. This will involve using the recurring revenues from the book as the basis for this calculation, which we noted earlier.

To come up with the purchase price for the book, you will need to apply a multiple to the recurring revenue figure. Multiples ranging from 1.5x to 3.5x are usually the norm in this scenario. The resulting output would give you the “Valuation Range” for the book of business – the high and low price for what the book is worth as a dollar value.

So how do you come up with the specific multiple to use for a given scenario? Since the multiple is really a scale from 1.5x-3.5x, you would use the quantitative and qualitative factors you evaluated earlier to select the specific multiple you feel most accurately reflects the value of this book of business.

Hence, a very attractive book that received high quantitative and qualitative scores would very likely get paid closer to the multiple of 3.5x. Conversely, a book that scored low on both components would receive a multiple towards the bottom of the scale (1.5x). It’s important to note that market conditions and other related factors could also impact your selection of the multiple.

By applying this simple yet reliable approach that combines the art and science of evaluating a business, you will have a system that can inform and benefit both the seller and buyer in a transaction – one that can provide a clearer picture of the actual value of a business.

Making the decision to buy or sell your business is never an easy or simple one, and it often involves taking into consideration a multitude of factors. Feel free to reach out to us if you’d like some guidance or advice on how best to approach book valuation.

How Long Does Exit Planning Take?

Thu, 29 Oct 2020 17:57:00 GMT

Succession: Understanding the Exit Planning Timeline

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One of the first questions business owners ask about exiting their businesses is, “Just how long is all of this supposed to take?” The true answer is it depends. There are many things to consider as you shape your Exit Plan. You might have a business that’s worth $10 million but is overly reliant on you for success. You might have a small team or a partnership with other advisors, or a book with a mixed bag of client segments. Different obstacles provide different answers to “How long does this all take?”

Factors Affecting Exit Planning Duration

Fortunately, there are some general guidelines for how long planning can take. However, Exit Planning timeline guidelines are primarily dependent on you. If you and your business are ready for an exit, advisors can shape and implement an Exit Plan for you. If neither you nor the business is prepared, planning will need to include a phase for getting both you and the business ready, as well as a phase devoted to designing and implementing the actual exit.

Once you’ve shaped your plan for your business’ future, it’s time to implement and execute it. If you are ready to act, implementation and execution can begin immediately. Here are a few things to consider.

Building Necessary Business Value

Building necessary business value can be the longest part of implementing an Exit Plan. Many business owners have a sizeable gap between the resources they have and the resources they need to achieve their goals. This can mean that owners must increase the value of their businesses beyond what they’re worth today.

Compounding this challenge is the fact that you and your existing management may not have the know-how to grow the business further and achieve your Exit Goals. To build necessary value, you’ll likely need a growth plan. A strong growth plan positions you and your management to implement strong Value Drivers in the business.

Different Exit Paths and Their Timelines

Recall that you have two overarching options when you sell or transfer ownership. You can sell to a third party, like a strategic buyer, or transfer to an insider, such as a child or your employees. If you and your business are prepared for an exit, and you commit to pursuing a third-party sale, it’s possible for you to sell your business and be completely out within a year or so.

Typically, transfers to insiders take longer, even if you and your business are ready for your exit. The additional time is due primarily to incoming ownership’s financing capabilities. But the time it takes to sell a business to a third party or transfer to insiders is not primarily dependent on the nature of the Exit Path. It’s dependent on whether you are ready to exit and whether your business can support your exit.

The Role of Time in Exit Planning Decisions

In Exit Planning, time binds all decisions. As you look toward your future, whether your timeline is one year or 20 years, consider asking yourself, “Do I want to wait until I’m ready to move on to do all these things?” Experience shows that the answer is “No.”

If you’d like to explore your personal exit planning timeline, let’s connect .

For a dive into the various aspects of Succession Planning and to better understand your options, get our Succession Planning Playbook .

Cost of a Portfolio Service

Wed, 14 Oct 2020 20:37:00 GMT

Like all services, the cost of investment management is relative to the complexity and number of services you require to meet your needs. The primary goal of all investment management is to provide you with the appropriate level of return for the risk you are willing to take, at a price you are willing to pay to meet your financial planning goals.

For all the bells and whistles in portfolio management as well as a service that is independent and objective, you should expect to pay a premium. You should also expect value that is over and above those costs in the long term.

The cost of portfolio management services goes towards a variety of investment management and operational services. It is broken down as follows:

1. The cost of Investment management

This includes:

Active security selection : top independent asset managers charge a premium for their talent. Internal managers who work directly for a bank or other financial institution are generally less expensive than third-party expertise.
Many mainstream providers, such as banks or large mutual fund companies, hire asset managers on staff to provide security research and selection capabilities. In- house money managers tend to manage assets to a single category or style. Often, they focus on competing solely within their asset class category (e.g. global balanced, dividend or fixed income) and manage for returns to beat their peers in a given category. How they do relative to their peer group very often determines their bonus or compensation structure - a factor that may bias a portfolio’s long- term returns potential. This approach is common in the industry. A portfolio service, on the other hand, may hire any one of these suppliers if they are suited to any part of an overall portfolio strategy.
Investment specialist selection and monitoring : for the research, selection and monitoring of each investment specialist managing assets in a portfolio. Each investment manager provides specific security selection capabilities for a given geographic market, investment style or asset class.
Portfolio design, stewardship and oversight : for the construction of well- diversified multi-strategy, multi-manager portfolios. Includes regular rebalancing, asset allocation calls, portfolio constraint management, tax management, currency management, and risk management strategies.
Administration and operational oversight : the administration of the assets, buying and selling securities, tax reporting, regulatory filing, etc.
Reporting and communication : detailed reporting on how your portfolio is tracking towards your goals, market commentary and reports from investment specialists, trading summaries, capital gain/loss reporting and other regulatory reporting.

2. The Cost of Advice

A portion of your fees go directly to your financial advisor for the personalized advice and wealth management services they provide you. This part of the fee is usually agreed upon between you and your advisor when you first start to work together. Some factors that influence the cost of advice include the type and level of financial planning services you require, and the amount of assets that they invest on your behalf.

Factors that influence your costs

Account size: as with many other services, generally, as the amount of money you invest with a portfolio service increases, your average cost rate declines. Generally, we include all assets that belong to your entire family unit when calculating your overall costs.
Type or structure of investment– some types of investment structures are more expensive than others. If you are looking for basic exposure to an asset class without the benefit of oversight or security selection, then an ETF is a less expensive alternative to a full-service money manager.

If capital preservation is important to you, then you may want to include specific downside protection strategies or access to alternative investments (e.g. real estate, specialized sectors, etc.) and currency management strategies, which add to the overall cost.

Even the type of assets that go into your portfolio will have an impact on cost. The fee to manage a bond portfolio, for example, is less expensive than an actively managed stock portfolio.

What you ultimately pay for portfolio management will depend on the services you require to best target your goals. You can work with your IPC Advisor to better understand what you need to achieve your goals.

Click Here to Read Our Forward Looking Statements Disclaimer

What is Coverd by a Management Fee?

A management fee towards a variety of portfolio management and operational services.

Multi manager

Discretionary money management with multiple investment managers to provide you with access to global expertise

Tax Loss Harvesting

Strategies to minimize realized taxable gains in your portfolio

Overlay Portfolio Management

Oversight: selecting, monitoring and replacing investment managers

Portfolio Rebalancing

To maintain your portfolio’s allocation over time

Portfolio Design Optimization

Dedicated Portfolio Management Team to review market trends and analyze asset classes to optimize the design of portfolios

Asset Custody & Record Keeping

Online account access, safekeeping of individual accounts and mandate records

Portfolio Constraint Management

Monitoring: to ensure we honour your request to avoid exposure to specific securities

Operational Oversight

Legal, compliance, technology and operational support

Reporting & Communication

Detailed and customized account performance reports, manager commentaries, trading summaries and realized capital gains/losses

Management fees vary depending on the complexity of managing a portfolio.

Independent Advisors Have a Choice with their Succession Plans

Tue, 06 Oct 2020 15:12:00 GMT

The age old saying about the cobbler’s kids having no shoes is one that is often referenced when talking about financial advisors and their succession plans. As financial guides, advisors focus on setting their clients up for success by helping them plan for their ‘what next moments’ and retirement. Yet, many advisors fail to prepare for their own departure from their business, risking their retirement plans. The reason for this could be one of many – busy schedules; too soon to start; uncertainty over where to begin; who to transition to, or what they themselves would do once they’ve retired.

The reality, however, is that the advisor population across Canada continues to age. At the same time, there isn’t a clear path up through the profession for young new entrants into the industry. Couple that with narrowing margins, how technology is changing the way advisory businesses evolve, and how consumers are changing their own preferences for financial guidance, the pressure for advisors to not just think about their succession but, more importantly, to get it down on paper and prepare their successors to inherit, is only becoming more important.

In a recent poll ¹ , we found that less than one in two advisors have a preferred succession path, while only two in 10 have documented that strategy and shared it with their family and successor.

Less than 1 in 2 advisors said they have chosen their preferred succession path.

Only 1 in 5 had a written succession plan that they have shared with their family and their chosen successor.

This lack of preparedness has significance consequence. As an independent business owner, you risk diminishing the value of your legacy, not to mention the potential negative impact to clients who may be left at a loss if something unexpected happened to you.

The Challenge

For most independent advisors, putting a sound succession strategy in place is challenging – whether it’s defining goals, identifying the right successor or purchaser, ensuring a smooth transition of clients, or making sure they’re able to fully realize the value in their business.

The first step to overcoming this is to know the choices you have for your succession path. Then review your business practices and identify what you must implement to structure your practice in such a way that you can indeed maximize its value and sustain your legacy long after you’ve exited the business.

We break-down the three choices you have in our Succession Planning Playbook . The Playbook will help you identify your options, define what “success” looks like for you, and help ensure you protect and prepare your business for your next step, whatever that may be. It also includes a six-step process to help you design your personal action plan.

¹ Poll among advisors who participated at Investment Planning Counsel’s virtual event on Succession Planning for Financial Advisors in July 2020.

Download the playbook and get strategies you can start using today!

Reach out and connect with us if you would like to start a conversation about your succession strategy and learn how we can work with you to help you shape your legacy.

If you'd like to learn how one of our advisors navigated the ups and downs of succession planning when he took over his father's business, read Barry's story.

Improving the Client Experience with Effective Onboarding

Tue, 22 Sep 2020 18:39:00 GMT

Enhancing Onboarding for Client Satisfaction

If you have ever attempted to move your retirement investments from one financial institution to another, perhaps engaging with a new advisor, you know the process can be long and arduous. It’s not that the process itself is complicated – moving money and assets are what financial institutions do all the time. But after you meet with your new advisor, complete your KYC, and the request is made to transfer your investments over to your new firm, you will likely wait four or more weeks, during which time you may not be very clear as to where you are in the process. In fact, you’ve probably had more clarity around placing a pizza delivery order than you have had around your own investments.

Setting Clear Expectations During Onboarding

Currently, most of our industry operates within an opt-in policy for clients receiving updates: clients need to make a request, or we take it upon ourselves to share with them. Given the impact of the work we do, we must do better. In addition to setting realistic expectations around timing, wouldn’t it be nice if we could make data shareable to clients, and set it up in such a way that there is transparency in the process, while removing the inconvenience to the client of always having to ask?

With this in mind, IPC is working to drastically improve the client experience, starting this journey with onboarding. By year end, we are aiming to be able to provide clients with a kind of transparency they rarely experience in our industry. Clients will have the ability to know at any time where in the onboarding process they are as it relates to their account opening. They will not need to contact their advisor for this information, but will simply log on to their account to see where they are in the onboarding process right before their eyes. They’ll know right away if the process is delayed due to a required signature or if another action is needed.

Leveraging Technology for Transparent Onboarding

Let’s face it, the financial industry in North America has rarely been at the forefront of innovation or open to change. For example, globally, Australia and Europe are moving towards Open Banking 2.0 (a term used to describe a system that is set up to allow clients access to their data at any institution, as well as knowing exactly how that data is being used). Predictably, the North American financial industry has been slow to adopt this move, as our current systems are not set up for this model.

Eventually however, we will need to acquiesce, because our clients will demand it. It’s all about transparency as we start to erode old systems that would keep information hidden. Look at the impact of the current pandemic on mutual fund companies traditionally resistant to change – they were forced to quickly upgrade their technology to accommodate their business and quite frankly, to survive.

"If we are not prepared when changes in our industry happen – if clients want their advice in a different way or want more transparency and we’re not ready for it, they will move past us and look elsewhere."

