After the shock financial advisors and their clients experienced during the previous couple of months, focus began to turn to the new reality in May. For many, that meant taking the necessary measures to make the best of the current situation.
Revisions to financial plans, investment strategies to setup portfolios for success and technology’s increasing role in the investment industry were some of the topics that resonated most with Globe Advisor readers last month.
Here are 10 articles that garnered the most interest.
Both the U.S. and Canadian governments have introduced a series of financial support measures to help working people, business owners and retirees cope with the economic fallout of the public health crisis including job losses, business closures and a steep drop in stock markets. U.S. persons living in Canada could benefit from both governments’ relief packages – and advisors can help these clients determine where they might be eligible for help.
Although COVID-19 has been a vicious headwind for many stocks, it has emerged as a strong tailwind for others. That includes some Canadian companies flying under the radar that may benefit from changing consumer and corporate behaviour or could have a possible treatment for patients suffering from the coronavirus. Three portfolio managers shared their top small-cap picks.
The stock market volatility brought on by COVID-19 has advisors fielding questions from older clients about whether they need to go back to work or stay in their jobs longer. Even some clients who have financial plans set up to sustain a market downturn are worried about how the economic fallout might impact their longer-term returns. For people in retirement now, or close to it, advisors agree the options may include working longer, spending less, or changing their asset allocation.
With many Canadians concerned about the impact of COVID-19 on their businesses and personal finances, some advisors have introduced audio and video content to address investors’ concerns and help them stay focused. This format provides an ideal opportunity for advisors to maintain personal contact and ensure clients are getting information that’s relevant to their situations while they’re being bombarded with information and opinions from many sources.
Cash, considered to be a drag on portfolios when stock markets are booming, turns out to be not just a lifesaver in bear markets, but a tool to buy assets when their prices crumble. The trouble is that holding on to cash too long wrecks its value, making it a depreciating asset. For many advisors and investors, how much cash to hold on to is a question of the cost of waiting. It’s a tactical tool, but a potentially expensive one.
As we begin to make the transition to the “new normal,” advisors need to think about how to best position their clients’ portfolios in a period of ongoing volatility. If anything is certain during these uncertain times, it’s that those who use an array of strategies will be more prepared for whatever the future holds. Barry McInerney, president and chief executive officer of Mackenzie Investments, shares four investment strategies that could help Canada’s financial professionals create more diversified and resilient portfolios.
The emerging use of artificial intelligence (AI) to support or even replace human advisors is attracting the attention of regulators – mainly in Britain but also in Canada. While they’re broadly supportive of AI as a cost-efficient tool to broaden the reach of financial advice, they’re also monitoring the potential risks and challenges, trying to ensure that this advice remains both suitable and transparent for clients.
Liquid alternative investment funds – known as “liquid alts” – have only been available to many Canadian advisors and their clients since Jan. 2019, but it hasn’t taken long for these products to prove their worth in investment portfolios. Their recent strong performance in March, when stock market losses were at their deepest, is likely to lead to increased demand among advisors and investors who seek all-weather returns, downside protection and diversification from traditional asset classes such as stocks and bonds.
U.S. wealth-management technology giant Envestnet Inc. announced in late May that it’s partnering with Toronto-based automated communication and marketing platform AdvisorStream to create a new application that leverages clients’ financial data so that advisors can provide them with personalized, compliance-approved media content that’s relevant to their unique situations. That followed news from two weeks earlier that Toronto-based Canaccord Genuity Group Inc. was adding Envestnet’s Enterprise Portal platform to its Canaccord Genuity Wealth Management business, giving its advisors and portfolio managers access to enhanced account-management tools and performance reporting.
COVID-19 has accelerated changes in the retail industry and how we shop. Bricks and mortar stores are closed and curbside pickup is not always convenient, so more goods are being purchased online and delivered to consumers’ doorsteps. The questions for advisors and investors are whether the recent bump in e-commerce is a temporary or long-term trend – and whether it could be a boon for transportation and logistics companies.