By Paul Vorstadt

…”Markets crash all the time. You should, at minimum, expect stocks to fall at least 10% once a year, 20% once every few years, 30% or more once or twice a decade, and 50% or more once or twice during your lifetime.” –Morgan Housel of Motley Fool.

As we know, too many investors have the habit of buying towards the tops of the markets and bailing out when things get rough – they’ll often sell towards or at the bottom of the market. It’s because the narrative becomes negative and our emotions change from one of opportunity to one of fear. Our emotions lead us astray and it is our emotional decision making that leads to losses and or very small returns for many investors.

It’s easy to stay the course when markets are going up, but when uncertainty hits, it’s often hard to remember all the reasons we thought it was a good idea in the first place.

We need to remind ourselves that corrections are a natural and expected part of investing that usually provides opportunity for the patient investor. Market corrections are healthy and they can return markets to more sensible valuations. During periods of uncertainty, by slowing down the process and reviewing what is happening against our long term plan we can prevent those costly knee jerk reactions.

Looking at the market performance since 2011 and really since 2009 the market clearly had gotten ahead of itself. As such the media in addressing this correction needs to take that into consideration. Unfortunately this is how the financial media is geared, pounding the table on the news of day while at the same time trying to entertain.

Looking forward there are several things that we need to keep in mind. Again, the most important of which is that corrections are a normal part of investing in the markets. Right now we believe it is premature to fear a market crash or long term bear market. The more prudent behavior is to take this correction as an opportunity to update portfolios. In doing so there are some key issues that investors need to look at.

1. What do the intermediate market internals of supply and demand look like?
   
2. What is the impact of decreasing oil prices? Is this good news for consumers?
   
3. What is the impact of rising interest rates on the economy? And over what period of time.
   
4. Is sentiment improving?
   
5. What is the outlook for both the domestic and global economy?
   
6. Canadian Business is projecting increased hiring over the next 12 months.
   
7. Is the US economy with its strong domestic demand able to withstand the European and Emerging Market issues?
   
8. What are the effects of a strong US dollar on Canada?
   

We are not saying that this correction cannot continue, but rather this is a good time to ensure your portfolio construction under the current economic and market conditions match against your long term goals and objectives and if so then to stay the course.

© NATIONAL BANK FINANCIAL. All rights reserved 2013 – 2017.
National Bank Financial is an indirect wholly-owned subsidiary of National Bank of Canada. The National Bank of Canada is a public company listed on the Toronto Stock Exchange (NA: TSX).

Products and services of the National Bank Financial — Wealth Management are only offered in jurisdictions where they may be lawfully offered for sale. All products and services are subject to the terms of the applicable agreement. The information in this Website is subject to change without notice. This communication does not constitute an offer or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada should consult with their financial adviser to determine if these securities may lawfully be sold in their jurisdiction.

Our career in finance began in 1994; we have worked for one of Canada’s largest retail banks as well as Canada’s largest financial planning company and have been through both the “Tech Reck” of 2000 and the market crash of 2008-2009. Our move to Dundee Goodman Private Wealth was predicated by the notion that there had to be a better way.

Few industries have become as commoditized as financial services. Commoditized financial products and services of the past would no longer (possibly never did) be able to meet the needs of Canada’s aging population. We felt we needed dramatic changes in every aspect, from current business practices, to products and services.

Clients demand advice untainted by conflicts of interest. To achieve this we needed to break away from the traditional Wall St/Bay St business model. Here, we are client advocates who offer advice based on a fiduciary relationship of trust and loyalty to the client. Together we take a uniquely integrated approach to some of today’s most complex financial challenges. With our strategy we look to reduce the emotional anxiety our clients face in trying to maintain, grow and ultimately pass on their wealth.

As Portfolio Managers (PM) we deliver a premium level of discretionary wealth management designed to free you from the day-to-day details of managing your wealth. Our job is not to sell financial products. Our job is to gain a deep understanding of your financial situation, to construct a real
financial plan followed by an investment policy statement, and ultimately overseeing the daily activities necessary for strategic implementation.

