The Wealth Exchange

Today on The Wealth Exchange, Mark sits down to talk with Nicola’s Chief Investment Officer — Rob Edel — once again, to discuss his monthly market commentary.

This episode Mark and Rob talk about tax reform in the U.S., capital investments in the U.S., why the Canadian market outperformed the U.S. market this month, and equity evaluations. Rob also talks about his expectations of where he sees the U.S. dollar headed, his outlook on European markets and companies, and oil prices driving up Canada’s economy. 

Today’s conversation is a fascinating one so tune in to find out more!

Key Takeaways:

[:28] About today’s topics and guest.

[:52] In the month of April, Nicola experienced five intraday trading sessions with the clients in excess of 1% — one more than what they saw in the entire year, last year. What does that tell Rob?

[1:44] Why did Canada outperform the U.S. this month?

[2:46] Oil prices are driving up the Canadian economy — what is going on?

[5:12] Will prices for oil continue to go up in the short-medium term? 

[6:45] Does Rob expect the U.S. dollar to continue to strengthen against other currencies?

[8:53] Nicola’s outlook on the Europe markets and companies short-term and long-term.

[10:38] The Wall Street Journal’s Market Data Group estimates an additional 28% growth would be required before trailing price to earnings multiple returns to its ten year average. Does Rob think they are saying that there’s that much room for growth to get back to its ten year average? Are we looking at undervalued stocks?

[12:41] Why might the U.S.’ recent tax reform want to incentivise people to put their money towards growing their business as opposed to paying back shares or dividends?

[14:57] What will be the indicators that the tax reform was successful in getting companies back to growing their businesses?

[15:53] What has changed within the last month and a half that has caused us to see a switch in the flat, long ten year bond rate.

[18:00] Because of the bond rate changing, does this change Rob’s outlook?

Mentioned in this Episode:

OPEC

Wall Street Journal

Guest Bio

Rob Edel

Rob is the Chief Investment Officer at Nicola Wealth Management.

Before joining the team at Nicola, Rob spent 9 years working for one of Canada’s largest money managers and — most recently — as a Portfolio Manager responsible for managing U.S. equities for the firm’s high net worth clients. Previous to that, he spent seven years working for the Treasury Department of a Major Canadian Chartered Bank, splitting his time between Vancouver and Toronto. Rob has completed his CFA and is a member of the Association for Investment Management and Research (AIMR).

For his full bio, visit: nicolawealth.com/our-team/rob-edel

About Your Host — Mark Therriault

Mark is the Financial Advisor and partner of Nicola Wealth Management — and your host for The Wealth Management podcast.

As a member of the NWM Planning Team since 2006, Mark has become his clients’ trusted advisor. He prides himself on providing an exceptional experience to his clients while quarterbacking their financial affairs.

Mark earned his Bachelor’s degree in Economics with a minor in Finance from the University of Calgary. He went on to secure his CFP designation and also completed the CIM, CSC, the B.C. Life Insurance License.

For his full bio, visit: nicolawealth.com/our-team/mark-therriault

For More Information on this Week’s Episode, Visit:

www.nicolawealth.com/thewealthexchange

Disclaimer:

This presentation contains the current opinions of the presenter and such opinions are subject to change without notice. This material is distributed for informational purposes only and is not intended to provide legal, accounting, tax or specific investment advice. Please speak to your NWM Advisor regarding your unique situation. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. NWM fund returns are quoted net of fund-level expenses. Past performance is not indicative of future results. All investments contain risk and may gain or lose value. Projected returns are estimates only. Returns are not guaranteed. NWM is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required provincial securities’ commissions in Canada.

Today on The Wealth Exchange, Mark interviews two fantastic guests: Nicola Wealth Management’s CEO and Chairman John Nicola, and Dino Infanti — partner at KPMG.

John has been a veteran of the financial services industry since 1974 with areas of expertise in investment management, estate and financial planning, as well as business planning. Dino has over 15 years of experience and is very well-known for his expertise on tax technical work in estate and succession planning, corporate restructuring, and tax mitigation. 

