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Investment Philosophy

  • What is the Fundamental Retirement Plan?
    At Fundamental Wealth we believe there are many elements that must be considered and accounted for when it comes to creating a holistic, comprehensive retirement plan customized to your unique needs, situation, assets and vision for retirement. To that end, we created the Fundamental Retirement Plan (FRP), which incorporates a structured, customized process that coordinates decisions across the five key areas of a goals-based retirement plan: 1) Investment Allocation - The wrong "ingredients" in your portfolio could be the difference between retiring successfully or running out of money. 2) Income Planning - With your investment allocation in order, we can create a dynamic retirement income that can be adjusted up or down based on your trajectory. 3) Tax Planning - Now that we have your allocation and income plan in order, we can fine tune our tax analysis to help minimize the amount of tax you pay. 4) Health Care Planning - Health is Wealth. We need to factor potential health care and long term care costs, as a mistake here can be devastating. 5) Estate Planning - Lastly, we want to be certain your estate goes to who you want and less goes goes to CRA. The Fundamental Retirement Plan isn't just an initial plan that set it and forget it. It's a timeline for execution of the key components and also a process to continue to monitor and make adjustments on the fly when necessary. As long as we have visibility into how the decisions we're making today are impacting our future security, what we find is you tend to live a more comfortable retirement. That means comfort around the level of income that you're receiving and how much you're spending. Not to mention what we're doing from a tax perspective, to make sure you don't carry a ton of risk and potentially pay too much tax down the road. Listen to our podcast Episode 30 to learn more about the Fundamental Retirement Plan
  • Where do you hold my investments and how can I see them?
    For your safety and convenience, Fundamental Wealth of Harbourfront Wealth Management uses National Bank Independent Network (NBIN) as the custodian for our clients investments and retirement accounts. NBIN administers more than $304 Billion in assets for more than 1 Million Canadian Investors. As a trusted custodian, NBIN safely holds your investment accounts and provides reporting to you and the CRA each year. Your accounts can be viewed at any time at through My Portfolio Plus Login or by navigating through our website under valued clients.
  • Why should I consider hiring Fundamental Wealth?
    There are five reasons to consider hiring our firm: To turn your nest egg into a reliable paycheque in retirement. To pay CRA less and keep more of your hard-earned money. To reduce risk in your portfolio and generate healthy after-inflation returns. To spend more of your time doing the things you love in retirement. To ensure your family, spouse, and/or heirs have a trusted professional to lean on if something happened to you. You can learn more about our expertise by checking out the Retiring Canada Podcast, sign up for our weekly newsletter or get your complimentary one-page financial plan.
  • How are you different than other financial advisors?
    There are three really important things about our firm that separate us from others: We are retirement and tax planning experts. Just a Cardiologist wouldn't perform foot surgery, we remain highly specialized and only work with retirement savers we have the expertise to help. We limit the number of new clients we take on. This allows us to provide unparalleled value and highly personalized service to the families that have entrusted our firm to help them. We work as a team to service our clients. Being a client of Fundamental Wealth means that you have access to a financial planning team that is here to support you in your retirement journey. Combining our resources and intellectual capital enables us to deliver high-quality advice and ensure nothing falls through the cracks. The fact that it's hard to differentiate one advisor from another is EXACTLY why we offer a Complimentary One Page Financial Plan. Many of us have similar titles, designations, and service models. It can be wildly challenging to evaluate advisors and find the best one for you! If you think there is a potential fit between your needs and our expertise, the first step is to schedule a complimentary phone call.
  • Can I work with your team if I don't live in Saskatchewan?
    Yes. We are registered through CIRO to advise clients in Saskatchewan, Alberta and British Columbia. Although we are not currently registered elsewhere in Canada, we would consider extending our registration if the opportunity to help were to arise.
  • What happens next if I want to become a client?
    After completing the full complimentary one-page plan process, here are the next steps to become a client of Fundamental Wealth. 1) Review & agree to our Client Service Standards. 2) Provide all relevant documents requested by our team. 3) Virtual or in-person meeting to complete outstanding and time sensitive tasks. 4) Finalize investment & retirement income decisions. 5) Our team will complete all paperwork and facilitate all transfers. 6) Follow up discussion and preparation for ongoing client service standards.
  • How does Fundamental Wealth make money?
    We are an independent, Fee-based advisory team. One transparent fee includes ongoing retirement and tax planning + tax-smart management of ALL investment accounts and more. Our ongoing advice fee is based on the portfolio size that you have with us: It only makes sense to hire a financial advisor -- or any professional -- if the value they provide exceeds the fee being charged. In other words, the time and effort saved by hiring an expert + the tax savings (and potentially increased investment returns) need to exceed the fees being charged.
  • Markets are efficient. Respect the evidence: "beating" the market is highly unlikely and costly to attempt. Instead, fully capture market returns using passive/index funds.
