What the rich can teach us in these turbulent times

The Globe and Mail – Kira Vermond

Between President Donald Trump threatening to “shut down” the United States government, the war of words with North Korea and global stocks taking more dives (and rebounds) than a desperate soccer player, the average investor has probably been a tad rattled lately. But how have Canada’s wealthy fared?

These top advisors for high-net-worth investors weigh in on what they’re hearing from their richest clients – and what we can all learn from them.

Paul Harris, partner and portfolio manager at Avenue Investment Management, Toronto

“I think the general feeling is of nervousness because the market has gone up so much. People are also unsettled by the political situation in the United States. They feel there is something that’s going to blow up and cause the equity market to blow up with it. They don’t believe that this individual who runs the country is not going to blow up something along the way.

“Everybody also feels there should be a market pullback. There hasn’t been one in a while. But when everybody wants a pullback, it never happens. It’s Murphy’s Law. The market continues to go up.”

Susan Latremoille, wealth advisor and director of wealth management at the Latremoille Group, Richardson GMP Ltd., Toronto

“They have fear, but I think it’s connected primarily to what’s going on in the world.

“Ultimately, the mindset of wealthy people has more to do with capital preservation than taking a lot of risk. Most of the wealthy people we work with say, ‘Don’t lose my money. I’d rather just hold onto it than take a lot of risk, but I’m also looking for a return better than just leaving my money in the bank.’

“So there’s no need to shoot the lights out, it’s about protecting the money and increasing the value over time.”

Tony Maiorino, vice-president and head of RBC Wealth Management Services, Toronto

“Here’s an analogy for you: You’re flying from Ottawa to Toronto and there’s 30 minutes of turbulence in that 45-minute flight. When somebody asks what the flight was like, you’re going to say, ‘It was a horrible flight!’ You’re focused on the short term. But if you’re taking a 12-hour flight to Hong Kong and you have that same 30 minutes of turbulence, unless it comes right before you’re going to land, you’ve forgotten all about it.

“These clients have been through this before. They’ve seen it and understand it’s short-term in nature. They’re not overly concerned by what they’re seeing. They’re frequent fliers, if you will.”

Nancy Grouni, certified financial planner, Objective Financial Partners Inc.,Markham, Ont.

“There isn’t one particular mindset that wealthy people have when it comes to the stock market. I work with very wealthy people who are enormously risk tolerant and others who are enormously risk averse. I see both ends of the spectrum.

“It depends more on how they acquired their money. Those who inherit money are less likely to have a lot of experience with the stock market. So they’re more likely to be risk averse.

“But we also work with a lot of people who have become wealthy due to investing in their own corporations. Because it’s part and parcel of what they do for a living, I find those people are more risk tolerant and more likely to have a higher component of their portfolio in the stock market.”

Glen Brown, head of investments, Manulife Private Wealth, Toronto

“When Brexit came out the first thought was, ‘Well, how is this going to affect my portfolio? What should we be doing?’ Well, you shouldn’t be doing anything because they just voted for something, and we have no clue how this is going to unfold.

“If you’re doing a properly diversified global portfolio, as the high-net-worth people do, they tend to not overweight Canada – which is a propensity many of us have. I think that is something that protects them.

“I think if you’re looking for something for the long term, you don’t care what a politician has said – no matter who that politician is. Quite honestly, you will be riding this out and dealing with your money after that politician has retired.”

Ian Black, fee-only financial advisor at Macdonald, Shymko & Co. Ltd., Vancouver

“Our clients aren’t necessarily concerned with what’s happening day to day in the market. That’s because we teach them that diversification is your friend. If you’re happy with all parts of your portfolio at one time, you’re probably not diversified enough.

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