 The objective is simple – to ensure that our clients are armed with the knowledge and understanding of the risks and consequences prior to making any financial decision. Where most investors go wrong is that their decisions are based on emotions. Once emotions take hold it’s like trying to stop an 8000 pound elephant. Knowledge and understanding act as the harness to control the elephant from ever running amok.

In conjunction with DGPW, we have created a community of wealth management professionals who together put unprecedented control, power, knowledge and opportunity directly on your family’s side of the table.

Consider for a moment your existing team of advisors – your lawyer, accountant, banker, etc. When was the last time they worked together with one shared goal – to understand your total needs? Collectively we can give you the greatest possible chance of reaching your long-term financial goals, with the lowest possible chance of risk and regret.

 At the end of if all, clients partner with us and DGPW to achieve the following:

Transparency– Quite simply our clients no longer operate in the dark. One of our guiding principles is to ensure our clients do not receive any surprises. The only way to do this is to give full access to information that will answer who, what, where, when, why and of course how much. Along with greater transparency comes greater accountability.

Understanding– When we combine access to information with education the result is understanding and trust. It is vital that our clients understand the inner workings of not only their financial plan, but also their investment plan. Our clients know the potential risks and consequences of all decisions.

Control– Ultimately our clients want to be in control of their financial future. Having full transparency to information combined with education will generate a level of understanding that will give control where it belongs…the client.

© NATIONAL BANK FINANCIAL. All rights reserved 2013 – 2017.
National Bank Financial is an indirect wholly-owned subsidiary of National Bank of Canada. The National Bank of Canada is a public company listed on the Toronto Stock Exchange (NA: TSX).

Products and services of the National Bank Financial — Wealth Management are only offered in jurisdictions where they may be lawfully offered for sale. All products and services are subject to the terms of the applicable agreement. The information in this Website is subject to change without notice. This communication does not constitute an offer or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada should consult with their financial adviser to determine if these securities may lawfully be sold in their jurisdiction.

    By Paul Vorstadt

For almost 20 years I have been working with clients helping them achieve a successful retirement. Over this period of time I have seen it all, the good, the bad and the downright ugly. Albeit a successful retirement means different things to everyone, it does depend on having assets and income. What kind and how much will differ.

The biggest difference between those who are successful at retirement and those who are not is the acceptance that it takes time to build wealth. Those that do not understand this or do not accept this will typically do 3 things that guarantee being poor in retirement.

1. Take on as much debt as the banks are willing to give. The banks have lots of money that they are dying to loan you….at the right interest rate of course. Debt as they say is a dirty four letter word. Using debt to push forward purchases of stuff is a sure way to ensure that you keep paying for that stuff over and over again; long past its usefulness. The more debt you have the less ability you have to save. The sooner one realizes that happiness does not come from how much stuff you have the better off you will be.
   

   If there is one thing to be taken away from the market crash of 2008-2009 it’s that at some point the debt always has to be paid.
   

2. Start investing too late in life. There is no substitute for time! We all know the power of compounding yet investing/savings is still put off to “next year”. Before you know it you are 50 years old with nothing but debt and what once was some pretty cool stuff. The reason we do this is we think he have lots of time. If you were to think of yourself ten years from now it would be tough to relate to the future you because it seems so far in the future. Take that one step further and try to envision yourself at 65. Now look back ten years and try not to tell me that time has just flown by. Without any emotional attachment to your future self, there is no sense of urgency to start planning and investing. Yet I am willing to bet that the top piece of advice that most retirees would have for their younger selfs would be to start saving earlier.
   

3. Expectations that the market will make them rich. This is the same mentality as planning on winning the lottery. Usually this behavior follows that of living on debt and thereby delaying savings which makes people desperate. At this stage clients are living and dying with every tick of the market constantly looking for that one stock or one sector that will put them over the top. What happens is investor’s behavior is guided by the fear of missing out. This leads to chasing performance but actually achieving very little. The chart below from JP Morgan shows the 20 year annualized performance for the average investor at 2.3%.
   