Adapting to Client Expectations

Expectations around our industry have so rapidly changed that it’s imperative we keep up. If we want to continue to provide valuable advice to our clients, we need to be nimble enough to evolve along with their demands. If you place a pizza delivery order and the company does not have transparency in their process, chances are pretty good that you will be ordering elsewhere the next time. The same thing can happen to us. If we are not prepared when changes in our industry happen – if clients want their advice in a different way or want more transparency and we’re not ready for it, they will move past us and look elsewhere.

Client expectations outside of our industry will continue to move our industry forward, and those that lead in responding and accommodating will be the ones that win in the end.

Succession - Selling Your Book to Family

Wed, 02 Sep 2020 20:42:00 GMT

Advice for Advisors on Selling to Family Members

In navigating buy-sell agreements created for practice succession, parties can run into any number of deal-breaking elements, causing them to walk away from negotiations. This usually changes when family is involved.

Selling you book to a family member can be notably beneficial to both parties. Still, getting the most value for your business takes time and a plan. If ignored, each unplanned year can remove a substantial amount from the total you’ll walk away with at the end - whether your successor is family, or otherwise.

Although a family purchase might appear relatively straightforward, the process can actually take longer than average, and much longer than you might guess at the outset - a fact I know all too well.

It was 2001 when I first thought about moving from Ontario to Nova Scotia, to take over the East Coast practice my father started in 1990. Succession for my father, along with thoughts of a better lifestyle for my family, all made the move seem like a good course of action for everyone involved.

Challenges in Family Practice Succession

What I couldn’t foresee at the time, was the litany of tests life would throw at me. The largest life changes were positive, but the combination of various other elements challenged some of my carefully laid plans.

While my family agreed that I would take over Hennigar Planning from my dad, Robin and his wife, Janet, my move to Nova Scotia was delayed for a year when my own son was born.

Later, after selling my book to the branch owner I worked with in Toronto, I moved my family to Nova Scotia to begin the massive task of meeting with clients, tracking transfers, and buying a home, all while moving offices and still conducting regular business.

Around the same time, I found out that my attempt to get licensed in Nova Scotia was delayed, as Investment Planning Counsel (IPC) worked to navigate inter-provincial inconsistencies, and help my office become the first dual-licensed IPC practice in the province. 1

Client Retention Strategies

"The longer my father was around, the more continuity there was for our clients. It can’t be measured, but if I tried to move everyone within two years, I believe there might have been more clients lost."

For six months, I couldn’t solicit business in Nova Scotia. All I could do was focus on insurance, and our out-of-province business operations.

Following that, the 2008 market correction happened, making everyone reluctant to proceed on schedule. My father stayed, a move that undoubtedly helped with client retention during that time, but it did require an additional outlay of unforeseen expenses. Then, our firm’s lone assistant quit the business - I have since hired another - and believe she has been the lynchpin of my day-to-day operations.

On arriving in Nova Scotia, I found out that client portfolios were all over the place. Streamlining this to move forward with my own plans for future growth, also meant selling a block of Hennigar Planning’s original client base.

Moving to the IIROC platform, meanwhile, allowed me to create a “tidier” book, and manage more consistent portfolios that are clearer for clients, as well. As a result, my business grew an additional 80 per cent over the next five years after my father left in 2009.

I can now see what everyone has, and how everything is doing at any given time. By being on the IIROC platform too, I am able to gain wallet share from my clients - investment assets and insurance – as I can bring them on-board through this platform. So, I may not grow my number of households greatly every year, but I can manage more for my clients and bring their assets together into one place.

Plan Your Own Exit Well in Advance

Interestingly, the lessons I've learned have very little to do with potential difficulties, and everything to do with client value.

Slow was better due to the effort to move clients from my father’s MFDA practice to the IIROC book I was building. I wasn’t about to compel people to move at a time when markets were down one-third.

Although five years is often bandied about as the time needed to prepare and sell a practice for its fair price and walk away, my experience is a clear indication that no two transitions are identical, and life will rarely let you do things exactly by the book.

By the time my dad truly retired and left the practice, people knew me. It can’t be measured, but if I had tried to move everyone in two years, I believe there might have been more clients lost. So, although the acquisition of my father’s business took much longer to complete, I had successfully retained over 95% of the household names. Being agile and able to adjust my plans as my personal circumstances and the market changed were important.

Tax Implications of Selling to Family

If you are looking to sell your book of business to a family member, it’s important to check the tax status of your sale proceeds ahead of time. Selling to family members is not always viewed the same from a tax perspective as it would be if the sale is to an arm’s length buyer. This, of course, can be costly.

Your business could be worth what you think, but factors - both in your control, and not - can make it worth far less. By failing to plan, a typical book will suffer lower client retention rates on transition, and carry with it the potential for higher, longer-term business reputation risk - all of which makes your book less valuable to prospective buyers.

Support and Resources for Advisors

Having a succession plan in place is only the first step to ensuring the business you’ve built is successfully transitioned and your legacy isn’t diminished. At IPC, we work with Advisors who are looking to either buy or sell a book of business.

Barry is an example of the difference it can make to have a team helping you navigate your succession journey. If you want to hear other real life succession journeys from our Advisors, watch this webinar by using the password: discover.

Apart from working with Advisors to identify suitable partners for a buy or sell, we can share knowledge on the factors that influence purchase or sale prices and work with you throughout the time it takes to develop or refine your succession strategy and post-succession growth plan.

The Blind Men, the Elephant and Expected Returns

Wed, 29 Jul 2020 20:19:00 GMT

I recalled the parable of the Blind Men and the Elephant this week after a conversation with a colleague. If you aren’t familiar with the parable, you can read it here .

If you know the story well, you know that each blind man described the elephant based on their experience of a single feature of the animal. Though each was right given their narrow experience, none could describe the full picture. Their disagreements were resolved by the wise man who saw the full picture.

The moral of the Blind Men and the Elephant can be related to how you view “expected returns” for your investment portfolio. In short, if you only see things from one perspective, you will miss the big picture.

Events Interfere with Perfectly Good Plans

Returns and risks are what investing is all about and it is a subject that we constantly think about. However, I don’t think I have done a good enough job to articulate what we do, our investment strategy, positioning and market beliefs. My passion for the topic is based on wanting to root out overconfidence in, and for the promotion of humility and pragmatism in investing. So, in this letter, I describe how we think about the world when we manage your money.

Our understanding of the expected rewards and risks that financial markets may offer in the future is central to our investment process. ‘Expected returns’ are how much you make on average overtime on an investment or investment strategy. ‘Risk’, on the other hand, is the possibility that over any time horizon, you don’t get your expected return.

World events have the unfortunate habit of interfering with a perfectly good plan, resulting in expectations for returns not being met.

As such, there is always uncertainty about any expectation. Significant events like the global financial crisis or COVID-19 can make an investor question their financial situation and/or abandon a good portfolio due to short-term uncertainty, or fear when they see their returns trailing expectations. Hence, the need for portfolio insurance (see my last commentary: The Siren’s Song and Investing Without an Air Bag ).

So, why estimate future returns? Well, imagine if you made nothing on your equity portfolio in the final decade before your retirement, because you bought them at extremely high prices. We don’t need to look far to know the real possibility of this. A simple review of the 10-year rolling returns of the S&P 500 shows us that since 1925 there were 297 (of 990) 10-year rolling periods in which equity returns after inflation was zero or negative. That’s 30% of all periods! Cliff Asness, the CIO of AQR Investment Management, says it best, “if risk is about surviving the short term, expected return is about whether, after surviving, you think it was worth it!”. So, in estimating future returns, our goal is not just to survive but to thrive.

Overlapping Measures of Expected Returns

So, what do we mean when we say "expected returns"? When we think about returns, we examine them along four dimensions:

The expected return you get paid for owning one of the broad sets of asset classes: stocks, bonds, cash, etc. We call this return “Beta”.
The expected return you get through exposure to well-known strategies (known as ‘risk factors’). These include factors such as Value, Momentum, Size (e.g. small cap), Low Volatility, High Profitability and Low Investment. By employing these strategies, you get exposure to a set of risks that is different from what’s described in #1. Hence, the return for carrying these risks is different compared to the risk of just being invested in a market-weighted basket of stocks (i.e: like the TSX or S&P 500). The extra return that accrues to these risk factors is over and above the returns from the universe of all stocks - because there are additional risks or investor behaviours that cause these factors to accrue additional returns over and above a market portfolio of equities.
The expected return you get from being willing to take the risk of being exposed to economic or other risks. For example, liquidity risk in small cap stocks, or inflation risks in high dividend stocks.
The expected return we get from pursuing an active strategy. This is what we call “Alpha” – the return we get from an active manager that is over and above returns described in #1, #2 and #3. This expected alpha comes from stock selection, trading and market timing in aggregate and is a much smaller component to overall performance in the long term.

To illustrate the point mathematically, expected returns would look like the following:

Expected return = Rf + β(Rm – Rf) + Risk Factor exposure (b x Value + b x Momentum + b x Size …) + α 1

Rf = the risk-free rate of return (usually represented by treasury bills)

β = the beta value of the investment (a measure of its price sensitivity to market movements)

Rm = returns from the equity market (denoted by a cap-weighted benchmark such as the S&P 500 Index)

α = alpha which is the return from stock selection, trading and market timing Have I confused you yet? I hope not.

So, all these types of expected returns are connected and overlapping. For instance, the passive ownership of equities exposes you to more risk of poor real economic growth. In contrast, the ownership of a portfolio of bonds increases your exposure to the risk of higher than expected inflation. Case in point, the ongoing experience of COVID–19 and the resulting shock to economic growth resulted in a rapid downturn in equities in Q2 this year. Or, small cap stocks expose you to more liquidity risk relative to large cap stocks due to the potential unavailability of a small cap stock at a good price or to difficulty selling it at a favourable price.

So to recap, there are two ways you can get a positive expected return: the first is taking a risk you get paid for, that would be #1 (market beta) and #2 (factor exposure) or by outsmarting someone else (“alpha”).

So, you can think about then parsing the sources of returns in the following ways: asset classes, factor exposure and alpha. Exposure to any of these three can generate a positive return for the following two reasons: a rational compensation for risk or outsmarting others who are less than rationale.

Now that we have identified the sources of returns, we need to think about a method for estimating returns going forward. There are three ways to go about this:

You can forecast the future based solely on a theory of how something has done in the past.
You can forecast the future based solely on your theory on how the world should work without examining the data.
You can forecast future returns by estimating the cash flows that corporations supply (realized returns can be attributed to corporate fundamentals such as dividends and growth in fundamentals (i.e. earnings, dividends, and book value).

In the long run, the cash flows that corporations supply are the ultimate drivers of stock returns.

So, as an investor, when you make judgments about the expected returns of various investments, you will need to ensure you aren’t blinded by past performance and consider all of the following:

Historical average returns
Financial and behavioural theories
Forward-looking market indicators
Discretionary views – in the short run, the stock market is mostly driven by demand, with risk-on/risk-off environments causing over- and under-reaction to the underlying fundamentals

Summary

There are two reasons why you might get paid an expected return, three overlapping ways to divide the different sources of expected returns and three overlapping methods to estimate returns going forward. Each of these provides part of the answer, but not all of it. So all three must be considered for the full picture. I didn’t promise that this would be simple.

Successful investing is a process, one that identifies the structural qualities within a portfolio allocation process to reliably increase the likelihood of success.

It’s about learning from more than 50 years of theoretical and empirical literature and practices to build resilient portfolios in order to avoid (for example) earning zero on your investment portfolio over 10 years because you paid too much. We recognize that as investors, we are impatient. We want to generate high returns over short horizons. Some will succeed, but most will fail. Having a disciplined investment process means that over the medium to long term, we significantly increase the odds of achieving our investment goals.

Stay disciplined with your investment portfolio.
Best wishes,

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

1 Investors tend to attribute any good past performance to skill (aka “alpha”). We repeatedly get “fooled by randomness” when we equate past performance with skill and underestimate the role of chance. This is true in many of life’s activities. This formula is not only a way to think about expected returns but also a way that my team and I attribute an active manager’s returns to understand how much of it was derived from easily replicable market and risk factors and how much might have been from alpha or luck. For more information on the role of luck, I recommend reading The Success Equation by Michael J. Mauboussin and Fooled by Randomness by Nassim Nicholas Taleb.
2 Historical returns are a natural starting point for investment analysis, partly because we are all hardwired to imitate successful actions and to learn from past experiences. Those traits enabled our ancestors to survive and develop, but are harmful in investing. The disclaimer “past performance may not be indicative of future results” isn’t just a legal disclaimer but a warning against following our evolutionary traits.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of May 6, 2020 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

When Families Blend, Life Changes

Wed, 15 Jul 2020 19:57:00 GMT

It wasn’t that long ago when blended families were an uncommon family unit. Today, they now represent about 1 in 8 couples in Canada with children.

