"Savvy" Investing

I was flipping through a copy of Chatelaine magazine last weekend and happened onto the horoscope page where I read my (Virgo) October prognostication:

"Your financial savvy will improve the lives of others this month. Projects coming together around the 10th require up-to-the-minute efficiency, which just happens to be your specialty. Powerful people will be suitably impressed."

I do not normally put much into horoscopes, but this one was definitely hitting close to home and what pressure (this month)!

(Savvy – noun : Also, sav·vi·ness. practical understanding; shrewdness or intelligence; common sense)

I do not think my advice is particularly shrewd, but it is full of common sense:

My clients have structured financial plans: we (our team) know and understand their cash flow needs. In times of financial market volatility, like those we are experiencing now, being forced to take a sale to provide liquidity for lifestyle needs can be devastating to the long-term validity of the plan. So we hold a percentage of liquid, money market instruments that allow for this cash flow need. In fact as markets made new highs in 2007, we were selling off small portions of profitable investments to increase our cash cushion (if a correction occurred and new opportunities arose this money could be re-deployed).

As we watch the total value of the portfolio decline (with the current market volatility) I remind my clients of the financial markets' ability to recover (historically), to guard against the emotional reaction of wanting to sell good investments that are being re-priced lower in daily market trading activity and that we have the necessary liquidity to ride out the storm.

The Media will be busy counselling us all on the dire circumstances and the potential for disaster which will seem rather daunting and compel us to re-think our strategy: but history shows that market bottoms are made when selling is the most aggressive and market tops when buying is most euphoric.

Our brains are programed this way: it is our evolutionary psychological make-up. Our natural instincts for survival are to avoid pain. The sight of a declining portfolio is painful, the natural reaction is to cut out the pain: ie. sell.

This, however, is historically proven to be the incorrect action when it comes to long-term investing (especially because our prudent investment strategy has allocated assets accross a diverse spectrum) .

On average, the markets take 16 months (S&P500) to 20 months (S&P TSX) to reach the previous peak from their respective bear market bottoms.

This implies an 18% to 23% annualized return over those recovery periods for the S&P TSX and S&P500, respectively.

Some might be inclined to throw out the old adage: "but this time it is different".
They are right, every market correction or bear market is the reaction to a different stimulus that causes "investor concern" and a loss of confidence.
But it will recover, it always has.

Time is the only variable. So we need to have the appropriate plan that will allow us the flexibility to be able to stick to that plan.

Need help with that plan? Call/email me.

It may not be shrewd, but it is common sense: Savvy

Prudent Investment Strategy

For the great majority of our wealthy clients, it begins with a fairly basic goal: provide your family with the lifestyle that you desire for the rest of your life and quite possibly for future generations.

We call the first meeting with our clients the Discovery. This is where we uncover exactly what Values you hold as priorities: what is important to you about your money.

Goals, challenges, opportunities: what you want to achieve with your money.

We talk about risk. What is at risk?

1) Not achieving the goals that you set.
2) Losing your money.
3) Running out of money.
4) Having to adjust your lifestyle.

So it is essential to minimize the risk.

How do we do that?

We create an investment strategy that focuses on Diversification:

1) by Asset Class (Asset Allocation)
2) Assets that have a low correlation to each other (less likely to move in the same direction)
3) Globally Balanced Portfolios

Diversification reduces volatility. Volatility, over time, can erode the compound annual return. You are investing to maximize your compound annual return over time because compounding returns over time is essential to the growth of your investments.

This is our challenge, especially in the very turbulent investment markets that we are negotiating at the moment.

We very carefully select experienced multi-asset class investment management who have a track record (over a significant period of time) that out-performs the corresponding Global Balanced bench-mark. We can buy the index (or a group of indexes) at a minimal cost, so if we ask our clients to pay management fees, they had better be getting value for those management fees. One of our consulting roles is to ensure that our clients get value.

Some of that value is also ensuring that the portfolio is systematically rebalanced and that we are maximizing tax efficiency to improve performance.

Our goal is to make sure that you reach yours. Growing your investment portfolio with a well thought-out strategy and ensuring that you are receiving value for what you pay us.