This episode, the three of them discuss corporate tax reform, Canadian tax proposals, the backlash to the legislative proposals relating to income taxes, and what the Canadian government is currently doing for business owners compared to the United States. Dino and John also give their insights and opinions on the current tax system and rules, which rules they see impacting business owners and families the most going forward, and their hopes for what a future tax reform could possibly look like.

Key Takeaways:

[:29] Mark introduces this episode’s guests.

[1:22] About John and Dino’s involvement, their ideas around where everything started to where they are now, what the process has been like, and what it has meant for their clients.

[6:15] Were John and Dino surprised by the backlash to the legislative proposals relating to income taxes?

[8:21] What the Canadian government has been doing for business owners, compared to the U.S. and how these differences could impact Canadian business owners.

[17:11] John and Dino give their thoughts and opinions on tax reform.

[19:16] Did the Liberals’ increase in tax rates to certain levels of income accomplish the equality they were striving for in the final rules?

[21:18] Dino and John’s opinions on lowered business tax rate and the Tax on Split Income rule.

[22:22] Which rules Dino and John think will have the biggest impact on business owners and their families going forward.

[25:25] About the ‘reasonableness test’ and the other ways to measure spousal contributions in a personal business.

[26:54] As a tax advisor for his clients, how does Dino make the distinction or decision about what is reasonable? What is the CRA looking for with regards to what’s reasonable?

[30:38] Dino and John’s thoughts on how the CRA is looking at financial contribution and income splitting.

[37:18] John’s thoughts on the complexities of wealth accumulation and small business deductions.

[39:46] The importance of educating clients on the tax system and rules.

[40:55] All about investing in other private businesses and learning to de-risk by diversifying. 

[47:00] Who is the typical individual or business owner that would fit an individual pension plan?

[51:58] Dino speaks about the requirements needed for an active real estate portfolio opposed to a passive one.

Mentioned in this Episode:

Tax on Split Income (TOSI Rule)

Reasonableness Test

Canada Revenue Agency (CRA)

Registered Retirement Savings Plan (RRSP)

Individual Pension Plan (IPP)

Guest Bios

John Nicola

John is the CEO and Chairman of Nicola Wealth Management. He provides strategic leadership to Nicola Wealth Management — exercising his passion for providing innovative solutions to clients’ complex problems.

John has been a veteran of the financial services industry since 1974. His areas of expertise include investment management, estate and financial planning, as well as business planning with a focus on best practices for wealth building, exit strategies, and shareholder agreements.

For his full bio, visit: nicolawealth.com/our-team/john-nicola

Dino Infanti

Dino is a partner at KPMG in Canada, and has over 15 years of experience.

He is well known for his insights and guidance on tax technical work in estate and succession planning, corporate restructuring, tax mitigation strategies and divestitures. Dino specializes in owner-managed enterprises primarily in the construction, real estate development, and holdings sectors, in addition to the entertainment sector.

For a more indepth bio, visit: home.kpmg.com/ca/en/home/contacts/i/dino-infanti

About Your Host — Mark Therriault

Mark is the Financial Advisor and partner of Nicola Wealth Management — and your host for The Wealth Management podcast.

As a member of the NWM Planning Team since 2006, Mark has become his clients’ trusted advisor. He prides himself on providing an exceptional experience to his clients while quarterbacking their financial affairs.

Mark earned his Bachelor’s degree in Economics with a minor in Finance from the University of Calgary. He went on to secure his CFP designation and also completed the CIM, CSC, the B.C. Life Insurance License.

For his full bio, visit: nicolawealth.com/our-team/mark-therriault

For More Information on this Week’s Episode, Visit:

www.nicolawealth.com/thewealthexchange

Disclaimer:

This presentation contains the current opinions of the presenter and such opinions are subject to change without notice. This material is distributed for informational purposes only and is not intended to provide legal, accounting, tax or specific investment advice. Please speak to your NWM Advisor regarding your unique situation. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. NWM fund returns are quoted net of fund-level expenses. Past performance is not indicative of future results. All investments contain risk and may gain or lose value. Projected returns are estimates only. Returns are not guaranteed. NWM is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required provincial securities’ commissions in Canada.

