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July 2020

Talkin’ About My Generation: How Family Affects Your Finances

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Are you sandwiched between two generations: supporting your children and providing care for your parents? According to Statistics Canada, one in three Canadians between the ages of 45 and 64 has children under 25 still at home, and about one-quarter of those also care for aging parents.

This number is only likely to grow as Canadians continue to live longer and postpone child rearing, while at the same time, often struggling to save for their own retirements. Fellow “Sandwich Generationers” face many stressful issues, among them:

  • How do I know if my parents need a retirement, nursing home, or live-in care?
  • What are the housing options available in my parents’ area?
  • How do I have conversations with my parents about what they want vs. what they need?
  • Can my family afford the type of care I’m seeking for my parents?
  • What expenses will the government cover and how can I qualify?
  • How can I better prepare myself for my own potential care down the road?

Having to make these kinds of decisions can be overwhelming. This is where it can be helpful to reach out to a qualified investment advisor or Certified Financial Planner (CFP). As an advisor myself, here are some things a good advisor should be able to help you with.

Building a circle of trust.

Who should handle medical, legal and financial issues if you’re unable to do so. Ideally you want to identify people who only have your best interests in mind yet will also give you their objective advice or voice their concerns if they don’t agree with you.

Create financial safety nets.

These could include living benefits such as critical care insurance, which pays you a cash lump sum, tax-free, if you suffer from a covered illness. Long-term care insurance can provide a much-needed boost to cash flow during a long period of illness or disability and could relieve anxiety about potentially outliving your resources.

Prepare a critical document repository.

Keep important documents that outline your resources and preferences together in a binder, along with the names of key contact people and ways to reach them. This binder should be stored someplace convenient and be readily available should your “circle of trust” need to access information quickly.

Although your financial advisor can’t make family decisions for you, she can act as an objective sounding board and help you to navigate the financial side of being in the middle of the sandwich!

By Maili Wong, CFA, CFP, FEA and Author of “Smart Risk: Invest Like the Wealthy to Achieve a Work-Optional Life”

Sailing into your “Work Optional” Life

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“Embarking on a financial plan is like sailing around the world. The voyage won’t always go to plan, and there’ll be rough seas. But the odds of reaching your destination increase greatly if you are prepared, flexible, patient, and well-advised.”
– Jim Parker, Australian Portfolio Manager


Financial markets are volatile: geopolitical trade wars, interest rate changes, and global financial events. When seas get rough, should investors jump ship?

Before doing anything, recognize that market volatility is a normal part of the journey along the path towards building your retirement savings. How can investors maintain discipline through market ups-and-downs, political and economic uncertainty, or whatever crise du jour appears to threaten our retirement goals?

Here’s one way we can do it, based on my experience of learning how to sail in the Vancouver’s coastal waters. It was a perfectly sunny day when my instructor took three students, including me, across the Georgia Strait. Everything was fine until we got way out on the water and a few clouds started to roll in. Suddenly, the water became very choppy and our sailboat tossed violently from side-to-side. Needless to say, the students were very uneasy.

As a novice sailor, I was scared and disoriented as we bobbed on the growing waves. Fortunately, our instructor remained calm – he had a plan for these kinds of situations. I’m writing this today because he took over navigation and led us to calmer waters.


Investing is a lot like sailing We all know that the voyage may not always go as planned, and there may be rough waters. If you’re prepared, the odds of reaching your destination safely go way up. In my book, Smart Risk, one of the “5 Ps” stands for Plan. Before embarking on an investment, you need to choose your goal and be confident that it’s achievable. The actual portfolio is the vessel to get you there. Always ask yourself, or your advisor, “How much “bad weather” can my plan withstand along the way?”


A successful sailing voyage needs a good navigator
This is where a trusted advisor comes in. A skilled advisor—someone who is ever vigilant and makes the necessary adjustments—is key. When your personal circumstances or the investment horizon changes, you may need to replot your course.


