The Renaissance Advisor by renaissancemag

The Renaissance QUARTERLY FUND PROFILES / PRACTICE MANAGEMENT / OUTLOOK / OPINION

Q3 – SEPT. 30, 2015

Millennial Mindbender: Building Relationships with Tomorrow’s Economic Force Also Inside:

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Hollywood Lessons for the New World Advisor Central Banks Nearing Limits?

For Advisor Use Only

Page

In this issue

Economic Outlook 4 The Fed: Calling For Leadership Back of the Napkin 6 Hollywood Lessons for the New World Advisor

Tax and Estate 8 Help Millennials Get a Head Start on Tax Savings Global Market Perspectives Central Banks Nearing Limits?

Millennial Mindbender: Building Relationships with Tomorrow’s Economic Force 10

Solution Highlight 13 Diversification – Protection During Market Uncertainty Wellness Travel – Journeys for the Body, Mind and Spirit

Thanks to Our Supporters 17 Be Accessible and Available Brain Calisthenics 18

From the Managing Director of the Renaissance Sales Team

The Next Generation Welcome to the fall edition of The Renaissance Advisor. The leaves have fallen, the days are shorter, and once again we prepare to settle in for another Canadian winter. No matter how familiar we’ve become with the changing seasons, it still seems to come as a bit of a shock. We’re not always sure how to deal with it, but we know that we have to. The inevitable need to manage change is very much present in the nature of our business. Expectations, demands and even the types of clients we deal with are continually evolving. Now, there’s a whole new generation of highly-educated, tech-savvy and debt-ridden clients upon the horizon – the Millennials. In part one of a new two-part feature, Millennial Mindbender: Building Relationships with Tomorrow’s Economic Force, we examine our relationship with Millennial clients. We help identify and further explain this unique generation, and offer insights on how to work with your clients’ Millennial children in order to keep inherited assets part of your book of business. Also in this edition, Grant Shorten outlines some lessons from the Hollywood formula, and we hear from Jamie Golombek and Ben Tal. As always, we thank you for your business and welcome your feedback.

Shelly McLean Managing Director, National Sales Renaissance Investments

The Fed: Calling For Leadership economic outlook

The U.S. Federal Reserve (Fed) needs Winston Churchill. The institution lacks the leadership and guts to break a cycle where the market leads the Fed, not the other way around. The Fed also needs William Shakespeare to pen its news releases. The dramatic gap between the Fed’s language in September and Fed Chair Yellen’s in early October (more hawkish), demonstrates the struggle to find a balanced statement that won’t spook the market.

Interest rate uncertainty is costly. Increased risk aversion prompted another wave of capital outflows from emerging markets (roughly $1.5 billion in the four days leading to September 24). Emerging market bonds now account for less than 10% of total global bond allocation – the lowest share since 2010. Allocations to emerging market equities are back to 12% – the lowest level since the 2008-09 crisis.

“ Emerging market bonds now account for less than 10% of total global bond allocation – the lowest share since 2010.” Clearly, developments in China are key to the market and the Fed. A growing concern is that capital outflows from emerging markets, China in particular, might lead to a wave of liquidation of U.S. treasuries and push yields higher. That’s a risk, but probably not likely. It would also be a mistake to interpret China’s recent currency devaluation as a decision by Beijing to join the currency war. The renminbi is probably 10-15% overvalued, and the move is really aimed at making the currency more responsive to market forces. Chinese leadership fully understands that Beijing must tread carefully in the FX market. A dramatic depreciation of the renminbi could have major consequences for the global economy (Japan, in particular). This is the last thing China wants to see ahead of the IMF’s

decision on whether to include the renminbi in the SDR reserve currency basket. Furthermore, years of current account surpluses and liquid private sector reserves of less than $1 trillion make it unlikely that China will see a capital outflow crisis any time soon. Having said that, it is becoming clear that the role of official institutions as large players in global markets is diminishing. This may suggest slow and modest upward pressure on the long end of the yield curve as the influence of interest-sensitive players rises.

“ ...years of current account surpluses and liquid private sector reserves of less than $1 trillion make it unlikely that China will see a capital outflow crisis any time soon.” Back at Home In Canada, the recent increase in mortgage debt shouldn’t come as a surprise. This acceleration reflects an increase in average mortgage size rather than an increase in home-buying activity. Mortgage activity is returning to normal following a period where CMHC tightened its mortgage rules. That tightening had produced an increase in low-ratio (over 20% down payment) mortgages and consequently registered as a decline in mortgage debt. That situation is now stabilizing. A recent communication from the Bank of Canada (BoC) suggested that the stimulative effects of previous monetary policy actions are working their way through the Canadian economy. Given that the BoC eased policy from an already low level of interest rates, it’s doubtful that much stimulus came from the household credit channel. In fact, growth in household credit didn’t show any notable acceleration after the January easing move. Are low rates prompting an increase in housing activity? Certainly not across the country. The gap between real estate activity in Toronto and Vancouver and the rest of the country is widening. It is fair to say that, outside those two centres, the Canadian housing market is already in the midst of a soft landing (with Calgary obviously dancing to a different tune altogether).

