Episode 60: Valuation Theory and the Imminent Recession

Welcome back to the Rational Reminder everybody! We are taking this episode to round up all the recent goings-on and tackle a few residual issues that we believe need some attention. We start off by contemplating how much we have both been learning with the wealth of guests that come through our doors. We would never be confronted with this many ideas and inspiration if it were not for this great platform on which we find ourselves! From there we go on to discuss all the recent talk of a recession and the many assumptions that seem to be being made. Here at the Ration Reminder Podcast, we want to try and dissuade you from thinking you can easily predict the movement of the markets or believe those that say they can. It is just not that straightforward. Most often, a recession is only noticeable during or even after it has occurred. Rather stick to a good, diversified strategy without trying to guess and gamble on questionable information. The conversation also covers the portfolio changes from Wealthsimple before Benjamin does what he does best and explains valuation theory for all of us! So for all this and a few more goodies, be sure to listen in!

Key Points from This Episode:

 

•    Effects of hosting this podcast on our own money minds. [0:00:25.4]

•    The impending recession that everyone is talking about. [0:03:24.5]

•    Wealthsimple portfolio changes this week and the paper they published. [0:08:29.4]

•    Risk, return, low volatility, and balancing these in your favour. [0:17:32.2]

•    The theoretical underpinning of factor investing and valuation. [0:18:39.8]

•    Fama and French's Five Factor Model. [0:26:02.5]

•    Retiring early; spending rules for the FIRE movement. [0:28:18.2]

•    More viable alternatives for saving and preparing for retirement smartly. [0:33:21.6]

•    This week's bad advice! [0:35:28.2]

•    And much more!

Links From Today’s Episode:
Valuation Theory Summary Blog Post

Alexandra Macqueen — https://www.pensionacuity.com/

Moira Somers — http://moneymindandmeaning.com/about-moira/]

Trump — https://www.donaldjtrump.com

A Wealth of Common Sense — https://awealthofcommonsense.com

David Goetsch — https://www.imdb.com/name/nm0324477/

BMO — https://www.bmogam.com

Vanguard — https://investor.vanguard.com

Wealthsimple — https://www.wealthsimple.com

Robert Novy-Marx — http://rnm.simon.rochester.edu/

Eugene Fama — https://www.chicagobooth.edu/faculty/directory/f/eugene-f-fama

Kenneth French — https://mba.tuck.dartmouth.edu/pages/faculty/ken.french/

Modigliani-Miller Theorem — https://www.investopedia.com/terms/m/modigliani-millertheorem.asp

Fama-French Five Factor Model https://blog.quantinsti.com/fama-french-five-factor-asset-pricing-model/

Dave Ramsey — https://www.daveramsey.com

The Retirement Gamble — https://www.pbs.org/wgbh/frontline/film/retirement-gamble/

Valuation Theory Fomula -

Fama and French Formual.png

Episode 59: Financial Economics and Annuities: Rational Planning for Retirement

Welcome to another episode of the Rational Reminder Podcast! We have a fantastic guest joining us today to talk about annuities, or in more general terms, pensionization. Alexandra Macqueen is certified financial planner, who is also a financial author, editor, York University educator, consultant, and speaker. Alexandra co-wrote a book with Dr. Moshe Milevsky called Pensionize Your Nest Egg: How to Use Product Allocation to Create a Guaranteed Income for Life, an incredible resource on our topic today. In this episode, Alexandra talks about the important distinction between financial economics and financial planning, the former being much more rational and quantitative than the latter, which is largely based on folklores and rules of thumb. We discuss the concepts of retirement sustainability quotient (RSQ) and financial legacy value (FLV) and the impact they have on each other, before diving into explaining what annuities are and how they are meant to function. She also advises on the use of the GIC ladder, copycat annuities, and considerations for deferring your CPP. Don’t miss out on this insightful conversation!

Key Points from This Episode:

 

•    The distinction between financial economics and financial planning.  [0:02:38.8]

•    Product allocation and how it relates to pensionization. [0:04:15.8]

•    The retirement sustainability quotient (RSQ) and what it measures. [0:06:46.3]

•    How the RSQ affects your financial legacy value (FLV). [0:07:45.7]

•    The idea of eliminating the probability of ruin from your portfolio. [0:09:39.6]

•    What exactly is an annuity and how does it work? [0:10:15.3]

•    The type of person and age group that annuities appeal to. [0:13:53.2]

•    Why allocating to an annuity can allow you to spend more on your overall capital. [0:16:20.0]

•    The problem with the folklore rules around appropriate withdrawal rates. [0:19:47.8]

•    Suggestions for annuities for wealthy people under 50. [0:23:08.3]

•    Why a GIC ladder is not a guaranteed stream of income. [0:26:04.9]

•    Defining copycat annuities and their accompanying issues. [0:30:57.6]

•    CPP and the impact of deferring it at retirement. [0:33:52.4]

•    And much more!