The markets are as unpredictable as my little sailing adventure in Georgia Straight.  A sudden squall can whip up waves of volatility, tides can shift, and strong currents can threaten to blow you off course. An experienced advisor can work with these and adjust and adapt.


Once the storm passes, you can pick up speed again. Think of a well-diversified portfolio as a sturdy vessel that acts as a ballast against tempestuous markets.


Avoid Distractions
Distractions take both sailors and investors off course. It takes discipline to side-step hot investment trends that could veer you away from your plan. The business media with their scary news headlines are experts at creating distracting noise, tempting you to act on fear or news that’s probably already be priced into markets.


The Bottom Line
A degree of uncertainty is inherent in the investment journey—as in everything else. Nevertheless, you can prepare for a range of possibilities while always keeping your final destination in mind. Trust yourself and your navigator to chart the course to your Work-Optional Life.


By Maili Wong, CFA, CFP, FEA and Author of “Smart Risk: Invest Like the Wealthy to Achieve a Work-Optional Life”

What Should Your Advisor Do For You?

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Do you think an investment advisor’s role is to predict the future? Well, think again. Investment advisors (IAs) don’t have a crystal ball. The advisor’s job has changed a lot. Years ago, she might have been expected to pick stocks or gain her clients access to IPOs (Initial Public Offerings). Investments were often made based on reactions to news events, “hot” stock tips, or even anecdotes.

Yet without research and scientific evidence backing each decision, when the markets got volatile, it was difficult to stay invested: the advisor or investor was more likely to sell on a whim. Reactive trading isn’t such a good idea because while, a price dip for a stock or fund could be part of a downward trend, it could also be a temporary blip, causing the investor who exited to miss out on significant long-term gains, in which case the investor would be better off weathering the downturn.

The introduction of better, more disciplined approaches and new technologies over the past decade have enabled advisors (and clients) to actively track their investments. Transparency is a buzzword in the industry today, as all stakeholders can see a much richer and more complete picture of how their investments are performing, as well as a more holistic view of how these align with their goals.

Greater transparency has led to a better advisor-client relationship. You and your advisor should be able to communicate openly not just about investment ideas, but about your hopes and goals for your lifestyle, family, retirement, long-term care options and other major choices you may face. Today, the advisor’s role is multi-faceted: including understanding their client’s needs, risk appetite and circumstances, and then creating an effective investment strategy around them.

Every good advisor should wear these 7 hats:

  • Expert: Develops client-specific expertise and risk-aware strategies to help clients meet their goals.
  • Objective Advisor: Serves investors’ needs without becoming a salesperson.
  • Listener: Gives clients time to discuss their goals, dreams, and concerns, and provides practical solutions to accommodate them.
  • Teacher: Explains investment fundamentals.
  • Architect: Builds a long-term wealth management strategy that matches the client’s risk appetite and life goals.
  • Coach: Reinforces the investment strategy and its benefits during periods of high emotion.
  • Guardian: Takes a proactive approach to highlight issues that may affect the clients’ investments.

How do you find the right advisor for you? Ask questions!

As an investment advisor myself, potential clients ask me everything from my personal history to past performance to client deliverables. Here are the questions that every investor should ask of a potential advisor:

  • How would you describe your investment approach?
  • How do you develop investment strategies for each client?
  • Who is your ideal client and am I a good fit for your practice?
  • How have your clients’ portfolios fared in down markets?
  • What type of risk management strategies do you use to deal with downturns or adverse market conditions?
  • What is your client retention rate?
  • How often do you meet with clients to discuss future strategies and past performance?
  • How and what do you charge for your services?