0.50

m/m % change, three-month moving average BoC eases policy

0.45 0.40 0.35 0.30 0.25 0.20 2013

In Toronto and Vancouver, it’s well established that the increase in the average house price masks a widening gap between the surging prices of detached properties and relatively muted increases in condo units. In both cities that price gap is currently at a record high, and the price asymmetry goes well beyond that. In general, over the past decade, prices of more expensive detached properties have risen faster than prices of less expensive properties. In Toronto*, the price of properties in the lowest price bracket (lowest 5%) rose by a cumulative 74% over the past decade. This is less than the 87% increase seen in the mid-price bracket and substantially less than the 91% price appreciation seen in the upper end. The only exception to an otherwise very linear trajectory is prices at the highest end (top 10%), which have risen slightly more slowly than in the 90th percentile. In Vancouver, the disparity is even more pronounced. The price gap widens the fastest at the highest end of the market – a fact that might reflect the impact of foreign investment activity. This has major implications for the “move-up” market and the growth in the renovation market in both cities.

2014

2015

Household Credit 0.45

Average m/m % growth

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 Avg. Jan - Jun 2014

Avg. Jan - Jun 2015

Source: Bank of Canada

*Census Metropolitan Area

Household Credit 0.50

m/m % change, three-month moving average BoC eases policy

0.45 0.40 0.35 0.30 0.25 0.20 2013

2014

Source: Bank of Canada

0.45

Average m/m % growth

2015

Benjamin Tal is Deputy Chief Economist for CIBC. Described as one of Canada’s leading experts on the real estate market by the International Monetary Fund, he is responsible for analyzing economic developments and their implications for North American fixed income, equity, foreign exchange and commodities markets. www.renaissanceinvestments.ca/en/economy/ www.renaissanceinvestments.ca/en/economy/

Hollywood Lessons for the New World Advisor back of The napkin

Get ready for the rocket science at the heart of the matter! For

the past 40 years, I’ve been living in the great city of Toronto, and I couldn’t be more proud of how the “big smoke” (as it is sometimes called) has steadily evolved into a world-class destination.

As human beings: We love to be entertained We seek escape We thrive on emotional stimulation

If you’re a fan of the theatre, the cinema, or big screen productions, you will almost certainly be familiar with TIFF – The Toronto International Film Festival. Although I’ve never had the privilege of attending the event, I’m always amazed by the pomp and circumstance surrounding every aspect of this 10-day extravaganza. The scope of the drama includes big-name movie stars posing on red carpets, screaming fans with cameras flashing, and talk show hosts desperately scrambling for just 15 seconds of attention from the next Academy Award winner! Let’s face it…Hollywood is BIG…Hollywood provides something of tremendous perceived value to an expectant audience, and it delivers that value in a way that dramatically affects our emotional chemistry. Think about the simple act of movie-going. Many of us are happy to travel a substantial distance, stand in line, spend our hard-earned money, and sit for two hours while images and sounds bombard our visual and auditory senses. Then, at the end of each year, a wellrespected committee votes to determine the very best “visual and auditory experiences” in a broad range of categories. So, what’s behind all this strange behaviour? Why do we seek madly after “the very best” visual and auditory experiences? What do these things ultimately do for us, and what lessons can we learn from this fascinating human predilection?

When we’re treated to a truly great film, we leave the theatre with an “experience.” We’re affected on the inside and we walk out of the building in a different emotional state than when we entered. And, every once in a while, we are changed forever in some small way. The most common words used to describe a great film are: captivating, moving, riveting, action-packed, brilliant, breath-taking, exciting, hilarious and inspiring. This is what it takes to qualify as a “great film” and these are the elements that bring us back…again and again and again. Now, let me ask you a crazy question… What kind of “visual and auditory” experiences are you delivering to your clients and prospects? These are individuals who have travelled some distance to meet with you, are putting their hard-earned wealth at risk, and are secretly hoping for something great. I know what you’re thinking and, yes, it’s true that there’s a very big difference between going to a blockbuster movie for entertainment, versus meeting with a financial professional to discuss serious money matters! Nevertheless, your clients and prospects are human beings and are, therefore, wired to respond positively to certain basic triggers.

What kind of “visual and auditory” experiences are you delivering to your clients and prospects?