Links From Today’s Episode:

 York University — https://www.yorku.ca/index.html

Pensionize Your Nest Egg on Amazon — https://www.amazon.ca/Pensionize-Your-Nest-Egg-Allocation/dp/0470680997

Moshe A. Milevsky — https://moshemilevsky.com/

Alexandra Macqueen — https://www.pensionacuity.com/

Wade Pfau on Twitter — https://twitter.com/WadePfau?ref_src

An Efficient Frontier for Retirement Income — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2151259

Why the 17% drop-out rule is key to your CPP entitlement — https://www.moneysense.ca/columns/ask-moneysense/17-percent-drop-out-rule-cpp/

Episode 58: The Ins and Outs of Real Estate: Mortgage Rate, Rentals, REITs and Variable Annuities

On today’s episode, Benjamin and Cameron are talking real estate, specifically mortgage rates and REITs. For the first time since the early 90s, fixed mortgage rates are lower than variable ones, which have always been the popular choice. However, due to the fact that Canada’s yield curve is inverted, short term rates higher than their long-term counterparts. This is not usually the case, which makes it a great time to consider a fixed term mortgage, bearing in mind that it requires some lifestyle considerations. Benjamin and Cameron also provide some insights into the rental property market changes since 2015, with some astonishing figures. They then discuss REITs, which many think should be considered their own asset class. While it is often recommended to have REITs in your portfolio, research is starting to show that you are taking a great deal of risk you are not being compensated for. This means you may be better off investing in other options such as high exposure bonds which bear much less risk. For all this and much more, join us today!

Key Points From This Episode: 

  • Why fixed-rate mortgages are now lower than variable-rate ones. [0:03:58.0]

  • Interest rates went up, but the shape of the yield curve changed as well. [0:06:25.0]

  • Property prices have almost doubled relative to rent since 2015. [0:07:12.0]

  • What a rental wage is. [0:12:48.0]

  • What a REIT is and the benefits of investing one in your portfolio is. [0:17:05.0]

  • Why the risk of a REIT may not be justifiable. [0:21:01.0]

  • Variable annuity investors routinely outperform mutual fund investors [0:26:23.0]

  • And much more!

Episode 57: A Masterclass in Business: Money Philosophy with Barry Ritholtz

On today's episode we are so happy to be joined by none other than Barry Ritholtz! As the founder and CIO of Ritholtz Wealth Management, host of the Masters in Business Podcast and regular financial blogger for more than 15 years, Barry is someone we have been dying to speak to on the show and who we have taken loads of inspiration from over the years. We talk to Barry about his own podcast which has been going strong for years now and is just about to reach its 250th episode! He also explains the beginnings of his firm and how his role has evolved in it since it started. From there, the conversation turns to the different parts of an investing philosophy we and Barry pretty much share and we ruminate on the state of the financial industry in US and Canada currently. We all feel that it is surprising that brokerage firms still find business in this day and age, when it has been shown so many times, for an extended period of time to be a far inferior business model for clients. Barry offers some pretty sensible advice on how to pursue financial growth in the long term and shares how RWM approaches client acquisition. For all of this and so much more, be sure not to miss this great episode!

Key Points From This Episode:

 

  • Why Barry feels he has the easiest gig in podcasting. [0:03:17.6]

  • The inspiration behind starting the firm and Barry's day to day work. [0:05:53.9]

  • The RIA model versus the brokerage model in investment firms. [0:12:45.4]

  • How Barry and the firm have chosen to run their business model. [0:16:03]

  • Specific portfolios at Ritholtz and the philosophy behind them . [0:21:18.8]

  • It's no good breaking a record if you crash straight after! [0:28:13.1]

  • How Barry and the firm find customers and the client conversations they have. [0:34:04.2]

  • Behavioral counseling as RWMC's biggest value proposition. [0:42:34.8]

  • Barry's opinions on robo-advisors and the factors to consider. [0:47:06.2]

  • Why are there still commission based advisors in 2019? [0:50:38.9]

  • Things Barry has changed his mind about since starting the firm in 2013. [0:55:09.9]

  • Small cap tilts, lower rates and the longer term vision that is necessary. [1:01:11.1]

  • How Barry defines success in his life. [1:07:01.5]

  • And much more!

Episode 56: GIC's, Portfolio Questions and Education Saving Plans: What's Right for You in Your Retirement and Education Preparations?

