The Renaissance Advisor by renaissancemag

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

Q4 – DEC. 31, 2015

Millennial Mindbender, Part II Capturing the Golden Opportunity Also Inside:

A New World Order – Engineering your Business to Survive and Thrive Commodity Pain, Your Clients’ Gain?

For Advisor Use Only

Page

In this issue

Economic Outlook 4 Canada: Searching For Growth Grow Your Business 6 A New World Order – Engineering your Business to Survive and Thrive

Tax and Estate 8 Five RRSP Hacks Global Market Perspectives Commodity Pain, Your Clients’ Gain?

Millennial Mindbender, Part 2: Capturing the Golden Opportunity 10

Solution Highlight 13 Asset Allocation and a High-quality Focus It’s All About Heart

Thanks to Our Supporters 17 Establish a Strong Personal Connection Brain Calisthenics 18

From the Managing Director of the Renaissance Sales Team

Managing Expectations Welcome to the winter edition of The Renaissance Advisor. Between the busy RRSP season, ever-changing markets and evolving financial industry, it’s certainly a demanding time for advisors. The most important thing right now is to be aware of everything that’s happening. Although we began 2016 in a less-than-desirable investment landscape, market uncertainty is nothing new. It’s how we share information with clients and manage expectations that can truly impact the outcome. Consistent communication is paramount in ensuring clients remain calm, confident and focused on the big picture – their long term needs. In Grant Shorten’s article, A New World Order: Engineering your Business to Survive and Thrive, he explains why now is the perfect opportunity to embrace the changes happening in the Canadian financial services industry. To help ease the pressure of market ups and downs, Renaissance Investments offers a diversified product lineup, including the Renaissance U.S. Equity Income Fund. In addition to yield and growth, dividends provide the opportunity to capture upside potential and much needed downside protection. We finish off our two-part series Millennial Mindbender: Building Relationships with Tomorrow’s Economic Force, this time focusing on growing your business with Millennial clients. We hone in on how to understand them, find them and talk to them. Also in this edition, Jamie Golombek outlines five RRSP hacks, and Ben Tal discusses opportunities for growth in today’s market. As always, we thank you for your continued support and welcome your feedback.

Shelly McLean Managing Director, National Sales Renaissance Investments

Canada: Searching For Growth economic outlook

It’s difficult to get excited about the Canadian economy in 2016. Any optimistic forecasts (including the Bank of Canada’s) are based largely on wishful thinking rather than the abundance of visible green shoots. The collapse in energy sector capital spending that was the primary driver of 2015’s anemic growth isn’t likely to be reversed this year, or even in 2017. Outside of the oil patch, a turn in investment will be delayed by the recent softening in corporate profitability.

Although the cheap loonie should be an eventual catalyst, the Canadian export basket’s composition means that 2016 will be too soon to see many benefits. Greater government spending at the federal level will provide a lift, but the support will be largely offset by provincial governments’ tightening. So, once again, the Canadian growth outlook is relying on the consumer. But despite bargain prices, real retail spending is hardly impressive even in central Canada – the region that was supposed to benefit from lower gasoline prices. Consequently, growth will be in limited supply, with the economy advancing by a below consensus 1.7% in 2016, before accelerating to a still-modest 2.3% in 2017.

Fortunately, growth is calculated year-on-year, and though we aren’t looking for a blockbuster year for profits, more favourable base year comparisons will allow for a decent pick-up. That should drive a modest leg higher in investment in the years ahead. But don’t count on any “dead money” to finance new investment, as cash holdings as a share of assets was relatively stable over the past few years. Part of the challenge is that the little investment that domestic firms have been making hasn’t been at home. Although domestic non-energy capital spending has been essentially unchanged since 2013, the past several quarters have seen a pick-up in foreign direct investment by Canadian firms. Sure, a weaker Canadian dollar makes foreign investment more costly for domestic firms, while also making inbound investments cheaper for foreigners. That should be a factor in making Canada a more attractive place to invest down the road – especially with domestic labour now at a significant discount to same-currency costs in the United States. But the infrequent nature of major plant decisions, and the lead times involved, make a turn in Canadian capital spending a 2017 story. Non-energy Investment in Line with Profitability Non-energy Capital Spending vs. Non-energy Profit (2007-15) 40%

Capital Spending – Not There Yet

In the non-energy space, dismal capital expenditures are less about animal spirits and more a reflection of sub-par profitability. Firms don’t typically rush out to add capacity in years in which profit growth is low, or even negative.

30%

y/y chg

Forecast

40% 30% 20%

4% 2%

10%

-2%

20% Profit Growth

Capital expenditures in the energy sector are half the level seen before the correction, with more cuts coming. While the impact on the macro environment will be reduced in 2016, given where all-in costs lie, recently announced cancellations won’t be reversed even if crude recovers to $50-$60/ bbl. Indeed, more volatility in oil prices will favour more flexible means of production, putting Canadian oil sands production – with its high fixed cost share – at a long-term disadvantage.