3. The Acting

Consider the Foundational Elements of a Great Film The Screenplay

Script

Dialogue

Monologue

The Direction

Angles

Cast placement

Sequencing

The Acting

Rehearsal

Becoming the character

Owning the part

The Costumes

Role appropriate

Fitting

Attractive

Fluidity

Eliminating redundancies

The Editing

Continuity

As an investment professional seeking to grow your practice, you will find yourself in a perpetual contest for the attention and acceptance of would-be clients. Each and every interaction provides an opportunity to deliver something special – something that will, even marginally, differentiate you from the rest of the pack. Very often, those points of differentiation will be found in the subtle nuances and details of the face-to-face “experiences” you deliver. Lessons from the Hollywood Formula 1. The Screenplay Carefully choose the words you will use in your meetings with clients and prospects. Spend quality time crafting heartfelt scripts for your introductory meetings, second meetings, third meetings, and your ongoing wealth management reviews with your existing clients. Consider treating each interaction as a single “take” and then assess the effectiveness of your delivery and how your screenplay is being received. 2. The Direction As the leader of your advisory franchise, you are the director of the operation. The director carries a tremendous amount of influence and control over every aspect of the project and takes that responsibility very seriously. Take the time to act as a detached observer of your practice and make critical adjustments to ensure the most optimal client experience. Some considerations: When and how should your team members “enter” the picture? What will they say and do?

The greatest stage and screen actors in the world are renowned for their tireless commitment to practice and rehearsal. As a trusted investment advisor or financial planner, you will need to “own the part.” Don’t confuse this with “pretending.” Great actors truly “become” the character by internalizing the deepest values, beliefs and physiology of the role. Take the time to rehearse and choreograph your body language and your message-delivery to the point of mastery. 4. The Costumes With the exception of elaborate period films, we often don’t even notice the costumes being worn by the characters. Little do we realize that a tremendous amount of planning and forethought has gone into every stitch of every outfit adorning the actors. When it’s done well, the costumes just work, and ultimately play a significant part in how the audience perceives the character. As intuitive as this might seem on the surface, consider revisiting the outfits and accessories you typically wear to your meetings, and leverage the advantages that come with even subtle changes. 5. The Editing This is the final stage in the creative process for a great film. It’s in the editing room where all the hard work and moving parts come together and a masterpiece emerges. The editing process involves an absolute commitment to: ruthless evaluation, constructive criticism, cutting, trimming, slicing and dicing. In fact, most of what was originally conceived and produced, will end up on the cutting-room floor. In your advisory practice, your ongoing editing process will require you to ruthlessly assess every aspect of your practice, eliminate redundancies in your process, and to leave a pile of preconceived notions on the cutting-room floor. Have fun as you apply some of these simple Hollywood principles to your craft!

Grant Shorten is Director of Strategic Insights at Renaissance Investments. He offers insights and approaches that will work with your clients and have an immediate impact on your practice. www.advisor.ca/togo

What collateral tools will you incorporate into your meetings?

Podcast > 4 Ways to Compete with Robo-Advisors

How will your office be configured?

Podcast > Book-Building Tips for New Advisors

What images do you want your guests to see? What feelings are you hoping to elicit from your audience?

www.renaissanceinvestments.ca/en/practicemanagement/

Help Millennials Get a Head Start on Tax Savings to Ease Their Financial Futures

Tax AND Estate

Here are a couple of tips to help your recently graduated Millennial clients start towards a lifetime of tax savings. Millennial Student Debt Are your Millennial clients struggling to pay off those student loans? They are not alone as this is generally the first financial priority for 20-somethings. Fortunately, if the loan was made under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or similar provincial or territorial laws, your clients can claim a non-refundable tax credit for the interest they pay on such loans. But be sure Millennial clients are wary of promotions from financial institutions offering loans (often lines of credit) with lower rates of interest than their student loans. The trade-off for a lower rate may be sacrificing their interest tax credit, since the loan may not qualify for the interest tax credit. Before refinancing student loans, have your Millennial clients do the math to ensure that the savings they are getting on the lower interest rate are greater than the value of the interest credits they are forgoing.

An advantage of contributing to an RRSP through work is that your Millennial clients’ employers may reduce the amount of tax withheld at source from their paycheques to take into account the deductibility of their RRSP contributions. This has the added benefit of increasing your clients’ regular cash flow by them essentially receiving their tax refunds throughout the year, instead of waiting until they file their tax returns. Finally, assuming your Millennial clients also wish to buy a home in the next few years, having an RRSP allows them to participate in the federal Home Buyers’ Plan, which offers access up to $25,000 from their RRSPs, tax-free, to purchase a first home. The amount must then be repaid over a maximum of 15 years. With a TFSA, however, there is no limit to withdrawals and clients can generally recontribute the entire amount beginning the following year. By starting RRSP and TFSA contributions early your Millennial clients may begin reaping immediate tax savings and will also be saving towards their down payments, or other important goals.