    Markets work well. They are powerful mechanisms for quickly and continuously aggregating the wisdom of crowds. Markets are highly “efficient,” meaning that the price of a market-based asset (stock, bond, etc.) already reflects all known information about that asset. In other words, the price of every stock already incorporates everything that is known about the company, and any new information that comes along will quickly and efficiently be priced into the stock. The implication of market efficiency is that attempts to “beat” the market – whether through stock picking, manager selection, or market timing – are highly unlikely to succeed. Worse yet, attempts to beat the market are very costly (in terms of both fees and taxes), which nearly guarantees a losing bet for those who attempt it. While this concept is counter-intuitive – it feels like smart people working hard should be able to beat the market – an overwhelming amount of both academic and real-world evidence has proven otherwise. Fortunately for investors, long-term market returns are also powerful. Those willing to accept these returns – rather than try to beat them – will outperform the vast majority of investors attempting to do better and will fully benefit from the market’s robust long-term performance. By using only the most intelligently-structured and lowest-cost passive/index mutual funds and ETFs in our clients’ portfolios (such as those offered by Dimensional Fund Advisors, Vanguard and iShares), we ensure that Fundamental Wealth clients fully capture these powerful long-term market returns. This is the “evidence-based” approach to investing.
  • Simpler is (usually) better.
    Every investor should understand what they own, the purpose of each of account, and how it all fits together to form an overarching financial plan. Unfortunately, there is complexity built into the financial services industry that often prevents this from happening. We believe that this complexity is confusing, costly, and largely unnecessary. Most investors have too many accounts. A brokerage account here, an RRSP there, an old LIRA somewhere they can barely remember; the result is a portfolio that lacks coherence and is difficult to monitor. We believe that investors should maintain the fewest number of accounts necessary to fully utilize their tax-advantaged options, and no more than that. Consolidating our clients’ accounts helps to eliminate some unnecessary complexity and redundant costs. Most investors own too many investments. The diversification of a portfolio is not determined by the number of mutual funds or ETFs owned, but rather by the underlying investments within those vehicles. We believe that investors should own the fewest mutual funds or ETFs necessary to be fully diversified, and no more than that. Not only is this cost-efficient, but it enables the investor to better understand what they own and how it fits into their overall strategy. We want to make our clients’ lives simpler and for them to feel more in control of their financial situation. To us, that means a developing customized, understandable investment plans using only those components that are necessary to achieve our clients’ goals.
  • Taxes matter. A lot. Use tax-advantaged accounts wisely. Realize gains strategically. Harvest losses.
    While returns are nice, after-tax returns are what really matter. Investors should take advantage of every legal mechanism available to reduce the taxes owed on their investment gains. Fundamental Wealth helps our clients minimize their tax burden in several different ways: First, we ensure that every client take full advantage of any and all tax-advantaged accounts available to them ( RRSP, TFSA, Spousal RRSP, RESP, FHSA etc.). Maximizing an investor’s usage of tax-advantaged accounts – in which the investments grow tax-free or tax-deferred – can make an enormous difference over time, especially to those in high tax brackets. Second, we strategically place certain assets in certain account types. Some asset classes (bonds, GICs, REITs etc.) are tax-inefficient and should be held in tax-advantaged accounts whenever possible, while others (most passively-managed stock mutual funds and ETFs) are tax-efficient and can be owned in any account. By carefully locating assets in the proper account type, the entire portfolio becomes dramatically more tax-efficient. Next, we are strategic about when to realize gains within a portfolio. There are situations when an investor should avoid realizing gains and situations when doing so is desirable. By understanding each client’s unique circumstances and tax profile we attempt to optimize these decisions. Lastly, we continuously monitor our clients’ portfolios for tax loss harvesting opportunities. ‘Harvesting’ a loss (selling a depreciated investment to lock in a loss, waiting the required 30 days, and then buying it back) can be hugely valuable in certain situations, and we work with our clients to identify them.
  • Diversify broadly across asset classes and geographies. No big bets.
    Nobody can reliably predict which individual security, asset class, or geographic region will outperform the others. For that reason, we diversify. We diversify across asset classes, meaning that our clients invest in every productive asset class: US Equities, Canadian Equities, Developed Markets Equities, Emerging Markets Equities, Global Real Estate Investment Trusts (REITs), Canadian Government Bonds, International Government Bonds and Investment-Grade Corporate Bonds. We also diversify within asset classes. For each of the asset classes mentioned above, our clients own hundreds – or often thousands – of individual securities (held via low-cost, passively-managed mutual funds and ETFs). Combining investments that are not highly correlated (meaning that they do not move in the same direction at all times) results in an overall portfolio with less volatility – and higher risk-adjusted expected returns – than any of the individual assets that comprise it. This is the power of diversification. Many investors make big bets – often without realizing it – on a particular company, country, or asset class. By diversifying properly, we help our clients avoid this critical mistake and the unnecessary risks that come with it.
  • Thoughtfully allocate between equities (for growth) and fixed income (to reduce portfolio volatility) based on individual goals and risk tolerance.