10%

-10%

Current

-20% -30% -10% -5% 0% 5% 10% Capex Growth Source: Statistics Canada, CIBC

-10%

-4%

-20%

-6% -8%

07 09 11 13 15 17F

-30%

Non-energy Capex (L) Non-energy Operating Profit (R)

The Loonie Export Lift: Lacking Thrust A weaker loonie also boosts exports, but much like capital expenditures, next year won’t see the greatest impact. In part, that reflects the current struggles of U.S. manufacturers, who are not growing their orders from Canadian suppliers that are integrated into their production chains. Canada’s higher weighting towards intermediate goods rather than final goods also dulls the impact of a weaker exchange rate on export volumes. Final goods are more sensitive because there are fewer intermediate layers in getting products to customers abroad, making the transmission mechanism to a more competitive final price quicker. Data shows that Canadian consumer goods exports are already seeing the positives of a cheaper dollar. In contrast, intermediate goods tied to the U.S. or global industrial cycles are still struggling. (Some) Fiscal Stimulus Will the government step up to fill the void? The status quo budget outlook would have resulted in the public sector providing a modest drag next year due to provincial restraint. The Liberal plan reverses that, but it’s hardly enough to build momentum in the Canadian economy in 2016. Given the direction provincial budgets are going, the degree of stimulus will be miles from what we saw in the Great Recession. Consumers Doing Their Bit, to a Limit Although consumers haven’t been missing in action, they are an unlikely source of acceleration in the coming year. The third-quarter increase in spending was buoyed in part by Ottawa’s one-time lump-sum child care tax benefits to families. Despite that, for retailers, the overall trend has been slowing, even as soft gasoline prices are giving Canadians a break at the fuel pump. It’s no surprise to see tighter purse strings in oil-affected provinces, but we haven’t seen momentum build elsewhere either. That reflects in part that though interest rates are lower, consumers aren’t rushing to build more credit, with the contribution of consumer credit growth to spending falling to less than 3% – a fraction of the share seen in previous cycles.

Furthermore, the labour market hasn’t been as resilient as perceived on the surface. True, readings on the labour force have on the whole outperformed our expectations given how the economy has fared this year. But even if employment outside of the resource sectors of the economy has held steady, wage and salary income has decelerated even when stripping out the effects of what’s happening in mining, oil and gas. A slowing in fire power augurs for real consumer spending to decelerate to 1.5% growth in 2016, and 1.4% in 2017 as higher gas prices and rate hikes pinch pockets.

“ ...real consumer spending to decelerate to 1.5% growth in 2016, and 1.4% in 2017...” A Cautious Canadian Outlook A muted export recovery. Capital spending bogged down by further cuts in the oil patch, and little growth elsewhere. Federal and provincial budgets moving in opposite directions, leaving negligible fiscal stimulus. A consumer with little room left to go. That’s a recipe for a cautious Canadian outlook for 2016, with hopes for better days reserved for a brighter global economy in 2017.

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/ renaissanceinvestments.ca/en/economy/

A New World Order Engineering your Business to Survive and Thrive

GROW YOUR BUSINESS

2. The Advance of the Robo-advisor The

Canadian financial services industry is in the process of rapid and permanent change. The fact is, we’re living and operating at a unique moment in history – a moment punctuated by the convergence of three powerful forces that will ultimately define a new world order for investment advisors. The three driving forces are:

1. The Fee Transparency Revolution 2. The Advance of the Robo-advisor 3. The Invasion of the Affluent Let’s take a closer look at each of these.

The typical robo-process begins with a questionnaire-based discovery which leads directly to a risk-profiling mechanism. A portfolio is then constructed on behalf of the client using computerized algorithms which are founded upon the principles of modern portfolio theory and strategic asset allocation. Once the portfolio has been built, the client will also have access to automatic rebalancing. This package of services is delivered to the investor at a very low cost – anywhere between 30 to 50 basis points on assets and some firms will also charge a small flat monthly fee.

1. The Fee Transparency Revolution

Robo-advisory firms have been known to run aggressive marketing campaigns, and are absolutely intent on changing the face of the investment industry.

The Client Relationship Model (CRM2) continues to unfold in three distinct phases.

As the robo-advisor continues to advance in the midst of the Fee Transparency Revolution, a third driving force is occurring.

The first two phases have already been completed, leaving only phase three to come into effect in July 2016. This final phase will see the introduction of the Annual Charges and Compensation Report, along with the reporting of annual performance on a money-weighted basis.

3. The Invasion of the Affluent

CRM2 has already had a widespread impact on our industry. The implementation of the new procedures has kept our dealer firms extremely busy and has demanded the involvement of many departments and divisions. Most investment advisors and financial planners understand that CRM2 means only one thing when it comes to their client relationships – full transparency. Your clients will see exactly how much they’re paying for their investments. Fee transparency is no longer an option…it’s the law. As this change sweeps across our industry, there is a second powerful driving force playing out at the same time.