When families change, so do finances.

Here are some life-long things to consider.

These families come in various forms, with either one or both partners bringing their child or children to the blended family, and the new couple may add to the mix with another child of their own.

Life changes in many ways as new family members become accustomed to living together under the same roof. Even the house itself will be different for some or all of the blended family members. It’s important to recognize that financial life also evolves. In fact, virtually every component of financial planning is subject to change.

Treating children fairly

Each parent may have taken a different approach to the way their children receive or earn money. Perhaps they managed allowance differently. Or maybe one parent encouraged a child to work part-time during the school year, while the other parent discouraged taking a job in favour of focusing on schoolwork. Parents in a blended family must determine how to approach such financial matters, which may involve compromise, and communicate their decision to all children.

Another possible difference involving the parents and their respective children might be the amounts saved for the children’s education. Parents in a blended family need to determine if education savings will remain separate or if they wish to equalize the accounts for all children.

Adjusting investment objectives and financial life

With a new partner and children, it’s very likely that both partners will need to reassess their previous short-term and long-term goals, and establish new ones together. For example, retirement plans can change. Depending on the new nest egg objective and each partner’s age, partners in a blended family might aim to retire either earlier or later than previously planned.

The way that updated financial goals are reached may also change. Each person may have budgeted in different ways and to different degrees. Together, the couple may need to establish a budget that enables the family to enjoy their desired lifestyle, while saving and investing to achieve their new life goals.

Providing for multiple heirs

In their previous marriage, each partner’s estate plan may have directed major assets to the spouse – which is typical. Now, however, a partner may want to provide for both the current spouse and children from the first marriage. One solution is to establish a spousal trust in the will that would help support the spouse for his or her lifetime, with remaining assets distributed to biological children. Another method is to make the children beneficiaries of a life insurance policy, with estate assets going to the spouse. Or you can give children an early inheritance, while you are living.

Home ownership can also be different for blended families. You may want to own the home as tenants-in-common, with each partner controlling his or her share of the home, which ultimately passes to the individual’s biological children.

It’s crucial to discuss estate plans with everyone involved. This way, you can address any conflicts that arise, avoiding discord among family members after you pass.

Although financial planning undergoes many changes when you’re in a blended family, the process needn’t be challenging. With guidance from an advisor, you can examine all your options and make decisions that suit you, your partner and children.

If you’re in a blended family or will be soon, speak to your Advisor or contact one of our Advisors.

This blog post is for informational purposes only and is not and should not be construed as professional advice to any individual. Individuals should contact their IPC representative or financial advisor for professional advice regarding their personal circumstances and/or financial position.

The Siren Song and Investing Without an Airbag

Wed, 08 Jul 2020 19:34:00 GMT

In his novel, The Alchemist, Brazilian author, Paulo Coelho, wrote, “when you want something, all the universe conspires in helping you achieve it.”

From my perspective, when it comes to life and investing, nothing has ever been achieved by simply wanting something. Desire and action are required to achieve our goals and, even then, the universe does not guarantee success. Investors want high returns and no risk. Wanting these things and achieving them are universes apart. When it comes to life and investing, often, the universe needs a helping hand.

In Homer’s The Odyssey, we follow the quest of Ulysses. While on a sailing expedition, Ulysses decides he wants to hear the beautiful Siren song of legend. But there’s a problem. The Sirens would lure sailors with their music, only to lead them to perish along the rocky coast. So, Ulysses makes a plan. He instructs his crew to put beeswax in their ears so they can’t hear the Sirens’ song, then orders them to tie him to a mast so he can’t jump into the sea if rendered temporarily insane. No matter what happens, or how much Ulysses begs otherwise, once in earshot of the Sirens, the crew is to stay the course.

The plan works. The ropes hold, and Ulysses and his crew escape with their lives. It wasn’t desire that caused Ulysses to achieve his goal. It was his planning and commitment that turned his wishes into reality.

Ulysses knew what he wanted and was ready to commit. He also knew his limitations. Sheer willpower was not going to see him through. To accomplish his goal, he had to do more than just hope for the best. In fact, he did the opposite; he planned for his failure. In doing so, Ulysses was taking steps to constrain his future behavior. He knew that he was human, fallible, and that he was likely to succumb to temptation. Likewise, in investing, there are times when our best intentions will be insufficient to overcome the force of our short-term desires.

The rational decision for investors who do not have the means to “lash themselves to a mast”, would be to avoid equity market risk and invest all their savings in inflation-linked bonds.

This would mean that they might have to save more to achieve their retirement needs, since there would be no growth in their portfolio above inflation (although not to changes in real interest rates – but let’s save that concept for another day).

For example, an investor retiring today at 65, having worked and invested in a simple balanced portfolio (60% equities, 40% fixed income) for the last 30 years, will have grown their assets twice as much as an investor in an inflation-protected bond portfolio (see chart below).

30-Year Growth: Balanced Portfolio vs. Inflation-Protected Bond Portfolio

Now, don’t take the above as a proof statement of the future. This chart represents one economic regime: globalization, disinflation, and declining interest rates. When we exit this regime, investment variables will change over time – returns, factors, correlations, styles, volatilities, asset classes – but our models to deal with them are built on stasis. The models do not account for the movements of those variables. To do so would require perfect foresight of the future, which is not possible. The best that we can do is take a systematic approach to our portfolio construction and asset allocation, and accept that over the short term (which may seem like the long term for many clients) there will be times when we will be “wrong” or unlucky. There will also be times when we get it right and our expectation is that the latter will outweigh the former. Of course, over the short-term you can be lucky, but I would rather do what is right and do what gives our clients the best chance of achieving success than depend on being lucky.

Protecting the Downside

This is where tail risk strategies come into play. For the purposes of a client’s portfolio, strategies that address tail risk achieve two goals. First, they protect the client from long systematic drawdowns in fixed income and equity markets, helping to reduce the timing effect of an investor’s time horizon (i.e. when a client started investing and when they are nearing the end of their time horizon). Second, they achieve the effect of “lashing the client to the mast”.

Having protection in a portfolio gives comfort, even though there is a cost associated with it, just like the airbags in your car or life insurance.

I’ve yet to hear about anyone complain to their car dealer or life insurance agent about paying for an airbag or insurance policy premium and not ever having to use it.

Across the spectrum of the Counsel and IPC Private Wealth Portfolios we utilize strategies that are designed to reduce exposure to financial markets as the market becomes stressed and are falling. These strategies are key during environments where markets continue to fall for long periods of time and, as The Pain Index table below shows, markets can fall sometimes for years. For investors in IPC Private Wealth, we also include alternative strategies that can generate positive returns during up and down markets. These tail risk strategies have the effect of smoothing out returns over the investing lifetime, paying for themselves many times over that long horizon.

We have two systems of reasoning, the intuitive and deliberative. For most decisions, these two processes are closely aligned. However, when it comes to financial decisions, they become very misaligned. Our objectives can be 15 years out, however, our emotional selves are making decisions now, in a zone of high anxiety. Today I find that investors are getting caught up in the moment and making portfolio decisions based on recent market performance and themes that they believe will continue to persist. Investors have difficulty with the fear of missing out. Even though they recognize it as bad behaviour in others, they are not so good at recognizing it in themselves.

Portfolios Solve for a Need

The purpose of portfolio construction is to build a portfolio to fulfil an investor’s need. That need may be to achieve good returns relative to a benchmark over a 3 – 5 years, or it may be to preserve capital by protecting on the downside. The success or failure of whether a portfolio has fulfilled a need (or achieved its goal) should be measured over much longer time horizons, specifically during market periods in which they were designed to outperform. What is key is to avoid the temptation to tinker too much with it along the way.

Investors have a habit of sorting their portfolio returns over the most recent day/week/month/year and then ranking all the elements of contributors and detractors to performance from best to worst. This is contrary to the purpose of good portfolio construction.

If all elements of your portfolio have the same underlying driver, then your portfolio becomes very exposed to that single driver, meaning you no longer have a diversified portfolio.

Performance will be good so long as that single theme remains intact, but when the bubble bursts, the portfolio will perform especially poorly and likely become permanently impaired.

One example of this was the 2000s commodity super-cycle, driven by rapid growth in China and other emerging-market economies. An enormous amount of money was inadvertently shepherded into this one giant theme across multiple asset classes – developed market equities, emerging market equities, emerging market debt, foreign exchange, and even U.S. mortgage bonds. All based on that one underlying commodity super cycle theme which did well for years until the bubble burst. Investors didn’t notice, or perhaps didn’t care so long as their portfolio returns were good. But, that’s how Minsky Moments happen. (A Minsky Moment refers to the onset of a market collapse brought on by the reckless speculative activity that defines an unsustainable bullish period – i.e. stability breeds instability.)

The future is always highly uncertain and, therefore, prudence should always come first. In a properly constructed portfolio, true diversification comes when parts of the portfolio zig while others zag. The recent rise in the market is being perceived as a permanent recovery (it may be, but I do not know that absolutely. Anyone who says that it is with certainty is willfully blind of the significant uncertainties that lies ahead of us). This market rise is causing many investors to experience FOMO. I understand that it is hard to resist the sirens’ sweet song. The anxiety of missing out is considerable and I understand why. The cost of including tail risk strategies in a portfolio is missing out on some upside during sharp market snapbacks, however the short-term cost is considerably less than the implications to an investor’s long-term portfolio returns.

So, why are tail risk strategies important in an investor’s portfolio?

To answer that question, let’s agree on some key points:

Market crashes happen frequently. A careful look at historical market data reveals that large market corrections occur on average about every nine years.
The recovery period from a market crash historically has varied considerably . The Pain Index table below shows significant events that have impacted the U.S. stock market over the last 150 years, and a record of the largest real declines from peak to trough along with the time it took before the markets started to recover.

The Pain Index

Sources: Kaplan et al (2009); Ibbotson (2020); Morningstar Direct; Goetzmann, Ibbotson, and Peng (2---_; Pierce (1982), http://www.econ.yale.edu/~shiller/data.htm

The Pain Index gives a perspective on how bad each of the episodes of decline were, taking into account not only the magnitude of the decline but also how long the decline took to unfold and how long it took to recover. An effective tail-risk strategy can help to mitigate some of that pain.

Most investors will see several market crashes in their lifetimes . The timing and actions of investors during market crashes and recoveries have significant impacts to their overall wealth (see this previous letter for one real life example).
The duration of the loss period matters as much as, if not more than, the total cumulative decline . In other words, with all else being equal, a short rapid decline is preferable to a long drawn out one because of the opportunity cost of not growing their assets for a long time.
For most investors, the prospect of losing 20% in a single month is exceedingly difficult to stomach for variety of valid reasons, including their ability to stay invested, liquidity needs, and so on. There is also a psychological element at play: spreading a 20% loss over the course of a year (e.g. losing 1.7% per month) may not even register as extreme and may be the more comfortable path for many investors even though, as we pointed out in #4 a sharp, short decline is a better outcome for overall wealth accumulation.

Final Thoughts

Investors are funny creatures. We suffer from cognitive biases that are well documented. We quote them in our letters and conversations to clients so that they may learn from these mistakes, become better investors, and achieve better outcomes for themselves and their loved ones. However, sometimes all this effort seems for naught. We seem to have to repeat the same messages over and over and I’ll admit that it must be tiresome to hear the same message over and over, especially when the FOMO siren song seems to be so hard to resist.

Today we refer to a Ulysses Pact as any freely made decision, designed and intended to bind oneself in the future. In investing, we recognize that there may be times when we must tie ourselves to the proverbial mast to protect ourselves from ourselves.

A common refrain after a major market meltdown is that to build a more resilient portfolio is much like “closing the stable door after the horse has bolted.”

Given that equities and bond yields today are more expensive than their long-term averages, the case for diversification very much remains strong, maybe even stronger than ever.

As Mark Twain once said, “it ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

We are nearly four months into a bull market and there are very few things that are certain. We do not know, for example, how long the pandemic will last or what will be the lasting economic damage. We do not know, and no one is discussing, if COVID-19 is the cause of our difficulties, or simply a symptom of a lack of resilience in our economies.

What we do know for certain is the optimism embedded in today’s security prices implies an enormous faith in our central banks, otherwise equity and bond prices would be significantly lower.

The bullish narrative assumes the central banks can continue to prop up security prices for an exceedingly long time. It also assumes society can continue to successfully manage debt by creating ever more debt. I hope the bulls are right, but I wonder, are we perpetuating the same maladies as previous generations? We seem to be taking the exact same medicines in creating ever more debt and acting as if debt creates prosperity. Could it be we are just as delusional in thinking this will not end badly? From my perspective, there is no “for sure” when it comes to investing, so for our portfolios a little insurance from our tail risk strategies goes a long way in keeping our clients invested and reducing the timing effect of when they started investing and when they need their assets to fund their objectives.