On the show today we are going back to basics, just Cameron and Benjamin going through some useful topics for your financial benefit! We start talking about GIC's and the article on MoneySense that led to this conversation. GIC's have a somewhat mix and match reputation, one which we believe has been often misunderstood and misrepresented. We try to show in which ways people have been misled into thinking that GIC's are the best option when, we believe, they are not. From there we turn to more general portfolio ideas, comparing the performance of the S&P 500 over time and drawing on a very useful study that illuminates the index's limitations. Our last topic for today is around saving for college and RESP's or registered education saving plans. We talk about asset allocation, how to think about starting and best practices when drawing on these funds. We finish off the show with some bad advice regarding dividend investing that actually referenced a video we made! So for all and a bunch more great stuff, be sure to tune in today!

Key Points From This Episode: 

  • Our recent summer travels and getting away from it all! [0:03:02.4]

  • The article by Jonathan Chevreau that sparked part of today's discussion. [0:05:46]

  • GIC's, long term returns and the financial implications of your choices now. [0:07:15.2]

  • Reasons why returns on GIC's can be misleading in the short term. [0:11:02.7]

  • The S&P 500's performance against other portfolio options. [0:13:56.3]

  • Market drops and risk appetites during panic periods. [0:19:15.2]

  • Saving and drawing on college funds and education plans. [0:22:40.2]

  • Asset allocation and the best way to think about covering costs. [0:27:41.1]

  • Withdrawing funds and making the most of unused college savings. [0:31:21.3]

  • This week's bad advice! An argument about dividend investing. [0:33:30.8]

  • And much more!

Episode 55: Being Frugal: The Crux of Financial Happiness

Joining us on the podcast today is Jonathan Clements, former Wall Street Journal columnist, founder of HumbleDollar and author of From Here to Financial Happiness, How to Think About Money and several other books. Jonathan is a well-known name in the world of personal finance as he has been giving financial advice for more than 20 years. Today he talks about the role of stories in shaping people’s understanding of and relationship with money by sharing an anecdote from his own childhood. He discusses how his investment philosophy has changed in favor of index funds, why investing is much simpler than people tend to believe and then he gives us a glimpse into his own investment portfolio and the financial decisions he is making in his personal life. Jonathan also offers a balanced perspective on home ownership from an investment point of view, advises on the things worth spending money on and then we debate the age-old question of whether money can in fact make you happy.

Key Points from This Episode:

  • Working as a financial journalist on Wall Street for more than 20 years. [0:02:01.0]

  • How old family stories taught Jonathan to be thrifty and careful with money. [0:02:28.0]

  • How his philosophy and the investment world has changed over the years. [0:06:09.0]

  • The hardest part of investing is accepting how simple it is! [0:07:39.0]

  • Why Jonathan tilts towards value in his own investment portfolio. [0:11:12.0]

  • Considering the many sides to home ownership as an investment. [0:13:57.0.]

  • How his partial retirement has affected how he thinks about his portfolio. [0:17:43.0]

  • What HumbleDollar is about and dealing with the human side of money. [0:19:58.0]

  • Three things to do to get more happiness from your money. [0:24:17.0]

  • What people should be talking more about in finance. [0:30:46.0]

  • And much more!

Episode 54: The S&P Dow Jones & S&P 500: A Brief History

Today on the Rational Reminder Podcast we have joining us Dr. David Blitzer who is the Managing Director and Chairman of the S&P Dow Jones index committee. He has been there from the time when indexes were barely even being traded and the first time S&P Futures began trading, and since then, indexing has turned into the massive phenomenon we all know today. Indeed, S&P indexes were (and still is) at the center of this explosion. Today Dr. Blitzer talks to us about the early days of indexing and shares some of his ideas about why indexing became so popular. We also discuss the possible reasons why some people still choose actively managed funds and the effect that the abundance of research has had on their dwindling appeal. Ever wondered where the rapid growth in indexing will end up? What happens after indexing? Can indexing become too big? Be sure to join us for this masterclass on indexing!

Key Points From This Episode:

When Dr. Blitzer joined S&P and how index investing has changed over time. [0:03:33.0]

The relationship between an S&P and a product manufactured like Vanguard. [0:06:03.0]

Considering the reasons why indexing became so popular and the role of ETFs. [0:10:11.0]

How research has impacted people’s perception about active management. [0:12:54.0]

Some theories on why it is so difficult to beat the S&P 500. [0:18:13.0]

How the change to indexing has affected smaller markets such as Canada. [0:25:39.0]

Dr. Blitzer’s thoughts on factor weighting. [0:30:28.0]

The line where we cross over from passive to active investing. [0:32:18.0]

Can indexing become too big, and what’s next? [0:41:00.0]

What Dr. Blitzer ascribes his success to. [0:45:26.0]

And much more!