A robo-advisor is a low-cost online alternative to a full-service investment advisor or financial planner. They’ve been operating in the U.S. for several years, but are essentially new in Canada. In that short time, a rapidly growing number of robo-firms have collectively been able to gather an estimated $20 billion in assets under management across North America.

According to Investor Economics, the number of millionaire households in Canada is set to nearly double in the next 5-7 years. It’s estimated that the year 2022 will see the upscale and affluent market segments controlling a whopping 82% of the personal wealth in Canada. To position your advisory practice for this juggernaut of spending power, you’ll first need to step inside the mind of the wealthy to gain a basic understanding of their psychology. Two important facts will quickly become abundantly clear. Firstly, the affluent investor expects to pay less than the smaller client for their investments. Secondly, they are accustomed to VIP treatment and expect the same from their financial advisors. What does all this mean to you?

The Impact to Advisors

Strategy 4: Focus on the High Net Worth

This convergence of forces will ultimately impact the full-service advisor in three primary ways:

Affluent investors continue to dominate the financial landscape, with complex financial affairs. The elite advisor, in the new world order, will position themselves as the central coordinator for all of their clients’ needs. This doesn’t require you to become an expert in all things related to taxes, insurance and the law. It does require you to become interested and engaged with clients, and to hold meaningful conversations on these matters.

Downward pressure on fees Increased demand for the evidence of value from advisors Increased demand for brilliant customer service This is a wake-up call and a perfect opportunity to step back and re-evaluate the very structure and composition of your business model. Now is the time to take proactive steps to adapt, and to hardwire your practice to survive and thrive in the new world.

7 Strategies for the New World Advisor

Strategy 5: Incorporate a Few Low-cost Investments into Your Clients’ Portfolios The simple act of incorporating one or two low-cost index funds (or ETFs) into your clients’ portfolios will immediately create the following triple-win scenario: 1. Eliminate the “big accusation” from clients who may claim that you are only loading their portfolios with high-cost investments 2. Effectively lower your clients’ overall portfolio cost 3. Showcase your objectivity when it comes to portfolio construction

Strategy 1: Master the Value Spectrum

Strategy 6: Get Prepared for the Tough Questions on Fees

The concept of “value” is elusive and shifting. It often means different things to different clients. In the new world, you’ll need to ensure that you’re consistently delivering value based on your clients’ definition – not your own. Get absolutely clear on the precise package of services your clients consider valuable, and then deliver that package in a customized and tailored way.

As clients begin to receive their Annual Charges and Compensation Reports, you’ll likely be confronted with a number of fee-related questions. Take the time to plan, script and rehearse your responses.

Strategy 2: Create a Comprehensive List of Your Services How would your clients answer the question, “What does your advisor do for you?” Truthfully, most of them are completely unaware of what you do for them. In the new world, you’ll need to make it easy for them to answer that question. Create a comprehensive checklist of all the hidden services and benefits that are included in your clients’ fee. Once completed, begin to strategically incorporate the list into your face-to-face meetings and portfolio reviews. Contact your Renaissance representative to receive a sample checklist! Strategy 3: Get Bigger! Create the Optic of Size In an environment of fee-compression and higher expectations, your clients will be looking for more substance, depth and breadth. Begin the process of building a network of strategic alliances with other professionals, including: accountants, lawyers, private bankers, real-estate agents and general contractors. Spend quality time developing mutually beneficial cross-referral relationships. Begin to showcase your expanded virtual team in your brochures and newsletters, and on your website and email correspondence.

Examples of fee-questions to expect: • Why am I paying this ongoing trailer fee? • What exactly am I getting for this fee? • Why am I being charged a fee when my investment is underperforming?

Contact your Renaissance representative to receive sample responses to these questions!

Strategy 7: Embrace the New World Order! This is a time of tremendous change and evolution for the Canadian financial services industry. The most successful advisors will be those who choose to embrace it, and are willing to adapt and align with the inevitable changes.

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. Watch videos on each of Grant’s 7 strategies at renaissanceinvestments.ca.

renaissanceinvestments.ca/en/practicemanagement/

Five RRSP Hacks Tax AND Estate

Here are five RRSP hacks you can share with your clients that will help them reap the full benefits of their RRSPs.

or common-law partner. If both withdraw funds, a total of $40,000 may be available. To avoid an income inclusion, amounts withdrawn under an LLP must be repaid over a 10-year period, starting five years after the first withdrawal or two years after ceasing studies, whichever is earlier. 4. Contribute to a Spousal RRSP

1. Forget the RRSP Altogether For many Canadians attempting to save for retirement, a Tax-free Savings Account (TFSA) may be the better option. The amount one can contribute to a TFSA is based on accumulated “TFSA contribution room.” Canadians who were at least 18 in 2009 and, as of 2016, have not yet opened up a TFSA can immediately contribute $46,500 to a TFSA. Our report, The RRSP, the TFSA and the Mortgage, describes some of the factors to be considered when choosing, given limited funds, whether to make a contribution to an RRSP or TFSA or pay down the mortgage.