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of May 6, 2020 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Grow Your Investments with Dollar Cost Averaging

Fri, 12 Jun 2020 19:58:00 GMT

The truth is, it is nearly impossible for any investor to accurately “time the market.”

A vital key to successful investing is to “Buy Low and Sell High.” However, predicting when the market will go up or down is difficult even for the experts. The truth is, it is nearly impossible for any investor to accurately “time the market.”

But that does not mean, as an investor, you should stay away from the markets. One useful strategy you can adopt to avoid the problem of guessing the right time to enter the market is dollar cost averaging .

What is Dollar Cost Averaging (DCA)?

Dollar cost averaging is an investment strategy that involves putting a fixed amount of money into an investment (i.e. mutual fund or specific stock) on a regular basis, regardless of market conditions. This strategy usually allows an investor to take advantage of market downturns and enjoy the benefit of lowering the average cost of their investments over time. However, it does not guarantee a profit or protect against a loss.

How can DCA benefit your portfolio?

The unit price for your mutual fund or portfolio investment fluctuates over time. With dollar cost averaging, you generally invest the same amount of money each week, month, quarter (or at any interval you choose). This means that you buy more units or shares of an investment when the price goes down and fewer units or shares when the price goes up.

Advantages of Dollar Cost Averaging

Many investors employ the dollar cost averaging investment strategy for two main reasons:

It is an attractive option for investors who find it easier to add to their investment in small sums rather than large lump sums.
It eliminates having to predict and time the market’s directions. By using this strategy, an investor’s overall returns will be determined by the overall trend in a given investment rather than investor’s specific entry price.

How regularly scheduled investing can improve your average investment cost*

Let’s say John invests $200 into a mutual fund every month for six months. The unit price is up some months and down in others. The table below shows how John uses dollar cost averaging to benefit from the market’s volatility over this period and grow his investments.

Scenario 1: John 

Now assume Sally invests in the same mutual fund but places her $1,200 as a lump sum investment in January. She makes no other additional investments or withdrawals from her mutual fund for the next five months and, therefore, does not take advantage of the declines in the price. The table below shows how Sally would have fared over this same period.

Scenario 2: Sally

As you can see in these scenarios, for the same total investment of $1,200, John is better off than Sally by the end of the investment period.

While Sally’s overall investment reflects a loss of $120, John’s investments reflect a profit of $57.48.

This is despite the fact that the unit price for the investment has declined from $10.00 to $9.00 over the period. In addition, at the end of six months, John has purchased more units for a lower average price per unit and his overall investment value is greater than Sally’s.

* For illustration purposes only.

Success is the Death of Performance

Wed, 10 Jun 2020 13:28:00 GMT

Last time, we discussed two elements of due diligence: why investment success is not determined by a gene factor, and why just because there is a classification system, it doesn’t make it true or useful. This time, I’ll expand this conversation a little further and highlight a few examples of what I’ve seen during my career and where I’ve made mistakes so you can learn from them.

An often-unappreciated fact is that too much success is often the leading cause of death for performance. Active management is “capacity constrained.” That means

for most investment strategies, there is only so much money that you can direct into the strategy before you start significantly driving up the price you pay for stocks and/or you start owning too great a percentage of the company.

Investors should be wary of funds that have become successful (drawing large inflows of new money to it) in a very short timeframe typically because of past performance and marketing driven sales. This makes it more difficult to successfully enact the strategy. Great firms/managers close off their funds to new purchases before a fund’s size becomes too large and implementing the same investment strategy becomes an issue. However, don’t fall for the “trick” where the manager closes off one fund and then launches a “similar” fund with broader investment parameters. For example, the new strategy may hold more stocks than the original strategy, or it may broaden its investment parameters to include larger stocks, or it may apply the same strategy in a different geographic region. Rarely are these “line extensions” as successful as the original strategy. Performance becomes diluted and the additional distraction of running a second strategy often causes mediocre performance of the flagship strategy.

In my experience as a manager of managers, the second most frequent reason for changing managers has been a lack of constraint in managing asset growth. NWQ Investment Management, is a successful large-cap value manager that I mentioned in a previous post. The success of their performance after the technology bubble burst in 2001 caused their assets to soar. As a result, they were terminated from our program at Scotia because we strongly felt that their ability to create alpha for our clients in the future would be impacted.

Here is another example where a sound due diligence process can uncover issues. I’ll admit, this is one where I got it wrong and we should have caught the issue earlier than when we did.

Reed Conner Birdwell (“RCB”) is a boutique investment firm with a strong small-cap value track record. Jeff Bronchick, the lead portfolio manager at RCB, in his October 2004 newsletter described what investors all too often take for granted – CAPACITY.

“By concentrating smaller amounts of money in a patient fashion, it is entirely possible to outperform averages”

Jeffrey Bronchick, CFA

Principal & Chief Investment Officer

RCB Investment Strategy Newsletter – October 2004

Jeff should have taken his own advice. As a result of good performance, RCB’s small-cap mandate attracted significantly more capital than it could put to work. Over time, the portfolio’s cash weight increased from less than 10% to an astounding 40%. The manager’s reasoning was that he was unable to find good companies to buy at reasonable valuations. (Many of us who are veterans in this industry have heard Larry Sarbit say the same thing since the late 90s, but that’s another story for another day.) RCB clearly did not have the right perspective on the capacity of its small cap strategy. A manager with the proper perspective would have capped the portfolio long before reaching $4 billion in assets.

A robust due diligence process would have flagged the capacity issue. A review of the manager’s portfolio construction and investment style, along with an analysis of the small-cap market, would have shown that $2 billion (at that time) was the maximum that could reasonably be invested, however by the end of 2005 RCB was at $4 billion in assets under management. We missed this one. Up front, we should have established a capacity target for the mandate and monitored to that target. Having done so, we could have had conversations with the manager as they approached that target and then acted accordingly.

Investing, like many other activities in life, is subject to constraints. Small-cap investing is no different. Due to liquidity, the amount of money that can be effectively put to work and not affect performance is significantly less in small caps than in large cap portfolios. However, it is essential to remember that all portfolios are subject to capacity constraints depending on the universe of securities they invest in and their individual investment strategies.

Due diligence is about understanding and monitoring manager and organizational behaviour, which is in flux as the environment changes – although that fact is little appreciated.

In your due diligence efforts, take a look how firms handle capacity. Have they taken the route of protecting investors and capped their portfolios early, or have they capitalized on good performance (perceived or otherwise) to raise assets or launch new products? Understanding this will tell you a lot about a firm’s priorities and whether you as an investor are at the top of that list.

The lesson is: look at asset growth in a fund or strategy. Smaller funds are nimbler and can implement their strategies more effectively. Beware of new funds that are launched subsequent to closing of a sister fund.

Beware of the Back-test

We’ve already determined that investors love chasing performance, real or back-tested (i.e. a performance result based upon a quantitative model applied to historical market data to generate hypothetical performance during a prior period). In either scenario, investors take it as evidence that a particular product or strategy has – or would have – performed well in the past, with the clear implication being that it is likely to do so in the future. Typically, performance tests are offered to support statements that the strategy has the potential to offer higher returns, lower volatility, less downside risk, or other some other objective.

There is nothing inherently wrong with back-testing performance.

As long as back-tested performance is based on assumptions that are reasonable and clear, it can provide useful information to investors by helping them understand and compare how different strategies perform under various market conditions.

However, most of us are not “math people” and determining what is a good versus a bad back-test is not a reasonable exercise. With the benefit of 20-20 hindsight, it’s relatively easy to construct a strategy that worked well in the past. Of course, having a strategy that worked yesterday tells us nothing about whether it will work tomorrow. No strategy will work well in every environment, but a good strategy is underpinned by behavioural economic or academic evidence on how we believe that the world works. Any strategy can be lucky in the short term, even if you take the inverse of the strategy! An interesting paper (to me!), “ The Surprising Alpha From Malkiel’s Monkey and Upside-Down Strategies " explored this phenomena.

To illustrate my point further, many years ago my team and I met with a firm called F-Squared who presented us with an interesting quantitative strategy that would systematically reduce its exposure during falling markets. These strategies proved extremely popular with investors and in a few short years, they grew their assets from just a few million to $20 billion. We were doing a lot of research work in “tail risk” strategies to determine what would work best for our needs. We met with F-Squared representatives several times over the ensuing months, requesting a great deal of information and asking a lot of questions. We went to great lengths to recreate their investment strategy with the information that they provided us. There were several red flags for us along the way, but with respect to back-tests, the one thing that we could not do is replicate their investment strategy with a sufficiently high enough precision. As a result, we decided to pass on this manager. As is turns out, our due diligence turned out to be correct, and the red flags that we raised were soon independently uncovered by the U.S Securities and Exchange Commission. If you are interested, the whole story is detailed here.

Lesson: All back-tests can be made to look good. Do your research and ask: is this too good to be true? Could you reasonable recreate the results with the data at hand? There are no shortcuts in conducting due diligence. Many large U.S. firms, a large Canadian bank and a well known Canadian mutual fund company were taken in by F-Squared. The only explanation I have is that they didn’t do their homework.

Final Thoughts

Over the last few letters, we have explored several elements that are necessary for a robust due diligence process and why performance evaluation can be meaningless without understanding the investment firm and its people The bedrock of a good due diligence process is skepticism, but it is often in short supply. My team and I closely examine the people, philosophy and process of our investment manager candidates to uncover what I call their eco-systems and “ego-systems.” Remember that investment professionals are people. They make decisions just like the rest of us do and we can turn to psychology and behavioural finance for insights in understanding them. Similarly, investment organizations are like all other organizations. Don’t get tripped up by spending all of your time looking at past performance, when what is really important is how the organization works and how the people in it behave. Hopefully the examples and tips that I provided can help you avoid some of the most common mistakes.

Until next week, stay safe and be well.

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of May 6, 2020 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

“Pedigree” is for Racing Pigeons, not Investment Managers

Wed, 27 May 2020 14:43:00 GMT

Last week, we discussed two elements of due diligence: the importance of going beyond narratives and numbers, and that fund names rarely describe what a fund truly does. This week, we’ll expand this conversation a little further and I’ll highlight a few stories as examples of what I’ve seen during my career.

Investment Success is not Determined by a Gene Factor

I recently met an investment manager who started his own firm after a long career with a well-known Canadian investment firm. Part of their pitch was: “I think we have a unique product, pedigree and experience.”

What struck me in that statement was the word “pedigree”. In my youth, I raised racing pigeons (yes, I’ve had an eclectic history of interests!), so I know a little about genetics and pedigrees and what characteristics make for a winning race pigeon. Throughout my career though, I’ve never known pedigree to have ever been an element for success in investment management.

As far as I know, there is no investment management gene that determines success; and success isn’t automatically passed on because you worked at a given firm. Similarly, there isn’t a guarantee that what worked for an individual at one organization can be successfully replicated at another. Too often, the progeny of investment firms go out into the world and do not achieve success for their new clients. Why is that?

Simply put, investment management success is not about the individual, it is about a collection of individuals, structures and organizational culture.

The purpose of due diligence is to find the messiness in an organization, and the purpose of manager selection is to value the firm clearly in the context of everything else, including our investment objectives. The bedrock of a good due diligence process is skepticism, but it is often in short supply. My team and I closely examine the people, philosophy and process of our investment manager candidates to uncover what I call their ecosystems and “egosystems.” Remember that investment professionals are people. They make decisions just like the rest of us do, and we can turn to psychology and behavioural finance for insights in understanding them. Similarly, investment organizations are like all other organizations. Investors are often tripped up in their analysis because they spend all their time looking at past performance and pedigrees, when what is really important is how the organization works and how the people in it behave.

Just Because it’s Neatly Classified Doesn’t Make it True or Useful

I’ve stated previously that there are 3,359 unique mutual funds and 969 ETFs in Canada. That’s a lot of choice. Faced with a large and growing number of mutual funds in the financial marketplace, investors need a way to select funds that will best accommodate their own personal risk tolerances, objectives and preferences. Mutual fund classifications are one way to simplify that decision process and find the “right” fund. Apart from allowing investors to tailor their choice of fund to their own risk level and income need, the classification system, in theory, allows investors to rate the performance of mutual funds within their respective categories.

However, many research studies 1 , have shown that 40% of the funds examined displayed return patterns that more closely resembled another category than the one listed in their prospectuses.