Episode 53: The Real Value of Financial Advice: An Empirical Perspective

Live in the studio with us today is Preet Banerjee, renowned speaker, personal finance expert, consultant and author of Stop Overthinking Your Money. He is also the founder of MoneyGaps, a hybrid-advisor platform designed to help financial advisors make financial planning accessible to more Canadians. Having done a reality TV show and with a poplar YouTube channel, Preet is on the forefront of the finance world, and he is here to talk to us about the findings that his DBA research have produced. He discusses his endeavour of seeking empirical evidence for the actual contribution that advisors are making to the financial lives of people, and we talk about the crucial difference between robo and human advisors and how people’s diverse needs demand diverse solutions. This is a really insightful conversation with someone who knows what he’s talking about, so be sure to listen in on this one!

Key Points from This Episode:

  • What is the value of financial advice? Preet shares about his DBA research. [0:02:33.0]

  • Preet’s history in finance and how he gained a more objective perspective. [0:05:13.0]

  • Speculating around the findings and more about his research design. [0:06:41.0]

  • The relationship between wealth and financial advice: correlation or causation? [0:11:11.0]

  • Measuring the performance of someone who uses no advisor. [0:14:17.0]

  • How the financial security of the home you grew up in affects your finances. [0:16:26.0]

  • Building the model to score financial wellbeing and the challenges that surfaced. [0:20:20.0]

  • Paying more attention to aspects outside of portfolio management. [0:25:09.0]

  • MoneyGaps as a platform for affordable financial planning. [0:29:04.0]

  • How the value of human advisors depends on each individual consumer. [0:33:34.0]

  • The core benefits of human advisors. [0:34:44.0]

  • And much more!

Episode 52: A Closer Look at the CPPIB Report: What You Need to Know

Welcome to this week’s Rational Reminded Podcast! Today we’re diving into the recent CPPIB report that portrays actively managed funds in the most optimistic light. But before you trade in your index funds, we look at the methodologies and calculations employed by the report and show why there are a number of issues with their findings. Benjamin shares his proposal for an alternative analysis that employs a more risk appropriate benchmark, and we discuss why the report can be seriously misguiding. We also talk about the transitional issues that have result from MB Financial being taken over by Scotiabank and why some MB Financial clients have not been too pleased with it all. We tackle the issue of value versus growth stocks and look at a number of research papers that could explain the developments that have taken place in this regard. Nearing retirement and unsure when to take your CPP? Be sure to join us to find the answer to this complex question!

Key Points From This Episode:

  • The positive report about the active management strategy of the CPPIB. [0:01:19.0]

  • Why there is a red flag about the calculations done for this report. [0:03:19.0]

  • Benjamin’s alternative analysis and how he built up a more risk appropriate benchmark. [0:05:43.0]

  • The problem of CPP comparing a relatively safe portfolio with a much higher risk one. [0:09:02.0]

  • CPPIB’s argument for why they are investing in illiquid asset classes. [0:11:31.0]

  • A few repercussions of MD Financial being taken over by Scotiabank. [0:16:16.0]

  • Does value still make sense? Looking at the data of value relative to growth. [0:19:45.0]

  • An overview of three research papers on on the overreaction hypothesis. [0:25:10.0]

  • The complex question of when to take your CPP and when it’s better to wait. [0:33:27.0]

  • And much more!

Episode 51: Writing About Money: Advocating for Consumer Rights with Ellen Roseman

On the Rational Reminder today we are joined by Ellen Roseman from The Toronto Star, who has been writing and working in the realm of Canadian personal finance and consumer rights for many years. We have a great chat about her work history, what has driven her career and what motivates her to continue to pursue her path of creating financial awareness for more people. We discuss the position of advocacy for consumer rights and how that translates into her everyday work, her most important and recent areas of action, the classes she is involved in teaching and her most recent book, titled Fight Back. Ellen weighs in on the topics of financial advice and how to seek out the best of it, actively managed funds and how she is involved FAIR Canada. We finish off with a fun bit about how Ellen found herself blocked on Twitter by Suze Orman and Dave Ramsey! For all this and more, listen in today!