A spousal RRSP may help clients to achieve income splitting since withdrawn funds are usually taxed in the hands of the spouse who is the annuitant, rather than the spouse who made the contributions. If the annuitant is in a lower tax bracket than the contributor upon withdrawal, there may be tax savings. 5. Name an RRSP Beneficiary Naming a spouse or common-law partner, child, or grandchild as the beneficiary of an RRSP may help clients defer taxes that would otherwise be payable on an RRSP at death. Also if there is a valid beneficiary designation, then the RRSP property is not considered to be part of the estate, which may help to avoid provincial estate administration taxes (where applicable).

2. Use an RRSP to Buy a First Home The Home Buyers’ Plan (HBP) may allow an individual (and the individual’s spouse) to each withdraw up to $25,000 from their RRSPs, for a combined total of $50,000, to purchase or construct a new home. A client will qualify for an HBP withdrawal if neither the client nor the client’s spouse has owned a home in the past five years and occupied it as a principal residence. Amounts withdrawn under the HBP must be repaid over a maximum of 15 years to avoid an income inclusion. 3. Use an RRSP to Go Back to School Under the Lifelong Learning Plan (LLP) an individual can withdraw up to $10,000 per year, or $20,000 in total, to finance full-time attendance at a qualifying educational institution by the individual, or the individual’s spouse

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

renaissanceinvestments.ca/en/jamie_golombek/

Commodity Pain, Your Clients’ Gain? Global Market Perspectives

The commodity boom-bust cycle continues to wreak havoc on global markets. Resource sectors (energy, materials, minerals, etc.) are cheap, with depressed earnings; non-resource sectors, particularly the consumer sectors, are expensive, with peaking earnings. With commodity prices still falling, it is difficult to pinpoint the exact bottom – but at some level these market extremes will likely trigger an investor response. That could mark the beginning of a period of strong performance from the “beaten-down” sectors. For the moment, it’s too early to be a contrarian, given we believe that commodity prices could reach lower levels before recovering*. As a result, we are currently neutral on the Canadian equity market. The risk is for continued weakness in 2016, that forces the Bank of Canada (BoC) to cut rates further and consider unorthodox monetary policy instruments – negative policy rates and quantitative easing. The BoC has already started to prudently prepare for this possibility.

“ Emerging market equities face challenges from slower growth in China, weak commodity prices and expectations of rising U.S. rates.” Emerging market (EM) equities face challenges from slower growth in China, weak commodity prices and expectations of rising U.S. rates. Their resulting underperformance has left them with very attractive valuations. Based on our long-term return forecasts, emerging markets represent one of the most attractive asset classes. As their currencies depreciate, EM companies grow more competitive and earnings should improve. Meanwhile, EM real rates have declined, just as they start to rise in the developed world. Relative to other regions, emerging countries have seen a significant improvement in their monetary conditions. At this point, the growth outlook needs to stabilize, especially in China, to see an improvement in the relative performance of EM equities. But patient investors following a valuation discipline should be rewarded over the medium-to-long term.

“ We expect the U.S. market will offer the least attractive prospects over the coming year and it remains our least-favoured market.” U.S. equity markets face a much different set of circumstances than EMs. U.S. stocks are among the most overvalued. In addition, U.S. companies have to contend with a strengthening U.S. dollar and a Federal Reserve that is expected to raise interest rates, pushing financing costs higher. We expect the U.S. market will offer the least attractive prospects over the coming year and it remains our least-favoured market. International developed-market equities fall somewhere between the U.S. and emerging markets. On one hand, they are neither cheap nor expensive, but they will continue to benefit from very accommodative monetary policy. They are also seeing profit growth improve at the margin, which leaves them slightly favoured in our regional overview. *As at January 15, 2016

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

renaissanceinvestments.ca/en /the economy/

millennial Mindbender

2 T__ PAR ____

Capturing the Golden Opportunity

ilding > Bu Relationships

with Tomorrow’s Economic Force

• • • • • • •

sfer With the Great Tran thinking , ay of Wealth underw t base ien about your future cl ll wi be and work associates success. your key to long-term eir current Millennials, despite th , will be a force economic challenges ars to come. to deal with in the ye

To help you understand and harness Millennials’ potential, we present part two of a series that explores how you can engage Millennials as both clients and colleagues. Part 2 – Capturing the Golden Opportunity

• Millennials are likely to respond positively to financial-planning messages that come through social media, email or a text rather than a phone call or office visit.5 “Have a social media presence and take a different tone than you would with Boomers,” says MacDonald. “Social media can also be used for investor education,” he says, “which makes for better-informed investors.”