Of those, 9% were seriously misclassified two or more risk tiers away from their declared categories and exhibited behaviour that is inconsistent with their category. The study by Dennis Bams, Roger Otten, Ehsan Ramezanifar found that, in the long run, misclassified funds significantly underperformed well-classified funds by 0.92% per year. Much of this underperformance is due to “style drift”, meaning the fund’s managers changed their investment style over time. Some of the reasons for this may be due to an inconsistent investment philosophy or changes to an investment team. This is why the adherence to philosophy and the stability of an investment team’s members is something my team an I research and monitor closely when we evaluate our stable of investment managers.

Here are some of the questions we take the time to ask when selecting a fund or investment management team.

What is the goal of the fund and how does it intend to achieve its goal?
Has the fund’s investment approach changed over time?
How long has the team been running the fund and what are their prior experiences?
Has there been any turnover in the team? If so, when and who?
What is the fund’s benchmark?
What market environments should lead to the fund outperforming, or underperforming, its benchmark?
What makes the fund different from its peers?

We ask these questions every day.

A manager may describe their investment process in a certain way, often finding creative ways to describe their process and their style. Case in point: last year, our team met with an investment team that described their investment process as “value-style” and insisted that Morningstar had misclassified them as growth managers. In my experience, that’s a first!

I admit, life is more complex than the Morningstar style boxes. In most of our endeavours, we try to avoid ambiguity and are quick to classify people, places and things. Such classifications make it easier for us to think in a shorthand way. Yet, while it takes some of the complexity out of the intricate nature of everyday life, it creates the real possibility of errors in mis-categorization.

Lesson : Don’t make decisions based on the narratives presented to you. If you cannot describe the firm’s investment process beyond what is written on the marketing material, then you don’t really understand it. Along the same lines, it’s important to understand the limitations of standard classifications.

If you aren’t verifying, comparing and contrasting investment strategies, but depending on the tidy boxes that some third party has designed, then you are likely to make poor choices and comparisons.

The Hamster Wheel of Performance Chasing

The most common error with historical performance information is the desire to chase performance. No one admits to performance chasing, but it is prevalent even though evidence shows it does not work for long. So why do we continue to do it? In a world of ambiguity, performance is something we can anchor on. Perhaps it has to do with what psychologists call “recency bias,” believing that the conditions that persisted in our recent past will continue to persist. If we know this, then why can’t we stop? Consider these questions posed by Jason Hsu 2 , adjunct professor at UCLA’s Anderson School of Management and founder, chairman and CIO of Rayliant Global Advisors, a quantitative asset manager based in Hong Kong, as well as co-founder of Research Affiliates:

Would a consultant or financial advisor recommend a shortlist of managers with poor recent performance?
Would the pension CIO and his staff choose a manager with a negative trailing three-year alpha (return above the benchmark) to present to their layman board?
Given a keen understanding of investors’ buying behaviour, would salespeople and marketers educate client prospects on products that have recently underperformed?

Well, most would not recommend managers that have underperformed. Rather than take the time to educate clients on managers that have underperformed and explain to them that the underperformers may offer a great investment opportunity, most simply do not mention the underperformers. We are conditioned to not consider managers who do not have good performance over the past few years, mostly because of concerns relating to career risk and business risk. It basically comes down to market conventions and fear trumping best practice. But, as Howard Marks, the founder of Oaktree Capital Management, the largest investor in distressed securities worldwide, put it, “to achieve better results, you have to invest differently than the average investor. To do that, you have to think differently than the average investor. And to do that, you have to consider different inputs than the average investor, or consider inputs differently. 3

Final Thoughts

Evaluating an investment manager, investment strategy or fund is a complex and detailed process that encompasses a great deal more than just analysing returns. The focus is on understanding how past investment results were achieved and assessing the likelihood that the investment process that generated those returns will produce superior – or at least satisfactory – investment results going forward. Due diligence also entails an evaluation of a firm’s integrity, operations, and personnel – both quantitatively and qualitatively. Classification systems, pedigree and narratives aren’t due diligence factors that will raise the probability of finding a successful investment manager. For all the reasons discussed, these will likely lead you to the wrong choices.

Lastly, to have investment success, we need to break the hamster wheel of chasing performance and do things differently, think differently. That means doing the hard due diligence work and making those difficult recommendations. Hopefully, you have found this series of due diligence letters informative.

Next week is the last one in this series, where we discuss how having too much success can be bad for future performance and why you need to be wary of the backtest.

Until next time, stay safe and be well.

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

1diBartolomeo & Wikowski (1997), Brown & Goetzmann (1997), Kim, Shukla & Tomas (2000), Kim, White & Stone (2005), Cremers and Petajisto (2007), and Mason et al. (2012), Dennis Bams, Roger Otten, Ehsan Ramezanifar (2016), among others

2Jason Hsu, “If Factor Returns Are Predictable, Why Is There an Investor Return Gap?,” Fundamentals (November 2015): www. researchaffiliates.com/Our%20Ideas/Insights/Fundamentals/ Pages/488_If_Factor_Returns_Are_Predictable_Why_Is_There_ an_Investor_Return_Gap.aspx.

3Letter from Howard Marks to Oaktree Clients, “What Does the Market Know?” (2016): www.oaktreecapital.com/docs/defaultsource/memos/what-does-the-market-know.pdf.

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of May 6, 2020 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

When a business owner faces retirement: A clean exit or stay involved?

Tue, 26 May 2020 20:55:00 GMT

You’ve spent decades building your business and making it your own. Retirement is on the horizon, and it’s time to think about transitioning your company to a successor.

Can you imagine being a full-fledged business owner one day and a laid-back retiree the next? Some owners are ready and able to leave the business behind while others prefer to keep a foot in the door. It’s a very personal decision, based on your own feelings and the nature of your company, but you do have choices.

A clean exit

For some owners, cutting ties to the business upon retirement is not a difficult decision. They may be very excited about welcoming this entirely new chapter of their life. Others may want to exit due to health issues and are quite ready to let go of the daily duties and obligations. Whatever the reason, there’s a lot to be said for a clean exit. After working hard for decades, it’s time to take it easy, travel, spend time with family and fulfill retirement dreams.

If you do intend to exit cleanly, selling to an outside buyer may be the easiest way to completely remove yourself from the business. You can still make a clean exit when a family member or current executive takes over, but you may need great resolve to keep away from business operations. The new owner, being close to you, may seek your advice or you may be tempted to step in to offer guidance.

Staying involved throughout retirement

A clean exit, however, isn’t for everyone. When you own and manage a business, it’s not just a job – it can be your identity. For many business owners it’s only natural to wish to maintain ties to the company while also enjoying the life of a retiree.

Fortunately, there are ways to stay involved during retirement. In fact, you could still own the company. Hire a general manager or suitable replacement who performs your former duties, while you draw earnings to help fund your retirement. Or, you may sell the business to an outside buyer, family member, or current executive with the provision that you hold an ongoing position in the company – a position involving limited hours. This can be any permanent part-time role that makes business sense to the new owner and is personally fulfilling for you. For example, mentoring staff, helping retain existing customers or servicing a large new customer.

Staying involved…temporarily

There is another possibility. You stay involved in business operations after the sale, but only for a specified period – perhaps several months or one or two years.

This gradual transition can be ideal because it’s mutually beneficial. You have the personal satisfaction of helping ensure the business you built continues successfully, while gently easing into your new retirement lifestyle. The buyer is better able to learn the business, establish rapport with staff and develop relationships with customers. Your temporary role could be a term of the sales agreement or you could be paid as a consultant for your contribution during the transition.

The choice about whether or not to maintain ties to your business during retirement also involve financial considerations. You can contemplate the personal side of your possible choices and talk to your Advisor or one of our Advisors for input on the financial side of this important life decision.

The bottom-line is to ensure your business succession plan meets your personal goals, so you enjoy your retirement just the way you envision it.

Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Investment Planning Counsel is a fully integrated Wealth Management Company. Mutual Funds available through IPC Investment Corporation and IPC Securities Corporation. Securities available through IPC Securities Corporation, a member of the Canadian Investor Protection Fund. IPC Private Wealth is a program offered by IPC Securities Corporation. Member of the Canadian Investor Protection Fund. This blog post is for informational purposes only and is not and should not be construed as professional advice to any individual. Individuals should contact their IPCSC advisor for professional advice regarding their personal circumstances and/or financial position.

The Narratives and Illusions of Investment Management

Wed, 20 May 2020 14:53:00 GMT

Over my next few letters, I’ll take you through examples of what to look out for and give you a sense of the types of questions to consider when evaluating potential funds. This week, we look at two themes: Stories and Numbers; and What’s in a Name.

After reading my last letter on the Fear of Missing Out (FOMO) , where I touched on the need to ask lots of questions when evaluating investment funds, a colleague remarked, “great advice, except, I wouldn’t even know where to begin, or what kind of questions to ask. Please tell me more!” So, Alexandra, this week, I respond to your feedback.

Investors often interpret a fund’s past performance as evidence of a strategy’s merit or the skill of its management team. So, it’s no surprise they chase performance. Numerous studies, including one of the most important ones on the topic 1 , found that funds that have outperformed over the past year tended to continue to outperform over the following year.

However, this performance edge largely disappeared over longer horizons, mainly because the market’s preference for stocks – or investment styles – changes over an economic cycle.

This trend indicates that there isn’t a reliable relationship between past and future performance over horizons longer than three years. It’s also evidence that investors should not hire, or fire, investment managers (or select a fund) based on past performance alone. Why? Because on its own, past performance is not a clear measure of skill. For many reasons, including bad luck, even the best managers don’t outperform consistently given their pre-disposition to stocks with a common set of characteristics. As such, when evaluating investment funds, investors should combine performance analysis with an assessment of other quantitative and qualitative factors, such as a fund’s fees, quality of its investment process and management team, and the stewardship practices of the asset management firm. We group these into what we call our ‘8P Evaluation Metrics’ (where we ask questions about the Philosophy, Process, Progress, Purpose, People, Perspective, Passion, and Performance of a team and investment strategy). This rounded approach improves our odds of success for our clients.

Over my next few letters, I’ll take you through examples of what to look out for and give you a sense of the types of questions to consider when evaluating potential funds.

This week, we look at two themes: Stories and Numbers ; and What’s in a Name .

Stories and Numbers

Doing your due diligence is more than just collecting information or ticking a checklist of questions. This formula does not work. As humans, we have many biases that lead us astray when making assessments. How information is presented to us affects what we think.
Over my 20-year career, I’ve attended at least a thousand due diligence meetings and read at least as many pitch books. I can tell you they all look pretty much the same on the surface. Most people, however, miss a wealth of information during these meetings because it’s not found on any standardized checklist.

Let me show you what I mean. Take a moment to watch this short video 2 (some of you may have seen this before).

In the video, kids are passing a ball back and forth. How many passes did you count?

How many passes did you count?

Did you see the gorilla? Don’t feel bad if you didn’t. In experiments at Harvard University, half the people who watched the video and counted the passes missed the gorilla.

Did you see the curtains change colour, or that one of the players in black left the game? No, then watch the video again.

This experiment reveals two things:

we miss a lot of what goes on around us; and
we have no idea we are missing so much.

So, you may be saying, that was an entertaining exercise, but what does it have to do with numbers and stories?

(By the way, if you’re wondering, the answer to the number of passes is 16).

This exercise illustrates my point. When we are so focused on a task, such as interviewing an investment management team, we often miss significant details.

Numbers and stories are at the core of how information is relayed and how we make decisions. However, both numbers and stories have traps, so how we process them is critical to decision making. With numbers, we tend to rely on history. Historical data is often presented as ‘proof’, but it’s really the allure of proof. History is not proof, just “proofiness”, as Nobel Prize winning economist, Paul Samuelson, was fond of saying.

Stories, well they are powerful. Stories connect with people’s emotions, they are remembered, and they elicit action. Why is this so?

There is evidence that we are all wired to connect to stories. Perhaps it’s because, for centuries, knowledge was passed from one generation to the next through storytelling.

Professor Paul J. Zak found that stories elicit chemical and electrical reactions in our brains. He explains it in this video.

Stories, however, can be dangerous, not just for the listener, but also for the storyteller. For the storyteller, it is easy to wander into an alternate form of reality, where the line between good stories and fairy tales get crossed. For the listener, stories can appeal more to their emotions than to reason. Stories also play on our irrationalities, leading us to trust and believe without question. Ultimately, a good story is less about specifics and more about big picture. With investment funds, it usually speaks to star investment managers, pedigrees, track record, grand visions of the future and stock exploits.