 

Key Points From This Episode:

  • What it means to Ellens to be an advocate for consumer rights. [0:02:43.1]

  • The most recent cause that Ellen has been championing through her work. [0:05:4]

  • Three tips from Ellen's most recent book, Fight Back. [0:07:59.0]

  • The class Ellen teaches at UFT, Investing for Beginners. [0:14:18.9]

  • Ellen's attitude towards seeking advice and when it is necessary. [0:16:19.6]

  • Bad investment advice and the cases that crop up the most for Ellen. [0:18:18.5]

  • Some of the results of Ellen's course and how it is laid out. [0:21:05.4]

  • Are actively managed mutual funds still holding the majority of Canadian assets? [0:26:03.2]

  • A little about FAIR Canada and Ellen's work there. [0:27:55.4]

  • Ellen's recent Twitter activity which led to get her getting blocked by Suze Orman. [0:32:14.5]

  • A definition of success from our wonderful guest! [0:38:14.0]

  • And much more!

Episode 50: Tax Tales: Considering The Tax Implications Of Asset Allocation ETFs

Welcome back to the Rational Reminder Podcast! We’re nearing our one-year anniversary, and we are still getting more listeners every episode and we have some incredible guests lined up for you! Today we are tackling more technical issues and some interesting topics overall. We explore the tax implications of VGRO or any of the asset allocation ETFs of Vanguard and iShares and discuss the scenarios in which it might be more advisable to configure the asset allocation that you want using a different form of fixed income and equities. We compare the tax rates on various funds and then dive into some literature on currency hedged global fixed income and what key role players have to say about diversification and dispersion. The spotlight is then diverted to disability insurance and we talk over whether it really is a necessity, what statistics show, and we advise you on the specific points to consider when looking for the right cover plan. For all of this and more, be sure to join us for this episode!

Key Points From This Episode:

  • The listener question about the tax efficiency of VGRO that keeps popping up. [0:01:58.0]

  • The tax issues with premium bonds and how interest rates impact their value. [0:02:41.0]

  • The benefits of the different ETFs that VGRO gets its bond market exposure from. [0:05:34.0]

  • Buying VEQT or other equity ETFs as an alternative to buying VGRO. [0:07:49.0]

  • Comparing the tax rates on funds and why tax efficiency is a vital consideration. [0:09:31.0]

  • Some interesting research findings on currency hedged global fixed income. [0:12:21.0]

  • Understanding the tax, liquidity and risk implications of GICs. [0:14:16.0]

  • Is it possible to over-diversify? And important points on dispersion. [0:16:31.0]

  • Considering disability insurance, what data shows and what do look for. [0:22:47.1]

  • And much more!

Read more on GICs replacing bonds here: https://www.pwlcapital.com/should-gics-replace-bonds-in-a-portfolio/ 

Episode 49: Insights into Horizons: Continuous Innovation in the Canadian ETF Market

On today’s episode, we are joined by Jaime Purvis, Executive Vice President at Horizons ETFs. Having been the company’s third ever employee, he has worked at the company for nearly 24 years and provides an in-depth inside look into how Horizons has come to have the reputation of being ahead of the curve in the Canadian ETF market. He takes us through some of Horizons history, how they got into ETFs, as well as giving some insights into how these products were chosen. Given the instability of the market today, it is important not only to innovate, but also to leverage experience when creating ETFs, which is what Horizons seeks to do. With such high levels of unpredictability, they aim to provide their clients with as much knowledge as they can to make informed decisions, especially given the Canadian national budget proposal, which will likely affect ETFs across the board greatly. Along with this, Horizons has also created a variety of ETFs, based on products they anticipate will soon play a huge role in daily lives, such as robotics and AI. Despite casting this wide net, these decisions are still made with careful consideration, drawing on the company’s extensive knowledge pool. This ability to continually innovate has put them at the forefront of the Canadian ETF market. To gain more insight into the world of ETFs and Horizons, join us today!

Key Points From This Episode:

  • How Horizons has swap structure works and why these swaps should not be feared. [0:06:55.0]

  • What the rationale behind the Canadian government swap-based ETF targeting is. [0:11:45.0]

  • What the redeemer’s methodology is and the effect that is has. [0:16:08.0]

  • What some of the risks associated with the swap-based ETF structure are. [0:23:56.0]

  • The situations where it does not make sense to have a swap-based ETF. [0:28:43.0]

  • How Horizons chooses their thematic ETFs. [0:30:35.0]

  • What the deciding factors in closing a stock down are. [0:36:29.0]

  • Why it is becoming increasingly difficult for starter ETFs to launch. [0:39:20.0]

  • And much more!

