We have been working very diligently on the value that we bring to you. We want to make a much greater difference in your life and in the lives of your family, friends and associates.

We are rolling out our platform at an event we call “The WealthSmart Summit”.

Please join us on Tuesday, May 28^th at The Richmond Gateway Theatre Studio B at any of the following times:

•  2:30 PM – 4:00 PM – A great time for our retired clients and those with more flexibility in their schedules.
• 5:00 PM – 6:30 PM – A special session for our entrepreneur friends, including business networking opportunities.
•  7:30 PM – 9:00 PM – Timed especially for those who can’t get away from their daytime work schedules.

Highlights include:

• The WealthSmart Way – our new approach to resolving the wealth management rollercoaster and delivering a substantially improved financial planning experience.
• Rethink the Way You Invest – Critical factors in the pursuit of a better investment experience.
• Being a Hero – Financial Success is best lived when shared with others. We will show you how.
• Introducing our new team – We have been building systems that work to provide a more consistent financial planning experience. You will meet the team that will be with you for the long run.
• Pictures & gifts – Our photographer will take complimentary portraits. You will receive both a matted print as well as an electronic copy. In addition, we will have a number of useful giveaways to make absolutely sure that you get the best value out of this event.

This is an adult only event that you will want to invite family, friends and associates to. No financial products will be sold and we ask that you leave your cheque book at home.

We will have beverages and snacks available, but you won’t need the sugar or caffeine to keep you awake.

Please RSVP your attendance and preferred session by emailing Zinha Vetter or calling 604-241-4357. Attendance per session is limited, so we need to hear from you as soon as possible, but no later than May 20^th. Once we hear from you, we will send you a map and parking information.

We look forward to seeing you at The WealthSmart Summit!

This is the first in a regular series of drawings that I will be emailing and posting to my website.

I think it’s something that’s worth sharing with your friends and family as I also believe understanding it is pivotal to having a good long term investment experience.

This drawing explains why, over the past few decades, many investors have had a great investment experience and many have done nothing but lose money.

Dalbar Research & Communications regularly publishes their “Quantitative Analysis of Investor Behaviour” report, or QAIB for short. It finds that, over the 20 year period ending in December 2011 the S&P 500 index of the top US stocks experienced a 7.81% compound rate of return, whereas the average US Equity investor experienced a 3.4% rate of return. That’s a difference of 4.32%!

Here’s the sad truth about the average investor experience:

Rather than letting the markets grow our wealth for us over time, we are led by our hearts rather than our heads. We invest when we feel comfortable and the markets are relatively high and we often make poor decisions and sell when we are uncomfortable and the markets are down.

Warren Buffett said it best – “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.”

You don’t have to be a rocket scientist!

Friends and family know that I could go on for hours about financial matters (and sometimes do), but let’s try to measure this in minutes. These 10 lessons can make you a far more successful investor, avoiding common errors that cause financial anguish for many.