By now you might be thinking, “if I can’t trust the story, then I should just believe the numbers.” No, I’m not saying that. I understand the appeal of numbers. In a world of uncertainty, numbers offer us a sense of precision and objectivity and are a counterbalance to stories. As our CEO, Chris Reynolds, is fond of saying “numbers don’t lie.” However, I would have to disagree with Chris. The precision that we seek in numbers is often illusionary. There are a multitude of ways in which our own biases can find their way into numbers. As Aswath Damodaran, Professor of Finance at the Stern School of Business at New York University, and sometimes known as the 'Dean of Valuation' writes “we number crunchers often use numbers to both inform and intimidate.”

The First Lesson of Due Diligence : Avoid the temptation to let the stories and numbers that are presented to you drive your investment decisions. Instead, break through the narrative and dig into the numbers. It is important to understand the philosophy, process, and people that drive those investment results.

What’s in a Name (of an investment fund)

A quick Google search describes the following rules for good product names:

It should be readable and writable
It should be unique
It should be short, punchy and memorable
It should look good written down and sound cool to say
It should evoke an emotion, feeling or idea

Ok, let’s be honest. An investment fund’s name is rarely cool to say, let alone unique. When it comes to investment funds, the issue with these rules is that names don’t convey what an investment solution is or what it’s supposed to do. Also, in the investment industry, as with other industries, there is liberal use of certain words such as ‘value’, ‘dividend’, ‘balanced’. To illustrate what I mean, let’s look at the following two funds as an example:

Manulife US Monthly High Income
Manulife US Balanced Value Private Trust

On the face of it, these look like two completely different funds. The only thing they seem to have in common is that they are both distributed by Manulife and, from their names, focus on the investing in the U.S. However, when you dig a little deeper, you will find that the two funds have a lot more in common than their names suggest.

A quick look at my Morningstar Direct application (if you don’t have access to Morningstar Direct, a quick review of the funds’ holdings documents) will reveal that the Manulife US Balanced Value Private Trust’s assets are 99.8% invested in the Manulife US Monthly High Income fund. In other words, the first fund’s only investment is the second fund. The second interesting fact is that the Manulife US Balanced Value Private Trust isn’t a value fund at all. A simple review of the investment style (see chart below) shows that the Private Trust, and the underlying US Monthly Income Fund, are very much growth funds in style. Wolf is sheep’s clothing? You decide. By the way, this isn’t to pick on Manulife. This is just one example of many naming issues in our industry.

The Second Lesson of Due Diligence : Investment fund names don’t always convey what a fund does. Like any other product, names are way to get a potential purchaser’s attention. Investors should consult various sources such as Morningstar, the Fund Facts, a fund’s financial statements and other available documentation, or their financial advisor to go behind the scene and understand a fund’s strategy better.

Final Thoughts

Evaluating an investment manager or investment solution is complex. It is a detailed process that must go beyond the narrative presented to us.

The focus is to understand how past performance results were achieved and to assess the likelihood that the investment process that generated those returns will produce superior, or at least satisfactory, investment results going forward.

Due diligence also entails the evaluation of a firm’s integrity, operations, and personnel (i.e. independent quantitative and qualitative analysis). I don’t expect individual investors or advisors to do the level of due diligence that my team and I can do (nor do I think they will reasonably be able to do so comprehensively). Hopefully, the examples and tips I’ve provided will help them avoid some of the most common mistakes. In my next letter, we will explore how investment fund classifications are misleading and how a manager’s perspective of their investment style and process should be taken with a grain of salt (or perhaps a tablespoon!)

A few of you made some helpful suggestions to deal with Leo’s iPhone FOMO. Some suggested I point out that many of my colleagues had older phones. I took their advice and I have to say it failed miserably! Leo’s response was very “altruistic”. He suggested I purchase a new phone, so he could have my iPhone 11 and then he would give his phone to my colleague. “Everyone is now happier and better off Daddy”. Hmm, I’m not sure that everyone is better off. I think my wallet is significantly lighter in that scenario! Maybe I should go back to my original plan and buy him this phone….it was new in 1980!

Until next week, stay safe and be well.

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

1 On Persistence in Mutual Fund Performance, Mark, M Carhart, The Journal of Finance, Vol. 52, No. 1. (March 1997)

2 The Monkey Business Illusion by Daniel Simons, shortened

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of May 6, 2020 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

FOMO: An Affliction Among 11-Year-Old Boys and Investors Alike

Wed, 06 May 2020 17:10:00 GMT

Last week, my 11-year-old son, Leo, presented me with this letter.

What struck me, aside from the fact that it was a well-written argument (at least from my perspective), was his emotional FOMO response. FOMO (the Fear of Missing Out) is real whether you’re a child feeling the social pressures of having the latest phone, or an investor looking at alternatives to your current portfolio.

Why do we have FOMO? Behavioral economics and decision theory help explain some of this. These bodies of study say that common human errors can arise from cognitive shortcuts and biases that affect how we make decisions1. One of these biases, the basis of FOMO, is the Paradox of Choice.

Psychologist, Barry Schwartz, says the more choices we have, the less happy we are with what we choose 2 . Too many choices can also lead to poor decisions, anxiety, and depressive FOMO feelings.

Schwartz explains the Fear of Missing Out in this TED Talk .

The Paradox of Choice, FOMO and Investing

So why are investors susceptible to FOMO?

There are some 3,359 unique mutual funds and 969 ETFs in Canada. That’s a lot of choice, and it can – and does – lead to decisions that can be destructive to our long-term objectives. When faced with too many choices, our brains have a way of suppressing ambiguity so that a single interpretation is chosen, without us ever being aware of the ambiguity3. When it comes to investments, that single interpretation is often ‘historical performance’. Unsurprisingly so, as past performance is the most widely available and easily comparable metric. Yet, when used alone, it can also be the most misleading.

Market conditions are cyclical. Styles and sectors move in and out of favour from year to year. As the saying goes, “every dog has its day.” The fact is funds too cycle in and out of favour. Plus, there is a high volume of data and analytical complexity that are not reflected in typical measures used to evaluate funds (such as the Morningstar “star” rating). So, historical performance alone don’t provide enough information on the objectives of a fund or the drivers of past performance for us to make well-informed decisions.

Past Performance is Not a Guarantee of Future Performance

Take, for example, two funds in the same category (e.g. global neutral balanced). The objective for one is to closely match the benchmark or category performance (to reduce investor FOMO). The second fund’s objective is to minimize large losses due to persistent market declines. These different objectives are not reflected in the funds’ names or their category. The subtle differences are discerned only by asking lots of questions.

The key to reducing FOMO and increasing happiness and savings is to understand what’s most important to you as an investor.

Do you want short-term relative performance, or to maximize the probability of meeting your financial goals, while minimizing losses along the way?

My suggestion is to reduce the number of options you consider. Ask lots of questions throughout the selection process. Remember, decisions can be only made with the best information at hand at the time. View limits on the choices you face as liberating not constraining. Focus on outcomes: yours as well as those of your portfolio relative to your financial plan.

When my team and I evaluate investment managers, performance is one of eight metrics. The other seven are qualitative measures (i.e. an investment team’s philosophy, process, people, passion, perspective, purpose and progress). We ask a lot of questions throughout our process to uncover risks and opportunities. This approach helps improve our decision-making process and has enabled us to avoid costly mistakes both in hiring and changing investment managers.

As a parent, and an investment manager ...

...the lesson here is that there are no ‘right’ answers. We need to be transparent in our choices, stick to our values, and focus on our objectives.

Perfection is not possible whether in parenting or investment management. The best we can hope for is to be right more than 50% of the time and when we are ‘wrong’, that the damage is limited, so that the impact of our successes outweighs that of our mistakes.

Markets and Economics: Investor FOMO May Feel Real Now

Markets rallied nearly 30% through April, but some retail investors would have missed it if they were sitting in cash. For them, FOMO could be real now and they may try to chase returns. The question is, are investors getting ahead of themselves and have valuations become “expensive” again? The following are some statistics that I have been looking at to discern investor expectations versus our own.

Valuations

The long-run average price to earnings (“P/E”) ratio for global stocks is about 15.5x. As of last Friday, the 12-month forward P/E based on consensus estimates was 17.3x, above its pre-pandemic level. From my perspective, investors are underestimating the damage to earnings this year and next. The consensus projects earnings will contract -14.4% in 2020 and grow 23.5% in 2021. If earnings fall more than estimated, then markets are much more expensive than the 17.3x future earnings implies. One of our investment managers, Irish Life Investment Management, estimates earnings will contract 50% in 2020 and rise 40% in 2021. This implies a 12-month forward P/E of 20.4x, also more than the 17.3x consensus. Regardless of which estimate you use (consensus or Irish Life), the current P/Es are elevated relative to historical the average.

Economic health

The composite Purchasing Manager’s Index (PMI), which measures the prevailing direction of economic trends in the manufacturing and service sectors, tells another story. Flash figures for April suggests the composite PMI will have fallen approximately 42% year-over-year. The chart below highlights the divergence in expectations between the current equity market and the economic backdrop – investors are expecting a “V-shaped” recovery but prevailing economic conditions suggest a longer, deeper slowdown.

Central bank policies

The rise in equity markets since the March 23 lows are at least partly, if not mostly, due to investor confidence that central banks will continue to intervene and support markets. However, this puts central banks in a quandary, as doing so creates a moral hazard for investors. Central banks don’t want to trigger volatility by signalling that they have no intention to continue to expand monetary policy programs to buying stocks. Instead, they have chosen to be silent, hoping an economic recovery will justify current market valuations. However, a corporate debt default cycle is coming. The question is the scale and duration of damage from defaults.

Though central banks may succeed in blunting the default cycle for now, the debt burden will increase in two to three years – intensifying the pressure to keep rates low.

I could look at many more pieces of data to infer information. However, for the purpose of this letter, these suffice. What we can sum up here are the following:

Investors are optimistic, based on current valuations, which are expensive
Businesses are pessimistic, and so the decline in earnings may be more significant
Central bank policies may have given investors a false sense of security

Another interesting tidbit this past week was the annual Berkshire Hathaway shareholder’s meeting. What came out of that meeting was that Warren Buffett was a very small buyer of stocks in March, when markets were going down, and a seller of stocks in April ($6.5 billion) when markets were going up. He is currently holding almost $125 billion in cash and U.S. treasury bills. Buffett is clearly not in a rush to invest his cash and, given current conditions, it is no wonder.

Final Thoughts

I’m not sure that I cured my son’s anxiety of not having the latest phone. Applying logic didn’t work. To be clear, he has my used iPhone 7 (Wi-Fi only), not an “old” phone by any means. I understand that peer pressure and social anxieties aren’t necessarily logical, so I’m taking the long route, having longer conversations as to what is it that a new phone will do for him, how “stuff” won’t make you happy in the long run, and that if your friends only like you for your stuff, then they aren’t really your friends. Complicated conversations to have with an 11-year-old.

Markets are driven by fear and greed. Successful investors manage their risk religiously and are fearful when others are greedy. In my mind, this is not the time to be greedy or chase returns. Rather, the best course of action is to remain thoughtful and ensure our portfolios are resilient no matter what the markets throw our way. We are happy to participate and bid our time.

With respect to your investments, we continue to focus on protecting against significant and sustained reductions in our clients’ wealth, not on relative short-term performance.

We would be lying if we said that we don’t suffer from FOMO or other cognitive biases. Recognizing that we all have biases, however, means we have a process to mitigate these cognitive mistakes. For my part, I have a checklist that I often reference – one that allows me to question my thinking and identify if I am taking a mental shortcut. Also, it helps that I have a team that isn’t afraid to challenge my thinking. A strong dose of humility is a good thing!

Until next week, stay safe and be well.

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

1 Judgement Under Uncertainty: Heuristics and Biases, Amos Tversky and Daniel Kahneman, 1974

2 Paradox of Choice, Barry Schwartz, 2004

3 Judgement Under Uncertainty: Heuristics and Biases, Amos Tversky and Daniel Kahneman, 1974

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of May 6, 2020 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

The Cost of Chasing Investment Performance

Wed, 29 Apr 2020 17:34:00 GMT

“Comparison is the thief of joy.”

- Theodore Roosevelt, 26th President of the United States

The Right Price for Value or Growth

I discussed the dynamics of the oil markets in my last letter. I believe those dynamics will be with us for quite some time, at least until the supply and demand imbalances adjust. However, another interesting dynamic has been occurring. The market is punishing value and high dividend yield stocks more than expensive growth stocks. That is disappointing news for value managers who have been waiting a long time to say "I told you so" to momentum and growth investors. Take the following example of Canadian company Shopify.

Note: Data show the price of Class A shared of Shopify listed on the New York Stock Exchange

Source: FactSet

Shares of Shopify hit a record last week, cresting at US$630 as investors scrambled for any winners in the stay-at-home economy that has resulted from the pandemic.

