Turmoil in the markets, tariffs at the border and Canadian politics in transition make for uncertain times for wealthy families and investors.
A check-in with advisors last week found that the emotional reactions of their wealthy client families are all over the map. Some are worried, some are angry over President Donald Trump’s unpredictability, and others are looking for opportunities in the swinging market.
But so far there hasn’t been a landslide of panicked phone calls.
Christopher Foster, CEO of Foster & Associates in Toronto, says the feedback he’s receiving from clients surprises him. They’re angry about Trump and they want to send a message, he says. And they’re willing to take a drop in their portfolios to do it.
“People have become so patriotic, they want to sell U.S. stocks. They want to invest in Canada,” Foster says. “They think that’s going to be the best thing for Canada, and if they have to lose money in the meantime they’re happy to do it.”
Some clients have needed assurances that the Trump administration will pass, and that long-term investment requires diversification that includes U.S. stocks.
That said, his firm is optimistic about the fate of Canada in the wake of the current turmoil and thinks the Canadian dollar is going to ultimately rise in value. Advisors aren’t arguing with these passionately patriotic investors, but they’re cautioning that it’s unwise to be impulsive when you’re investing for kids and grandkids, he says.
Marvin Schmidt, founder and principal of The Schmidt Investment Group at CIBC Private Wealth in Edmonton, says his clients aren’t panicking.
Your plan should last more than a Trump presidency or the next election.
Elke Rubach, Rubach Wealth
“That doesn’t mean that we haven’t had plenty of conversations with people to discuss the current environment and how we see that playing out. But not from a panic side,” says Schmidt.
Clients might be more concerned about their businesses and the less wealthy people around them than the effects on their own substantial nest eggs, suggests Schmidt.
In fact, some clients are interested in opportunities to buy. “Pretty much all clients would have a view that there is some good that is coming from this. Maybe lots of bad, too, but there is some good.
“Interprovincial [trade] barriers have long been a problem. This is a catalyst to maybe begin to address that file. Less regulation in the U.S. probably means a demand for less regulation in Canada.”
Schmidt sees a difference in whom clients are blaming for today’s troubles compared to past crises. “It’s very much, ‘this is what Trump is doing,’ and therefore it’s not being projected at what we [financial advisors] are doing.”
When the crises are not political in nature, “It was more, ‘Couldn’t you see this coming? Why was the portfolio structured this way?’”
John Amonson, president of Unbiased Financial Services Inc. in Calgary, says his clients have been relieved to find out that media noise doesn’t necessarily reflect what’s going on in their portfolios.
“On a 12-month basis, we’re still positive five to eight per cent, depending on the client,” says Amonson. “I think there’s quite a dissonance between the racket that we hear on TV or whatever else we listen to and what is happening.
“And once they know what’s going on, they seem reasonably secure.”
Pretty much all clients would have a view that there is some good that is coming from this. Maybe lots of bad, too.
Marvin Schmidt, The Schmidt Investment Group at CIBC Private Wealth
Amonson says establishing a policy to guide through turbulent times and avoiding major shifts is key. Also beneficial is providing clients with a coherent scenario of what is happening, including some explanation of why the U.S. is taking action to swerve away from the status quo.
Declan Ramsaran, managing director for Pangea Private Family Offices in Toronto, has clients who own businesses on the front lines of the trade war.
Whipsawing tariff announcements have directly caused price increases, and some business owners are closing their firms, he says. They are apprehensive and fearful.
Disruption and increased costs along the supply chain will result in ripples downstream, says Ramsaran, meaning business owners will have a reduced ability to reinvest in companies, communities and charity.
From a personal investment point of view, Ramsaran says some clients are seeing opportunity in the market gyrations. One is interested in buying stock because he has patient capital and doesn’t have to liquidate immediately, enabling him to hold for five to seven years.
For the clients who want to divest their U.S. holdings out of anger with Trump, Ramsaran suggests showing empathy before expressing caution.
“It’s okay to even embrace it and identify with the client … but then after we take the time to express the emotion, you sit down after having a beer and maybe it’s time to have a coffee and sober up a bit. Then we realize, you know what? It’s only four years.”
One of Ramsaran’s clients is developing affordable rental units in heritage properties in Toronto. “They’re now removing the old floorboards and finding these 100-year-old newspapers. In these newspaper articles, guess what they are talking about? They are talking about tariffs and the impact of tariffs.”
Elke Rubach, president of Rubach Wealth in Toronto, says she is concerned about the clients she isn’t hearing from in these troubled times.
“People are scared, they’re confused, and in some cases, they’re paralyzed, because wealth doesn’t make them immune to that,” she says.
Not checking in can signal avoidance, says Rubach. “They go quiet, and it’s not that they’re confident. It’s often fear or pride or shame. … They know that there are holes in their plan. Maybe their wills are outdated, their structures are messy, they put off conversation with their families, but they feel they should have known better, and that keeps them from reaching out.”
She says when clients go quiet—and she knows that silence is not good news—she calls to ask whether they’d like to talk.
On the flip side, other clients want to double down and look for deals in the declining market, Rubach says.
But mostly she has heard from clients who have a plan. They send an email to make sure everything is still going according to plan, and once she assures them it is, it’s the end of the conversation.
“We had COVID. Trump is going to be here four years,” she adds. “But your plan should last more than a Trump presidency or the next election.”
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