Get Them Saving with an RRSP or TFSA One of the best habits to get your newly employed income-earning Millennial clients into is to begin a systematic savings program by contributing to an RRSP or TFSA, which provide tax advantages for their investments. The RRSP contribution limit is 18% of “earned income” for the prior year to a maximum of $24,930 for 2015, minus any pension adjustment, plus any unused contribution room from prior years. In addition, the TFSA dollar limit for 2015 is $10,000, and depending on your clients’ age, they may be able to contribute up to $41,000 to a TFSA in 2015. Many employers offer direct savings plans whereby contributions can be made automatically from your clients’ paycheques. With contributions deducted directly from their paycheques, clients never see the money so they won’t miss it.

Jamie Golombek is Managing Director, Tax and Estate Planning with CIBC Wealth Advisory Services. He works closely with advisors to help them provide integrated financial planning solutions for their high-net-worth clients. Jamie is frequently quoted in the media as an expert on taxation. Follow @JamieGolombek

www.renaissanceinvestments.ca/en/jamie_golombek/

Central Banks Nearing Limits? Global Market Perspectives

Central banks can only stretch policy so far in order to ignite growth – and many are nearing those limits. Several interest rates are already at zero and some central banks are also likely approaching their boundaries for non-conventional policy. Despite their best efforts, global growth remains relatively low by historical standards.

Central bankers also face the problem that it is difficult to raise interest rates without derailing any existing momentum. Uncertainty is a negative – the U.S. Federal Reserve (Fed) introduced higher volatility to financial markets by postponing a first rate hike and keeping the market on edge. However, if monetary policy keeps rates close to zero, what tools are left to prevent the next economic slowdown? The last few months have provided growing evidence that the Fed is making progress towards renormalization. Sufficient improvements have been made in the U.S. housing sector and labour market to allow a lift away from zero interest rates and still remain very accommodative. However, the strong appreciation of the U.S. dollar against most currencies over the past year and recent developments in China are factors that argue against a rate increase. In the past, foreign exchange developments played very little part in determining the Fed’s monetary policy stance. When domestic conditions justified hiking interest rates, the Fed did not shy away because of the potential impact on the U.S. dollar. The current situation is different. The U.S. dollar has gained substantial ground in recent years, appreciating nearly 30% on a tradeweighted basis since 2012. This is definitely complicating the situation for U.S. monetary authorities, forcing the Fed to put more weight on foreign exchange developments in its policy decisions.

Outside the U.S., Europe is showing signs of life, with domestic demand improving. But growth remains relatively low by historical standards. Canada remains challenged by weak commodity prices and a weak domestic economy. Then there is China, which we could call the “elephant in the room.” China’s persistent slowdown looks more and more structural and is increasingly showing signs of impacting its neighbors. Supportive monetary and fiscal policy will be required to prevent China’s economic rebalancing from becoming disorderly. Given the size of its existing economic imbalance, policy measures are more likely to temper the slowdown than reverse it. Despite efforts by policy makers to spur economic activity and stabilize debt levels, developed economies have seen total debt rise substantially since 2007. Central banks would like to renormalize monetary policy, but debt levels are too high and global economies too fragile to consider much rate tightening at the moment.

Luc de la Durantaye is Head of Asset Allocation and Currency Management with CIBC Asset Management. He is responsible for strategic and tactical asset allocation, currency management, absolute return strategies and index management. Go to RenaissanceInvestments.ca to read the full Perspectives report

www.renaissanceinvestments.ca/en

Millennial Mindbender Building Relationships with Tomorrowâ&#x20AC;&#x2122;s Economic Force With the Great Transfer of Wealth underway, thinking about your future client base and work associates will be your key to long-term success. Millennials, despite their current economic challenges, will be a force to deal with in the years to come.

To help you understand and harness Millennials’ potential, we present a two-part series that explores how you can engage Millennials as both clients and colleagues.

On the negative side, they have been described as lazy, narcissistic and prone to jump from job to job.

Part 1 – Defining a Generation

Here are some more interesting differences between Millennials and other generations that Environics has discovered:

Last year, Millennials became the largest cohort in the Canadian workforce: they comprised 36.8% of the workforce, while Gen Xers came in at 33.9% and Boomers at 31.1%.1 Consider that there are almost nine million Canadian Millennials2 – the largest generation in terms of sheer numbers. And while it’s your Boomer clients who have the wealth and currently lead consumer spending, Millennials will become the new source of both – as a group, they already have more than $70 billion in potential purchasing power and their buying power will continue to grow as their incomes increase.3

Compared to all Canadians, Millennials are:

This foretells of a massive shift of wealth that will unfold very quickly as our oldest living generation passes on, leaving their financial legacies to their Millennial adult children and other beneficiaries. Who are the Millennials? According to Environics, Millennials are the generation of people born between 1980-1995. The Millennial generation is also known as Generation Y, because it follows Generation X – those born between 1966-1979.4 Here’s how the generations line up: Baby Boomers

Born 1946-1965

Generation X

Born 1966-1979

Generation Y (Millennials)

Born 1980-1995

Generation Z

Born 1996-2010

How are Millennials Unique from Other Generations? Each generation has different personalities, values and beliefs. What defines Millennials? They are the first generation to have computers at home and school, to have always had cell phones, instant messaging and an almost infinite number of cable channels. Their familiarity and comfort with technology may be the single biggest difference between Millennials and every other generation.5

Financially, 60% of Millennials graduated from a post-secondary institution with student debt4 and, as a generation, they entered the workforce during the decade that saw both the 2000 stock market crash and the 2008 financial collapse.

• Adaptable, resilient and creative • Prone to question norms and authority • Environmentally concerned • Avid consumers and trust advertising Compared to Gen X, Millennials are: • More deeply connected to local family/community • More engaged in work • More stressed • More individualistic • Greater discriminating consumers with a concern for saving Your Opportunity in The Great Transfer of Wealth As the largest generation in Canada, Millennials represent a coming tidal wave for anyone who manages money for aging clients. According to Investor Economics, a whopping $895 billion of wealth will be transferred from Boomers to their Millennial children between 2012-2022.6 Millennial Relationship Challenges With all that money changing hands, it may seem that your business success is imminent. But as you may also be discovering, when an elderly client passes away, the money you were entrusted to manage on behalf of that client simply disappears.6 Why? “All too often, we, as an industry, are simply failing to ‘own’ the family matrix,” says Grant Shorten, Director of Strategic Insights at Renaissance Investments, CIBC. “We may have formed a solid relationship with the head of the family, but we maintain little or no relationship with their adult children or grandchildren,” he says.

According to the Pew Research Center, an American think tank based in Washington, D.C., Millennials are “confident, self-expressive, liberal and open to change.” They are also more accepting, less religious and on track to becoming the most educated generation in history. Even though, as a group, they currently suffer from devastatingly high unemployment, they are still optimistic.5

Dealing with Millennial Debt

Think about how you established your current client relationships. Maintaining a relationship requires confidentiality of client information. This mandate may have compelled you to keep certain information from the child’s knowledge and diminished your ability to build a trusting relationship with the child.7

Why are they struggling?

Another factor that may have hindered you from developing a relationship with your client’s child is your desire to focus on the client, consequently leaving the child out of the relationship.7

Look at today’s economy and you’ll see the load under which Millennials are labouring. Wages are falling. Job growth remains uneven. According to The Conference Board of Canada, the income gap between younger and older generations is expanding. Also consider a high youth unemployment rate, unpaid internships and chronic underemployment of post-secondary graduates.9

Also, the relationship model you developed with your Boomer client may not be appropriate for their Gen X and Millennial children. The younger generations have different cultural, social and economic standards due to their unique technological and economic experiences.7 Get Everyone in the Loop

Then consider the social impacts: lower marriage rates, more adult children living with their parents, and young people holding off on starting relationships or home ownership.9

With The Great Transfer of Wealth underway, the last thing you want is to leave any inherited or new assets hanging in the balance. By bonding with family members and beneficiaries now, you can gain their future trust.

These trends related to delayed adulthood can damage the economy and slow economic growth.

Reach out to Millennial family members early on in their productive working years. This can be done most easily within the context of your existing relationship with their Boomer parents. Becoming a recognizable figure in the child’s life increases your chances of retaining the child as a client in the future.

Conquering Millennial Debt One of the most indebted generations, Millennials need a multi-layered strategy that conquers today’s debt loads while planning for tomorrow, says CIBC’s tax expert Jamie Golombek. This includes: 1) Contributing to a TFSA 2) Contributing to an RRSP 3) Paying down debt Millennials, however, may be undecided as to where to invest their funds. • “Educate your clients that paying down debt is also a form of savings,” says Jamie Golombek CA, CPA, CFP, CLU, TEP, Managing Director, Tax & Estate Planning with CIBC Private Wealth Advisory Services. “When funds are saved via an RRSP or TFSA, assets increase through the initial contribution and the accumulated future earnings on that contribution.” • When funds are used for debt repayment, liabilities are decreased through the principal repayment and elimination of future interest payments. This increase in assets or decrease in liabilities results in an increased net worth, so paying off debt can essentially have the same effect as savings.