    

There is no real secret to achieving financial security in retirement. The sooner one realizes that there are no get rich quick schemes (now or in retirement) the sooner we can start living with the same financial systems our parents and grandparents did. They lived within their means, avoided debt whenever possible, saved for the things the needed, save for the future and invest with a long term discipline.

© NATIONAL BANK FINANCIAL. All rights reserved 2013 – 2017.
National Bank Financial is an indirect wholly-owned subsidiary of National Bank of Canada. The National Bank of Canada is a public company listed on the Toronto Stock Exchange (NA: TSX).

Products and services of the National Bank Financial — Wealth Management are only offered in jurisdictions where they may be lawfully offered for sale. All products and services are subject to the terms of the applicable agreement. The information in this Website is subject to change without notice. This communication does not constitute an offer or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada should consult with their financial adviser to determine if these securities may lawfully be sold in their jurisdiction.

By Paul Vorstadt

The concept of retirement is a relatively new phenomenon. It wasn’t that long ago that people didn’t retire at all. Thirty years ago people retired at 65 with a life expectancy of 70-72 years of age. Retirement was short and as such people were able to retire on their pensions.

As time passed people were living longer and their expectations of retirement lifestyle increased along with it. As the length of retirement increased the focus on who was going to pay for it changed. It became apparent that for a person to retire successfully the onus to save for it was now on them – this lead of course to the flourishing of the investment management business.

Few industries have become as commoditized as financial services over the past three decades. Products and services become more removed from the customer, and the personal touch that was provided is replaced by “cookie cutter” solutions. Relationships disappear as personal dealings with customers become streamlined.

“The world of commoditization has landed on the finance industry like a ton of bricks,” says James Scurlock, senior manager in Cap Gemini Ernst & Young’s (CGEY) financial services industry (FSI) practice.

While some will argue that commoditization of financial services worked during the accumulation phase of the baby boomers, others would point out that it was only successful due to one of the greatest secular bull markets ever from 1966 to 2000. Commoditziation will not work during the decumulation phase. Deculmulation is where you turn your hard earned capital into retirement income. Preparing for the decumulation phase is an extremely individualized process that will need to be tailored to each client’s unique circumstances.

The decumulation side of the advisory business is where investment management was 40 years ago— pre-retirees and retirees will be the fastest growing segment across the next five years as well as the next 20. More importantly, the process of aging and the “event” of retiring will fundamentally change the needs of many high-net-worth individuals. This transformation of client needs will occur on a never-before-seen scale and trigger a corresponding set of risks and opportunities.

Commoditized financial products and services of the past will no longer be able to meet the needs of our aging population as there are fewer clients fitting into an established mold. While technology will continue to augment financial planners, it will never replace them. Clients need adviser’s that understand and can build scenarios around the fact that careers, corporations, industries, markets, marriages, family life, and healt often take unexpected turns. Clients need to understand the “what ifs” and how alternative scenarios can play out. It means that relationships need to move back in time in order to move forward. The Internet, the telephone, the “one size fits all” financial plan, will never replace the caring, conscientious wealth advisor who not only can provide solutions but more importantly can point out the potential pitfalls.

© NATIONAL BANK FINANCIAL. All rights reserved 2013 – 2017.
National Bank Financial is an indirect wholly-owned subsidiary of National Bank of Canada. The National Bank of Canada is a public company listed on the Toronto Stock Exchange (NA: TSX).

Products and services of the National Bank Financial — Wealth Management are only offered in jurisdictions where they may be lawfully offered for sale. All products and services are subject to the terms of the applicable agreement. The information in this Website is subject to change without notice. This communication does not constitute an offer or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada should consult with their financial adviser to determine if these securities may lawfully be sold in their jurisdiction.