Foresight - Fall 2019

AFT Trivest celebrates the close of its 25th year in September, whilst Nilson & Company closes its 40th year. The end of this fourth decade marks time for change at Nilson & Company as, effective October 1st, Errin Mechler will acquire the accounting firm. Don will continue to be involved on the tax and accounting side on a part-time basis.  For Trivest clients, there is no change, as he will continue to work full-time there, in fact with an increased role, as he will have more time available to work alongside Gary. Going forward, the two entities will continue to deliver our professional, integrated services that have been our hallmark for these many decades.

As with the Fall Insight edition, we will usurp this issue from its usual course and, instead, share a historical perspective on these past twenty-five years.

Practicing Patience While Weathering Summer Volatility

Depending upon the day this past summer, global equity markets were up or down by 2%, depending upon whether markets felt global trade tensions were falling or rising. This resulted in some very bumpy weeks. That said, at writing, the US S&P 500 remains within 2% of its all-time high. U.S. and Canadian employment numbers remain robust ten years into this economic cycle and we are finally starting to see some wage inflation: welcome news for a labour force that has seen wage stagnation for far too long. Lastly, corporate earnings remain reasonably strong. So why are central bankers, like the U.S. Federal Reserve, cutting interest rates at this point in the economic cycle? The answer seems to be the fear of a potential global recession caused by global trade wars. On the interest rate front, the United States and Canada stand out as countries that still have government bond yields that are in positive territory. At writing, a 10 year US Treasury Bond yields 1.6% and a similar term Canadian Government Bond yields 1.2%. These are yields that look both underwhelming in their own right, yet very competitive, given there is approximately $15 Trillion in global government debt trading with negative yields. In fact, this negative government yield environment has resulted in banks in Denmark, for instance, being able to offer 20 year mortgages to their customers at a 0% interest rate (this is not a typo). As is the norm in summer, global trading volumes have been light due to understaffed trading desks in the vacation season. This light volume results in increased volatility when sentiment changes. In these volatile markets we choose to remain patient, ignoring the +/- 2% swings in markets while they bump up against all-time highs. We wait for calmer heads to prevail on the global trade front…..this may take a while.   

Retrospective

• 1994 Trivest opens its door for business.

  We publish the inaugural issue of Foresight.

  Foresight starts the first of many articles explaining the complex issues in owning fixed income investments.

  We introduce quarterly Investment Study Groups, providing investor education in intimate venues.

• 1995 We are interviewed by CBC on the eve of the Quebec referendum.

  Foresight starts the first of many articles explaining the complex issues in owning mutual fund investments.

• 1999 Trivest launches its own website….InvestorU.ca.

  We move to Folkestone.

• 2000 Stephanie joins Trivest.

• 2001 Foresight starts writing about Industrial sectors and investing.

  Stephanie writes an Excel program that allows us to track client equity portfolios by industrial sectors.

  Foresight starts writing about tax smart investing.

  Stephanie Venn is appointed to a federal committee to help develop national standards in financial planning.

• 2002 Foresight starts its Annual Market Review...and continues so to this day.

  We launch our annual Client Appreciation event, which starts out by inviting 7 people to spend the day at Don’s cottage on Gambier.

  In 2007 it morphs from a day-time event to overnight on a cruise ship.

  In 2008 it expands to a weekend at Harrison Hot Springs Resort, with attendance of 45 people.

  In 2019, it moves to the Fairmont Whistler, with attendance of 117 people.

  One person present at the first event in 2002 was in attendance in 2019: Joan McLeod.

• 2003 Don and Stephanie are interviewed on CBC Radio on investing matters.

  Foresight starts writing about, and investing in, ETFs .

• 2004 Don and Stephanie return to CBC Radio.

  Foresight introduces a table showing marginal tax rates by type of investment income, in order to highlight tax-smart investing. The table has been updated annually on our website ever since.

  Foresight starts writing about the impact of foreign currency on investment returns. 

• 2005 Foresight writes a piece on Our Credo.

  Foresight talks about the Wealth Effect from the recent real estate run-up. 

  We introduce a scholarship award for children of our clients, adjudicated by a volunteer independent Board.

• 2009 Diane and Don undertake a longitudinal, detailed study on the subject of tax smart investing in the wake of the new TFSAs. Our analysis and conclusion is presented at a financial conference in Halifax. The findings were precisely opposite to how investment managers deployed the first tranche of TFSA contributions. Trivest continues today to execute these conclusions.

• 2010 Foresight launches its first comprehensive, annual global market survey, which continues to this day.  

  Foresight writes an article reviewing the book “Triumph of Optimists -101 Years of Global Investment Returns”, which provides a massive compendium of data on world-wide returns on all asset classes over the one hundred years of the 20th Century, providing significant insight.