Episode 48: Current Investment Topics: Market Efficiency, Grossman-Stiglitz Paradox, and the Home Ownership Debate

Welcome back to your weekly reality check on sensible investing and financial decision making for Canadians. On today’s episode we kick it off with a combo of a current topics, answering listener questions, and discussing the bad advice of the week. We then dive into the huge shift in the industry in the US in terms of fund flows into index funds out of active mutual funds. When you look at the overall US market cap, 13% of it is in index funds. This means that price discovery is being done by 87%. Inside this episode we unpack what that means for investments overall and how it differs in the Canadian market. We then take to a deeper discussion on our portfolio management topic of the week, which is looking at the relationship between price and future returns. We know that when prices are high, future returns tend to be low, so we dive into how that affects the context of pricing. We also take a look at the AQR study, Vanguard’s dollar cost averaging versus lump sump study, and of course our planning topic for the week; renting versus buying a home and understanding the unrecoverable costs. Join us today and be sure not to miss out on today’s incredible episode!

Key Points From This Episode:

  • Answering a listener question: using dividend stocks to pay down your mortgage. [0:03:41.0]

  • Busting the beliefs and concepts of this week’s worst investment advice. [0:06:33.0]

  • The shift in the US market place: index funds versus active mutual funds. [0:11:27.0]

  • Understanding the Grossman-Stiglitz Paradox: market efficiency. [0:15:40.0]

  • Portfolio management topic of the week: relationship between price and future returns. [0:18:19.0]

  • Discussing the Vanguard study: Lump sum versus dollar cost averaging. [0:24:18.0]

  • A viral topic: understanding the debate of whether to rent or to buy a house. [0:28:28.0]

  • And much more!

Episode 47:The Used Car Business: Inventory, Margins and Customer Experience, with Brad Boehme

Today we’re talking about a slightly different topic from the usual – used cars. We have Brad Boehme joining us and he is the Dealer Principal/General Manager at MyCar, a successful used cars dealership that has three different locations around the country. Brad shares with us how he got into the industry, how the 2008 financial crisis helped them to start the business, where they source their inventory from and why the profits are in the buying more than in the selling. Client experience is a high priority for them, and he tells us how they approach negotiations with clients and what he advises listeners to consider before leasing or buying a car. Tune in today to learn more about the business of used cars!  

Key Points From This Episode: 

  • An overview of Brad’s education and how he got into the car business. [0:1:46.0]

  • The different roles that taught Brad about remarketing and the ins and out of the trade. [0:02:54.0]

  • Why the financial crisis of 2008 was an opportunity to start a used car business. [0:4:10.0]

  • What volume of inventory they typically have between the three locations. [0:05:41.0]

  • Where they source their cars from and why the buying process is so important. [0:07:23.0]

  • The digital platforms they use to buy and sell and what the process involves. [0:08:55.0]

  • How car dealerships make profits, where the margins are and understanding lot packs. [0:12:12.0]

  • How they approach negotiations with clients and prioritize customer experience. [0:14:57.0]

  • Buying and leasing new cars and how residuals work. [0:16:42.0]

  • Factors to consider when you want to buy out a leased vehicle. [0:20:27.0]

  • Weighing up whether it is best to lease or to buy used. [0:21:35.0]

  • Advice for buying used cars and what protection there is for consumers. [0:24:58.0]

  • The cars that are investments and that have a good growth rate on them. [0:29:42.0]

  • The aspects of the business that are most rewarding to Brad and how he defines success. [0:31:25.0]

  • And much more!

Episode 46: Raw Truth of Investment: Why the Best Investment Advisors Cannot Beat a Dart

Welcome back to the podcast everybody! Today we are running through our weekly topics as usual, giving you the best, worst and everything in between on investing in Canada. We are talking a bit about the really interesting and important SOHN Investment Conference and what goes on there. We also go into why random stock picks, chosen by a thrown dart, beat Wall Street's elite and what we can learn from the SPIVA Report. From there we go pretty deep into the topic of low volatility and how its different permutations and readings can impact our investments. In our planning section of the program we talk about returns and how Canadian investing fits into the global landscape. Lastly, we finish off with our segment on the worst advice of the week, where we evaluate a claim that new kinds of ETFs with a new kind of value are what is needed in the market currently. For all this and more, be sure to join us today!

Key Points From This Episode:

  • A little about the SOHN Investment Conference. [0:01:51.3]

  • Why the 'best' investment advisors cannot beat a dart. [0:04:42.4]

  • Active funds versus index funds and the SPIVA report. [0:06:59.7]

  • Low volatility stocks, a definition and understanding them better. [0:13:18.2]

  • The most important metrics in the low volatility equation. [0:19:01.1]

  • Average returns on mutual funds over time. [0:24:42.6]

  • The worst advice of the week! [0:31:56.3]

  • And much more!