    The single most important decision that an investor makes – the decision that will have the greatest impact on investment results – is the percentage of his or her portfolio to be allocated to “growth” assets versus the percentage allocated to “conservative” assets. When it comes to investing, risk and return are inextricably linked. Investments with a greater expected return must come with greater risk, and vice versa. There is no avoiding this trade-off. “Growth” assets (equities, REITs, etc.) have higher expected returns than “conservative” assets (government bonds, inflation-protected bonds, etc.), but they come with greater risk and volatility. Determining the right balance requires a deep understanding of one’s unique goals, risk tolerance, other assets/liabilities, career arc, investment sophistication, demeanor, and other personal factors. Because these factors are not static, the allocation decision should be regularly revisited to ensure that the portfolio continues to match the investor’s ever-evolving financial situation. We take great care to ensure that our clients’ asset allocation strategies are continuously aligned with their unique circumstances and goals.
  • Ignore the noise.
    Investors are continuously bombarded with information that activates two of our most basic human emotions: fear and greed. The overwhelming majority of this information is “noise,” which has no effect on our long-term financial well-being. The more completely we tune it out, the better off we will be. Noise comes in many forms: news headlines that make us feel scared about the market; an “expert” forecast about the short-term prospects for a stock or asset class; our knowledgeable friend convincing us of the merits of a promising start-up or real estate deal. These all prey on our natural tendencies toward fear and greed, and challenge our commitment to the thoughtfully-developed investment plans we established to meet our specific goals. Those without plans are even more vulnerable. Ignoring this noise is simple in theory, but difficult in practice. Distinguishing between noise and relevant information can be difficult, especially when our pesky emotions get in the way. The best strategy is to work with an advisor who knows how to spot noise and understands the emotional response that comes with it. Having a trusted advisor – who understands the plan in place and the reasoning behind it – allows an investor to better filter and react to this constant flow of information.
  • Utilize alternative assets reduce volatility.
    Investing in private equity, private debt and private real estate companies is not new, but for the most part, has only been accessible by institutional investors such as pension and endowment funds, charitable foundations and the ultra-high-net-worth. ​ For years now pension funds like CPP and endowment funds like Yale have been rebalancing the their investments to better align with the changing investment landscape. Here is why: Diversification - Different asset classes with different investment/risk profiles results in lower risk when combined in a portfolio. ​ Low Correlation - Alternatives have low to zero correlation with equity markets and traditional fixed income options, creating a more efficient portfolio. Reduce Drawdowns - Uncorrelated assets will perform differently at different times. Alternatives perform more consistently with lower volatility, protecting portfolios from large drawdowns or losses. Risk - Adjusted Returns - With lower volatility than fixed income and equity, but high-income streams, alternatives provide better risk-adjusted returns. ​
  • Costs matter. A lot. Own low-cost investments. Minimize transaction costs.
    Investment costs are the worst enemy of portfolio returns. Seemingly small fees can have an enormous effect on long-term returns. Investors must vigilantly protect their portfolios against any unnecessary expenses. Unfortunately, most investment costs are invisible to the average investor. The majority of expenses are contained within the investment vehicle (such as mutual funds or ETFs), but because investors never see an itemized list of these fees, they never know how much they are paying or how severely the fees are eating into their returns. This is a critical error. The most effective way to minimize investment costs is simple: own low-cost investments. Passively-managed mutual funds and ETFs typically have dramatically lower costs than their active counterparts. Fundamental Wealth prefers mutual funds and ETFs managed by Dimensional Fund Advisors, Vanguard and iShares because we believe them to be the lowest-cost options that provide the best value to our clients. It is also important to minimize the costs associated with buying and selling these investments. Transactions costs add up, and can result in a meaningful reduction in portfolio return.
  • Rebalance systematically. Avoid market timing.
    Once the appropriate allocation strategy is in place, investors need a well-defined plan for rebalancing. When market movement causes an individual asset class to deviate too far from its target within the portfolio – and therefore the overall risk profile of the portfolio to no longer match the investor’s needs – the necessary trades must be placed (remaining cognizant of transaction costs and tax implications) to bring the portfolio back in line. An investor’s allocation should reflect his or her financial situation, and not his or her prediction about the direction of markets. While it would be nice to participate in bull markets and to sidestep declines, “market timing” has been repeatedly proven impossible. Develop a thoughtful plan for asset allocation, and do not allow predictions or emotions to alter that plan.
  • Use small cap and value funds to improve expected returns.
    Small company stocks have been empirically proven to outperform large company stocks, and “value” stocks have been empirically proven to outperform “growth” stocks. This phenomenon can partially be explained by risk (i.e, small companies are inherently riskier than large companies, so investors demand a premium for owning them). However, the historical premium is larger than can be explained by risk alone, so including small cap and value stocks in a portfolio improves its risk-adjusted expected returns. We attempt to efficiently capture these premiums for our clients by investing in mutual funds and ETFs managed by Dimensional Fund Advisors. Dimensional mutual funds and ETFs are designed to capture the small and value premiums in the most intelligent, cost-effective, and tax-efficient manner available.
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"The greatest enemies of the investor are Expenses and Emotions."

- John Bogle, Founder of the Vanguard Group

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