Nine million Millennials in Canada1 present a golden opportunity for you.

Then, Find Them

Not only are the numbers overwhelming – according to Investor Economics, a whopping $895 billion of wealth will be transferred from Boomers to their Millennial children between 2012-20222 – but considering how they’re handling their finances, it’s easy to see Millennials need professional help.

It may seem that Millennials, as prospects, are a nebulous entity behind a cyberspace wall, but you can find them.

According to Canadian research-based consultancy Environics Research Group: • 39% of Millennials are managing their own finances • 29% currently work with banks/credit unions • 27% work with independent advisors • 5% work with discount brokerages “A lot of the assets in transition will be up for grabs,” says David MacDonald, MBA, CMRP, Group Vice President, Financial Services with Environics. “Millennials are comfortable working with banks, for example, because of the familiar branding,” he says, “but that can go both ways – if they have a poor customer service experience, Millennials will go elsewhere to get their questions answered.” So, when the next generation takes over the family business or inherits wealth, will they choose to work with you? To win tomorrow’s business, position yourself to be financially relevant and tech savvy, today. First, Understand Them If your current client base consists mainly of Boomers, Millennials could prove challenging if your approaches aren’t adapted to fit their preferences. Here are some things to understand about Millennials’ financial and cultural situation: • Many Millennials are dealing with unprecedented burdens of debt. And despite access to information, they don’t feel they’re more sophisticated than others and may be more risk averse with their money.3 • They want advice and don’t want to go it alone, but want an advisor-investor relationship based on mutual trust, respect and open dialogue.4 “The cookie-cutter, robo-advisor approach won’t satisfy them,” says MacDonald. “They won’t mind that a computer algorithm is being used to start the process, but they want to know how you will adapt it to meet their specific needs,” he adds.

First and foremost, start building relationships early with the Millennial children of your existing Boomer clients. That way, when Boomers pass on wealth to their Millennial children, you will be in a strong position to manage the assets. Also consider partnering up with other Millennials. “Being proactive about connecting with young finance professionals is another way to gain Millennial clients,” says 34-year-old Eric Roberge, CFP and founder of BeyondYourHammock.com, a financial planning website that helps young professionals achieve their lifestyle goals. “If an older advisor reached out to me, I would definitely set up a meeting to hear what he or she had to say.” 6 Find Millennial clients by hiring Millennial advisors. According to Dr. Edwin L. Weinstein, PhD, of the Brondesbury Group, advisors have clients who are usually in the same age range, plus or minus 10 years.7 Finally, get online. Millennials communicate over multiple channels: they text, blog, Facebook and tweet. Master a variety of communication vehicles or hire someone to do it for you.8 Now, Start Talking Now that you’ve found them, how do you build a relationship? It lies in what you say and how you say it. What to Talk About Budgeting – Talk to Millennials about what matters to them and provide solutions to their financial challenges. MacDonald says that Millennials know they’re responsible for their finances, but need help defining goals and plans, and are conflicted by trade-offs, for example, rent or own? Pay down debt or invest? RRSPs or TFSAs?9 As Millennials may not be as concerned with retirement right now, focus on goals that they actually want to save for, like travelling or buying a house. Investing – Many Millennials are risk averse and haven’t embraced equities.10 However, MacDonald says the good news is that even though Millennials are risk averse right now, their adaptability will eventually allow them to tolerate market cycles.11

The Millennial Workforce Did you know that 16% of the top independent advisors in Canada are Millennials?15 And that number is growing. No doubt that if you’re not working with them already, you will be. To attract and retain this group, the Canadian Management Centre, a firm specializing in professional development, developed three solutions to help employers tap into Millennials’ full potential. 1. Engage: Integrate what Millennials value, such as a forum for employees to be heard and strategies that promote collaboration.16 2. Prepare: Help Millennials develop skills that will prepare them for their future roles. Create mentoring opportunities and provide regular feedback.17 3. Impact: As Millennials move up, they may manage individuals who have more experience and expertise. Support all employees with training to understand the dynamics of the people they work with.18 Client Servicing As Millennials take on increasingly important advisor roles with your Boomer clients, your most important role will be to manage the succession. “Clients’ satisfaction with their advisors is very high until the age of about 72 – the time the advisor retires and someone else steps in,” says MacDonald. “To maintain client satisfaction, you can’t just do the hot-to-cold tradeoff – the retiring advisor has to manage the transition,” he says. In addition to fostering the relationship between existing clients and new advisors, share the following strategies with Millennial employees to help them better serve older clients. 1. Take the time to explain things. Boomer clients want full explanations more than speedy results. Resolution is still important, but doesn’t have to be instantaneous.19

