Our May Newsletter

We provide these newsletters each month. Our clients and fiends on our mailing list got this information last month.

Kim and I had a good trip to Ottawa for the Peak national conference. I was happy to hear the President and CEO of Peak, Robert Francis, speak. I have met Robert once before and he is one of the main reasons we choose to move to Peak. Robert did an excellent job of outlining how Peak is planning to move forward over the next few years to increase our value to you my clients and make sure we are the leading group of Independent advisors in the country.
 I probably don’t do a good enough job of explaining why I am an INDEPENDENT advisor.  Being independent allows me to absolutely put my client’s interests first. I have no sale quotas, no products to push, no targets to meet and no bonuses to earn. I only get paid if my clients are happy and choose to continue to do business with me. That is very important to me. 

April was generally a small negative month for most of our portfolios. Gains in foreign assets were offset by a rising Canadian dollar which left us with small losses in the month,  The TSX(Canada) is up about 4.5% so far this year now while the S&P 500(USA) is up about 5.8%. Europe continues to outpace North America at 12.9% for the MSCI all Europe.  We also had small losses on the bond side of our portfolios this month with Canadian bonds losing 1.4% this month.(source:Fidelity Investments:Datastream)

Given the high rates of return we have experienced for a while it is not surprising to see a negative month and I am sure this will not be the only negative month this year.  Having said that, I am comfortable we are well placed for the long term and see no signs to change course.
Risk, we use this term a lot in the financial industry but I do not think many clients really grasp what it is.  Many clients interpret RISK as meaning; “they will lose all their money”.  That would be a risk but not usually the one we are really worried about.  There are many safety features in our financial system that help keep that risk to a very, very low level.
One way to think about Risk is; the chance you will not like the outcome.  So when we say that there is a risk that you might out live your money. We are saying there is a chance you might not like the outcome.  If there is a risk you may die, there is a chance you are not going to like the outcome.

There are always two components when measuring risk. The first component is the chance or probability that something will happen. For example, there is usually a very low chance that your house will burn down.  The second component is how bad the outcome is.  Most people do not have enough cash laying around to build another house so losing the one you are in could be catastrophic for your finances.  Even though there is a low probability, the outcome of your house burning down is so bad that you have to consider that risk to be worth taking steps to guard against.  Therefore, we all have fire insurance.

Our job is to minimize the risks in your portfolio or reduce the chance of an outcome you don’t like. We also want to find ways to reduce the severity of the outcome if it does happen. If we are doing our job then hopefully you are sleeping better at night!