Once you find the right investment advisor – one who feel has your best interests in mind, has an honest, intelligent approach, and has the expertise to stay on top of the evolving financial landscape, hold on to her dearly. Avoid the trap of judging your advisor’s value based on short-term investment performance and, instead, focus on what you and your advisor can control, namely:

  • Creating an investment plan to fit your needs and risk tolerance.
  • Structuring a portfolio tilted towards capturing positive expected returns.
  • Diversifying investments globally.
  • Managing expenses, turnover, and taxes.
  • Staying disciplined through market dips and swings.

A good financial advisor will help you focus on actions that will add value in the long run. Investing your time to find the right advisor for you will certainly pay dividends.

By Maili Wong, CFA, CFP, FEA and Author of “Smart Risk: Invest Like the Wealthy to Achieve a Work-Optional Life”

Opinion: Looking at your kids’ inheritance — Rethinking wealth transfer

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Do your children expect to inherit from the ‘Bank of Mom and Dad’? Recent surveys point to mismatched expectations between generations on the issue of inheritance and just how much they can expect. A recent Vancouver survey made waves when it revealed that 39 per cent of British Columbian millennials expect to inherit $300,000 or more, while only 12 per cent of parents anticipate being able to match that amount.While about 1.5 million Canadians are apparently relying on inheritance as the primary source of funding for their own retirement, their reality may be markedly different when the time comes. Decima Research’s 2006 Canadian Inheritance Study indicated Canadians then expected to receive $150,600 compared with the actual average inheritance of $56,000.

[PNG Merlin Archive]

So how do you feel when you hear about the much hyped great wealth transfer that is expected to take place over the next 20 years? An estimated $1 trillion is said to be changing hands in Canada as boomers pass down their wealth to the next generation. If you are like many people, the idea is fraught with emotion:

How can I leave a legacy to my children and grandchildren when I don’t even know how long I will live? How much will I need to age comfortably in a volatile economic market?

I meet with people approaching retirement age almost every day and nearly all of them are wondering these same things.

This week was Make A Will Week in B.C. and it brings up the question, “What do I do?” I believe people need to think about investments and financial decision-making in a new way, to take what I call “smart risks.” Emotions — our own limiting perceptions, beliefs and expectations — are often what hold us back from making significant financial progress. To overcome these, I recommend a framework that follows five guideposts, or the ‘5 P’s’, to help you rationally and objectively assess probabilities of outcomes and compare risk versus reward in a prudent and disciplined way. This allows you to consistently stack the odds in your favour and keeps you on the path to long-term financial success.

  • Purpose: whether you are looking to secure your own financial future or leave a legacy to your children, you need to begin by defining your purpose;
  • People: surround yourself with the right people to help you make smart decisions. Build a circle of trust with people who are experienced, resourceful and who have your best interests at heart.
  • Plan: a good plan is one that is designed to be flexible as the marketplace takes unexpected twists and turns and sets appropriate risks and return targets.
  • Perspective: being open-minded to changing your views will allow you to take actions that break through any emotional baggage holding you back.
  • Positive Action: this is often the hardest step; it is also where the momentum and resilience you’ve built up can propel you forward to achieving your goals.

You’ve worked hard all your life; it’s time to make your money work hard for you — and for those you love and plan to pass it on to. Starting with the 5P’s can help you clarify steps to achieve your purpose, and then prepare for the conversations with your kids to help manage expectations effectively.

Maili Wong is executive vice-president and senior portfolio manager with Wellington-Altus Private Wealth.  Her published book Smart Risk: Invest Like the Wealthy to Achieve a Work-Optional Life became a #1 bestseller on Amazon.

The ‘work-optional’ life and the purpose for building wealth

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Many of us hope to reach the point where work is an optional activity. It’s a way of life where you no longer need to work to sustain your lifestyle.

Instead, you have built a source of sustainable cash flow from your portfolio of stocks and bonds, real estate or other investments.

To achieve this “work-optional” life, start with understanding which stage of life you’re in, then focus on appropriate priorities when building wealth over the medium and long term.

Here are four key stages of pre- and post-retirement where you may find yourself searching for solutions.

