Managed Money Reporter Newsletter — Issue 298, March/April 2017


Editors: Carl Spiess & Allan McGlade


Featured Articles



Are you happier after you retire?

Carl Spiess

By Carl Spiess, CFP, CIM, FMA, FCSI, MBA

The Spiess McGlade team has helped hundreds of clients through their retirement transition. While there are usually a lot of questions during the process, we have anecdotally noted that our clients seem happier after they retire. Which is what one would hope of course!

Now we have statistical evidence of what I've observed over 26 years in this industry. Vanguard has done a survey of 5,000 investors in 4 countries and found that post retirees are happier than pre retirees!

Not surprisingly, the survey also finds that using an advisor (who has helped many other clients successfully retire) contributes to financial satisfaction. We are pleased to help with detailed pre and post retirement plans to help ensure your satisfaction. Please contact us if you would like an update to your financial plan.

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2017 Budget update

We are pleased to provide our firm's analysis of the 2017 budget. Fortunately for investors and despite the rumours, there were no increases to capital gains inclusion rates. The elimination of the Canada Savings Bond (CSB) program is a bit sad to see - the CSB program has been around since 1946. However, the announcement is not surprising given the little interest (pun intended) that clients have had in CSBs in recent years. See the complete analysis and other details at the direct link:

And Scotia Wealth Management regularly provides interesting "thought leadership" including on this budget at:

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CPP Enhancement – Good news tax update

One interesting matter that isn't related specifically to the budget but was announced earlier this year. It affects our taxes through the coming change to CPP in 2019. New and higher contributions to CPP will allow for the first time a tax credit on those new contributions "in order to avoid increasing the after-tax cost of saving for Canadians". The following article shows the difference between RRSP and CPP contributions for higher income earners.

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Active vs. Passive investing: 10 year results are a draw

Dalbar recently released a report comparing actual investor returns in various active and passive investment funds (press release).

We have received details of their findings and our copy of their report is linked, below. The conclusion is that in the long term eg. 15 years, investors in active funds outperform. Over 10 years returns are equal, and over shorter terms (during the recent bull market) investors in index funds outperform. The second link is to an observation on the matter from an investment industry publication:

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Target Date funds are a solution to Active vs. Passive debate

Similar to the Dalbar survey, a great article from a US Blog awealthofcommonsense.com looked at what kind of funds investors actually achieved the best performance in. They used Morningstar data for their analysis. As it turns out, there is one type of investment that had the best investor outcome. Low fee index funds? No. Active funds with star managers? No.

According to empirical research on investor returns, the best funds for investors are target/retirement date (lifecycle) funds. It makes sense really. The biggest challenge for investors is staying invested during periods of volatility. When one picks a 2035 target date fund because retirement is 15+ years away, investors are most likely to remain invested. We are pleased to have a variety of target date funds available and are among the largest TDF/RDF fund users in Canada.

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Further cost disclosure coming – this time for ETFs

With the roll out of CRM2 performance and fee statements earlier this year, all of our clients now have complete 4 year rate of return calculations and clear information on how much ScotiaMcLeod services cost. We used to do those calculations manually to show trailer or other fees so the automated reports are most welcome.

One area where costs are still a bit opaque is on Exchange Traded Fund trading, specifically the bid ask spread on ETFs. Scotia has produced a report that outlines what those costs could be. We promote a buy and hold strategy when using ETFs in client portfolios, and thus help to minimize those ETF costs. See the full report attached.

We were already noting questions about ETF bid ask spreads in 2009. We will continue to use a mix of active and passive investments, within mutual fund or ETF structures in our client portfolios, considering the exact factors that Dalbar points out in their survey referenced, above. And in many cases a simple target date fund can be the easiest and best solution.

Please let us know if you have any questions about the investments in your account or your account performance or costs.

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Recommended reading


Wealth Insights
Our most recent issue of has general articles on:
  • Prospects for economies and markets for 2017
  • Putting interest rate changes into contect
  • Family businesses, and
  • The importance of estate planning

Portfolio Compass 
Also, our firm's "Portfolio Compass" has replaced the long running "Investment Portfolio Quarterly". Here's the last issue – and look for the next update in early April.

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Recommended Link of the Month

My CRA is the easiest place to go to confirm your RRSP, TFSA room. You can also find the tax slips from investment fund companies. The Sign-In Partner feature means you do not need to set up a new password to access your information, you can use the same sign in information you use for ScotiaOnline!

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Contact Us

T.  416.863.RRSP (7777)
     1.800.387.9273
F.  416.863.7479
E. carl.spiess@scotiawealth.com
    allan.mcglade@scotiawealth.com

ScotiaMcLeod is a division of Scotia Capital Inc., member of CIPF.

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