Another important element in connecting with Millennials is understanding that this technology savvy group wants services that include 24/7 online access and mobile application capabilities. Young clients also expect virtual office technology over face-to-face meetings, which are too slow. “Most Millennials don’t want to gather their documents, travel to an office and sit down with you just to review and sign some forms,” says Joshua J. Sheats, CFP, CLU, ChFC, CASL, CAP, RHU, REBC and host of the daily Radical Personal Finance podcast. “Using online meeting services to share your desktop view with clients and mark it up online in real-time is much more effective than trying to do something in person anymore.” 8 The Great Transfer of Wealth will challenge even the most experienced of investment professionals. “But those who strike early and proactively can secure existing assets and gather new assets in the process,” says Shorten. Get Ready With the coming tide of Millennials in increasingly important financial roles, it’s important to understand where they’re coming from and what their financial advice needs will be. By establishing relationships now, you can position yourself as the go-to expert in the future.

http://www.canadianbusiness.com/innovation/the-millennial-majority-workforce/ http://strategyonline.ca/2013/08/21/millennials-by-the-numbers/ 3 http://www.greenhousecanada.com/business/marketing/selling-to-millenials-4344#sthash.P03CEuaH.dpuf 4 Environics Research Group, Millennials as Investors, Oct.1, 2015. 5 http://finance.youngmoney.com/careers/boomers-to-millennials-generational-attitudes/ 6 http://www.renaissanceinvestments.ca/en/practicemanagement/pdf/Q313-BackOfNapkin.pdf 7 http://www.lifehealth.com/millennials-next-great-client-base/ 8 http://www.icpas.org/hc-insight.aspx?id=25468 9 http://www.canadianbusiness.com/blogs-and-comment/the-youth-unemployment-myth-myth/ 1

• “Look further to maximize the benefit by considering how the rate of return on your clients’ investments, the interest rate on their debt, their tax rates and time horizon can impact their savings,” adds Golombek. Ultimately, whether Millennials choose to invest or repay debt, they will still be saving for their future.

Diversification –

Protection During Market Uncertainty

Solution Highlight: RENAISSANCE OPTIMAL INCOME PORTFOLIO

As market volatility continues, lingering memories of other turbulent times are shifting investors’ focus from growth to downside protection. The Renaissance Optimal Income Portfolio (OIP) offers the benefit of diversification to your clients’ investment strategies. Its asset allocation of 60% fixed income and 40% equity has helped preserve the value of investors’ portfolios over the last three market downturns. Global Financial Crisis (June 18, 2008 – September 3, 2009) 0

-10 -20

2011 Downturn (April 5, 2011 – October 3, 2011)

-5 -17.52%

0 -2

-2.33%

-4 -4.82%

-6

-10

-30

-8 -15

-40

-10 -12

-20

-50 -60

2015 Global Growth Concerns (April 15, 2015 – August 24, 2015)

-19.82%

-48.46% OIP 60% Fixed Income 40% Equity

100% Equity*

-25

OIP 60% Fixed Income 40% Equity

100% Equity*

-14 -16

-14.35% OIP 60% Fixed Income 40% Equity

100% Equity*

* S&P/TSX Composite TR Index

For more information on OIP, visit realoutcomes.ca Contact your Renaissance representative for more details. renaissanceinvestments.com 1-888-888-FUND (3863)

ADVISOR ToGo Access to the experts when you need them

Listen to short podcasts from our expert OIP sub-advisors. www.advisor.ca/togo

Scott Vali, CIBC Asset Management Inc.

Podcast > U.S. Rate Hike Could Weaken Commodities

Access the Experts When You Need Them

Patrick O’Toole, CIBC Asset Management Inc.

Podcast > Volatility Makes Corporate Bonds Attractive

Nick Langley, RARE Infrastructure Limited

Podcast > Where to Find Infrastructure Opportunities

wellness travel Journeys for the body, mind and spirit.

As personal health and wellness initiatives continue to gain momentum, travellers are increasingly looking for vacations that are more physically, mentally and environmentally nurturing. Whether itâ&#x20AC;&#x2122;s about ramping up your fitness goals, choosing a spa and wellness resort or helping the earth to stay healthy, you can pursue diverse services that will keep you feeling fantastic while you play.

Physical Fitness Gone are the days of just sitting on the beach sipping margaritas and then heading for the nearest buffet. With the myriad options for incorporating physical activity in your vacations, it’s easy to maintain or even exceed your fitness goals while travelling. If you’re truly adventurous, challenge yourself with a ski-and-snowboard vacation in the Rockies, a jungle exploration foray in the Dominican Republic or learning to surf in Costa Rica.

According to Spafinder Wellness 365, you can enjoy a range of spa options that cater to “the self”:

Resort/Hotel Spa Resorts and hotel spas offer a wide variety of recreational facilities, including full-service spas. Activities may include golf, tennis and water sports. Dining options abound, and spa treatments and services generally complement a hotel stay or vacation activities at a resort.2

Destination Spa

• Renting a paddleboard and learning a new sport.