Stage 1: Wanting it all

This is a stage often experienced 15 to 30 years before retirement. It’s characterized by multiple goals, including the desire to accelerate your career and income, buy a bigger home, plan for children’s education or support aging parents.

At this stage, it’s worthwhile to consider developing a financial plan that projects the impact of current saving and spending on future retirement goals, and set up automatic monthly contributions to your investment portfolio.

Build a financial safety net like critical illness insurance, to help protect retirement savings from being depleted in the event of an unplanned health setback.

Stage 2: Time is running out

This stage typically arrives three to 10 years before retirement. Feeling like time is running out, at this stage people often ask, “How much money will I need to have before I can retire comfortably?” Beware of underestimating how much is required to fund a sustainable retirement that involves an active lifestyle.

Consider increasing your savings to your investment portfolio and review portfolio returns with your adviser.

Determine if existing insurance policies, wills and estate plans are providing the right protection for you and your family.

Stage 3: Work-optional life

This stage begins at retirement when going to work is a choice, not a necessity. At this stage you may be active and travel a lot. In order to sustain the work-optional life, you may require professional advice to balance cash flow needs.

Your cash flow may come from multiple sources, unlike a salary, which tends to be fixed.

Balance spending for today and investing for tomorrow and cut down on unnecessary expenses.

Stage 4: Giving back and a focus on legacy

This stage tends to be filled with greater reflection and a deeper awareness of your life’s purpose, and it typically involves less physically active travel.

Consider consolidating your assets to simplify the process of succession and estate planning.

Update your financial, investment and estate plans, allowing you to be prepared for future challenges like memory loss and cognitive decline.

There is no fixed age bracket or prescription for each of these retirement planning stages. For some, the stages may come earlier; for others, later. But the need for financial planning is important for all, especially for those who want to achieve a work-optional life.

By Maili Wong, CFA, CFP, FEA and Author of “Smart Risk: Invest Like the Wealthy to Achieve a Work-Optional Life”

The Gold Standard Interview: Maili Wong

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Rita Silvan, editor-in-chief of Golden Girl Finance talks to Maili Wong, author of the bestselling book Smart Risk: Invest Like the Wealthy to Achieve a Work-Optional Life. In 2018, Maili was named one of Canada’s Most Powerful Women by WXN.  Maili is a senior portfolio manager with Wellington-Altus Private Wealth based in Vancouver.

GGF: In your book, you give examples of people, including your Mom, taking “smart risks”. What is the difference between a ‘smart risk’ and a ‘dumb risk’?

MW: A ‘smart risk’ is one where the likelihood and magnitude of a good outcome outweighs the likelihood and magnitude of a bad one. For example, taking a smart risk when investing can involve looking for an “asymmetric payoff” where the likelihood of a large profit outweighs the likelihood of a large loss. A ‘dumb risk’ is when there’s a low chance of success and high potential of a significant loss. For example, enabling a friend’s gambling addiction. In investing, taking smart risks means acting in a consistent and disciplined way so risks are more in your favour and there’s a high probability of good results over the long term. I always say, “hold a space” for long-term results.

GGF: What’s the biggest risk you took?

MW: The two biggest risks I ever took were both personal. Staying in New York after the September 11 attacks was a smart risk. Of course, it was distressing to stay but I felt it wasn’t the right time to leave either, as it was my second day on the job. After period of market volatility had just started and there were many layoffs during this period and that opened up possibilities for earnest people like me to step into more responsibility and leadership.

My second smart risk was leaving New York five years later to move back to Vancouver. I had reached some career milestones and had matured and was ready to lead a more purposeful life.

GGF: You give the example of the Nortel meltdown and the risks of herd mentality. How can investors learn to spot herd mentality?

MW: The first clue is when friends or colleagues boast about the investments they’re making and say these are “a sure thing”. Get underneath why you’re attracted to an investment. Is it a case of FOMO (fear of missing out)?

