2017 - What's Ahead


As we kick off 2017, we felt it might be worthwhile to look ahead to a few of the key trends and initiatives impacting our industry going forward. Some have already been covered off in recent Martens Reports, and we also talked to several of these issues at our Client Seminar last month. Following is some additional information including a behind the scenes change of our parent company that is scheduled for later this year. As always, please don’t hesitate to call if you have any questions whatsoever.

RRSP Contribution Limit: is 18% of prior year’s earned income to a maximum of $25,370 for 2016. Deadline is March 1, 2017 (for a deduction on your 2016 Income Tax Return). For 2017, the contribution limit is $26,010.

TFSA Contribution Limit: is $5,500 again this year. Total room is now up to $52,000 for someone who has never contributed before (and been eligible since the TFSA’s inception in 2008).

A New Parent Company: As you know, for some time now Scotiabank has existed behind the scenes as the corporate owner of HollisWealth. This ownership is scheduled to change over to IA Financial group later this year. Clients should see minimal impact. HollisWealth Inc will continue to function as a completely separate, stand alone, operating company. Your accounts will not change. Our relationship, your investment options and the service you are used to receiving will not change. The financial institutions we use for your investments remain. IA may not have the size of Scotiabank, but is no lightweight on the Canadian financial scene. They are a full service dealer handling a full suite of financial products. The IA name comes from the oldest of their operating divisions - Industrial Alliance Insurance Co. IA Financial Group is one the largest NON-bank owned wealth management advisory firms in Canada with $126 billion in assets, over four million clients and 5300 employees. It has a 125 year track record in Canada, and is a publicly traded company, listed on the TSX. As noted, little change is expected. We consider IA an excellent fit for HollisWealth, as IA is committed to operating an independent wealth management business and has a strong culture of independent advice.

CRM 2(Client Relationship Model – Phase 2): We devoted last month’s newsletter, and client seminar to this. In brief, CRM is an initiative launched several years ago that is all about improving the client/advisor relationship – largely by providing better, clearer and more transparent information about your investments and our role as the dealer/advisor. “Phase 2” begins this month when your statements mailings will include clearer information regarding performance and costs. Please click here, to pull up the December Martens Report, which also has a link to the information piece that was sent to all clients last fall.

More Cost Efficient Investment Options: Within the last few years there has been a major initiative by industry providers to “sharpen their pencils” and lower the underlying costs of owning mutual funds. This of course translates directly into better performance and higher returns for investors. Intense competition and new found efficiencies are contributing. Perhaps, however, the most visible and significant development in this area is that many providers are offering lower cost options for accounts of larger values and/or reducing the amounts required to qualify for such. A few years ago, the threshold for these lower cost products was frequently in the $250,000 to $500,000 range. Now, it is common to see thresholds of $100,000 to qualify. As independent financial advisors we have access to a broad range of products from many providers. We are constantly on the lookout for lower cost investment vehicles, that still provide a high quality management team and a history of consistent performance.

“Know Your Client” Focus: As noted above, CRM involves improving the flow of information, from us, to you as the client. This additional disclosure has been going on for years now - we’re sure you’ve noticed with the additional paperwork that is now required in servicing your account. Now, the regulators are increasingly looking for disclosure to work both ways. Expectations are that advisors need to gather more and more information about our clients in order to provide the best possible service and back up why we make the recommendations we do. Consequently, a focus this year is to try and improve our knowledge of you. By understanding completely your personal situation, we’ll maximize our ability to help you meet your financial goals.

Market Unpredictability: This is a given for not just next year, but for ANY year. It’s what makes the market, the market. If markets were predictable, returns would be like those of predictable investments (think GIC’s). 2016 exemplified this unpredictability at its best. There were countless examples, but two that spring to mind were Brexit and the election of Donald Trump. Despite a widespread expectation that a “Yes” Brexit vote would hurt the markets, they have mostly rallied since. The election of Donald Trump is perhaps an even better example. Again, the majority viewpoint amongs all the “experts” was that it would be negative for the markets if Trump won. Instead, exactly the opposite has happened in the weeks following his election.

Continuing Bond Market Weakness? Interest rates have been low for decades now. For years, predictions that they would finally start trending up were proven false. In the last few months however (basically since the election of Trump with his promises to increase spending, lower corporate taxes, etc.) bond yields have been trending up. The result, of course is lower bond prices. This is noteworthy because many clients have bonds in their portfolios to provide some balance and downside protection when markets head South. It’s been so long since interest rates rose in any meaningful way, that many have forgotten that the “safe” portion of many portfolios (i.e. Bonds and products with bonds in them such as Balanced funds) are capable of dropping in value).

A Final Thought: on not just SAVING for, but also REALIZING your Dreams and Goals. Financial Advisors of course focus intently on helping our clients save enough money for retirement. Likewise our clients share this focus. However, it might help to also be cognizant that once having saved enough to realize our goals and dreams, we ensure our hard earned $$ is spent to REALIZE them. As advisors we often comment how it is sad it is to see when people have not been able saved enough, but how it is perhaps even sadder still to see individuals who have more than enough $$, but then run out of time or health to enjoy it!

On that thought (and this perhaps is uncharacteristic of financial advisors to comment on how to spend rather than save), here are a few links in the area of travel.

Canada ranked best travel destination in 2017 by Lonely Planet guide

Where to go in 2017: Best Travel Destinations Around The World

The World’s Best Places To Visit in 2016 and 2017

Happy New Year! Andrew & Peter

#investing #financialplanning #tfsa #miscellaneous

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