Destination spas offer a full-immersion spa experience. All-inclusive programs offer fitness activities, nutritious spa cuisine, various therapeutic spa and body treatments, educational classes and often mind/body/ spirit offerings.2

• Joining the aerobics classes offered at many all-inclusive resorts and on cruise ships.

Connoisseur Spa

If you want something a little less strenuous, try:

• Pumping weights at the fully-equipped gyms offered at many hotels. Whatever your fitness goals, make your vacation unique and special to you. Whether you are a fitness enthusiast or are working towards a new body, there’s no reason to take a vacation from your fitness.

The crème de la crème of spas, these elite venues suffuse you with extraordinary ambience, luxurious accommodations, high staff-to-guest ratio, exceptional spa services, outstanding cuisine, and industry awards and recognition.2

Healthy Diet and Weight Management If you need help getting into shape, a weight-loss holiday may be just what you need to kick-start your new way of life. Some unique weight-loss vacations include3: • A yoga and zumba fitness retreat in Costa Rica, where dancing, posing, stretching and tropical adventure are par for the course.

Spa and Wellness Treatments With our increasingly busy lives and time-taxing activities, travel can be one of the few downtimes in our hectic schedules. Whether it’s choosing a vacation property that offers à la carte spa and wellness treatments, or luxuriating at a destination spa, spa therapy has become not just a luxury, but for some, a necessity.

• A wellness ranch in California where a complete overhaul of your health habits and fitness is the order of the day. Programs consist of six-to-seven hours of moderate exercise, yoga sessions, afternoon massages and a daily nap. Food is organic and vegetarian, and the diet excludes alcohol, caffeine and processed sugars. • A coastal trekking resort in British Columbia that offers daily hikes to lead you down trails through high mountain peaks, deep shaded valleys and alongside rivers and streams. Yoga and stretch classes that cater to all fitness levels are also on the agenda.

Eco-friendly Hotels Our embrace of health has extended to beyond just ourselves. Eco-friendly, otherwise known as green or healthy, hotels save water, save energy and reduce solid waste. In saving the environment, they also fulfill profound human needs as many of us, more than ever, need travel that restores. Even though healthy hotels have been around for years, they are still evolving to become more inspired and comprehensive. The industry is expanding its sustainability focus beyond just saving water and having the lights automatically shut off when you leave the room. According to Hotel Business Review4, a publication for hotel company owners, senior executives and institutional investors, these new trends for green design reflect the ongoing challenges being addressed by architects, designers, engineers, developers and hoteliers alike:

• Establish green design as the norm NOT the exception; sustainability is no longer just an option. • Implement biomimicry: the use of nature as a guide and mentor to advance design. • Reduce water and energy consumption. • Use alternative materials and resources stemming from recycled, natural and rapidly renewable products. • Source locally, regionally grown and produced products and services.

To that end, unique Earth-saving hotels are popping up all over the world5: • I n the Swiss Alps, luxurious individual pods (not hotel rooms) are designed to be “low-impact accommodations,” meaning you use minimal water and electricity, produce less waste and utilize renewable resources. • I n North Carolina, a hotel boasts more than 70 sustainable practices, including a vegetated restaurant rooftop and 100 solar panels that heat 60% of the water for both the hotel and restaurant. •A t a coffee plantation/inn in Costa Rica, underground electrical systems don’t interfere with the wilderness, coffee pulp is reused as fertilizer, all linens are made from bamboo fibre and all of the vegetables are organic.

Travel to wellness When planning your next holiday, keep in mind that wellness travel is about more than just losing weight or exercising. The top three positive effects of wellness vacations – stress and anxiety reduction, a more positive mood and a more rested feeling – exemplify how the mental benefits triumph over the physical.6

Pedal Power Commuting by bicycle is the preferred choice for locals in many parts of the world. For the traveller though, cycling through a new city or countryside can be a total sensory experience.1 Along with getting a great cardio workout on a bike, you can also feel the slight inclines of streets, smell the culinary offerings of street vendors and hear the languages spoken in different neighborhoods – cycling through a city allows you to become intimately involved with new cultures. And cycling through a new countryside can afford you vistas and visual perspectives that would have otherwise been a blur if travelling by car. Safety is always a concern when riding in new territories, as unfamiliar traffic can be intimidating. Be prepared by educating yourself on both the stated and unspoken traffic rules.

http://momentummag.com/why-you-should-explore-cities-by-bike/

http://www.spafinder.ca/spaguide/types/index.jsp

http://www.besthealthmag.ca/best-you/weight-loss/8-unique-weight-lossvacations?slide=2#hdG6xEeSoHLWx0IX.97

http://hotelexecutive.com/business_review/2109/five-new-must-have-green-trends

http://mashable.com/2013/04/21/eco-friendly-hotels/#G32skyblsskH

http://blog.virtuoso.com/traveler_trends/8-remarkable-things-discover-wellness-travel/

Be Accessible and Available THANKS TO OUR SUPPORTERS

Without the support of advisors like you, Renaissance Investments would not enjoy the privilege of helping so many Canadians realize their investment goals. Here is one of the outstanding professionals we are so very proud to work with. What do you love about the business?