• 2011 We successfully launch our first Trivest Travels! Event with clients. Outings have included Portland, Desolation Sound, Long Beach and Santa Fe. The program continues today and heads for Iceland in 2020.

• 2012 Stephanie retires to Florida and Gabriola and Gary George joins Trivest. 

• 2013 Trivest commences it’s annual spring seminar event.

  Foresight writes about neuroscience and investing.

  We end our long relationship with TD Waterhouse and begin with National Bank. 

• 2014 Trivest expands into the space next door.

• 2015 Hunter applies his programming skills and Gold Medalist brilliance to create stunning automation of a 20 year manual process for Trivest, which quadruples our productivity and effectiveness.

  We work once again with our software developer to make further enhancements.

  Trivest is admitted to the Portfolio Management Association of Canada and Don joins its taxation committee.

  Trivest is chosen to be one of 24 national firms profiled in Blackrock’s iShares Connect publication.

  Foresight writes about multi generational wealth management, inverse compounding and the risk of under-achieving generations. 

  Don is nominated for a career achievement award from Morningstar Canada.

• 2016 Trivest convenes an ad hoc Client Advisory Board to review our effectiveness from a client perspective.

  Trivest conjures three statistical metrics to instantaneously highlight the status of a portfolio, and we program this across all accounts.

• 2017 Trivest announces its new, complimentary Concierge Service to assist clients with complexities in their day-to-day lives.

  Our long term graph reporting simply and elegantly shows the value of the saving habit and of the blessing of long term market returns...as Einstein said!

  Trivest writes about Financial Design and about Financial Pathology.

• 2018  Foresight writes a series of comprehensive articles explaining Exchange-traded funds.

  Trivest commences our patronage of the Arts by sponsoring the Kay Meek Centre, of sports by sponsoring the Tyee Ski Club and of academia  by donations to UBC and McGill.

  The newly appointed Concierge Manager, Adrianne Smith, launches our new service in the Fall.

  Trivest appoints a Volunteer Concierge Board, which holds its first meeting.

• 2019 Trivest celebrates its 25th year with a Gala at the Fairmont Chateau Whistler, with 117 people attending.

  With the backdrop of Jeremy Siegel’s lament in 2002 of investors accepting 10 year 4.4% interest rate returns against stock market returns, Foresight revisits this topic with 10 year interest rate returns at 1.5%!   

Over the years, Trivest attends various annual investment management conferences in Orlando,  San Diego, Boston, Seattle and Toronto.

National Bank: Getting to know your Custodian

National Bank of Canada is the smallest of the six large, strategically important banks in Canada.  The Bank was founded in 1859 and currently employs over 24,000 people across 428 branches. The bank has total assets of $269 billion, earning over $2 billion in fiscal 2018. It has over 2.5 million individual clients and approximately 140,000 corporate clients.

National Bank’s subsidiary, National Bank Independent Network (NBIN), is the custodian for the portfolios managed by AFT Trivest Management, as well as over 400 other independent firms like us, collectively comprising $180 billion in assets under management for over 600,000 individual Canadian investors. NBIN alone employs a team of over 200 professionals to serve these independent firms.

We have witnessed NBIN’s ongoing program to enhance client experience through improved technology. They have spent over $100 million in technological improvements since the purchase from TDWIS, both in the client web interface and in the robust Trading platform that we utilize every day on your behalf. 

 Cyber Crime Alert

We received this email in early July: 

“Hi Gary,

Hope you had a great weekend?

I might need $55,000 from my portfolio by next week without it affecting my assets too much. In case i wish to go ahead, can you please email me summary of what holdings to let go in order to have the fund available. The fund is to be EFT into my new bank account. Should i email the Voided Check of the new account to you. I believe you will make the best decision for me. Please email me full details of the assets to sell. I'll be waiting to read from you soon.

Thanks for your help!

Kind Regards,

XXXX XXXXXX”

We receive emails requesting funds almost daily. This is the second time that we have experienced a client having their email hacked by criminals who then try to scam funds from client portfolios. So what stood out in this email that caused us to call the client and confirm whether it was in fact from them (and it was not)? The first clue was the new banking information (on the previous occasion, the new bank account was in the United States). Also, the grammar was a little off, and finally, this particular client is never concerned with the actual mechanics of what we are going to sell in a rebalancing. Upon discussion with this client we found out they had recently been the victim of identity fraud. We subsequently sent the email to the local police to help track down this criminal group which is working out of Montreal. We will continue to be vigilant on your behalf, and don’t be surprised if we call you to ensure your request is actually from you.