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FRP Step # 1 - Investment Allocation


Welcome to the Retiring Canada Podcast!


In today’s post, we’re exploring Step One of the Fundamental Retirement Plan (FRP): Investment Allocation.


This foundational step sets the tone for the rest of your retirement strategy.


Let’s begin with a quick overview of the FRP’s five interconnected steps:


  1. Investment Allocation

  2. Income Planning

  3. Tax Planning

  4. Health Care Planning

  5. Estate Planning


Each decision made within your investment strategy impacts your income, taxes, healthcare, and estate. That’s why we always start with the right allocation.


Why Investment Allocation Comes First


From my experience, most people entering retirement have a handful of investment accounts but lack clarity on how to turn those accounts into a sustainable income stream.


Questions like “Can I retire?”, “How long will my money last?”, and “Will my family be okay if something happens to me?” are top of mind.


Your retirement years are meant for fulfilling your dreams and living with purpose. But to do that confidently, you need a structured plan that gives you peace of mind around your income, tax efficiency, and long-term financial security.


Retirement is like a puzzle. We start with the edges your vision, goals, and lifestyle and build inwards with financial strategies that support them.


At the centre of that plan is understanding your investment allocation.


What We Look for in Your Portfolio


Our first step in the Fundamental Retirement Plan is a thorough review of your portfolio.


Here’s what we examine:


1. Risk vs. Reward


We want to ensure you’re being properly compensated for the amount of risk you're taking. It’s not just about return it’s about how much risk you took to get there. That’s where metrics like the Sharpe Ratio, Standard Deviation, Max Drawdown, and Annualized Return come into play. These help us evaluate your portfolio’s risk-adjusted performance.

Think of it as grading your portfolio based on the quality of its returns, not just the quantity.


2. Diversification (The Only Free Lunch)


A common issue we see is overexposure to the Canadian market. Many portfolios we review have 40–60% invested in Canadian stocks, yet Canada only represents about 3–4% of global equity markets. For context, Apple’s market cap is roughly the same size as the entire Canadian stock market.


This home-country bias limits long-term growth potential.

Additionally, most portfolios only hold a small fraction of the 20,000+ investable global companies. A typical retiree might own 50–200 stocks, which is only about 1–2% of the total investable universe. Our approach aims for intelligent, broad diversification across global markets—without sacrificing return.


3. Portfolio Audit: What Else We Check


Beyond performance and diversification, we dig into other key areas:


  • Cost Analysis – Review of MERs, trading fees, and any hidden expenses.

  • Proprietary Products – Identifying in-house products that may prioritize the advisor’s firm over your interests.

  • Cash Drag – Excess idle cash can hinder returns.

  • Rebalancing Strategy – Is it consistent, strategic, or ad hoc?

  • Active vs. Passive – What investment philosophy is being applied?

  • Redundancy and Overlap – Are you duplicating holdings across accounts?

  • Tax Efficiency – Especially important in non-registered (taxable) accounts.

  • Use of Alternatives – Are risky or opaque products being used?

  • Big Bets – Are there concentrated or speculative positions?


The outcome of this step is a personalized investment analysis. We align your portfolio with our evidence-based investment philosophy—built to weather uncertainty and deliver lasting confidence.


Why This Step Matters


Investment allocation is the engine of your retirement plan. It drives your income, determines your tax burden, affects how you prepare for healthcare costs, and ultimately impacts the legacy you leave.


This first step helps uncover any hidden risks, inefficiencies, or missed opportunities in your current setup. It’s about building a portfolio that supports your long-term goals and withstands whatever the market throws your way.



If you haven’t already, visit fundamentalwealth.ca to learn more about our investment philosophy and how we help Canadians retire with clarity.


In the next blog, we’ll dive into Step Two of the FRP: Income Planning—how to create a reliable, flexible, and tax-aware income stream in retirement.


Be sure to follow us on social media and subscribe to the podcast so you never miss an update.


And remember—when it comes to your retirement, don’t take chances.


Make a plan so you can retire with confidence.


All comments are of a general nature and should not be relied upon as individual advice. The views and opinions expressed in this commentary may not necessarily reflect those of Harbourfront Wealth Management. While every attempt is made to ensure accuracy, facts and figures are not guaranteed, the content is not intended to be a substitute for professional investing or tax advice. Please seek advice from your accountant regarding anything raised in the content of the podcast regarding your Individual tax situation. Always seek the advice of your financial advisor or other qualified financial service provider with any questions you may have regarding your investment planning.

 
 
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