Best tip for gaining new clients:

Helping our clients achieve their goals, using our entrepreneurial spirit, and the fast pace at which this industry moves are all great things about the business.

Your existing clients are a tremendous source of referrals. If you provide them with exceptional service, they will provide you with additional clients.

What is your personal formula for building strong client relationships?

Favourite hobbies:

We spend a great deal of effort on being accessible and available to our clients and providing service at a very high level.

Golf and cycling. What is the one item you canâ&#x20AC;&#x2122;t be without?

What are the most common client concerns you hear and how do you address them?

My family. Also, my team and good technology.

The nature of our clients indicates that the current volatility in the market and longevity are the two greatest current concerns. Our approach to managing our clientsâ&#x20AC;&#x2122; wealth is predicated on a conservative long-range view which helps to mitigate the previously stated concerns. Are there areas or themes of financial or investment planning that you plan to focus on more in the future? Our approach is total wealth management. We focus on financial planning and maintaining constant communication with our clients to ensure that their plans are always current. How do you deal with your millennial clients? Do you find you have to approach things differently with them than with other clients? These clients are primarily interested in contacting us through email and social media. Our website allows them to reach us and access their accounts online. We also provide timely articles and links to various useful websites where clients can do their own research.

Tim Bertrand Firm: C IBC Wood Gundy Location: Cornwall, ON Years in Business: 14 Team Members: 3

brain calisthenics Word scramble – Unscramble the following letters to spell words from the article on pages 10-12:

Sudoku – Complete the Sudoku puzzle so that each and every row, column and 3x3 box contains the numbers one through nine only once.

1. wrofcorke

2. eaecigls

3. edinsfe

4. isntrassccii

5. thuortyia

6. ltida

7. arlnguibo

8. pymerntae

9. iacols

4 2

6 5

4 1

8 8

10. naeftrrs

Source: 4puz.com

Spot the difference – Can you spot the five differences between the pictures below?

Check your answers at www.renaissanceinvestments.ca/magazine/answers/

To learn more about how Renaissance Investments can help you and your clients, visit renaissanceinvestments.ca or call 1-888-888-FUND (3863).

FOR ADVISOR USE ONLY Renaissance Investments and the Axiom Portfolios are offered by CIBC Asset Management Inc. This material was prepared for investment professionals only and is not for public distribution. It is for informational purposes only and is not intended to convey investment, legal or tax advice. The material and/or its contents may not be reproduced or distributed without the express written consent of CIBC Asset Management Inc. 速 Axiom, Axiom Portfolios and Renaissance Investments are registered trademarks of CIBC Asset Management Inc.

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Real needs demand real outcomes. For Advisor Use Only. © 2015 Morningstar Research Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. 1Morningstar RatingTM is the overall rating for Class F units as at August 31, 2015 and is subject to change monthly. Renaissance Optimal Income Portfolio, Class F received a Morningstar Rating of 5 stars over 3 years (323 funds rated) and 5 stars over 5 years (233 funds rated). The overall 5 star rating is calculated from a fund’s 3- and 5-year returns measured against 91-day Treasury bill and peer group returns. The top 10% of the funds in a category get five stars. For greater details see www.morningstar.ca. 2MER annualized as at August 31, 2014. Please refer to the annual Management Report of Fund Performance for further details. 3Source: Morningstar Direct as at August 31, 2015. Risk-adjusted returns are measured by the Sharpe ratio for the Class F units of the fund over 5 years to August 31, 2015 and compare the ratio of the fund against the ratio of the average for the Canadian Fixed Income Balanced Category. (Fund: 1.54, Category Average: 1.19). Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. The information presented is accurate at the time of first printing, and is subject to change without notice. Please read the Fund Facts or the Renaissance Investments Simplified Prospectus before investing. Mutual funds are not guaranteed, their values may change frequently and past performance may not be repeated. ®Renaissance Investments is offered by, and is a registered trademark of CIBC Asset Management Inc.

Help confidence RISE in unpredictable market conditions with a 5-star solution.¹ Renaissance Optimal Income Portfolio has consistently delivered stable growth for clients since 2007. • Strategic blend of best-in-class global managers across 7 asset classes • Competitive pricing: 1.98% Class A MER, 0.91% Class F MER (Enhanced pricing options available)2 • Superior risk-adjusted returns3

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