You will not get that from mutual funds.

So you are selling your business....

Ideally you have made this decision because you are thinking about succession and the next stage of your life. You have worked hard to build what you have and you want to be able to maximize the value of your accomplishments and monetize it.

As legal (succession planning) expert Corina Weigl says: "Successful succession doesn't just happen. Careful planning takes time and patience"

This event will trigger a number of personal financial challenges as you move forward:

So how do you acheive confidence, peace of mind and financial freedom?:

1) Prudent investment strategy: to provide your family with the lifestyle that you desire for the rest of your life and quite possibly for future generations.

2) Efficient and effective tax planning: to ensure that you are taking advantage of all the opportunities available to reduce taxes where possible.

3) Estate planning: to provide peace of mind that all the possible risks (to your wealth) are addressed and covered. Especially if you want to continue to provide for future generations.

4) Future generations: to enable them to have the opportunities that your hard work has created for them.

5) Charitable giving: if your life experience has produced a cause that you are strongly allied with, you may wish to contribute to this cause and provide for it for the future.

To accomplish the goals you set for yourself and your family, the challenge is to map out a strategy for acheiving of them. This requires expert advice (solutions), good planning (implementation) and making sure that your plan is working (monitoring).

That is my life's work: using my 28 years of experience in coordinating the efforts of all the experts on your behalf through a consultative process. To ensure your success in accomplishing all the objectives that are important to you, no matter how simple or complex.
Optimizing your client experience. I take that very seriously.

I also support a number of charitable causes that have impacted my life...namely Breast Cancer Research (CBCF through our sponsorship of the "Paddle to the Cure" ( www.paddletothecure.com ) and Alzheimer's Research (Baycrest).

I intend to expand on the above 5 topics in upcoming Blogs, so feel free to tune in from time to time if you are interested.

Confidence, peace of mind, financial freedom...what do they mean to you?

Cross-Border Wealth Management

I spent part of last week visiting South Florida connecting with some experts and strategic alliances in cross-border tax and estate planning issues. All were extremely helpful. All have had a great deal of experience dealing with Canadians who spend (at least) part of their year in the US.

High net worth families need to be careful to be wary of the rules of what constitutes residency (substantial presence test) and the implications on your estate and tax matters.

As the Canadian$ remains strong and housing prices in the US remain depressed there are some great opportunities to purchase property at values that we haven't seen for years.

As my clients pursue these opportunities, I am creating relationships with experts who have the ability to help them understand some of the complexities that they might face.

As a Wealth Management Consultant it is my role to help fill the "gaps" in my clients' Wealth Management plans to ensure that all the key advisors are coordinated to ensure efficiency.

In this case, we are developing expertise for those who may want to, or already spend part of the year in South Florida.

Interestingly enough, it may be financially beneficial to become a "resident alien" of the US, depending on your circumstances, there could very well be some tax savings provided under the Canada/US Tax Treaty, depending on how your estate is structured. However, I stress that the rules are complex and every family's situation will be different and it is important to look at the whole picture from a wealth management perspective.

Family Wealth Management

What is Wealth Management?
In a nutshell it is about planning: planning the financial future of your family. More than just investing properly for the future, it is about coordinating all the advice from your investment, legal, tax, insurance and real estate experts.

Traditionally, each individual advisor has offered their advice separately. In most cases leaving gaps in the implementation and eventual outcomes of the planning process. Gaps that might be expensive in the long run.

Proper wealth management coordinates the efforts of all the advisors so that the process is streamlined and "gap-free".

So, perhaps you've sold your business...you have now a significant amount of money that needs to be managed. You worked hard to build your wealth, you likely want to protect it so that you can enjoy the comfortable lifestyle to which you have become accustomed.Equally as likely you would like to keep some or all of your wealth to pass on to future generations and perhaps give to a charity that is important to you.

You will need investment advice to properly diversify your assets to protect them from risk. You will want to ensure that you are maximizing tax efficiency. You will want to know that your Estate is structured according to your wishes.

Most importantly, you want to make sure that the process is coordinated. Hire an experienced wealth manager, spend a little money to ensure confidence, peace of mind and financial freedom.