 

Episode 45: Preparing for a Changing World: Advice that Sticks with Dr. Moira Somers

Today on the show we are joined by Dr. Moira Somers, author of the book Advice That Sticks and expert on neuroscience, advising and leadership. Dr. Somers does a great job of unpacking all the different parts of her job and career and a multitude of topics from the financial advice field. She explains what it means to be a wealth psychologist and who makes up the bulk of her clientele.

We then discuss the value of good, reliable financial advice and why most people seek it out and when. Dr. Somers tells us about the critical junctures that often lead people to find a new advisor and financial points of interest for people entering into a new relationship. We get into the value of face to face advice, trust and commitment between clients and advisors and why it is necessary to build a team of advisors with different areas of expertise and practice.

We end off the episode with Dr. Somers offering some great advice about newly acquired wealth, better practices for every day and the three things we should always be considering. For all this and so much more, be sure to tune in today!

Key Points From This Episode:

  • What is a wealth psychologist? [0:01:42.4]

  • How Dr. Somers got into the her current work and position. [0:02:35.8]

  • Using Dr. Somers' book as an advisor and as a consumer. [0:04:25.5]

  • The importance of a good financial advisor's perspective. [0:05:06.2]

  • What are the factors that drive people to seek out financial advice. [0:06:38.5]

  • Marriage, debt, finances and decisions. [0:08:49.6]

  • Choosing the right advisor for your own needs and not just your own feelings. [0:11:30.2]

  • Why so many advisors are fired in times of transition. [0:13:06.5]

  • The value of face to face advice. [0:15:10.5]

  • How to build a strong, trusting relationship with a client. [0:18:56.8]

  • The level of selectiveness needed when choosing an advisor. [0:21:42.6]

  • The benefits of building a diverse team of advisors. [0:23:53.1]

  • Skills that are vital in advising on newly acquired wealth. [0:26:06.4]

  • Smart lifestyle choices to improve your financial future. [0:28:55.7]

  • The central trifecta of time, energy and money. [0:32:39.3]

  • And much more!

Episode 44: Interactions with Trolls: Who Should You Listen To?

Have you ever received hate mail or negative comments on your social media posts? We’re here to tell you you’re not alone. On today’s show we are talking at length about your interactions online with people commenting on YouTube videos as well as a Globe and Mail article which is quite incredible. It’s kind of a theme for this week. We dive into online trolls, those people whose sole purpose in life is to get you down. It’s super interesting to read and obviously very entertaining for some to see. People are forever out there giving advice and it’s up to you to decide who you’re listen to and what advice you’re taking. In wrapping up our talk, we also reveal our pick for the worst advice that we’ve heard in the previous week and why you need to stay far, far away. For all this and more, keep listening!

Key Points From This Episode:

  • Why an index fund should be better than an active fund. [0:04:00.0]

  • How the index committee works. [0:06:30.0]

  • Differences in the types of indexes. [0:07:29.0]

  • Tax loss selling - buying something tracking a different index. [0:09:50.0]

  • People promoting their own beliefs and opinions by commenting on articles and posts. [0:11:00.0]

  • People following tribal leaders and why there’s too much information out there. [0:12:32.0]

  • Decision theory and why you can’t base a decision on past outcomes. [0:13:00.0]

  • Putting controversial content out there and “poking the bear” with dividend investing. [0:13:50.0]

  • Being more wary of who you listen to and take advice from. [0:15:40.0]

  • Who you should listen to - evidence based facts. [0:16:39.0]

  • The concept of dividend growth investors. [0:19:30.0]

  • Wanting the most reliable outcome possible. [0:21:25.0]

  • Dividends as a guaranteed source of returns. [0:24:35.0]

  • Using dividends as your spending rule. [0:26:25.0]

  • The FIRE movement and why not all advice is good advice. [0:28:00.0]

  • How irresponsible it is to use the 4% spending rule for your retirement goals. [0:29:35.0]

  • Worst advice - when mutual funds make more sense than active funds. [0:34:45.0]

  • And much more!

Episode 43: Life at Dimensional: The Constant Pursuit with Dave Butler

On the show today we welcome Dave Butler, who is now the co-CEO of Dimensional Fund Advisors. We have a great conversation about a wide range of topics from the beginnings of the firm, to his earliest involvement, how he was nearly in the NBA and the importance of trust and family. Dave takes us on a personal and professional journey in science-based investing, who his biggest influences and mentors are and how he found the path of fiducial advice after a few different careers early on. We discuss leadership, small cap stocks, efficient portfolios and the building of trust with clients as we scan through the last 40 years or so with our guest. Dave shares history and memories on some of the landmark events in the field and Dimensional's story, spilling the beans on his experiences with industry giants such as Gene Fama and Merton Miller. For a great conversation with an open, honest and inspiring person, be sure to tune in today!