GGF: The Chinese phrase wei chi translates as danger + opportunity. Yet, most of us are risk averse. How can investors deal with volatility?

MW: I think of it as learning to ‘dance’ with volatility. We should expect volatility because it’s a normal part of investing. If you build in the expectation, then you’re not as shocked when it happens. I use my five-point “Smart Risk Road Map” as a guide. It helps take the biases out of the process as it bakes volatility into the plan.

GGF: Most people would say that a ‘work-optional’ life is very desirable. However, there are factors today that make generating sufficient passive income more challenging. How are you advising clients to prepare for retirement?

MW:There always has been and will be uncertainty when planning for retirement. With our clients, we plan for longer and more expensive life spans. I find that oftentimes, people haven’t thought much about how much they will actually need to fund retirement. We may start the process with clients as young as 30 or 40. We then see a 180-degree turn in their behaviour—from carrying huge lines of credit to being more mindful of their spending, but not any less happy. My advice is to plan an independent retirement portfolio and don’t rely on your employer to do it.

GGF: You recommend that investors not focus on the rate of return but on the risk of outliving their capital. How should investors adjust to a potential future of lower-than-historical returns?

MW: You’ve got to assess your lifestyle costs against the long-term returns of different asset classes. Asset class allocation is very important because, historically, equities have outperformed fixed-income over the long term. Of course, there’s always a range of outcomes and we run best- and worst-case scenarios.

GGF: There’s a lot of pessimism in the markets today and talk of slowing global growth. Where do you think we are in the market cycle and what is the best investment approach at this time?

MW: I think we’re late cycle in terms of economic expansion. In fourth quarter of 2018, investors saw a 20% correction from peak to trough in the U.S. equity market (S&P 500 Index). However, just because we’re late cycle doesn’t mean you can’t make money. Statistics have shown that, in Canada, after a market decline of 10% or more, the average annualized return one year later was 15.2%, and over a three-year period it was 11.8%. So, the long-term trend is growth and the trade-off for that is short-term volatility.¹

¹Based on MSCI Canada Index (gross dividends) returns from 1/1970 to 12/2017

GGF: What financial advice would you give to a young woman?

MW: That it’s never too early to start building financial independence. I’m like a warrior to free women from financial fear. Women can feel very vulnerable and they need to gain confidence on how to make good financial decisions.

GGF: What money lessons did you learn from your parents?

MW: To value money and the freedom it can bring. If you can earn it, it gives you the ability to create more choices. Money is an enabler. My kids have three bank accounts: one is money to spend now, another is money to save and spend later, and the last one is money to give to others who may need it more.

GGF: What’s the best/worst piece of investment advice that you’ve received?

MW: The best advice is to always seek clarity, to keep asking questions and to not be afraid of looking stupid. Get to the real truth of what the issue is. Take your time, use your emotional intelligence and embrace your feminine energy.

The worst advice is sometimes from friends with sales pitches, “You gotta buy this…!”

GGF: What was your best investment?

MW: My best decision was choosing whom to marry because it’s a life investment. I met Keith in university and then we had a long-distance relationship while I was working in New York. I am thankful for our relationship, to have someone who is my partner, emotionally and psychologically. I have a high-stress job that’s emotionally draining sometimes, so it’s great to have a partner who supports my growth.

GGF: Maili, thank you for sharing your experiences with us.

MW: My pleasure!

UBC Alumni Viewpoints Newsletter, Spring/Summer 2016

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The Spring/Summer 2016 of Viewpoints, the alumni magazine for Sauder School of Business at UBC.

The UBC Sauder School of Business is one of the world’s leading academic business schools. Located in Vancouver, Canada’s gateway to the Pacific Rim, Sauder provides a global business perspective at a dynamic crossroads of the international marketplace. Dedicated to rigorous and relevant teaching, our programs generate business leaders who drive change and shape industries and organizations around the world.

View the article here.