So, be prepared to explain the need for investing in equities. You should also be able to show how equities have historically regained their value after declining in bear markets and have, over the long term, generated positive returns.12 Education – Close to 70% of Millennials invest their money, but the vast majority of them – whether they invest their money in the markets or not – say they are clueless about investing, admitting they lack financial knowledge and investing confidence, finds a new CIBC poll of Canadians aged 18-34. The third (33%) of Millennials who aren’t in the market cited a lack of financial knowledge and the fact that investing “intimidates” them as the primary reasons they haven’t begun to invest. The other major reasons they cited were not having any money left at the end of the month and putting other financial priorities first, such as paying down debt or saving to buy a home. MacDonald suggests holding seminars targeted to Millennials so they can learn both from their peers’ questions and the responses that are given. “If you educate them without hard-sell tactics,” he says, “you’ve got an opportunity to draw them in as clients.” How to Talk About It Call a meeting or call on the phone? When communicating with Millennials, determine the best channels for different situations. Decide what information needs to be talked about in person, what can be discussed over the phone and what can be posted online. Millennials want face-to-face when there is an important decision to be made, but would rather use digital sources for information gathering.13 How to present information can be another challenge. For example, your 50-page document that has a lot of charts, graphs and numbers may not be Millennial-friendly. What they are looking for is more of an executive summary with an infographic feel. Paint a picture rather than give a long explanation.14 Growing Tomorrow’s Business, Today If you start now, you can become your Millennial clients’ trusted and convenient guide to money management. The key lies in adapting to the needs and constraints that exist at each stage of their lives, while helping prepare them for the future. It is truly the definition of “advisor.”

2. Communicate in plain English. Don’t talk in acronyms or slang. You don’t want anything lost in translation when it comes to things as crucial as clients’ finances.20 3. Use what you already know. You likely have someone in your family who is a Boomer. Use that knowledge to provide the type of service you know that generation enjoys.21

http://strategyonline.ca/2013/08/21/millennials-by-the-numbers/

http://www.renaissanceinvestments.ca/en/practicemanagement/pdf/Q313-BackOfNapkin.pdf

3, 4, 9, 11, 15

Environics Research Group, Millennials as Investors, Oct.1, 2015.

http://financialadvisoriq.com/c/967154/96144

http://www.icpas.org/hc-insight.aspx?id=2546

r. Edwin Weinstein, Brondesbury Group, Financial Life Stages of Older Canadians, 2015 IFIC Leadership D Conference, Oct. 1, 2015.

h ttp://www.investmentnews.com/article/20140223/REG/302239990/meet-the-millennials-five-ways-toattract-the-next-generation-of-clients

10, 12

http://progressivefinancialadvisor.com/index.php/Practice-Management/keep-millennials-in-sight-as-prospects

13,14

http://www.thinkadvisor.com/2014/10/29/how-to-attract-and-keep-the-next-generation-of-cli?page=2

16, 17, 18

http://betakit.com/organizations-are-not-prepared-for-new-generation-of-leaders/

19, 20, 21

http://www.impactlearning.com/when-your-employees-are-millennials-and-your-customers-are-boomers/

Asset Allocation and a High-quality Focus Undervalued Securities Matter in This Market Environment

Solution Highlight: RENAISSANCE U.S. EQUITY INCOME FUND

Up to 20% of the Renaissance U.S. Equity Income Fund’s assets may be allocated to convertible bonds, which may help mitigate broad equity market downside (and help generate income). Also, to further fuel outperformance, sub-advisor American Century’s value team strives to select high-quality, undervalued securities. The benefit of this strategy has become evident over the past six months.

Allocation to Convertibles and High Quality Undervalued Stocks Helping Drive Recent Outperformance

(6 months ending Jan. 14, 2016)

$11,500 Renaissance U.S. Equity Income Fund

U.S. Equity Category

Growth of $10,000

$11,000

$10,500

$10,000

$9,500

$9,000 7/14/15

8/14/15

9/14/15

10/14/15

11/14/15

12/14/15

1/14/16

6 month

1 year

2 year

Since Inception (Sep. 2013)

Renaissance U.S. Equity Income Fund

12.59%

18.19%

19.58%

20.18%

U.S. Equity Category Average

5.90%

13.60%

15.96%

n/a

Source: Morningstar Direct. Standard returns calculations for periods ending December 31, 2015. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. To obtain a copy of the Renaissance Investments family of funds simplified prospectus, call 1-888-888-FUND (3863). Alternatively, you may obtain a copy from your advisor. The information presented is accurate at the time of first printing, and is subject to change without notice. Management fees for Class A, Class F and Premium Class units are outlined in the Simplified Prospectus. This material 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 Renaissance Investments. ®Renaissance Investments is offered by, and is a registered trademark of CIBC Asset Management.