Shopify, which publishes and sells software for online commerce, has a business tailor-made for a time when social distancing requires consumers to do most of their buying online. Sales have been up every year since it went public in 2015. It has about $2.5 billion in cash on the books and almost no long-term debt. On the other hand, Shopify earned “only” $770,000 in the fourth quarter of 2019, and that was its first profitable quarter since going public.

In a past weekly letter, I covered the concept of price vs. value, so let’s explore that further. As a business, Shopify has tremendous potential. What investors should think about is how much they are paying for that potential. Today, for every dollar of projected earnings (consensus forecasts by equity analysts), an investor is paying $3,333.33. We call this the price-to-earnings (P/E) ratio and it gives us one way to compare the relative expensiveness or cheapness of companies. Growth stocks are typically more expensive than the overall stock market, but a PE ratio of 3,333x is extraordinary.

A growing company is typically reinvesting into its business and doesn’t have any earnings, so looking at a metric like price-to-sales (P/S) ratio and comparing it to another successful company like Amazon would be more appropriate. Amazon has grown to be the largest company in the world, but it has not produced much value in the way of profits or earnings over the past 20 years as it has reinvested back into the business. But most investors would agree that Amazon has created phenomenal value along the way.

Currently, Shopify has a P/S of 46x, while Amazon has a P/S ratio of 4.33x. This implies that investors are assuming that Shopify will continue to grow unabated at a rate of 101% per year over the next 10 years in order for that P/S ratio to be equal to Amazon. Is a growth rate of 101% each year over the next 10 years reasonable? I don’t know for certain, but looking at Amazon’s historical growth rate over 10-year rolling periods, I would say that it may be a stretch.

I’m not saying that Shopify or other growth stocks shouldn’t be in an investor’s portfolio - we certainly do have them in ours - but in measured quantities and with a full understanding of the risk/return trade-offs. Today, investors are crowding into companies that they believe to be structural winners due to the impact of social distancing, but do their growth assumptions make sense? This brings back memories of the Tech bubble in 1999-2000 when analysts found new metrics, such as “price-to-eyeballs,” to justify the market cap of businesses such as Pets.com.

During every crisis, investors abandon adherence to fundamentals on the premise that they are in unique times and instead chase price.

True, it is difficult to measure what will be the full impact on a company throughout a crisis. However, investors ultimately have to make judgements about whether the company will come out of the crisis and, if it does, what it will generate in earnings to make sensible investment decisions.

This quote has been one of my favorites because of its elegance in addressing some things that affect all of us. In my life and career, I have thought a lot about how comparison can be a double-edged sword. On one hand, it’s a healthy measure for helping us reach personal goals and staying aligned to our personal values. On the other, it can drive us to worry about things we cannot control. When it comes to our finances, it can be detrimental to our long-term goals.

In high sc hool, I had a friend, whom I’ll call Tom. Tom was accomplished. He played the violin, was a good athlete and was excellent academically. Although Tom did his best in every subject and his report card was good term after term, it was never good enough for his parents. Tom would come home with an A+ (95%+) in math and sciences but his parents would say, “what happened to the other 5%?”, or “you know your cousin got 100% in biology?” Luckily, Tom turned out “normal”. He’s a successful engineer and has a nice family. Fortunately, Tom kept a positive perspective on his parent’s comments. He knew it was just their way of encouraging him to do better. Had Tom a different perspective, I’m sure these unrealistic expectations could have crushed him or caused him to take a different path in life.

Investors suffer from the same affliction as Tom’s parents and it often leads to poor decisions, lower returns and a less comfortable retirement.

A real-life investment example comes to mind. From 1997 to the first quarter of 2000, value managers had a tough go. Old economy stocks were passé and anything internet related was on fire. Clients were firing their value managers to go to growth managers. One particular client – let’s call him Bob (I’m sure there were many) had the unfortunate timing of doing so in March 2000, at the height of the Technology bubble. This cost them dearly. How much? Let’s look at the below chart:

Untimely Switching: The Impact on Performance

Bob invested in a value-style fund on January 1, 1996 and held it through February 28, 2000, when he switched to a growth-style fund on March 1, 2000 and held that through December 31, 2005. The chart shows Bob’s dilemma. From the end of 1998 through to the end of 1999, the value fund lagged the growth fund considerably. The temptation to chase returns was obviously very strong and Bob’s switch cost him considerably. At the end of the 10-year period, he had lost nearly 40% of his initial investment. Had he not made the switch, his portfolio would have grown by 251%, handsomely beating the growth of the S&P 500 of 104% and even the results of the growth fund’s 85%. Now, you may be a disciplined investor and would never chase returns, but let’s look at how the average investor tends to behave.

According to Dalbar, a Massachusetts research firm that has studied the behaviour of mutual fund investors for the past 26 years, the average investor underperformed the markets for both stocks and bonds over the past year, five, 10, 20 and 30 years.

Comparatively, through December 31, 2018, the average investor underperformed by:

5.88 percentage points, annualized, over 30 years (455% less total wealth);
3.46 percentage points, annualized, over 10 years (41% less total wealth);
4.35 percentage points, annualized over five years. (24% less total wealth)

(Source: 2018 Dalbar Quantitative Analysis of Investor Behavior)

Dalbar outlines several negative behaviours that cause this, but two of the biggest were:

Leaving the market during volatile periods; and
Performance chasing (i.e. switching current investments for ones that had done better recently).

Dalbar’s data leads to the inescapable conclusion that most investors suffer from performance anxiety. We make incorrect conclusions about performance and we panic, making ourselves poorer in the process. Thankfully though, there is help.

Another study, for example, finds that investors working with a (non-robo) financial advisor boosted their investment returns by 3% per year.

About half of this benefit came from “behavioral coaching,” which the study identified as the most influential action an advisor can take.

Is Inflation Lurking Around the Corner?

Some observers argue that once the pandemic passes, record fiscal deficits, debt sustainability concerns and higher inflation will push interest rates back up to, and potentially even above, pre-pandemic levels. Others believe that a combination of a larger private sector savings glut and something economists call yield curve control by central banks will keep interest rates low long after the pandemic has passed. So, which is it? In my April 15 letter , I provided our view on inflation, but I think this topic is so important that we should look at it a little more.

It’s far too soon to worry about inflation given the immediate humanitarian need for disaster relief. Many millions of newly unemployed people need cash now just to pay bills and buy food for themselves and their families.

Hesitating to provide help now because of inflation later would be morally wrong and is likely to set up our society for further disaster.

Approximately 26 million people across the US filed for unemployment insurance during the five-week period ending April 23. In Canada, that number was 7.8 million at last count and climbing quickly.

When people lose their jobs, they immediately cut back on discretionary spending while those who have jobs tend to reduce spending as a precaution. My family has cut back our spending. Vacations are cancelled. Restaurant meals are zero for the month and my gasoline consumption is less than one tank’s worth. Have you increased or decreased your spending over recent weeks? This sudden decline in spending reduces demand much lower than supply and thereby puts downward pressure on the prices of goods and services. Unsurprisingly, inflation expectations have dropped. According to the Bank of Canada in its April 15 update, inflation is expected to be close to zero per cent in the second quarter of 2020.

Fiscal stimulus is necessary to keep our economy functioning through this health crisis. By putting money in people’s hands, governments are propping up demand and preventing a larger than necessary decline in economic output. Failing to do so would risk a depression and profound human suffering.

It is true that when tax receipts tumble and government spending soars, deficits and debt expand.

How much new debt will be created? Economists say Canada’s federal government is headed for a $180-billion deficit this year― about seven times larger than the previous year’s deficit. But rock-bottom interest rates likely mean this massive new IOU will “only” cost taxpayers around $1 billion a year to service.

You might be saying that printing money is inflationary, and you would be right – if the value of output and consumption were otherwise the same. But in this crisis, not only is consumption declining, but we are also losing productivity every day. If today’s money printing succeeds in maintaining the current value of consumption spending, then there would be many more dollars chasing fewer goods and services, and the result would be inflation. However, consumption has declined in line with the value of lost output.

In our view, we shouldn’t be worried about the quantitative easing policies by the Bank of Canada or the U.S. Federal Reserve.

It won’t be inflationary. We should be aware of and concerned about fiscal policy conducted by our governments. If they are imprudent about deficit spending beyond this crisis, then we should be concerned. After the economy recovers to full employment, ongoing high levels of deficit spending would be inflationary. Will our governments have the foresight and will to be prudent? I hope so. Whatever comes, as I have mentioned in my previous notes, we will manage through it.

Final Thoughts

I know that the last several weeks have been difficult for everyone, not just on a personal level but also on the economic front. As social beings, we are growing tired of being apart and we long for going back to the way things were. We see the evidence of that in the U.S., where there are protests over social distancing. Closer to home, with the warm weather this past Saturday in southern Ontario, I saw a dramatic increase in the number of people out and about.

Personally, every day feels like ground hog day. The routine is the same. Video conference calls weigh on me. I think I’m getting ‘ Zoom Fatigue ’. As you have heard me say, I long for the outdoors. I’m sure many of you feel the same way. My fear is that we may abandon our discipline and, as a result, it may cost us in the long term. Japan’s northern island of Hokkaido offers a grim lesson of what happens when restrictions are lifted too swiftly. Hokkaido acted quickly and contained an early outbreak of the coronavirus with a three-week lockdown. But, when the governor lifted restrictions, a second wave of infections hit even harder and, 26 days later, the island was forced back into lockdown. Let’s stay disciplined. Just like investing, this is going to be hard. There are no easy shortcuts to battling COVID-19 or to achieving your long-term goals.

Whatever your investments, when you are feeling that itch to chase performance, or make performance comparisons, remember that comparisons can be a double-edged sword if you don’t understand what drove that performance and why. Equally, it’s important to go back to the fundamental reasons of how your investments fit into your financial plan and assess whether they are keeping you on track to meeting your goals.

Until next week, stay safe and be well.

Corrado Tiralongo

Vice President, Asset Allocation & Chief Investment Officer

Canada Life Investment Management

Disclaimers:

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of April 29, 2020 . There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  Investment Planning Counsel Inc. is a fully integrated wealth management company. Counsel Portfolios are a family of funds managed by Canada Life Investment Management Ltd., a subsidiary of the Canada Life Assurance Company. Trademarks owned by Investment Planning Counsel Inc. and licensed to its subsidiary corporations. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation.

Business Succession Planning 101

Fri, 10 Apr 2020 14:02:00 GMT

What you should know before transferring, selling, or winding down a business

Selling a business or passing it on to the next generation can be the most important financial event in an entrepreneur’s lifetime. But Canadian small business owners are not succeeding when it comes to succession planning, reveals a new IPC Private Wealth poll.

The poll’s two most startling findings are linked and, fortunately, quite solvable. According to a poll of 300 business owners with 50 or fewer full-time employees, 42 per cent are uncertain about their retirement and almost half – 48 per cent – have no plans to seek the help of a financial advisor regarding business succession planning.

Chances are, if those business owners who are unsure about their future consulted with a financial advisor, they would feel much more confident.

Creating a Plan

Entrepreneurs, by their very nature, are resilient self-starters. They’re used to acting on their own. But when it comes to planning how to pass on, sell or wind down their business, acting alone is no longer in their best interest. This is where the true value of a financial advisor shines. By getting to know the full picture of an individual’s business and personal finances, an advisor can work with an entrepreneur, their business partners and/or family members to plan for the future. And as other specialist business professionals are needed – such as lawyers, tax professional, accountants – they can be brought to the table.

Only 36% of the small-business owners polled informed their family about their plans.

Contrary to what many business owners think, succession planning shouldn’t just take place when retirement is in sight. Most financial advisors suggest it should be done at least five years before retirement, and many believe a succession plan should always be in place – in case the business owner is unexpectedly unable to continue to work.

Having a plan in place can increase certainty around retirement for an entrepreneur and their family, but it’s not something that can be created over just one meeting or a weekend-long planning session. An effective succession plan involves real soul searching on the part of the business owner, guided by a knowledgeable advisor, as well as multiple meetings with family members, and full transparency when it comes to finances and future projections.

Once a succession plan is in place, it should be shared with family members or other stakeholders. Surprisingly, after working hard on a succession plan, only 36 per cent of the small-business owners polled informed their family about it.

Passing the Torch

The poll also found that more than one-third (36 per cent) of business owners don’t plan to give up ownership until they are too unwell to manage their own business. It’s a number that’s shockingly high, and it indicates that too many business owners will not be actively involved in the future of their business because they might be too ill to do so. They may be forced to sell under duress or hand over their life’s work to a family member who hasn’t been adequately prepared or trained.

36%

Don't plan to give up ownership until they are too unwell to manage the business on their own.

