With markets starting off the year to a rocky start, wealth managers are taking time to reassure clients not to jump the gun, as well as seeking out potential buying opportunities.
Here's what some advisers are saying:
"Clients are waking up and hearing a lot of doom and gloom in the markets and we are certainly receiving a lot of e-mails from individuals who are concerned about what they are hearing, mainly about their asset mix for both Canadian and international equities. They want to know if they should sell their index fund. Or are they too exposed to global markets. For a lot of our clients, who fall into the millennials category, this is their first experience with dips in the market, so we are taking the time to reassure them, remind them of their initial conversation around long-term investment planning and explaining the benefits of having a diversified investment portfolio."
Shannon Lee Simmons, a financial planner with Toronto-based Simmons Financial Planning, who runs a fee-for-service firm that targets the younger generation
"We have educated our clients and have appropriate asset allocations in place that they are comfortable staying the course. If there is available cash or the asset allocation is out of balance, then there could be a buying opportunity. Our firm doesn't counsel market timing per se, but given it is the start of the year and if any adjustments were delayed because of the deferral of triggering tax, now would be a good time to sell/buy."
Gina Macdonald, a fee-only financial planner with Macdonald, Shymko & Company Ltd.
"We were positioned very defensively heading into the end of 2015. We were holding our largest cash balance (roughly 12 per cent in our growth mandate) since the inception of the firm (September, 2009) and did not have any emerging-markets exposure. However, we have viewed the sell-off as a buying opportunity and have started to reposition some of the cash. We have reduced our cash weighting by 3 per cent and have been buying some of the undervalued investments in 2015, specifically Canadian energy and preferred shares."
Mitchell Prothman, portfolio manager with Alitis Investment Counsel Inc.
"These are the kinds of markets that we like and where we differentiate ourselves from our peers. With the spike in uncertainty and overall volatility, our active use of options allows us to not only manage the downside risk for our clients but also provides the opportunity to take advantage of the attractive premiums currently being offered in the option market. While such strategies provide enticing upfront tax-efficient income, the upside is capped at the premiums received for certain strategies (e.g. Put Writing), which means giving away a portion of the upside in a rapidly recovering market but on the other hand, providing significant protection in a down market. Our clients are fully aware of this and have been depositing more funds to take advantage of the current environment."
Martin Pelletier, portfolio manager at TriVest Wealth Counsel in Calgary
My clients have all been in the markets for a while so they know that this is just a bump in the road and that markets will come back. On a daily basis, they tend not to be looking at their portfolios and performance numbers, so when they hear about these drops in the media it is easy to get a bit concerned. What I like to show them is a comparison of what the TSX looks like and then their portfolio's performance and they are able to get a clearer picture that they are not as down as they may believe to be."
Gregor McDonald, a financial planner with Vision Financial Planning