Itâ&#x20AC;&#x2122;s all about

heart We know that following a heart-healthy diet, getting plenty of exercise and reducing stress all help to maintain a healthy heart. But there is also new research and electronics that can get you well on your way to making sure your ticker lasts as long as you need it to.

Rethinking Nutritional Research The next time you go grocery shopping, pass up the convenience foods. The Heart and Stroke Foundation of Canada (HSFC) says that processed foods, not saturated fats, could be the cause of heart disease. Experts have always warned us that saturated fats, found in red meat, dairy products and certain oils, can raise the risk of heart disease. But recently, the HSFC said that instead of focusing on saturated fats, we should be eating fresh fruits and vegetables, whole grains, meat and products that have not been processed.2 There is no doubt that fried and processed foods contribute to poor longterm health. A study led by Russell de Souza, an assistant professor with the Michael G. DeGroote School of Medicine in Hamilton, Ontario, found that saturated fat is not linked to increased risk of stroke, type 2 diabetes, heart disease or death. The study, published in the British Medical Journal, did however, find a clear relationship between trans fats, which are often found in processed or fried foods, and heart health problems.3 It’s not surprising there is such concern about our consumption of processed foods. Consider that between 1938 and 2011, Canadians’ share of household expenditures for natural/whole or minimally processed foods fell from 34.3% to 25.6%, while expenditures for more processed products rose from 28.7% to a staggering 61.7%.4

Appealing Apps for a Healthy Heart In our increasingly technology-oriented society, we are faced with an overwhelming number of choices for apps to help us improve our health. But how do you pick the ones that are right for you? “When looking for an app, first make sure it’s coming from a credible source,” says Ahmad M. Zbib, MD, CPHIMS-CA, Director, Digital Health and Innovation with HSFC. “Second, make sure there is a theory behind the app, so that it uses some proven techniques. Third, it has to be easy to use, or else you won’t use it. Fourth, make sure there is connectivity between the app and your phone, Fitbit, or other wearable device. And finally, ask people you know if they’ve tried it and what their experiences have been,” says Zbib.

Here’s a rundown of some apps and gadgets that may help you keep your heart healthy.

Behavioural Changes App

One of the most popular HSFC apps is a free heart and stroke risk assessment. It consists of 30 or more questions that help to create your risk profile. “But more than that, it will give you an action plan based on your behavioural state,” says Zbib. Why it that important? “A nicotine replacement treatment is not going to work for someone who smokes and doesn’t want to quit because they won’t use it,” says Zbib, “But if a person wants to quit, they will use it. The tool is customized to provide information based on a person’s stage,” he says.

Lifestyle Challenges App

HSFC has also developed another free app that sends a different challenge to you each day for 30 days. The challenge is based on a series of questions and helps you target the lifestyle changes that would benefit you most. “For instance, one of the areas you may need to address is lack of exercise,” says Zbib. So your challenge on one day may be to not take the elevator – you will be doing stairs all day long. At the end of the day, you tell the app you’ve completed the challenge and it will log your progress. “People really like this experience and it’s become a very successful app – we’ve had about 130,000 downloads since October 2015,” says Zbib. In addition to the HSFC offerings, other innovative apps on the market also help you monitor your physical state. You may have to pay for some of these apps, so get all the information before you commit.

Blood Pressure Apps These types of smartphone apps track and create charts of blood pressure readings and may help you to better control your condition. Some automatically remind you to take a blood pressure reading or medications; others include educational information on high blood pressure. But apps that use the phone itself to measure blood pressure may not be accurate unless connected to a wireless device.5 Make sure the app that you are using gives you accurate data. Select images courtesy of the Heart and Stroke Foundation. http://www.heartandstroke.on.ca

Do You Gadgets?

Today’s electronic health gadgets go way beyond the pedometers we used to use (the first pedometer is accredited to Leonardo da Vinci). Modern wireless digital devices track your activity and allow you to access the information through your app or computer. Try these new state-of-the-art gadgets to stay on top of heart health.

Heart Rate Monitors The human heart naturally beats regularly and within a safe range. But sometimes events like exercise or abnormal heart conditions can take you out of your safe range. Heart rate monitors make it easy to keep an eye on your heart rate in any event. Health care providers can even monitor your heart rate remotely with wireless devices.6

Smartclothes Are you ready to move on from your smartwatch to a smartshirt? Wearable technology – clothes made with sensors embedded in the fabric – can detect heart rate, breathing rate and even muscle activity. Even though the technology is still in the early stages (smart shirts, athletic pants and socks became available last year), it’s evolving rapidly. Experts say they hope to be able to use it in hospitals and rehabilitation clinics to potentially help patients with a variety of medical conditions, including heart disease.7

The Power of Positivity Staying positive is such a powerful lifestyle influencer that the Harvard School of Public Health looked at 200 previous studies that measured psychological traits, health behaviours and risk factors for cardiovascular disease. Happiness and optimism were both linked to a lower risk of heart disease and stroke, with the most optimistic people having the greatest benefits.8 Still skeptical? In another study, researchers at Johns Hopkins found that people with a family history of heart disease who also had a positive outlook were one-third less likely to have a heart attack or other cardiovascular event within five to 25 years than those with a more negative outlook. The finding held even in people with family history who had the most risk factors for coronary artery disease.9

Live a joyous life and your heart will thank you for it.