Key Points From This Episode: 

  • How Dave describes Dimensional. [0:02:32.2]

  • Dave's basketball career before finance. [0:03:05.8]

  • A 24 hour transition from sports to business. [0:06:46.7]

  • Leadership, drive and team mentality. [0:09:38.6]

  • The founding of Dimensional and the evolution of index funds. [0:11:32.5]

  • The early days of small cap stocks. [0:17:40.1]

  • Acting in the best interests of the clients and the rise of the fiduciary. [0:21:05.6]

  • The first financial advisor at Dimensional! [0:23:59.0]

  • Dave's own 'aha moment' and joining Dimensional. [0:25:42.6]

  • Independent advice and always acting in the best interests of the client. [0:31:52.1]

  • Building efficient investment portfolios for advisors. [0:35:51.1]

  • Access to Dimensional funds and the indispensability of advisors. [0:37:33.5]

  • Developing the essential element of trust. [0:38:51.1]

  • The expansion of the advisor role over the last 25 years. [0:42:29.9]

  • Dave's relationship with co-CEO Gerard O'Reilly. [0:45:22.4]

  • The incredible experience of working with leading minds in finance. [0:47:50.8]

  • Dave's definition of success. [0:51:38.0]

  • And much more!

Episode 42: IPOs, Indexing and Market-Linked GICs: Weighing Up Their Worth

Welcome to this episode of the Rational Reminder Podcast! We’ve decided to tweak the format of the show slightly, so you can look forward to a more focused conversation around current and portfolio topics and much less talk about factors! In our talk today, we uncover the recent popularity of IPOs, giving you a balanced perspective so that you can decided for yourself whether the hype holds enough merit for you to get involved. We also get into the various arguments against indexing, pulling apart all the factors to keep in mind, and then advise you on choosing account types based on your individual financial needs. In wrapping up our talk, we also reveal our pick for the worst advice that we’ve heard in the previous week and why you need to stay far, far away. For all this and more, be sure to join us!

Key Points From This Episode:

  • How we are changing up the format of the episodes. [0:01:50.0]

  • A closer look at the two Canadian funds with class action lawsuits against them. [0:03:46.0]

  • Investigating the current IPO frenzy and whether there is merit in the hype. [0:07:40.0]

  • How to get an IPO allocation and the possible terms and conditions. [0:11:59.0]

  • A breakdown of the arguments against indexing. [0:13:46.0]

  • Why indexing is risky and the issue of a lack of control. [0:14:24.0]

  • Weighing up the degree to which the skills of fund managers play a role in indexing. [0:19:46.0]

  • Factors to consider when deciding on the type of account that you want to allocate to. [0:23:26.0]

  • The advisable cascading order in which to fill up your accounts. [0:26:37.0]

  • The complexity with market-linked GICs and what the basic premise is. [0:35:50.0]

  • And much more!

Episode 41: The Future of Canadian Fintech: Leading the Charge with Robo-Advisors

On the show today we welcome Randy Cass, owner and founder of Nest Wealth, who were the first financial firm to employ the use of robo-advisors in Canada. Their unique business model and forward looking systems and practices are at the forefront of the industry in the country and hearing Randy's recollections from their processes as well as thoughts going forward will be of great interest to anyone interested in the future of their money. In our conversation we cover the basic history of Nest Wealth and what inspired their big decisions. Randy unpacks their fee structure and how some of the systems work and have changed over the last few years before going into the ins and outs of how robo-advisors field questions. Our guest also comments on the financial market's constant evolution and his personal and professional attitude to passive investment strategies. We chat about obstacles that currently stand in the way of the fintech industry and finish off the episode with Randy explaining his iterative approach to development as technology advances. For all this and more, be sure to tune in!

Key Points From This Episode:

  • How Randy decided to launch the first robo-advisor service in Canada. [0:02:17.3]

  • The evolution of the systems used by Nest Wealth since its inception. [0:04:25.1]

  • Nest Wealth's unique fee structure. [0:06:38.0]

  • Handling questions from clients at the firm. [0:09:50.0]

  • Nest Wealth's place in the evolving financial advice market. [0:13:23.8]

  • How Nest Wealth use technology to scale financial advice. [0:19:04.8]

  • Randy's attitude towards passive and active investment management. [0:22:57.8]

  • Some of the notable obstacles that Randy has encountered in Canadian fintech. [0:25:32.1]

  • Looking forward to the future of the industry and developing iteratively. [0:29:19.0]

  • How Randy measures success in his life. [0:31:39.4]

  • And much more!