25%

Say they will exit when they have enough money to retire.

Another 25 per cent said they would exit their business when they felt they had enough money to fund their retirement – a sum that can be difficult to assess without the help of a financial planner.

Interestingly, among small-business owners with more than $1 million in investable assets, 23 per cent planned to hold on to their business until they were too sick to run it, and 29 per cent reported they would exit their business once they were sure their successor or heir could run it successfully.

Future Business Challenges

When it comes to selling a business, most business owners want to get top dollar for their enterprise, which means running it profitably and growing it leading up to a sale. But there can be barriers to those goals.

When asked to identify the most significant challenge to growing and increasing the value of their business, the majority (64 per cent) of entrepreneurs who were surveyed cited new federal tax changes, while 59 per cent cited rising labour costs and 41 per cent cited creating a business that can run smoothly without them.

Again, the three most significant challenges can all be addressed with the assistance of a financial planner and his or her key contacts.

Common Challenges

64%

Federal Tax Changes

59%

Rising Labour Costs

41%

Creating a Business that will Run Without Them

Top Six Tips for Business Succession Planning

Often given short shrift, business succession planning is a vital part of being a business owner – even if the eventual exit from the enterprise is years or decades away. These six tips should help pave the way for a successful sale or handover.

Start early

Succession-planning experts advise business owners to start drawing up plans for leaving their business five to 10 years before they think they might do so. If they’re considering handing down the business to a family member, the conversation should start when the kids are teenagers, and the dialogue should always be open and honest.

Get a plan

Divesting a higher-value business – worth $500,000 or more – involves more complexities, responsibilities, and opportunities than a lower-value business. When a valuable family business changes hands emotions can run high, so an advisor with the owner’s best interest in mind, and some psychological counselling skills, is a must.

Put systems in place

A business is less attractive to a potential purchaser if it’s too closely linked to the founder, their personality and their (sometimes quirky) way of doing things. The more a business can run itself, with systems and protocols to adhere to, the more attractive it is.

Increase the value

Business owners who plan to sell should take a hard look at their business and decide if and how they can increase its value as they get sale-ready. This could mean refocusing on the most profitable parts of the business or cutting segments that weigh it down.

Ask around

Seek out other entrepreneurs who have recently sold, passed on, or wound down their business and ask them to reflect on theIr experience. What did they do right? What would they have done differently?

Bring a financial advisor on board

Unlike a lawyer or an accountant, a financial advisor considers business succession holistically and looks at the best interest of the business owner and the family in transitioning a business. He or she can act as a trusted family advisor and look at the big picture, over the long term, and bring in other experts as needed. A worthy financial advisor not only helps with the transfer of the business, but also eases the transition into retirement for entrepreneurs, many of whom have been completely consumed by their business for decades or more.

Rely on a Professional

A financial advisor should be part of any business owner’s team of experts from day one, as an experienced expert who has broad and deep knowledge, and access to professional counter-parts across a range of other wealth management and planning disciplines. But they play an especially important role when an entrepreneur decides to consider selling, passing down or closing out his or her business. In fact, they’re a team member that no business can afford to be without.

Survey method: A total of 300 respondents across Canada were interviewed using an online methodology during the period July 24 - August 2, 2018. The survey was conducted by Environics Research.

The information and any statistical data contained herein were obtained from sources that we believe to be reliable, but we do not represent that they are accurate or complete, and they should not be relied upon as such

Proactive Leadership - Demonstrating the Value of Financial Advice

Fri, 27 Mar 2020 17:24:00 GMT

Now is the time to be thoughtful, to show leadership with empathy, and to proactively communicate with friends, family and clients. Above all, this is the time to demonstrate your value. Here are three simple strategies you can use to accomplish this.

How Financial Advisors can Create an Unbeatable Client Experience

Wed, 12 Feb 2020 13:56:00 GMT

Often when I talk to advisors, one-on-one relationships and financial planning are where they are delivering the greatest value. The challenge is that many advisors are not aware of how to take this success and systematically build a winning client experience in their business.

I’m talking about a really personalized process that not only adds a ‘wow’ to the service you offer, but it makes your business more efficient and successful, even when you’re not in the office.

I recently sat down with Pawel Brzeminski, host of Growing Your Financial Advisory Practice Podcast, to share:

Four factors that will make the biggest difference in client experience
The simple change that helped one advisor grow his business by 33% in one year
Where the biggest opportunities for advisors are right now

This podcast is an easy listen on the drive home, but if you’re like me, I encourage you to fast-forward to the parts that interest you or read Pawel’s takeaways here.

▶ Listen here

Here is a list of the highlights:

Why wealth management is as important as healthcare (5:10)
IPC’s Total Client Experience system and what it borrows from Disney (6:55)
Four factors that will make the biggest difference in client experience (15:45)
How financial advisors can improve the digital experience to stay relevant (19:45)
The simple change that helped one advisor grow his business by 33% (28:15)
Why commodified offerings like best returns or lowest fees are a bad idea (30:15)
Where the biggest opportunities for advisors are right now (32:00)

Let’s Make a D.E.A.L. - The 4 Hour Work Week

Tue, 11 Feb 2020 19:04:00 GMT

With RRSP season in full swing and January already behind us (wow - that was quick!), I wanted to share one of my favourite life-changing books: T he 4-Hour Work Week by Timothy Ferris .

For those who have not read this book, the themes revolve around work, life, and changing the traditional concept of retirement. However, my impression is that it describes a personal productivity philosophy and explains how you can apply it to your business. Specifically, I thought of the platform that IPC is building for our advisors and how it could lead to that freedom we all desire.

The basic premise of the book is that the average person works about four hours of productive work a week, and if we set up our businesses correctly, we could work this much each week with the same income.

This book advocates the 80-20 rule: eliminating the 80 per cent of work that delivers only 20 per cent of the output and strengthening the 20 per cent that produces 80 per cent of your success.

The book describes four steps under the acronym D.E.A.L:

D is for Definition

Most of this section is devoted to divorcing yourself from the idea of working yourself to death versus doing what is important. Many financial advisors put many hours in the office but feel that they are accomplishing very little, while others don’t work nearly as many hours but have 10 times the results. Why is this? Successful advisors define what is important and focus exclusively on that.

"Successful advisors define what is important and focus exclusively on that."

Here is one key exercise from the book: spend about five minutes and define your dream. If it wasn’t for the things you had to do, what would you be doing with your life right now? Now, define your nightmare in as much detail as possible. What is the absolute worst thing that could happen if you followed that dream? If you compare the dream to the nightmare, is the nightmare terrible enough to abandon your dream?

E is for Elimination

In terms of techniques that you can use to improve your day-to-day life; this section of the book has the best advice. It focuses on some straightforward techniques for eliminating most of the mundane activities that pervade our professional life. Here are some examples that I particularly liked:

Make your to-do list for tomorrow before you finish the day. When you add an item to this list, ask yourself if you would view your day as productive if that was the only thing on the list that you accomplished. Then, when you start the next morning, attack that list with vigour knowing that all the material is worthwhile.

Immediately stop all multi-tasking. When you’re trying to write, close your e-mail program, your instant messenger, and your web browser and focus on the writing, nothing else. This allows you to churn out the task much more quickly.

Check email only twice a day. Combining this with the “no multi-tasking” principle allows email to eat up only a sliver of your time instead of bogging you down.

Start keeping track of everything you do for two weeks. At the e nd of the second week, identify and cross out every activity on the list that can be either eliminated (it adds no value to your business) or delegated to someone else. I would guess that 50% or more of your current activities are not results oriented.

"Focus on the better use of your best weapons instead of constant repair."

Emphasize strengths, don’t fix weaknesses. Most people are good at a handful of things and utterly miserable at most others. It is far more lucrative and fun to leverage your strengths instead of attempting to fix all the chinks in your armour.

The choice is between multiplication of results using strengths or incremental improvement fixing weaknesses that will, at best, become mediocre. Focus on the better use of your best weapons instead of constant repair.

This section of the book has a lot more tips but the idea is to compress and compress, so that the unnecessary is squeezed out and you are left with more effective use of your time to produce the results you desire.

A is for Automation

To me, this section is the most valuable part of the book, but not in the way that Tim describes his version of automation. What I learned here is that with a proper business set-up, you can create a stream of income that permits you to make money with minimal effort doing the things that you like. This is an excellent quote from the book:

Henry Ford once said, referring to his M odel-T the best-selling car of all time, “The customer can have any colour they want, so long as it is black.” He understood something that business people seem to have forgotten: Servicing the customer is not becoming their personal concierge and catering to their every whim and want. Customer service is providing an excellent product at an acceptable price and solving legitimate problems in the fastest manner possible. That’s it.

In other words, clients don’t want to buy a drill (or many drills) they only want a hole. However, there are still advisors who are still selling drills. Because of all the drills we have sold (that all make the same hole in the end), we have created so much complexity in our business, which means we need 60 hours a week to sort it out.

L is for Liberation

The final section in the book ties the pieces of the puzzle together. It takes the dreams defined in the first part, the enhanced productivity of the second part, and the consistent income stream of the third part and creates that titular four-hour work week.

What do you do with your free time? The whole point of this book is that the real asset in our lives is time, not money. Time allows you to follow your dreams, and this book’s message is about moving more time into your personal life so that you can do these things.

Even though I have read this book several times, I still find it to be inspirational. Not all the ideas were practical, but it did back up what has been my working premise for years—that we spend too much time on unproductive activities, and a process of delegating, outsourcing, and systemizing these activities will allow us to be more productive.

So why not apply these principles to the financial advice business? You too, cou ld have a four-hour work week.

IPC Business and Market Insights Blog

Markets Under Pressure: Risks, Repricing, and Resilience

Summary

A Pause, Not an End

Executive summary

A pause, not an end

Markets were already looking through it

Energy still does the work

Volatility is rising, but risk is not being repriced

The structural story is still in place

Portfolio perspective

Closing thought

Trust and Focus: Separating Great Advisors from Good Ones

Trust is built through clarity, consistency, and care.

Circle TWO of The Six Circle Strategy: Trust

#1 Trust Starts With You:

#2 Ask Questions That Build Trust

#3 Trust Your Team or You Can’t Scale

#4 Trust Must Be Established Early

#5 Transparency and Accountability Matter

CIRCLE THREE: FOCUS

#1 Advisors Love Complexity but It Slows Them Down

#2 The Power of Saying No

#3 The Danger of Chasing Two Rabbits

#4 Growth Mindset Enables Focus

# 5 Outsource Everything That Isn’t Your Superpower

Understanding Your Investment Costs Through Total Cost Reporting (TCR)

What You’ll See on Your 2026 Annual Statement

For investment funds and ETFs

Fund Expense Ratio (FER)

What FER looks like in dollars

How TCR benefits you

What This Means for Your Relationship With Your Advisor

Understand the value of the advice you receive

Ask questions—your advisor is there to help

Interconnected risks are rising, but this isn’t 2008

What’s driving the current concern

Framing today’s risks

Systemic risk is rising, but the transmission mechanism matters

What’s different from 2008

Private credit: a liquidity pressure point

Equity concentration: a structural vulnerability

Geopolitics and the rise of “physical risk”

A more connected system, not necessarily a more fragile one

Portfolio implications: focusing on resilience

Bottom line: fragile dynamics, not a broken system

Succession Planning Checklist

Where are you in your succession planning journey?

10 Ways to Grow Your RRSP

Are you looking for tips on how to make the most of your RRSP?

The Circle of Value: Why Real Success is Always Shared

What does it mean to create something valuable ?

If you want to build something truly enduring, don’t just ask:

What’s valuable to me?

Ask:

What's valuable to us?

U.S. and Israeli Strikes on Iran

Executive summary

Oil markets: premium priced, disruption not yet

Inflation and central banks: manageable for now ﻿

Regional economic implications

Market reaction: early signals from Asia

Our portfolio implications

Growth

Inflation

Positioning and risk management

First Home Savings Account Infographic

Wondering how the First Home Savings Account (FHSA) works with existing programs to help you save for a home?

Tariff Policy Resets, but Protectionism Persists

Executive summary

The U.S. Supreme Court ruling and immediate policy pivot

Implications for CUSMA and North American trade

Canada’s trade reorientation: Progress, but concentrated

Broader macro context

Our portfolio implications: Positioning for structural fragmentation and broader participation

Overweight U.S. equities

Underweight Canadian equities

Underweight international developed markets

Overweight emerging markets

Broadening participation remains central

Inflation and central banks: manageable for now

Insights from Corrado Tiralongo, Chief Investment Officer, Canada Life Investment Management Ltd.  

Head-spinning headlines and the limits of macro impact

The limits of European strategic autonomy

Market implications: separating signal from noise