Welcome to The Wealth Exchange — the podcast that focuses on addressing the issues affluent families across Canada face everyday — from buying a vacation home

to selling your business, and tax planning to philanthropy. Your host is Mark Therriault, the Financial Advisor and partner of Nicola Wealth Management.

This episode, Mark has a great conversation with Nicola’s Chief Investment Officer, Rob Edel. Mark and Rob dive right into his monthly market commentary, discussing ‘the Trump factor'; where he sees headwinds in regards to both the Canadian and the U.S. economy; and current events such as facebook correction, marijuana stocks, and cryptocurrency. Rob also talks about what is driving the change of short term and long term interest rates, what he looks for when looking at a company to invest in, as well as his thoughts on NAFTA and the looming possibility of a future trade war.

Key Takeaways:

[:29] About this week’s episode with guest, Rob Edel.

[1:41] Does Rob see the volatility in the market based on ‘the trump factor’ of fears or is it more fundamentally based?

[3:08] The top two headwinds that Rob fears in terms of economic slowdown.

[4:13] Rob explains what is driving the change of short term interest rates going up and long term interest rates staying flat.

[5:49] Do bonds still serve as a safe asset in a portfolio (even with interest rates being low)?

[7:04] How does Rob and his team view volatility with regards to how they manage the equity portfolios?

[9:09] When Rob is looking at a company to invest in, what is he looking for (in terms of preparing for potential headwinds mentioned earlier)?

[9:53] What Rob sees playing out in regards to NAFTA and the current potential of a trade war happening in the world of politics.

[11:42] Does Rob think Donald Trump has a good strategic plan?

[13:39] Does Trump have the proper bargaining chips to actually go after a better deal with China and NAFTA?

[14:58] How does Rob see the potential trade wars playing out?

[17:05] What Rob’s biggest concern is about the Canadian economy in the short term.

[19:22] Rob’s concerns about the U.S. economy in the short and long term.

[20:46] Is Facebook a company or stock that Rob likes? Is it a buying opportunity with technology becoming such a large part of the market? And his thoughts on FANG.

[28:35] About the growth in the marijuana industry and the evaluations Rob is seeing in the market.

[30:41] Does Rob see there being other commodities or industries that are going to become more in-demand because of low supply? And more thoughts on the marijuana industry.

[34:13] Why are companies moving towards accepting cryptocurrency when we are seeing an insane amount of volatility?

Mentioned in this Episode:

Nicola’s Strategic Outlook Seminars

NAFTA

FANG

The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google, by Scott Galloway

Bitcoin

Guest Bio

More About Rob Edel

Rob is the Chief Investment Officer at Nicola Wealth Management.

Before joining the team at Nicola, Rob spent 9 years working for one of Canada’s largest money managers and — most recently — as a Portfolio Manager responsible for managing U.S. equities for the firm’s high net worth clients. Previous to that, he spent seven years working for the Treasury Department of a Major Canadian Chartered Bank, splitting his time between Vancouver and Toronto. Rob has completed his CFA and is a member of the Association for Investment Management and Research (AIMR).

For his full bio, visit: nicolawealth.com/our-team/rob-edel

About Your Host — Mark Therriault

Mark is the Financial Advisor and partner of Nicola Wealth Management — and your host for The Wealth Management podcast.

As a member of the NWM Planning Team since 2006, Mark has become his clients’ trusted advisor. He prides himself on providing an exceptional experience to his clients while quarterbacking their financial affairs.

Mark earned his Bachelor’s degree in Economics with a minor in Finance from the University of Calgary. He went on to secure his CFP designation and also completed the CIM, CSC, the B.C. Life Insurance License.

For his full bio, visit: nicolawealth.com/our-team/mark-therriault

For More Information on this Week’s Episode, Visit:

www.nicolawealth.com/thewealthexchange

Disclaimer:

This presentation contains the current opinions of the presenter and such opinions are subject to change without notice. This material is distributed for informational purposes only and is not intended to provide legal, accounting, tax or specific investment advice. Please speak to your NWM Advisor regarding your unique situation. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. NWM fund returns are quoted net of fund-level expenses. Past performance is not indicative of future results. All investments contain risk and may gain or lose value. Projected returns are estimates only. Returns are not guaranteed. NWM is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required provincial securities’ commissions in Canada.