A Year in Question: A Look Back and a Look Ahead

I am a New Year’s Eve baby. When my mother went into labour, the doctor asked my Dad if he wanted a New Year’s baby gift or a tax deduction. My Dad chose the tax deduction. This perspective towards a tax deduction may have shaped some of my financial thinking over the years, but it has also had the effect that every year between Christmas and New Year’s I become quite reflective, considering the year behind and the year ahead. I want to be clear that I rarely make New Year’s resolutions but I have asked myself some important questions over the years. My friend Dr. Steve Brown wrote a book entitled “Great Questions for Leading Well” and over the past 6 years I have used some of these questions to reflect on the past year and challenge myself for the year ahead.

I have found at times my personal reflection provides deep insight into the things that matter most to me, or I find that I focus on the most immediate things, the things that have just recently occurred or are about to occur in the near future. This “immediacy bias” can prove to be a real distraction from the things that are vital for the benefit of my family and friendships, our clients and business.

Last year, I identified a few things from a business perspective that I really wanted to address and focus on during 2015. While stock markets were volatile and kept us incredibly busy advising, informing and assisting clients, we were also busy on other fronts. At our recent open house on December 10th, we highlighted some of the things that have kept us busy during the year. The following is a summary of the things that we believe will add value to our clients in the months and years ahead.

  1. The ‘Viewstone Value Proposition’ – Articulating our Service Offering;
  2. The 2015 Client Survey and Results;
  3. Market Volatility – Articulating how we add value during periods of market volatility;
  4. Enhancing the Customer Experience – Our search for new office space;
  5. Enhancing the Customer Experience – Our website redesign

Allow me to go into detail:

1. The year 2016 will bring a major transition for the Canadian Investors and Advisors. We have been talking about CRM 2 for some time now. This is a fundamental regulatory change that has been phased in over the last 3 years. These new regulations will result in enhanced reporting for investors that will for the first time disclose things like the cost of investing, how much advisors are paid, and perform-ance reporting for investors. I (John) have been an advocate of these types of disclosures for over 15 years. Our clients have received annual performance reports and reviews since 2001, a process we look forward to regardless of market direction every year between January and March. The majority of our clients (over 94%) are fee-based, meaning that accounts pay an annual asset based fee, charged monthly. The fee is disclosed in monthly statements, and for taxable accounts, an annual statement is provided for tax purposes. One of the reasons we exist as advisors is because over 20 years ago I saw the need for better disclosure, unbiased advice, and fair pricing for the average investor. We are glad that our industry is catching up. We also realize that many of our clients may have friends and family who will realize for the first time this year what they are paying for advice, and may want to get a second opinion. We always welcome referrals. Our ‘Value Proposition’ comes from feedback given to us by our clients and what they have valued the most over the years. In our annual reviews, we will be discussing our Value Proposition to provide insight into what aspects you our clients may find of value in the year ahead.

2. In the fall of 2015, we embarked on a Client Survey to assess client satisfaction and to identify gaps or areas of weakness that we could address in 2016. The survey was finally ready for distribution in early November and sent out to all clients. Thank you to all who responded and provided feedback. We do appreciate all of the feedback, both positive comments and constructive criticism. The results of this survey are available. Please ask Lara for a copy at lhuska@iagto.ca. Some highlights are:

A) 96.3% respondents said that they are either satisfied or very satisfied with the services our team provides. 85.19% were Very Satisfied
B) 100% of respondents said that they are either satisfied (11.11%) or very satisfied (88.89%) with our client / advisor relationship
C) 100% of respondents said that they would refer our team to a friend or family member, with 77.78% very likely and 22.22% likely to refer.
D) The most neutral feedback came as a result of our website. We were already working to address what we saw as deficiencies on our website, but our client survey solidified our resolve to improve this aspect of our customer experience. More on this later.

3. Market volatility is not an “if” but a “when”.

If any year provided an example of this, it was 2015. Early in 2015, markets enjoyed a happy demeanor, and by the end of the 1st quarter, portfolio values were above expectations for the year. These early gains quickly evaporated as investors lost some confidence, particularly in Canada as the oil price continued to erode. The wave of selling pressure reached its climax in late August as equity markets around the world tumbled on news that Chinese stock prices were dropping precipitously.

What was not widely discussed was that Chinese stocks (only available to Chinese investors) had risen almost 75% before succumbing to selling pressure. In the end, the Shengzen market rose 60% by mid-June, and then fell an equal amount in June and July before climbing modestly. It was only in August that the ‘global investors’ thought that this market behaviour raised concerns. In the end, this market ended the year with a 10% gain, compared to the TSX Composite which ended the year with an 11% loss.