1. Be open to learning. Science trumps salesmanship but you don’t need a degree. We don’t hesitate to trust the disciplines of mathematics, biology, physics and chemistry and major decisions are rooted in economics. Why then do we ignore the science of the markets and continually chase the latest trends? An understanding of financial research can forever impact the way we invest.
2. Capital markets work. Only North Korea and Cuba would disagree! The markets are efficient. This means that securities prices reflect the knowledge and expectations of all investors. Traditionally, managers strive to “beat” the market by taking advantage of perceived pricing “mistakes” and attempting to predict the future. This often proves costly and futile. Instead, if we see capital markets as our ally and not an adversary, we can stop speculating and piggyback on the different ways that markets compensate investors.
3. There is no free lunch! Risk and return are related in that the market rewards investors who take greater risks. Stocks are riskier than bonds, but have greater expected long-term returns. Further, performance among stocks is largely driven by two other dimensions: 1. small versus large stocks, and 2. value vs. growth stocks. This has proven true across the globe. Great portfolio design happens when we figure out that by properly designing portfolios using these dimensions, we can reduce volatility and improve long term returns.
4. Diversification is critical. Returns of different asset classes are entirely random and holding a few concentrated positions will not, on average, add any additional expected return to the investor. Once a portfolio is designed along size, value and market dimensions, maximizing the diversification within those asset classes reduces risk.
5. Fees do matter. The financial critics are correct. Most investors are paying far too much in fees, both disclosed and undisclosed. For instance, $10,000 invested in a fund whose underlying investments have produced a 10-per-cent average compound rate of return grew to $57,535 in 25 years after deducting a 2.75-per-cent management expense ratio (MER). However, the same portfolio with a 1.50-per-cent MER grew to $76,868. That’s a $19,333 difference that most people I know could find a use for.
6. Index investing also has its flaws. Funds that mimic underlying indices such as the S&P500, the S&P TSX and the MSCI will underperform the index. Because index funds also charge fees and are continually reacting and paying hidden trading costs to track these markets, they will continually underperform the markets. Indices are simply a “snapshot” of different markets. The challenge is in finding a passive investment approach that minimizes these costs. There are a few that do this successfully.
7. Excessive portfolio turnover is bad. When a manager frequently purchases and sells securities, it triggers excessive taxes and hidden trading costs. Traditional thought states that this only matters outside an RRSP or RRIF. However, every time you trade a stock, there are trading costs – especially the spread between what a buyer is willing to pay (bid price) and what a seller wants (ask price). These costs can be quite high when a manager of a large fund wants to quickly unload or take up a position.
8. Long-term discipline is good for you! No one can tell the future and no one knows for sure when to be in or out of the market. Hence, we must establish our asset allocation and stick to the plan through thick and thin, regularly rebalancing to maintain our target portfolio mix.
9. Trust the gurus. Many of the great financial minds of our time believe that the best way for most investors to have a successful experience is to have a highly diversified portfolio of low-cost, highly diversified and passive investment strategies.
10. Get help. Work with a financial advisor who understands these truths and can help you stick to a long-term plan.

Ignoring the abundant financial noise out there and taking these ten steps should keep you on track to reaching your goals.

I’ve resolved to do something about my newsletter! Quite honestly, this has been a struggle for me. The occasional newsletters I’ve published in the past were time-consuming to produce, costly to print and mail and environmentally wasteful. Time to finally enter the 21st Century!

“WealthSmarts” will be a more frequent but quick read. We recognize that our clients and friends are very busy, value our environment and are only interested in well-written, relevant and educational content. Although we want to keep the content entertaining, we will not get cheesy! WealthSmarts will also be our tool to help communicate time-sensitive news quickly.

For future reference, most issues will be posted to our front page “blog” at www.wealthsmart.ca . This will allow you to delete each emailed issue once you’ve read it, knowing that you will always be able to view it on our website. However, you’ll need to stay on our list in order to receive some of the articles that we are not able to post.

Here are just a few of our ideas for future publication:

• “Rethink the Way You Invest” – a series where we draw on the lessons of science and common sense to help our readers transform their investment experience.
• Behavioural Finance - A plain English guide to why we behave the way we do as investors and tips on how to make more logical decisions.
• Guest writers - Since I don’t have all the answers, I’d like to draw on several key writers when the message is relevant to you.
• Research - We enjoy a unique feedback loop with the academic world and my role is to help interpret this knowledge and see where it can help in planning, building and securing your wealth.
• Travels with the Vetters - learning financial lessons through observations made while traveling. Since I’ll be in Europe for the month of May, this will be a good place to start.
  There will be an “Opt-Out” feature if, over time, you find the newsletters to be of no value to you. We would encourage you, however, to stay on the list as it will become our primary tool for delivering relevant news to you.

As always, we welcome your feedback and hope you enjoy our new on-line publication.

We all have goals and dreams and this requires focus and long term planning. A properly designed and implemented financial plan should provide peace of mind, knowing that no matter what is happening in the market, you will achieve your goals.

In the midst of tremendous market turmoil, it is difficult to separate truth from hype and hysteria. In times like these, we need to turn to the objective voice of financial science, distilled down to several essential truths:

1. The markets work in the long run and there is little point in trying to time them or actively guess which part of the market will outperform another.
2. Risk and return are related and we each need to determine what risk level we are comfortable with, seek help in structuring an appropriately designed portfolio and stick with the discipline.
3. Diversification is critical to reducing risk without sacrificing too much return.
4. Fees matter. Canadians pay some of the highest investment management fees in the world. For many investors, there are ways to reduce unnecessary fees and trading costs.
5. Paying attention to tax-efficiency will reduce the drag that income tax can have on a portfolio.

We take pride in helping our clients to successfully plan, build and secure their wealth.