In addition, the findings indicated that positive people, no matter what their history, were 13% less likely than their negative counterparts to have a heart attack or other coronary event.9

http://www.vancouversun.com/health/health+canada+approves+breakthrough+heart+failure+drug/11430628/story.html http://www.theglobeandmail.com/life/health-and-fitness/health/saturated-fats-no-longer-the-true-enemy-experts-say/article26513320/ 3 http://dailynews.mcmaster.ca/article/trans-fats-but-not-saturated-fats-linked-to-greater-risk-of-death/#sthash.fngtZNXe.dpuf 4 Moubarac JC, Batal M, Bortoletto Marins AP, Claro R, Bertazzi Levy R, et al. Processed and ultra-processed food products: Consumption trends in Canada from 1938 to 2011. Can J Diet Pract Res 2014;75(1):15-21. 5 http://www.health.harvard.edu/heart-health/smartphone-apps-for-blood-pressure-a-clever-choice 6 http://www.everydayhealth.com/heart-health/heart-rate-monitors-for-heart-health.aspx 7 http://www.npr.org/sections/health-shots/2015/04/03/397108232/will-smart-clothing-amp-up-your-workout 8 http://www.mensfitness.com/styleandgrooming/fashion/positive-thinking-has-heart-health-benefits 9 http://www.hopkinsmedicine.org/health/healthy_aging/healthy_mind/the-power-of-positive-thinking 1 2

Establish a Strong Personal Connection 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 are two 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:

We play a key role in helping clients with their financial goals. It’s rewarding to give clients the freedom to focus on their own interests, leaving the financial worry to us.

Establish a strong personal connection. Getting to know our clients, and learning what’s important to them, helps us find the best investment solutions for them. We want our clients so happy with our service that they recommend us to family and friends.

What is your personal formula for building strong client relationships? We begin by getting to know the client, listening to their views and experiences. We work with like-minded individuals with the same style and investment philosophy. This helps us deal with market volatility together. What are some of the most common client concerns you hear and how do you address them? Most commonly, it’s how clients can generate income and keep up with inflation without eroding capital. Also, planning for increased longevity. Most of our clients want a reliable return that covers inflation in a tax-efficient manner. Are there areas or themes of financial or investment planning that you plan to focus on more in the future? We’ve developed an appreciation for building wealth, incorporating personal values into a wealth plan. We address more tax and estate planning these days to ensure a smooth and tax-effective process. How do you deal with your Millennial clients? Do you find you have to approach things differently with them than with other clients? Our Millennial clients tend to seek additional outside information. The Internet offers a wide range of information; we help reduce “white noise,” providing clarity and relevance.

Favourite hobbies: Dan: Travel is a real passion. Even with two children, we’ve been to Bali and Hong Kong, and are planning a European vacation soon. Cheryl: My free time is spent helping my husband with two active teenagers, two crazy cats and a new puppy. What is the one item you can’t be without? Dan: I can’t think of any physical item! Cheryl: My 1990 HP business calculator – a certified antique at this point – but I can’t work without it!

Dan Zapior & Cheryl Rogers Firm: Legacy Wealth Management, TD Wealth Private Investment Advice Location: Ottawa, ON Years in Business: 34 collectively Team Members: 4

The recommendations and opinions expressed herein are those of Cheryl Rogers and Dan Zapior and do not necessarily reflect those of TD Wealth and are not specifically endorsed by TD Wealth. Legacy Wealth Management consists of Cheryl Rogers, Vice President, Portfolio Manager and Investment Advisor; Daniel Zapior, Investment Advisor; Belinda Windover, Sales Assistant; Andrew Nikolayev, Sales Assistant. Legacy Wealth Management is part of TD Wealth Private Investment Advice. TD Wealth Private Investment Advice is a division of TD Waterhouse Canada Inc., a subsidiary of The Toronto-Dominion Bank. TD Waterhouse Canada Inc. – Member of the Canadian Investor Protection Fund.

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

1. uaeeogllcs

2. hesnriit

3. ossadthiicetp

4. esbpyccrea

5. vereas

6. iacsmnyd

7. lsnag

8. asrsnemi

9. nacnselh

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

9 2

7 6

8 9

6 5

4 9

1 2

9 4

10. hagprs

1 5 2

2 3

1 8

Source: 4puz.com

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

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

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. ® Axiom, Axiom Portfolios and Renaissance Investments are registered trademarks of CIBC Asset Management Inc. 18

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