It is easy for investors and advisors to lose perspective and confidence during periods of market volatility. This is where experience and a perspective on history provide meaningful value for investors. Our 71 years of combined experience has provided our team with invaluable insight that shapes our response during volatile markets and we leaned heavily on our experience this past year. Four articles or studies have provided us with insight into the value of advice during periods of market volatility and to what degree an average investor benefits;

1. Annual portfolio review & rebalancing 0.30%
2. Tax efficiency of portfolio and wealth transfer planning 0.60%
3. Logic vs. Emotion: Direction & Discipline during periods of market volatility 1.30%
4. Account structure and efficient cash flow strategy 0.30%

4. Enhancing the Customer Experience – Our search for new office space.

We are often told that our offices are an inviting and welcoming place. This gives us great satisfaction because we know that often, talking about money matters can be filled with emotion. We want our actions, personalities and office environment to lower the anxiety that some people feel when talking about financial matters. When we considered relocating to a permanent home, our search was motivated by enhancing our customer experience. This was no easy search and encompassed over 1 ½ years. Thanks to my brother Elliott Tabet, of Sutton Group who kept searching for the perfect location for us.

Access & Visibility:

  • Close to highway access. We are now located at #12 – 250 Wyecroft Road, which is one light south of the QEW exit at Dorval;
  • One level for ease of client access and mobility. No more stairs or elevators. Simply park your vehicle in one of our convenient parking spots and come on in;
  • Improved reception. Our front door and signage are easily seen and located from the parking lot, and our new reception area has wonderful natural light and is larger making for a more comfortable welcome;
  • Open concept to enhance the flow of communications. While we have almost doubled of office space, we have created natural locations for casual meetings and conversations;
  • We have additional meeting space that is both formal (board rooms) and informal. Some conversations need to be held privately, while team meetings and larger group meetings need more open space to enhance communication opportunities;
  • Enhanced privacy of client files. Privacy is an important aspect of our value proposition. Client files are now held in file cabinets out of the line of sight of any visitor.

Allow for structured growth of our Client Service Team:

  • In order to continue to expand and enhance our services to you, we are looking at adding additional services.

5. Enhancing the Customer Experience – the redesign of www.Viewstone.ca

We would like to thank Ted Blenkhorne of QR Creative for his invaluable advice and insight. Ted has been a long-time friend and provided some meaningful critique early in 2015 about how our ‘web-based front entrance’ was not as inviting as the entrance to our offices. He made us truly review all aspects of our customer experi-ence, whether our clients connected with us by phone, in person or through the internet. Ted designed the ‘Viewstone’ logo and his design work factored meaningfully into our decision as to our new office location. When we visited #12 – 250 Wyecroft Road for the first time, we knew we had found our new home, when the columns, archway and the horizon depicted in our logo were prominent displayed in the reception area.

We would also like to thank BCNI, an Oakville web development firm for their work and expertise in assisting us in the redesign and relaunch. When you visit www.viewstone.ca you will note two ‘doorways’ that demonstrate the two major aspects of our service offer to clients. The web design team at BCNI helped us to address some website regulatory and compliance requirements, while making the site easy to navigate, and more easily searched on the web. The redesign also will make adding new articles easier, which is an aspect that we would like to increase in the coming year.

And what about the questions you are asking?

In our everyday work, we are asked many questions and we ask many questions. Some of these questions provide insight into your investment objectives, risk tolerance and time horizon. The Investment Industry Regulatory Organization of Canada (IIROC) has created an Investor Bulletin with a sub-title “Did you ever wonder why your investment advisor asks you so many questions?” This is an excellent article on the importance of letting us know when major financial changes occur in your life. These include; getting married, having kids, a new job, a new address, divorce etc. Please keep us informed of major changes in your life.

Most of the questions that our clients ask or that we ask our clients are more open-ended. They have no hard and fast answers. They are more subjective and require more consideration before answering. For example, over the past year, we have heard the following types of questions;

  • How much money will I have when I retire?
  • If I save ‘Y’ every month, how much money will I have saved for my children’s education?
  • How long into retirement will my money last if I spend ‘X’ amount each year?
  • Based on our savings into financial assets and real estate, how do we compare to the average person in our age bracket?
  • How much risk do I have to take to achieve “x%” return every year? Is this reasonable based on what you know of me as an investor?
  • I want to help my adult kids out financially today. What impact might this have on my safety and security tomorrow?

We also ask other questions, such as;

  • When was the last time that you reviewed or updated your will or power of attorney?
  • What financial legacy do you want to leave to your beneficiaries?
  • What are your goals in retirement? How will you spend your time? What do you want to do in retirement?

Questions shape our days. Some questions can be easily answered while others take much more thought and discussion.

What we have come to appreciate however, is that the questions that our clients raise and that we raise with our clients, help us to uncover important aspects for our clients financial well-being. Often, we face financial questions during periods of urgency or volatility, where some change in our financial lives is occurring, or during periods of market volatility. While this is normal, it is also normal to respond to these questions in an emotional way. I have found that often, our most valuable advice comes when we eliminate emotion from financial decision making.

I will close with some quotes that caught my attention this past year relating to questions and answers.

“We thought we had the answers. It was the questions we had wrong.” – Bono

“Asking the right questions takes as much skill as giving the right answers.” – Robert Half

“He who asks a question is a fool for 5 minutes. He who does not ask a question remains a fool for a lifetime” – Chinese Proverb

We look forward to your questions and the conversations we will have during the course of the year. Happy New Year!

Best regards,
John